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 April 10, 2007
Doing It Right: Providing Daily Meaning

 This essay is excerpted from True to Yourself: Leading a Values-Based Business, by Mark Albion.

There's a big difference between providing great benefits and understanding how to produce fulfillment for human beings.

In addition to the company that bears his name, Mal Warwick & Associates, Mal is the founder of three other companies that bring fund-raising and marketing services to environmental and human rights organizations. Now free from daily operations, he travels the world to teach fund-raising, principally in developing countries. A whirlwind of activity, Mal is frenetically committed.

He admits that he never thought about leadership until recently. He started his namesake company in 1979 and began hiring full-time staff in 1983. He didn't see himself as a good leader or manager. His company grew 100 percent a year for several years in the 1980s, a growth spurt for which Mal felt unequipped: "I had no idea what it meant to lead a small company, much less be 'values-based.' I had the strategic, creative and technical skills to be a well-paid consultant, but no experience or training in management, much less leadership."

He quickly learned that his leadership position gave his actions an importance he didn't know he had: "I was truly a workaholic, insensitive to the needs of a staff that wanted some balance in their lives. It took me a long time to understand that my role required me to think about how I might inspire or deflate the people around me."

Mal realized that he had a more multifaceted role as teacher and mentor. He had to be more careful about what he said and think more about how to motivate and support staff. As he spent more time out of the office, these roles took on a greater importance. After all, management is about what happens when you're around. Leadership is what happens when you're not there.

In the 1980s, Mal was also a self-described "control freak," a handicap of most founders. He started off doing everything from opening the envelopes and licking stamps to analyzing results for his clients: "I knew I could do it better than anyone else. No one was as competent as I was. I could have made a lot more money solo, but I wanted to achieve more than I could do alone -- and I wanted my work to go on after me."

Mal joined the Social Venture Network in 1990 and talked with fellow CEOs about success and failure. It was a profound experience: "I concluded that I wasn't successful. I didn't have the kind of organization that could carry on. I saw that to support advocacy work at nonprofits and foster the kind of social change I wanted, it would require a lot more hands on the oars."

Mal's challenge was not simply about moving from managing to motivating. It was more about values, something he hadn't paid attention to beyond delivering a superior product with great customer service to clients whose work he cared about. He did have employee loyalty as his staff was dedicated to the clients and inspired by them. But his staff didn't have those same kinds of feelings about his company. Mal needed to bring those values inside his organization.

Mal asked himself how he might build that commitment through policies and practices. He spent a few years learning about profit sharing, creative benefits programs, and environmental stewardship. But his personal values and politics got in the way.

In many ways, 1988 was a high-water mark, at least for Mal. The company raised $7 million for Jesse Jackson's presidential campaign and got a lot of press, but the campaign almost bankrupted the company. The day after the election, Mal had to lay off forty of his eighty-seven people.

Mal had some personal problems, too, and went into a depression. He cut his salary to $25,000 and became largely inactive in the company from 1989 to 1994. He did some individual consulting and writing but had little energy for the business. When the succession of CEOs he promoted from within each encountered resistance from employees, Mal was forced to confront the issue why he wasn't involved and what it would take to get him to come back to full-time work.

Mal gave his board of directors his conditions: "I told them that I wanted to put into place a comprehensive set of socially responsible business practices that would make our company per se motivating for the staff, just as our clients' work motivated us." He had put in place good benefits, but he needed to do more.

The staff wanted a strong profit-sharing plan, a voice in management, and more environmental leadership. These priorities led to the election of staff representatives to the company's board and to intensive environmental and energy audits. The audits have made the company a showcase for services companies.

As for the profit-sharing plan, Mal proposed to the board that half of the company's pretax profits be set aside each quarter, with 20 percent of that half (10 percent) going to charitable contributions selected by staff. The remaining 40 percent would be divided up largely on an egalitarian basis of one person, one share. What was the board's reaction? "Well, the board flipped out," Mal chuckles knowingly. "'We could have a cash crunch!' I told them that they could be right, but it wasn't worth keeping the company alive if we couldn't make a statement about social responsibility." They ended up settling on 45 percent of profits going to the plan, with 35 percent going to the staff and the same 10 percent to charities.

Mal returned to astonishing results. From a base of no profits, the first quarter checks were $30 per employee. By the fourth quarter of the new profit-sharing plan, the checks amounted to $2000. The company has been profitable ever since. In a peak year, a staff member making a $20,000-25,000 in salary received an additional $8,000 from profit sharing. The plan jump-started the change in culture the staff had been waiting for.

In 2002, Mal began the transition from sole ownership to employee ownership. An ESOP (employee stock-ownership plan) was put in place, with 10 percent of the ownership in the ESOP, 24 percent among key employees -- a democratizing of ownership Mal intends to continue for many more years. Mal knows that it's never too late to reinvent your brand of leadership and reignite your company.

As Mal's story shows, few small business founders think about what it means to be a leader or what their role is in creating a culture that produces fulfillment for others. Becoming more of a teacher and less of an expert consultant and salesperson requires a shift in attention from consumers to employees. But if you want to make a difference in your industry, you must walk toward the talk and bring those values inside your organization on a daily basis.