The Mormon Way of Doing Business

by | Jun. 06, 2007

LDS Life

How do they manage their time? What and how much do they delegate? How do they negotiate? How do they treat employees, business partners, and competitors? How do they handle ethical dilemmas? What is the secret to sustaining healthy marital and family relations while maintaining their competitive edge in the relentless corporate environment that expects a 24/7 work pace? Do they truly give ten percent of their earnings to the Church, and if so, why? What drives them? And how do they handle power, personal wealth, and control over vast corporate resources?

There are plenty of exceptional non-Mormon CEOs who have achieved great personal and professional success while holding true to their values and maintaining the highest standards of ethics and integrity. But this is an examination of an unusually successful group of Mormon business executives who have remained true to their values.

They are: David Neeleman, founder and CEO of JetBlue Airways; Kevin Rollins, CEO of Dell; Jim Quigley, CEO of Deloitte & Touche USA; Dave Checketts, former CEO of Madison Square Garden Corporation; Gary Crittenden, CFO at American Express; Rod Hawes, founder and former CEO of Life Re Corporation, the world's largest independent life reinsurance company; Kim Clark, dean of the Harvard Business School; and Clayton Christensen, a leading Harvard Business School professor and consultant to Intel, Eli Lilly, and Kodak.

My Word Is My Bond

Opportunities to be dishonest in business present themselves everyday, and none of these executives claim immunity from the pressures. "There is so much pressure to perform," said Dave Checketts. "Shareholders demand a certain kind of performance. You take that pressure, internalize it, and pass it down to other employees that work for you. They feel it and their job becomes 'How do we deliver expectations?' instead of 'How do we do what is right?'"

Checketts acknowledged that part of this is structural. "In some companies, the entire management team has compensation incentives that are based on hitting the goals and expectations and achieving budgets," he said. "Thirty to forty percent of their livelihood is based on this. You get pressure from the top down to hit the mark."

To avoid these temptations, these leaders subscribe to some simple rules:

Rule #1: Stay Away from the Gray Zone.

As the chief financial officer for American Express, Gary Crittenden is ultimately responsible for the company's books and financial statements. Improper and dishonest corporate accounting practices have been the downfall of a parade of CFOs and CEOs at numerous high-profile companies over the past few years. The chief financial officers at Enron, Tyco, and WorldCom are just three of the more prominent ones to be indicted for dishonest accounting practices.

"Our approach isn't 'Should we book this or should we not book this?'" said Crittenden. "Our approach is 'What's the right way to treat this?'"

As the CFO, Crittenden trains and instructs other accountants and finance executives at American Express. "I always say: 'If you ever see anything that's questionable, you need to raise it often enough and with enough people until you are absolutely satisfied you have the right answer.' That's just a hallmark. I don't mean to be Pollyannaish about it. That's just the way it is. We always ask the question in the first instance: 'What's the right thing to do?'"

Rule #2: Own the High Ground.

After taking over as CEO of Deloitte & Touche, Jim Quigley staked out seven strategic choices to frame the company's actions. Integrity is the accounting firm's first value. "I write and consistently reinforce in my speaking the importance of that value," said Quigley. "We have to own the high ground. What's important is that our employees know that's how I am. The employees need to know and understand that integrity is what this organization values."

This approach directly impacts how Quigley and his firm deal with clients. "When a client asks us to cut a corner, we won't do it," Quigley said. "If they push us unmercifully, we resign. We just walk away."

Rule #3: Make No Excuses.

The most important aspect of honesty in business is taking responsibility for one's own actions. In August of 2005, Dell Computers made an unusual announcement: It had fallen short of expectations and failed to meet its goals as well as the projections set by analysts during the second quarter of the year. Profits had gone up twenty-eight percent that quarter. But overall Dell had expected revenues to rise by several hundred million dollars more.

Then Dell's CEO, Kevin Rollins, made an even more unusual announcement: He took personal responsibility for the shortfalls by blaming himself. In a conference call with reporters, Rollins said: "Frankly, we executed poorly on managing overall selling prices."

Following Rollins' announcement, the New York Times profiled his unusual management style, pointing out that "there's an established drill, or so it sometimes seems, when a publicly traded company disappoints Wall Street. The chief executive blames high oil prices. Or it's the fault of unforeseen happenings in Asia, or of a software upgrade that didn't go as planned."

The Times went on to say that Rollins "could have offered any number of excuses, not the least of which is Dell's own previous success. Its revenue grew fifteen percent when compared with the same quarter last year--impressive for a company on target to bring in more than fifty billion dollars in revenue over the next twelve months, but still short of its own expectations for an increase of sixteen to eighteen percent."

This wasn't the first time Rollin's did this. In 2001 he blamed himself and fellow executives for failing to set the right tone. He said that the corporate culture at Dell had been tainted by greed. And he developed a new protocol that subjected every Dell manager--including himself--to periodic peer evaluations by subordinates.

Tithing Counts

Combined, these CEOs have earned hundreds of millions of dollars in cash and stocks. They have each paid tithing on all of their earnings. The practice is made easier by their perspective toward money. "I don't think the ten percent is mine," said Kevin Rollins. "Frankly, I don't think any of the money is mine. I just have the luck of having it to use, whether for good or not."

These CEOs' approach to tithing goes beyond just their annual salary. Kim Clark pays tithing on all capital gains; any gains realized through the sale of stock or real estate, and all interest earned. "We try to put into practice the spirit of 'one-tenth of our increase," said Clark, who goes as far as to pay tithing on the imputed income from the special zero-interest mortgage that Harvard Business School holds on his home.

Tithing conditions you that a certain percentage of what you make goes somewhere else," David Neeleman said. "It conditions you that it is not your money. It is a real valuable lesson. These are sacred funds."

Combating Greed

Mormon executives are generally quite frugal in their spending habits. "There's something about a lifestyle that demands sacrifice," Gary Crittenden said. "It makes you a happier person. Happiness doesn't come through self-indulgence."

An aversion to luxury spending has another benefit: It frees up these executives to focus more acutely on obligations to their companies and shareholders. The acquisition and maintenance of yachts, properties, and other luxury items can be a tremendous drain on a person's time. The more mental energy expended worrying over the protection of personal assets, the less energy is left for leading a company.

It also frees up more time to be with family. As JetBlue was preparing to go public, the investment bank handling the public offering sent Neeleman on a road show--a tour around the country to meet with potential investors. During the road show Neeleman traveled in private jets and private limousines, stayed in five-star hotels, and had a concierge person assigned to him at all times. All of this was paid for by the investment bank, which stood to make a lot of money by virtue of Neeleman and therefore wanted to keep him happy by essentially giving him whatever he wanted during the tour. The one thing Neeleman wanted most was to visit Salt Lake City in the midst of the road show in order to hear Gordon B. Hinckley speak at conference. The investment bank arranged for a private jet to take Neeleman to Salt Lake City, where he heard the prophet speak. In his message, the prophet said he was confident that when people stand before the judgment bar of God there will be little discussion as to a person's earthly wealth or earthly possessions. Rather, the conversations will dwell almost exclusively on a person's relationships, most particularly relationships with family members.

Neeleman took the prophet's words seriously. "I'm confident the Lord values the family above any other institution," said Neeleman, who jokes about how cheap he is when it comes to spending. The one thing he does spend money on is family vacations. He and his wife take their nine children on at least three family vacations each year. One time it may be skiing in Utah. The next time it may be Walt Disney World in Florida. But the spending is akin to investing in memories as opposed to accumulating monetary possessions.

A Day of Rest

All of these LDS business leaders have a general rule against working on Sundays. They all try to avoid it. But strict adherence to this principle is easier for some than for others. Running Harvard Business School presents fewer challenges to this habit than running a worldwide computer company such as Dell, or being the CFO of American Express. These positions sometimes require travel on a Sunday in order to get to business meetings somewhere else in the country on Monday morning.

Some LDS principles such as integrity, tithing, fidelity to your spouse, and avoiding alcohol and tobacco, are non-negotiable. There are circumstances when exceptions are made to travel on Sunday for business or when it becomes necessary to attend to business obligations on Sunday. The aim of each of these executives is to treat Sunday as a sacred day for worship and family. But they do what is necessary to ensure that they are not shirking their professional obligations to employees and shareholders.

"This is a practical approach to business," said Rod Hawes, former CEO of Life Re Corporation. "When I went to Harvard Business School I never studied on Sundays. That was family time and church time. And by devoting that time to family I was refreshed on Monday morning and performed better during the week. When you don't have a break it wears you down."

Hawes found that his approach to avoiding studies on Sunday worked in a business setting, too. "You need time off on Sundays to really focus on family and refresh yourself," he said.

Since he tried to avoid work on Sundays as a CEO, Hawes never required his employees to work Sundays either. "It's good for people who work for you to know they are encouraged and even expected to take personal time, too."

What Matters Most Lasts Longest

"Family has to come before everything else," said Dave Checketts, who logged fifteen-to-eighteen-hour days, six days a week, for nearly eleven years while at the helm of Madison Square Garden and the New York Knicks. Although his time was largely consumed by work, his approach to the family indicated that family remained his top priority.

"If my children call me during the day and leave a message, I return those calls first, not last," Checketts said.

Running Dell is a lot different from running Madison Square Garden. But Kevin Rollins shares the same perspective as Dave Checketts. "I realize that there will be someone else who will run Dell when I'm not there anymore," Rollins said. "They will forget about Kevin Rollins. It's just a fact. The same is true being a bishop in the Mormon Church or holding a position of civic responsibility. No one is irreplaceable. The only place this is not true is in your family. Your kids and your loved ones don't forget that. No one will take the place of Dad, never."

Frequently traveling overseas for Dell, Rollins goes to extraordinary lengths to fulfill his parental duties at home. He will routinely call home in the evening to help his youngest son with homework. On one occasion Rollins was in Asia, where the time difference with Texas was fourteen hours. His son was struggling with some math assignments. Rollins called home to work through the assignments with him during his son's regular homework hour. That required Rollins to be up at 4:00 A.M. his time. "He had flown the previous day across the world," recalled Debbie Rollins. "He didn't care about the fact that he should have been sleeping or that it was so costly to make an hour-long phone call from Asia to home. The kids never feel like they are missing their father."

It's easy to see how some might think such a strong commitment to family might compromise performance or productivity at work. These leaders have found just the opposite: A strong family commitment enhances performance and optimizes productivity on the job. "I've seen a lot of people that have neglected their families," said David Neeleman, "and then they are not productive at work because they are so preoccupied with family problems that it negatively impacts their ability to complete their assignments at work."

One of Neeleman's highest priorities at work is productivity and efficiency. He expects it from his employees. He demands it of himself. "There are a lot of people who are a mess at work when they are not right at home," said Neeleman. "If things are right at home, you're more productive at work."

In the World, but Not of the World

"We realize that what we're doing in the business world is a good thing. But it's not the best thing," said Kevin Rollins. "There's a higher good."

This approach, more than anything, explains why these leaders approach their roles as CEOs the way they do. Of course they take their corporate responsibilities very seriously. But they know their corporate roles are temporary and that when life ends, wealth and titles won't matter. "The perspective is that what you are doing now is not quite as important as you think it is, or as important as others think it is...because it will all go away," said Kevin Rollins. "The prominence, the money, the power, and the titles will all be stripped away. Then what are you? It's then that I want to be something."

Striking Similarities

Seven of the eight men are lifelong members of the Church, all born or raised in Utah, primarily in small rural towns. Only one, Rod Hawes, who grew up in a rural Idaho community, converted to Mormonism as a young adult.

Almost all of them had ancestors who crossed the Plains as Mormon pioneers in the 1800s.

With two exceptions, the fathers of these executives had occupations that generated no notoriety and only modest income. They include a forester, a farmer, a paint store manager, a highway department road grader, a cattle herder, a schoolteacher, a civil engineer, and a mobile home salesman. Each of them said his father taught by example the value of hard work.

All eight men credited their mothers with having a profound influence on their success in business. A few of them had working mothers--three as schoolteachers and one as a store clerk. All eight said their mothers were heavily invested in them, instilling self-confidence, determination, and a core value set that has triggered a hard-changing, focused approach to business coupled with a high emphasis on personal integrity.

Six of the eight served a full-time mission.

Five of the eight executives live within three miles of each other in New Canaan, Connecticut, and belong to the same ward.

None of them work on Sundays except when unusual circumstances require their attention. Most of them try to do minimal business on Saturdays, too.

All of them hold significant church leadership responsibilities and spend on average ten to fifteen hours per week on those assignments.

None of them has been divorced.

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