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How to be a great CEO? 8 tips

February 27, 2008 09:17 IST

John Deere. eBay. Johnson & Johnson. Disparate companies with one critical element in common: leaders who know how to create a sense of loyalty and passion in their employees. In other words, leaders who know how to inspire workers to go the extra mile.

Vijay Govindarajan, a professor at the Tuck School of Business at Dartmouth, examines how the most successful leaders do this in his study "The Emotionally Bonded Organization: Why Emotional Infrastructure Matters and How Leaders Can Build It." (It has yet to be published.)

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Govidarajan, also a professor in residence and chief innovation consultant at General Electric, recently discussed with Forbes.com how the best CEOs excite their workforce. Here is the edited transcript.

What is emotional infrastructure?

It's a style of leadership that makes employees feel such a level of passion that they want to make personal sacrifices for the good of the company. We got the idea of emotional infrastructure from families. It's one institution that has survived over time.

How do leaders create it?

There are eight factors. First is the leadership's proximity to the staff. Once the company grows beyond a certain size, the leaders can't be totally accessible. But through their actions, leaders can create a sense of proximity. I'm not talking about CEOs meeting with the staff when they want to meet. It's when the staff needs it.

A good example is how the CEO of eBay, Meg Whitman, handled a power outage in California, where the company is based. For 13 days, she stayed in the office 24/7. She slept on a cot and ate all her meals there until everything was restored. She didn't fix the power lines, but her act was symbolic.

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Instilling rituals. A good example is the tractor company Deere & Co's gold key program. On the day the tractor will be assembled, the company invites the farmer that placed the order to the factory, along with his or her entire family. They are received by a retired employee who walks them through the factory and shows the finishing touches being put on their tractor. Once the tractor is finished, they give them a gold key, and the farmer uses it to start the tractor. It's a powerful scene for employees. They can't help but feel a sense of pride.

Next is creating opportunity through adversity. Southwest Airlines is a good example. After 9/11, the airline industry was in turmoil and 120,000 employees were laid off. Southwest didn't lay anyone off, even though they, too, were affected. The executive team gave up their salary until the profits came back. The company continued to make the contribution to the employee pension plan. Meanwhile, the customer service representatives were bombarded with calls. The flight crew stepped up and helped them out because they were overwhelmed. It paid off. They're profitable and doing well. It's not an accident.

Exclusivity. The more difficult it is to get into an institution, the more emotionally bonded you are. If it's very easy to get into an institution, the easier it is to come out. When Nucor Corp's South Carolina plant needed to hire eight people, they placed an ad saying they would take applications at 8:30 a.m. on a Saturday morning. When the management team arrived to conduct interviews, there were over 1,200 people lined up outside the plant. Managers couldn't even get into the building, so they called the local police to ask for help. The officer on duty told them he couldn't send anyone because there were three police officers there applying for jobs.

Non-stop communication. In corporations, the higher-ups go to great lengths to keep things secret. Employees, in many cases, aren't told about financials. CEOs and other managers should keep their employees informed as much as possible so they feel like they're part of something.

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Social networks. When there's a problem at work, employees tend to go to their boss if they want a problem solved. There are two problems with this. The formal channels have a finite capacity. Also, subordinates might not feel comfortable telling the boss about an issue. General Motors encourages their employees to form affinity networks. These are groups of employees who have things in common, such as an Asian American group or working parents group.

Values. They should show that the company is about more than making money, and they must be practiced.

For example, in the early 80s Tylenol faced a crisis because six people died after someone in Chicago tampered with the pills. It was clearly established that Johnson & Johnson didn't have any legal responsibility -- they were the victim. But they wanted to do the right thing for their customers.

So J&J withdrew Tylenol from every market in the U.S., even though they clearly established that the tampering only occurred in one pharmacy. It took several months for them to come up with a tamper-proof lid, and they spent $100 million between taking the items off the shelf and designing the lid.

The competitors benefited by getting all of Tylenol's business. But J&J wanted to show they're serious about their values. Contrast this with how today's pharmaceutical companies deal with a crisis. When Merck dealt with problems with Vioxx they brought their lawyers out to fight the cases, instead of examining how the problem happened in the first place.

Vision. It creates emotional uplift. Think long term and then seeing what we need to do today to bring about the vision. We get uplifted when we want to do the impossible. Think about JFK saying we will put a man on the moon. That's a great vision because it created passion. We get uplifted when we want to do great things. It fires up the troops.

Why does this so often get left out?

Most executives are uncomfortable leading emotions. But we must create a sense of belonging at work, since most of us spend as much time there as we do at home. I want the same meaning at work that I have at home.

Tara Weiss, Forbes