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C. William “Bill” Pollard: Leading by Serving

C. William “Bill” Pollard joined ServiceMaster in 1977 and has served not once but twice as its chief executive officer. His first term as CEO was from 1983 to 1993, a period characterized by major change in the structure and direction of the business, including the introduction and rapid growth of the company’s Consumer Group. In October 1999, Bill returned as CEO of the company and served in that role for a period of 16 months until the process of identifying and electing his successor was completed. Bill also served as chairman of the board of ServiceMaster from 1990 to April 2002 and is currently serving as an advisor to the company.

During his leadership of the company, ServiceMaster was recognized by Fortune magazine as the No.1 service company among the Fortune 500 and also was included in its list of its most admired companies. ServiceMaster also was identified as a “star of the future” by The Wall Street Journal and recognized by the Financial Times as one of the most respected companies in the world. During this period, the company achieved market leadership in each of its markets and substantial growth in shareholder value.

In addition to his work at ServiceMaster, he serves as chairman and director of UnumProvident Corporation and as a director of Herman Miller Inc. He also serves as a director of a number of charitable and educational organizations, including Central DuPage Health and Wheaton College, as well as chairman of the Illinois Children’s Healthcare Foundation and chairman of the Executive Committee of the Billy Graham Evangelistic Association. He also serves as “Of Counsel” for the law firm of Huck, Bouma.

Bill is a graduate of Wheaton College, Wheaton, Illinois, and he received a J.D. from Northwestern University School of Law. From 1963 to 1972 he was engaged in the practice of law, specializing in corporate finance and tax matters, and from 1972 to 1977, he served on the faculty and as a vice president of Wheaton College.

He is the author of a best-selling book, The Soul of the Firm, and more recently, The Heart of a Business Ethic. In May of 2006, his new book Serving Two Masters? Reflections on God and Profit was released by HarperCollins. In April 2004, he received the Rev. Theodore M. Hesburgh Award for Business Ethics at Notre Dame.

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Ethix: You have often talked about “servant leadership.” What does that mean?

C. William Pollard: Peter Drucker has said, “Leadership is only a means, to what end is the real question.” This drives one to say that leadership is not so much about the leader, but instead it is about the people who follow and the direction they are headed. This is the principle that Christ was teaching his disciples when he washed their feet. A leader must know what he or she believes, the direction they are going, and why it is important for people to follow.

A leader must understand what it means to walk in the shoes of the people that follow. For me this meant experiencing the work and jobs of those people I would lead. We have developed a practice where once a year, every officer and employee from headquarters would spend one day doing service work for customers.

There can be dignity in serving others and a servant leader should never ask somebody to do something they are not willing to do themselves. It meant some very agonizing times for me as I was making decisions, giving people “opportunities” to move their families all over the United States and all over the world as we were growing our company. As part of testing my willingness to do what I was asking others to do, I would come home to Judy [his wife] and ask, “Are we willing to do what I am asking Mary and her husband to consider?”

Another key principle in servant leadership involves a willingness to be open, transparent, and to be vulnerable. You admit your mistakes. You ask for forgiveness and do not hide behind title or position.

One way I tried to demonstrate this was to make sure nobody had a special parking place, just because they were officers. But I also failed at some things. Big companies have car policies, providing you with a certain size car depending on where you were in the pecking order. I decided everyone who was entitled to a car was going to get the same kind of car. That lasted about two months and I was unable to hold to it. I am just giving you a few examples, but for me, being a servant leader is a process of continuing to ask the question, “How am I serving as I lead?” In so doing, I had to keep myself involved with people at all levels of the organization. It was a continual learning experience for me.

Dealing With Acquisitions

Yet at ServiceMaster, you did a lot of acquisitions, so you would bring in companies that didn’t see things that way. How did you deal with the cultural differences in these acquisitions?

Pollard: They were good firms in a position to be purchased, with customer bases and service lines that were compatible with our business. I decided to take a major role in the due diligence process, along with our director of People Services. We interviewed the senior executives and participated with them during the due diligence process, explaining our values, listening to them, talking about the objectives of ServiceMaster, what they meant, and how they would incorporate them in their business.

Leadership is not so much about the leader, but instead it is about the people who follow and the direction they are headed.

Was there ever an occasion where you didn’t make an acquisition because they didn’t fit with your values?

Pollard: Yes, and not every acquisition we made worked out.

Often mergers and acquisitions are motivated by the desire to increase efficiencies of scale by putting companies together. What motivated you?

Pollard: For us, it was part of our strategic plan. Our health care business was beginning to mature. We had service capabilities and the consumer services market was growing. ServiceMaster had started in the consumer market with carpet cleaning, but by the time of the acquisition of Terminix in 1986, our dominant business was health care. In our strategic planning, we recognized that there was a growing number of two-wage-earner homes. There was an opportunity for providing more services to the home, doing what people no longer had time to do themselves. We identified maid services, pest control, lawn care, and some other areas that had potential. Training people to do service was our core competency, and we needed to expand our service capability to the consumer market.

Six months after we started down this path, Terminix came on the market. We decided it would take us years to build a brand in this field, so we bought Terminix, and this started the acquisition program. Then we bought Tru-Green and then ChemLawn came to us and these filled out our lawn care services. Merry Maids became available and we added maid service to our lines of business. All of these were market-entry acquisitions.

We were not necessarily looking for efficiencies, but we did have the cultural challenges.

What was the relative size of Terminix and ServiceMaster when you did that acquisition?

Pollard: ServiceMaster would have been generating about $20 million in profit, and Terminix was about $16 million. But Terminix was far more profitable on a percentage, or revenue, basis. It was a big addition to the firm.

Once a year, every officer and employee from headquarters would spend one day doing service work for customers.

Helping People Develop

One of your values is, “To help people develop.” How did you do that?

Pollard: One way was through our educational and training programs. Although our M.B.A. program was not accredited, we did use visiting professors to help us in the teaching process.

We also had our senior officers teach in that program as well. Sometimes they thought they were too busy, but we had the guideline, if you were too busy to teach, you were too busy to work for us. People were expected to give of their time in teaching, training, and development of others.

Pursuing Excellence

Another of the objectives of ServiceMaster is “to pursue excellence.” Can you tell us how this plays out in the service business?

Pollard: For us, it meant seeking to excel at serving our customers. Whatever the task, whether working with a computer or scrubbing a toilet, people can excel. So what motivates the person to excel at scrubbing a floor, cleaning a toilet, or killing bugs? In our judgment, people will not typically seek to excel unless they see their job as something more than a task. They must see a meaning and purpose for the task and a reason why it is important to do it well. When they do it well, it is important to recognize them for a job well done.

What do you say to someone who sees their job as just cleaning the floors? Why should they want to do this job better and to excel?

Pollard: Let’s say they are working in a hospital. Their job is not just to clean the floor, their job is to help that patient become well. So the purpose of their work extends beyond the task. In our hospital services, we would often ask nurses or doctors to meet with our people and talk with them about how important their work was to the health of the patient.

Dealing With the Environment

Some of your products, ChemLawn for example, would seem to be harmful to the environment. What are your thoughts on these products?

Pollard: The chemicals we use in TruGreen-ChemLawn provide needed fertilizer and kill weedy plants that, if left alone, could destroy a lawn. I used to tell the analysts on Wall Street that asked the same question. We kill things; we kill bugs, we kill weeds, and we kill germs, and so there is a purpose for the use of toxic chemicals we use. Now, first of all, we believe that the world is better off when certain bugs and weeds and germs are killed. The question for us is not whether we are doing the right thing in killing the bug or the germ or the weed, but what is the effect of that chemical on the individual or the individuals, who might be exposed to them. So, we ask the question with respect to the effect upon a person rather than a generic question about the environment.

Whatever the task, whether working with a computer or scrubbing a toilet, people can excel.

We have our technicians, who are delivering the chemicals, tested on a regular basis to determine whether the chemicals are causing any reaction. In fact, there was a very small percentage of our technicians, less than 1 percent, who were affected in any way. In some of these cases, after a period of time, there was evidence of some retention of chemicals in the liver. These people were immediately taken off this type of work. So that’s how we tracked this issue and then disclosed all of this information to the Centers for Disease Control in Georgia. In fact, our database was the largest database for the disease center in Georgia, and we willingly shared it with them.

What about the runoff and the effects on streams?

Pollard: Most of the runoff issues result from the use of these chemicals by nonprofessionals, people who buy chemicals at a hardware store and apply much more than is needed. On the lawn-care side, the whole posting requirement by municipalities started with our encouragement. The signs usually say, “Stay off the grass until the treatment is dry.”

We also have an organic treatment for weeds in the lawn, and offer this to those who choose it. It is not as effective, but we do make these products available to customers who do not want to use chemicals.

Use of Illegal Immigrants?

There is a great deal of discussion about illegal immigrants working in many of the labor and service jobs. How does ServiceMaster deal with this issue?

Pollard: We face it and follow the law. We have participated in government-sponsored programs to hire people from Mexico for a particular period of time, from 6 to13 months, and then their employment is terminated, and they are to return home. We have found those workers to be very good and very loyal. But we always had questions about what happened to them when we terminated the employment. Frankly, I doubt whether many of them went back; they probably just found other jobs.

Today the global market is a reality. We are much better off recognizing this reality than trying to stop it.

I do think that our U.S. immigration policy is in disarray. We don’t have an effective policy that can be executed and managed. Some say, let’s be stricter. An article that appeared in the paper today suggested we should give amnesty to those already here, and then be much tougher on immigration. How do you get tougher on immigration when there are so many ways to get into this country? You certainly don’t build walls. We ought to know enough about history to know that they will ultimately get torn down.

Did you have a policy directing you to be particularly rigorous in checking up on new potential workers?

Pollard: We have a system for checking all new hires. If you make a mistake, the fines are significant, especially for large, public companies. We have to help our franchisees because some of the documentation they get from a prospective employee may not be reliable. For example, illegal immigrants can get a driver’s license. There are systems you can buy that actually track whether the social security number you are getting is valid.

When Wal-Mart got in trouble for this a year or so ago, it wasn’t because of their direct employees, right?

Pollard: At least in one case; it was a janitorial firm.

Would that be the functional equivalent of one of your licensees?

Pollard: Our franchises do janitorial work but they were not involved in the Wal-Mart situation.

Outsourcing, Technology, and Globalization

What about outsourcing in your business? Does this take away jobs from American workers, and is that a concern from your point of view?

Pollard: We were outsourcers in the sense that we managed service departments for hospitals and the homeowner outsources jobs to us that they do not want to do themselves. In the early 1990s, I got a call from Peter Drucker who wanted me to come and talk with him about outsourcing. I said, “Peter, what can I tell you about outsourcing that you don’t know?” What he was thinking about at that time was the disaggregation of work among knowledge workers, and the potential through technology of moving different segments of the task to other places with cheaper labor. He was trying to think through how that might develop as a part of a global market.

Today the global market is a reality. We are much better off recognizing this reality than trying to stop it. I am sure you all have read [Thomas] Friedman’s book, The World Is Flat, where he goes into great detail about this.

Friedman talked about two factors that are changing the nature of business today. One is the disaggregation of work, enabling parts of work to be done anywhere in the world. The second is technology. Could you tell us how these factors affect the service business?

Pollard: This disaggregation of work shows up in many ways. Friedman illustrates how a fast food company in one location can use a person over a thousand miles away to take your order, rather than somebody at the window of the store where you are. We have call centers all over the United States today. Those call centers do not need to be in the United States. There are aspects of our business that could move overseas, though we haven’t made that move yet.

What about technological change? I was visiting my wife in the hospital a few years ago, and the floors were being polished by robots — no humans involved except, presumably, to get them started. Do you see technology taking over other work that you do?

Pollard: I am not sure technology takes over work. It often helps the worker be more productive. There are many areas that still need improvement and innovation, including the development of new services that would provide new employment opportunities.

You mentioned Peter Drucker and knowledge work. He mentioned that in a knowledge-work environment, you may not be able to do the work of your people. In the service business you can mop the floor. But in the knowledge business, people working for you probably will be able to do things you can’t do. How does servant leadership work there?

Pollard: Not being able to do all the types of work of the people you manage is not a new issue for senior management. People are people even though they may have different skills or abilities. People who are served by their leaders learn to trust their leaders. Trust is essential to building a healthy organization. Knowledge workers typically are more independent and more mobile in their work. Work comes to them because of what they know. Because they are more mobile, it is even more important for a leader in a knowledge worker environment to encourage trust and loyalty.

CEO Salaries

Maybe you can say something about CEO salaries. A recent analysis showed that many CEOs did not perform, nevertheless they got very generous compensation, not only pay but then also severance pay. They talked about Carly Fiorina walking away from HP with $42 million dollars. What should be done about it?

Pollard: I think most of the severance packages for CEOs today represent a potential to steal from the firm. When high termination payments are made for failure to perform, it is a form of stealing from the firm. Severance packages are typically negotiated at the time the executive is recruited. Can you eliminate this market-driven provision? I think legislation would help.

I think most of the severance packages for CEOs today represent a potential to steal from the firm.

One of the principles we tried to follow at ServiceMaster is that the more responsibility you have, the more of your compensation should be at risk. We had an overall principle of pay based upon performance and promote based upon potential. I think at least 80 percent of total compensation of a CEO, based upon overall performance that creates shareholder value. But since we are talking long-term value, not short-term value, there is a question of how do you do that. I don’t think stock options are the vehicles to do that, I do think stock ownership is. Getting stock ownership of significance in the hands of senior officers is increasingly difficult today.

When I became CEO, the company gave me an opportunity to purchase ServiceMaster stock. But I had to borrow the money to do that, and the company supported the loan. But you can’t do that today, even if it is indirect. So, you don’t have that vehicle anymore. I also think that there should be some type of a multiple between the base compensation of the CEO and an entry-level position or some key position of the firm.

Did you have such a measure at ServiceMaster?

Pollard: We did. We had to drop it when we recruited a senior executive from the outside because the multiple didn’t meet what the market was demanding.

So, if you had held to your multiple you wouldn’t have been able to recruit the kind of candidate you wanted?

Pollard: Yes.

CEO Accountability

As a CEO, you can become isolated; you have no peers, and lot of people who are working for you are trying to please you. What keeps you on track, and what keeps you from believing the stories and starting to do some things that wouldn’t be appropriate?

Pollard: Well, I can tell you about my personal experience. One of the things that I am very thankful for is my wife, who has kept me on track in a lot of things in my life, including whether I thought too much of myself! So Judy has been a great partner. My faith in God and my time in prayer have also been important. Within the firm, you have to constantly work at not letting the trappings of the office go to your head. I read an article about the whole Enron fiasco and the conclusion of the writer was that the executives were isolated and were no longer able to define reality.

Within the firm, you have to constantly work at not letting the trappings of the office go to your head.

You have to make sure that you keep dipping into the organization at what I call strategic intersect points, where the service meets the customer. I didn’t complete a successful week unless I was out in a situation where the service met the customer, talking both to the customer and to our people delivering the service. One of the things I did was to set up a mechanism where a senior executive could tap into the call center and listen to customer complaints.

If we could get your direct reports together and they were being as candid as they could be, what would they have said was your greatest shortcoming as a leader?

Pollard: My tendency was to come across intimidating or to cross-examine when I got a report and felt I was getting gloss. I found myself going for the jugular. I think that is what they would say. We usually had to have some sessions afterward, where I would apologize and explain, “You know I really wasn’t going for your jugular, I was trying to find out what was really going on.”

Honoring God in All That You Do

We have talked about your “pursuit of excellence” and “developing people,” but you have other objectives as well.

Pollard: Our objectives have been a part of our company for a long time, and we have these posted wherever we work:

  • to honor God in all we do,
  • to help people develop,
  • to pursue excellence, and
  • to grow profitably.

Any new company we acquired was expected to incorporate these objectives in the management and operations of the business. These four objectives all work together, and the order of them is important as well.

“Honoring God in all that you do” is an unusual value for a publicly traded company. How do you do that in a diverse workforce, where you have people who have a different God than you do, or don’t acknowledge God?

Pollard: In honoring God, we recognized that there was an authority above ourselves for determining right and wrong and that there was a reason for treating every person with dignity and worth – for every person has been created in the image of God. The company did not impose a belief in God, but with this objective, we did raise the question of God. A person’s belief or lack thereof in God is a personal decision. The company cannot, nor should it, dictate it or define it.

Different people with different beliefs are all part of God’s mix. I personally believe that God is involved in all aspects of my life, whether I am in church on Sunday or in work on Monday. I believe that a person can spend most of his or her life cleaning floors in a hospital or killing bugs in a home, and can grow as a father or a mother, as a contributor to their community, and, yes, even grow in coming to know God. People can take pride in their work as they serve with excellence and, as they do so, they can take pride in themselves. It all wraps together in my mind, and it really reflects what I believe about God. I think God worked when he created this world and he provides work so that we can develop in life, including choosing for him. So seeking excellence in what you do and caring about people, in my view, stems from God.

Do you ever get people on your executive team, for example, who don’t believe in God, who resisted talking about honoring God in all they do? How do you deal with that?

Pollard: We did. As a part of our training sessions, we specifically included what it means “to honor God in all we do,” and every divisional officer or regional director had to lead one of those sessions. We had pushback from some people about this, and this opened up a discussion on the subject. We used some material in this discussion that was developed by Armand Nicholi, who teaches at Harvard in the medical school. He raises the question of God for his medical students by comparing the worldviews of Sigmund Freud and C.S. Lewis. Both Freud and Lewis addressed the question of God. Both men said that the question of God was the most important question in life. But each man answered the question differently. One said there is no God; and the other said there is God, and I want a relationship with him.

No one should deny the question. It should be resolved on an individual basis and may affect how you ultimately treat people. We promoted an inclusive environment that allowed for diversity of faith and belief but required everyone to treat people with dignity and worth. Over the years, we did not have major legal issues with this position.

I also dealt with this subject at the board level, frequently sharing my thoughts on what it means to “Honor God in all we do.” I recently compiled these discussions and reflections on God and profit in a book titled, Serving Two Masters? [Editor’s note: This book is reviewed on p. 11.]

Growing Profitably

Do analysts focus on this objective when your earnings aren’t what they think they should be?

Pollard: They have asked the question about our first objective when earnings were up or down. When I made my presentations to the investment community, I would always lead by saying, “I am sure there is somebody in the audience wondering what there is in common between God and profit.” Then I would explain that the common link is people. People who have been created in God’s image with dignity and worth and who can develop and grow as they serve others. We were an inclusive environment and did not discriminate because of religious beliefs.

Did you suggest that this approach would ultimately maximize your value to the shareholders?

Pollard: No, we didn’t have our first objective to make a lot of money. If that’s your view of God, in my judgment you’ve missed who God is. But I did say we were driven to recognize the importance and value of people, and I don’t think you can be a good service company if you don’t have a focus on people. In fact, we viewed profit and value for the shareholder as a means goal, not an end goal. This is an important distinction.

Did you feel pressure from the Wall Street analysts for performance, especially after growing profit for 24 straight years? And was there pressure on you to move this up in the priority level of your objectives, making it an end goal?

Pollard: Profit is not only a means goal, it is also an important measurement of effectiveness. Profit growth is a measure of health for a business. The push for quarter by quarter performance does at times contribute to imperfect decision making – a short-term view. But this pressure is part of being a public company.

Profit growth is a measure of health for a business.

What happens when you get to a point where you see that holding to your values will cost your company, and you, financially? Or have you been to that point.

Pollard: We have. It took us seven years to find the right partner in Saudi Arabia. We decided we couldn’t do a janitorial business in New York City. I was challenged in our health care business by some fellow Christians not to serve hospitals that did abortions. As I thought through that issue, I felt that we should not draw the line at this point. So, there were these questions. I think the biggest question that was always there, and most troubling to me, was were we pushing people too hard at the expense of their responsibilities to their families?

Dealing With Failure

Sometimes you end up making a mistake. I did a Web search the other day, and found a statement that said in essence, “We had this horrible experience with Terminix, and the company claims to honor God in all they do, this must be a different God than the God I know.” Surely you’ve seen such statements. How do you respond?

Pollard: Yes, we have made mistakes. We are a large company. During my tenure, we employed or managed over 200,000 people and served over 10 million customers. Some of our mistakes ended up in litigation.

As we implemented our objectives and they were understood by our people and our customers, we found that we typically could not hide our mistakes. They were flushed out in the open for correction and for forgiveness.

There were times when we were not successful and did not do the job or, where during litigation, we were under certain constraints. These were failures, there is no question about it, and you have to face them. I can tell you that some of the most painful times in my life involved dealing with these failures.

Did your litigation keep you from apologizing where you would want to have apologized? Is that what you meant by constraints?

Pollard: Yes. As a lawyer, you can understand how that can happen. [Editor’s note: Van Duzer practiced law for more than 20 years in Seattle, Washington.]

Getting Started at ServiceMaster

Tell us how you got involved in the service business?

Pollard: I practiced law for 10 years and then took a sabbatical from the practice and went to Wheaton College as an administrative officer and also served on the faculty. Soon after I came to Wheaton, they (along with another college) got a gift of an operating coal company. The estate had a lot of issues, and the coal company needed to be sold, so that became the primary focus of my job at Wheaton. The trustees of the college determined that for this part of my responsibility, I should report to a committee of the board. One of the men on that committee was the chairman of ServiceMaster. I had to work with that committee during most of my tenure at Wheaton. Five years later, after the coal company was sold and I had decided to go back to my law firm, I was recruited by Ken Hansen and Ken Wessner to consider joining ServiceMaster.

I can tell you that some of the most painful times in my life involved dealing with these failures.

It was a small public company at that time, but both men had a great vision of what it could become. They also inferred that someday I might be CEO of the company.

As I was coming to that final day of signing up, I decided I had to find out what I needed to do to become CEO. So that morning I began pressing Ken Hansen, “How long is it going to take, what do I have to do, what do you expect of me?” I just wanted to understand whether I could make it or not. As I pressed him more and more on the subject, he just stood up and said, “Bill, the interview is over.” Ken Wessner ushered me to the front door, I walked out thinking, “Well, I have blown this opportunity.”

Two days later, Ken Hansen called me up and said, “Bill, do you want to know what I was talking about in my office?” I said, “Sure, Ken.” We had breakfast the next morning and he said to me, “Bill, if you are coming for a title or position, forget it, but if you are coming to contribute, you are going to have a great opportunity in this company.” Then he launched into a discussion of what it meant to be a servant leader.

Obviously I took the job, and then he promptly had me doing some of our service work during the first eight weeks of employment. It was a great learning experience.

In the end, are you glad you gave up your law practice to run a company that mops floors?

Well, Al, we did more than mop floors. But, yes, I am glad I made that decision, because as I look back, it is where God wanted me to be, and I learned much from the people I had an opportunity to work with and the customers we served.

“We viewed profit and value for the shareholder as a means goal, not an end goal. This is an important distinction.”

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