Everything I Thought I Knew about Leadership Is Wrong

For example, I listened to some of our senior leaders talk about how they handled people on teams who didn't perform. I heard talk of "drive-by shootings" to "take out" nonperformers; then they'd "drag the body around" to make an example out of them. They may have meant it only as a way of talking, but I saw it as more: abusive language that would influence behavior. Left unchallenged, these expressions would pollute the company's culture.

The first moment of truth came when we held a three-day off-site meeting in Phoenix, Arizona with the top 12 leaders in the company. We had to decide the fundamental purpose and character of Perot Systems: Were we here only to create a successful Initial Public Offering (IPO)? Or were we here to build a great company? And if it were the latter, were we bold enough to review everything we'd done -- and then reinvent the company?

We decided that, as much as we wanted to do the IPO, we had to build a great company. And we concluded that this wasn't just "feel good" talk -- it was a serious business proposition. We had to launch a transformation of Perot Systems. It was a decisive moment, but none of us truly knew what we had begun.

We convened meetings of the top 100 people in the company and asked them long lists of questions: How did they feel about the company culture? What was their evaluation of our top executives? What were their feelings about our customer relations? The answers were a laundry list of horrifying bad news. Our people were angry, frustrated, irritated, deeply unhappy. If our company were entered in a 100-yard dash, I concluded, we were beginning the race from 50 yards behind the starting line.

We set up teams to address these concerns and then reconvened the top 100 to ask them, again, how they felt. We got the same answers. We initiated a companywide program to teach us how to disagree with each other without tearing each other down. I attended the seminars three times; all our company leaders in the United States and Europe participated; and we extended it down into the ranks, so that today two-thirds of the entire company has been through the course.

During these seminars, we identified people who were abusive. We coached them and took them through a personal reinvention process to show them new ways of leading. These were high-ranking company officials who had generated significant business, met or exceeded their financial goals -- but simply mistreated their people. Not all of them could convert. Those who couldn't change, we asked to leave. We gave them fair and extended compensation; we didn't strong-arm them out the door; and we tried to keep communications open with them. We simply told them that this wasn't a company that was right for them.

In all, several dozen people, ranking from project leader on up, left Perot Systems. This one difficult step made us a better place and a better competitor. Our people looked at what we'd said and then at how we'd handled those who'd left and saw that we walked our talk: we did ask them to leave, and we didn't treat them abusively in turn.

We involved top leaders and associates throughout the company in a discussion of our values and work styles. Finally, after nearly a year of internal conversation, we arrived at statements that we could all agree on. All of these efforts -- the emotionally charged meetings, the constructive contention seminars, the drafting of our company values -- produced a genuine transformation. We started to behave like a company whose people not only focused on day-to-day business and economic performance, but also concerned themselves with the well-being of the people on their teams and the concerns of their customers. We were becoming a company where the larger issues of life were as important as the demands of profit-and-loss performance.

My approach to compensation also changed. We still tell people we'll give them everything we can in the way of financial rewards. In fact, more than 60 % of our company is owned by the people who run the company. So if we go public someday, we'll still make a lot of our people very rich.

But we will have done it without having first made them miserable -- by offering them another dimension they can't get in most other high-performance companies: a human organization. If any of our people has an interest outside the company, we will encourage and support them; if they have needs outside the company, we will recognize them.

For example, rather than contributing corporate money to charities, we encourage our people to contribute their own time to a cause they believe in. Very simply, we don't believe in "write a check to charity." Instead we have an office that helps our employees carry out their own contributions to the community -- helping at a senior center or an orphanage, or teaching English-as-a-second-language in the afternoon at a local school.

Inside the company we apply the same set of values. Business-the-old way told people to leave their personal problems at home. Now we make it clear that personal issues are our issues as well. Not long ago, one of our sales executives had a child born with a hole in its heart. Through e-mail, I knew about that child within four hours of its birth. Within eight hours we had a specialist working with the infant. The child will now be able to lead a normal life. Our company made that happen because it was the right thing. It's not the only kind of thing we should do -- but it does represent what we should be, the kind of feeling our company should create.