The unprecedented spike in the number of people leaving their jobs–– The Great Reckoning, as I prefer to call it–– has been the talent topic of 2021. Though the causes are complex and hotly debated, one conclusion is inescapable. After nearly two years of fear, uncertainty and stress, people have become less tolerant of dispiriting work environments.
As a result, positions that fail to deliver a sense of purpose, meaning and human connection increasingly go begging, as evidenced by Help Wanted signs littering the landscape and the 10 million-plus jobs now open in the United States. The shortage is especially acute at the front-line level, that point of intersection where a company’s customers are most likely to feel the burn.
Some argue that work in retail, hospitality and restaurants is intrinsically dispiriting, and that it’s not the organization’s job to instill a sense of purpose into every employee’s workweek. The operating belief seems to be that most work is a slog and that, while carrots might be nice, bigger sticks are a more effective spur to drive results.
Hubert Joly, former CEO of retail giant Best Buy, would strongly disagree.
Joly signed on as CEO of the electronics retailer in 2012, when Wall Street and the business press had the company on death watch. He retired in 2019 after overseeing a case-study success story for how a large retailer can thrive in a world where buying stuff has mostly moved online. In the process, he moved the company’s share price from $11 to $110, a massive jump in value that was essential to the company’s survival. But Joly’s story, which he tells in his magnificent and timely book, The Heart of Business, is not about numbers or profit. Nor is it simply another “my lessons on leadership” reflection from a recently-retired CEO.
Instead, Joly has undertaken–– and in my view brilliantly succeeded at––something far more ambitious and far more relevant to the present labor crisis. He writes instead about the human experience of work: why we do it, what happens when we do it well and all the ways in which work can go tragically wrong for people who, for the most part, start new jobs with hope in their hearts. In the process, Joly examines why and how our approach to both work and to profit must profoundly change if we are to find our way out of the current crisis. What he offers is nothing less than what he describes as “an architecture for the refoundation of business and capitalism.”
Joly is an ideal prophet, skillfully interweaving his own story into the framework of his large-scale vision. As a young man in his native France, he held a series of low-wage jobs–– assisting the mechanic at an auto dealership, sticking price tags on cans at a grocery store. The work was so dispiriting that he looked forward to taking out the garbage in order to step away from the shop and actually felt grateful to be hit by a truck so he could apply for sick leave. Experiencing first-hand the alienating nature of work that exists solely as a means to an end (my time for your money) made him vow that one day, when he managed people, he would remember what it felt like to work such jobs.
Joly went on to receive an elite business education at HEC and Sciences Po, after which he joined a global consulting firm steeped in the gospel of maximizing profits. He proved to be very good at this and went on to hold senior positions at EDS and Carlson Wagonlit, eventually becoming CEO of Carlson Companies, which owns several major travel brands. From there, he was recruited to turn around Best Buy.
This range of experience honed Joly’s business and finance skills to a high pitch. Yet along the way he lost faith in the profit-centric approach that has become the norm in global capitalism and in which his early career was marinated. His evolution was shaped by his early experience of dispiriting work, his own search for meaning in the wake of a personal crisis, and by a chance meeting with former Honeywell Bull CEO Jean-Marie Descarpentries in the mid-1990s.
At a corporate retreat, Descarpentries caught an assembly of senior executives off-guard by firmly declaring that “The purpose of a corporation is not to make money!” Instead, he insisted that companies must respond to three imperatives: people, business and finance–– in precisely that order of importance.
As Joly sums up: “Excellence on the first imperative–– the development and fulfillment of employees–– leads to excellence on the second–– loyal customers who buy your company’s products and services again and again. This then leads to excellence on the third imperative, which is making money.” Making money is an outcome which should never be confused with purpose. “Jean-Marie taught that the purpose of a company is the development and fulfillment of its people.”
Joly sets forth the principles that shape his architecture with Cartesian logic. But the core of his book is not theory but practice: the specifics of how he returned Best Buy to profitability by shifting its focus to its people, starting with the Blue Shirts, as those who worked the floors were known. On his first day as CEO, instead of reporting to Best Buy’s suburban Minneapolis headquarters, Joly drove himself north to a struggling store in Saint Cloud, a working-class town on the Mississippi River. Here he spent three days studying how the store functioned and listening to employees.
The new CEO got an earful.
He heard how the company’s search engine did not help frustrated customers seeking to find even basic products. He heard how a cut in employee discounts diminished enthusiasm among electronics-loving front-liners, even as retention bonuses were handed out to senior executives. He heard about store layouts that baffled customers and Blue Shirts alike. And he watched how the lower prices offered online led to showrooming–– customers checking out products in the store before ordering from online competitors.
What he heard and saw shaped the strategic redesign he immediately began to put in place, which focused on giving customers a reason to shop at Best Buy. This required giving the Blue Shirts the resources they needed to provide excellent service, matching online retailer prices and offering total tech support including in-home advisors. Joly’s people-first efforts also recast vendors and competitors as partners, showcasing their brands in stores and providing specialized service for their products in order to encourage sales. This was all done in the service of the company’s redefined purpose: providing technology that enriches customer’s lives.
Joly’s experience, richly detailed in The Heart of Business, convinced him that a singular focus on profit antagonizes both customers and employees. Workers, it turns out, do not appreciate being seen as instruments in a financial game and are not inspired by the goal of maximizing shareholder value, an emphasis Joly views as the chief dysfunction in our economic system. For capitalism to be sustainable, he argues, it must return humanity to the core of human enterprise, which means expanding the focus well beyond shareholder value to take all stakeholders into account.
This view–– surprisingly iterated by the Business Roundtable in its 2019 statement that shareholder value should no longer be viewed as the sole purpose of corporate endeavor–– signaled a sea change that Joly believes is essential to the survival of capitalism. It also provides the key to addressing the collapse in engagement and morale that lies at the heart of the Great Reckoning we have been discussing in this newsletter all month.
Sally...first off...love the blog! So well done! This one in particular. It is amazing what you find out when you sit down (physically or virtually) with the people you work with and ask them the question Joly asked everybody when he took the reigns at Best Buy: "what is your dream"? Answers (as he predicted) are all over the map...but once you know your leaders know exactly what they need to do (connect those dreams to the noble purpose the organization). Again...love it...happy holidays...and much thanks for your many contributions!
Anyone with a heart will gain faith by reading Hubert’s story and experiences. He is the future of leadership and an early adopter of Stakeholder Centered Leadership.