Effective Leadership: The Value of Your Example
Considering a traditional perspective in the 21st-century workplace
By David Cox, SHRM-SCP | July 17, 2018
A business owner arrives at work on Monday feeling energized by the challenges he’ll face in the week ahead. He walks through the building and greets every employee as the day begins. This isn’t just a management tactic—he’s genuinely glad to see them and feels fortunate they work for him.
His employees are engaged at work. They are productive, focus on customer service, and collaborate with one another as needed. The business owner has chosen to lead by example and it’s proven to be effective. As a result, many of his employees have stayed with him for years.
His employees represent a pool of talent and the future leaders in his business. As a business owner, this could be your story as well.
The case of Jim Sinegal
Jim Sinegal, who co-founded and served as the CEO of Costco Wholesale for over 35 years, retired on January 30, 2018. He had celebrated his 82nd birthday earlier in the month and stepped down from the company that began as a single warehouse based in the Seattle, WA area and now operates 746 stores around the world.
I’ve read numerous stories about Sinegal’s time with Costco. Most attribute his remarkable business achievements to one thing: Jim Sinegal believes in leadership by example. Over the last six years of his tenure, Costco’s stock doubled while revenues continued to grow at an impressive rate.
His name tag plainly said “Jim,” he answered his own phone, and if what I read is true, his unassuming office at the company headquarters in Issaquah, WA didn’t even have walls.
A 2016 Seattle Times news article stated that while other CEO’s were spending tens of thousands of dollars just decorating their offices, Sinegal paid himself an annual salary of $350,000. Most CEOs of companies the size of Costco are paid in the millions. So how did he come up with his salary amount? Sinegal asserted, “I shouldn’t be paid more than 12 people working on the floor.” His simple contract was only a page long and even included a section that outlines how he could be terminated for not doing his job.
Costco’s employee turnover rate remains among the lowest in the retail industry, over five times less than rival Wal-Mart. In an age where CEOs are paid in the millions and would never be seen in the “trenches,” Jim Sinegal was unique among his peers. His employees truly respected this man who led by example until the day he retired and walk away with all wishing him the very best.
Business owners are not granted qualities of effective leadership that appear with their articles of incorporation. These individuals need to honestly assess their deficiencies and put an end to any leadership practices proven to be ineffective.
Moreover, business owners hold greater oversight responsibility for management functions and their leadership must also be measured by outcomes related to the quality of hires, productivity, employee retention, safety, individual improvement, customer loyalty, quality, and overall business performance.
If you want to improve your business from the top-down, identify what leadership qualities are most effective, adopt them, and lead by example.
Does your leadership by example have value? In my opinion – Yes. How a business owner chooses to lead will go a long way in determining the organization’s future growth and development.
A business owner who leads on the basis of rank and privilege will never lead as effectively as one who leads by example. Those who lead by example earn the respect of their employees and their willingness to help drive improvements throughout the organization. Such leadership inspires employees and helps a good business become even better.
Up next: Self-confidence