The Key to Risk Management
Irecently interviewed Joseph Iarocci, Chief Executive Officer of Robert K. Greenleaf Center for Servant Leadership to discuss how a Servant Leadership approach to business can improve overall risk management performance. As a risk management professional I have managed millions of dollars worth of claims over the years. Whether I was dealing with workers’ compensation, general liability or auto claims the scenario and the end result were often similar. One party was wronged in some way. The other party disagreed. Large sums of dollars were lost by both parties defending their own position.
Luckily, my career path also provided an opportunity to focus on leadership-based safety and quality programs aimed at improving corporate culture. These programs were often difficult to launch. They required an overall cultural shift to empower the employees, listen to their concerns, look for ways to embrace change and creatively improve the working conditions, procedures and processes. Companies can save millions of dollars by embracing a bottom up management and a human approach to leadership. Robert K. Greenleaf called this leadership movement “servant leadership.”
The Robert K. Greenleaf Center for Servant Leadership is an international nonprofit organization that serves individuals and organizations seeking to be better servant-leaders. Robert K. Greenleaf wrote The Servant As Leader and launched the modern servant leadership movement nearly 50 years ago. Both an ancient philosophy and modern practice, servant leadership enriches the lives of individuals, builds more effective organizations of all kinds and, ultimately, creates a more just and caring world.
Readers are probably thinking, “Is that my cue to sing Kumbaya?” Where does caring and enriching lives fit into the cutthroat world of the bottom line performance expectations? Well the answer is in the performance of those who embrace a servant leadership culture.
Joseph Iarocci, CEO of the Greenleaf Center, explains, “I learned throughout my career that any great problem of the world, like poverty or injustice, is never solved by throwing more money or technology at it. The only way great problems are solved is through great leadership. The success of any human endeavor is based on leadership.”
While working as a products liability litigator with a large New York City law firm, Iarocci experienced first hand the challenge, expense and time drain that litigation puts on corporate America. Iarocci’s career shift to serve as general counsel for the nonprofit CARE led him along the path of servant leadership. He joined the Greenleaf Center in 2012.
What is Servant Leadership?
Servant leadership is a philosophy that emphasizes focusing on the needs of others first. Servant-leaders are attentive to the growth and development of their stakeholders, including customers, partners, employees and the community. Iarocci states, “It goes against many traditional pursuits of leadership, where the ultimate goal is power, money, the corner office and the Mercedes.” The servant leadership approach enriches the lives of individuals while building organizations that are customer- and employee-focused, resulting in a more just and caring world.
Greenleaf describes the basic test of servant leadership as, “The best test, and difficult to administer is, do those served grow as persons? Do they, while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants? What is the effect on the least privileged in society?”
Iarocci explains that all the great leadership models of the world are grounded in servant leadership. Servant leadership reinforces any good management style. The common characteristics of servant leadership include:
Does It Work?
Today’s business environment demands that one produce more for less at a greater speed. The only way to successfully do that is to empower people. When people trust their leadership and feel empowered at work, high productivity and continuous improvement naturally follows. Several companies have embarked on a servant leadership journey and continue to obtain stellar corporate performance. Some of these success stories include:
TD Industries — For the seventeeth year in a row, TD Industries has been named to Fortune Magazine’s Top 100 Best Companies to Work For list. TD Industries is an employee-owned company where the employees are known as TDPartners. They have developed a sense of family focused on work-life balance, camaraderie and loyalty. They operate from a foundation of trust and accountability. TD Industries grew over 641 percent from 1992 to 2012. They benefit from high employee morale and retention and stellar workplace safety performance.
Southwest Airlines — The company’s philosophy is that every team member is seen as a leader and a follower, eager and ready to support others and take responsibility for his or her unique part of the business. This philosophy has propelled Southwest into one of the most successful airlines in history.
Popeye’s Louisiana Kitchen — Six years ago Cheryl Bachelder joined the company as CEO and immediately embarked on implementing a servant leadership approach. The company has three strategies to accomplish this goal: hire what it calls a “special type of person” who understands the concept; train franchisees and staff on servant leadership, and improve the customer experience. Today, Popeye’s is one of the hottest restaurants with increased profitability four consecutive years in a row.
PPC Partners — One of Wisconsin’s oldest, largest, employee-owned companies, PPC Partners has embraced servant leadership principles since in 1960. A leading electrical service contractor, PPC is clear about whom it hires: those “who seek mutual respect, honor, servanthood, expect high performance and love growing and being.” Has servant leadership worked? Absolutely. Since its founding, PPC has grown from three electricians to over 1,000 employees across the U.S. Its growth and profitability over the years has been accompanied by an enviable record of safety.
Improving Risk Management Performance
Iarocci believes that a servant leadership philosophy can ultimately prevent claims and improve overall safety and quality performance. Risk has two main elements. The actual accident or event and the individual’s response to the event. If a person pursues a claim after an accident or event it costs money. Servant leadership can drive down the cost of risk in three distinct ways.
Communication and caring — Servant leadership focuses on communication, training and genuine concern for people. It naturally leads to raised safety awareness and overall improved performance. If a company cares about people, staff, subcontractors and partners, safety becomes an absolute main concern. Nothing is more important than safety. Therefore the motive for safety performance is not about profit or reducing claims and legal fees. It is about caring for the people. In doing so, a naturally safer environment is created where accident prevention is intrinsically achieved.
Trust and relationships — Servant leadership is created through caring and trust. It is about building a reputation that benefits the overall workforce and community. Ultimately, there is a healthier relationship between the company and its people and community. If someone is treated with dignity, respect and proper care after an incident or event, perhaps they may have less of a propensity to sue. Fewer lawsuits result in fewer dollars spent on claims.
Lower turnover — Servant leadership companies have lower turnover. People don’t quit. They fire their bosses. At some point people will only be pushed so far in a toxic work environment. Toxicity breeds lawsuits and claims. By creating a culture based on servant leadership, turnover is reduced. Employee retention saves money. It is no longer about working for a paycheck. It is about being a part of an organization where a person is empowered and can visibly see that they contribute to making a difference.
Where to Begin?
Iarocci believes most people are born with an innate desire to serve others first. The choice to be a servant-leader comes from within and follows from that desire to serve. “Poor leadership skills are learned,” Iarocci says.
”Unfortunately, the desire to serve is often beaten out of people in workplaces that do not value servant leadership.”
The best way to embark on servant leadership is to simply start practicing it. Whether in a leadership role within your organization or not, the act of practicing servant leadership will have a positive effect on those exposed to it. The Greenleaf Center refers to this a “bright spot.” A person or department that practices servant leadership can often become a model for others when it demonstrates lower absenteeism, higher productivity, better quality and customer satisfaction. Servant leadership can be contagious. When it is, good things follow. Servant leadership is not just about reducing risk and cutting litigation costs. It’s about changing the world — one person, one organization at a time.
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