Federated and May CEOs Demonstrate Servant-Leadership
By George Anderson
Terry Lundgren, the chief executive officer of Federated Department Stores, wants employees of May Department Stores focused on improving business and not wondering whether they’ll be keeping their jobs or not when the planned merger between the two companies finally takes place.
In a letter to employees from Mr. Lundgren and May’s CEO John Dunham the two wrote, “We are announcing that Federated has committed there will be no work force reductions or job eliminations as a result of the merger prior to March 1, 2006.”
“We want everyone at May to be able to take a deep breath and realize that there is time for Federated to learn more about May, and there is time for May associates to learn more about the new company and the potential opportunities it will provide.”
Moderator’s Comment: What do you think of the announcement coming from Federated and May promising not to cut jobs before March 1, 2006?
Even for the glass half-empty crowd this has to be seen as welcome news.
With this one move, Messrs. Lundgren and Dunham seem to have demonstrated almost of all the qualities of the best servant-leaders enumerated by Larry Spears,
chief executive officer of The Greenleaf Center for Servant-Leadership, in our discussion from Wednesday, RW
05/25/05, What It Takes to Lead.
- Listening
- Empathy
- Healing
- Awareness
- Persuasion
- Conceptualization
- Foresight
- Stewardship
- Commitment to the growth of people
- Community building
They’ve succeeded in more than keeping employees focused and working for the next year, knowing that they will not be laid off for the moment at least.
They’ve signaled to those people who might have chosen to jump ship on their own that this is going to be a sensitive and responsible management team to both employees and shareholders. If I were one of their top employees wondering what role I might have in a new management team, this would let me know that this is a team with whom I would like to be allied. Well done.
First, let me disclose a significant favorable bias toward Mr. Lundgren, who has been a generous, visible and energetic supporter of the Retailing and Consumer Sciences program here at the University of Arizona.
It is classic corporate merger behavior to seek cost savings through “synergy” – a code word for head-count reduction. Federated-May’s announcement that it will forbear on its pursuit of this tactic sends two important messages:
1) Leadership believes the merger will accrue benefits for the combined firm, even before head-count reduction;
2) Leadership acknowledges the quality and contribution made by present associates.
Yes, for some employees, the March 2006 date may loom ominously. In my book, that anxiety is more than offset by these two messages and by the simple fact that the current announcement mitigates some uncertainty.
An excellent gesture, but it’s only a first step.
As the merger unfolds, management needs to share its vision of what the emerging company will look like. That will further allow associates to consider the future of their careers.
Here’s an inside scoop. I worked with Terry Lundgren at Bullocks back in the 1970’s, both when he was a China Buyer and a Lamp Buyer. Before that, he worked in the Personnel Department with a wide variety of responsibilities. That’s where I first met him, when he helped recruit me out of Arizona State University (he’s from University of Arizona). Terry is very good with his people skills, which can be rare with merchants. You can call these skills whatever you what, but Terry is one of the few people inside department stores who understands all the ingredients for retailing, including people skills.
Single acts do not define Servant Leadership. It is the cumulative consistency across a wide range of issues, circumstances and timing which deliver the benefits we’ve all been talking about.
Is this an example of Servant Leadership? Let’s see:
1. Listening: hard to say, but very likely the CEO’s listened to many within the organization that a challenge existed.
2. Empathy: no doubt. The words were chosen to exhibit empathy with dignity.
3. Healing: if healing the anxiety produced by the merger is the intent, it doesn’t meet the standard.
4. Awareness: absolutely.
5. Persuasion, Conceptualization, Foresight and Stewardship…..the jury’s still out.
All we can do is watch and wait. The circumstances of a merger of less-than-equals makes Servant Leadership harder than in other circumstances. The reality is that Federated is doing things better than May. and that the May identity is going away. Managing within that reality, with integrity, authenticity and respect will be a strong indication of Mr. Lundgren’s adoption of Servant Leadership characteristics.
Obviously I’m one of George’s half empty crowd. This sounded to me like confirmation that there will indeed be job reductions. The Welcome news bit might be that it gives people a reasonable amount of time to look around if they think they might be one of the ones asked to go. Or to look around for a better opportunity elsewhere. It could also be a way of reducing the number of people who will eventually be asked to go because of those who take themselves off voluntarily before names are named. The one thing it doesn’t feel like to me is a management team with whom I would like to be allied. Confirming that it will happen and announcing a delay do not feel like any of the ten characteristics listed. I wasn’t overwhelmed by the notion of servant-leadership when we discussed it on Wednesday and nothing in this announcement has done anything to change my mind. To whom are they listening and with whom are they empathetic? No one is being healed. Awareness corresponds to the confirmation that jobs will be lost but in that case, why would anyone be persuaded to stay loyal? I’m not sure what conceptualisation would mean in this context but foresight strikes me as being advised to get going before you get got. Stewardship? Commitment to growth? Community building? Hardly. The only point to being lead in this way is for the sake of the company, not its employees. May’s leader may be serving the company but he is not leading its employees into anything other than longer term worry and job insecurity.
This may be ‘Servant Leadership’ but, in this case, I am not sure whom they are attempting to serve – themselves (the leaders) or the associates.
For those of us who have worked with buying staffs, the only practical effect of the “we will not fire anyone until March 1, 2006” is to define the effective termination date of most May Company merchants!
The date that most felt was the obvious date for their terminations was Feb 1, 2006 (the beginning of the new fiscal year).
There is no likelihood that the May merchants will be focused on anything other than finding their next job between now and then.
The likelihood of anything other than even worse comp store performance (which is already horrid) over the next nine months is all but assured.
Federated will be inheriting a shell of a once proud retailer and will need to have an triage strategy in place well before they jettison the May buying offices.
If you are talking about sales associates who had hoped for a career with one company or the other, they may or may not be concerned… Depending on the person. Depending on where they might hope to go with the company. Depending on if there is a connection and if the communication lines grow or are terminated in favor of the associates forgetting about their future.
I know if I were looking to stay with a company long term and found out that there was a merger and my position might be a thing of the past soon, I would be concerned and would be looking for something else.
Corporations as a rule may say they care but seldom actually do.
The CEOs are usually removed from what the actual store associate is living through. They may lead in their individual offices but seldom show the interest that there should be in the store associates. The principle in this is usually that they can easily be replaced and they may be able to replace the bodies but dedication is another thing. A dedicated associate base will make a retail company better. There seems to be no interest in the people in the stores. Servant Leadership is not usually part of the store level atmosphere. I remember once when I disagreed about a situation with a supervisor in one of the stores that I worked in she said to me that she could easily replace me with two monkeys and save money doing it. That made me want to stay with that company a lot!
While I generally defer to Karen, I think I’ll respectfully disagree here. The announcement that jobs will be secure for nine months just gives people that much more time to worry about their futures. The decision moves the inevitable (some job loss) forward in time but that may actually be worse for people in certain departments with obvious redundancy.
It certainly might be considered a positive announcement but I can’t help feeling that many heard this more as a 9 month notice. In any event, communicating such indicators like this can be considered a courtesy that many companies do not provide. In reality, most people realize that jobs will be cut and they will prepare for that in their own ways. At least they know that they have until March.
I remember Meijer Supermarkets in Grand Rapids making a similar promise to their employees last year, and then headquarters heads rolled, and rolled, and rolled. Businesses say what they need to say at the time, but they always reserve the right to change their minds for the benefit of the business.