The Former CEO of Volvo, Pehr Gyllenhammar, On Why People Must Come Before Profits
Companies are going through difficult times right now with the current pandemic, and while Pehr is not currently the CEO of a company, he is no stranger to leading during challenging circumstances, including recessions. When asked how current leaders are handling organizations during this tough time, Pehr says there is one critical thing that leaders are not doing a good enough job with.
You can watch a video of our full conversation below or just listen to the audio version as a podcast.
Click here to get the transcript here or listen to your favorite player.
Putting people ahead of profits
There are very few leaders today who are actively putting the well-being of their people ahead of profits. Pehr says, “I put people before profits in the sense that if I don’t have good people, we could not have productivity, we could not go to have our aspirations come true unless we have good people. So I have people before profits and it’s not declining profits. I think that profits are very important for any shareholder company and that the shareholder should have their part of course, but that the people will create it.”
He says companies today are not only laying people off, but they are doing it brutally. And that’s not the way to lead. During the recessions Pehr went through as a CEO he made it a priority to take care of his people and to protect the most vulnerable. Because of that his employees trusted him, they were more motivated, and they felt safe.
Creating meaning and purpose for employees
The backbone of any organization is it’s people, if you want to succeed your people have to be happy, motivated, engaged, etc… Pehr did a lot at Volvo to prioritize the well-being and purpose of his employees. He actually got rid of the whole assembly line in order to keep employees from getting injured.
Instead of having employees work on a small piece of a part that was moving down the line they were able to work on a whole part of the car while it was stationary. “That made them save, first of all, their hands and their body, so they were never injured, they didn’t have to run after a product or walk with a product. And they could also do a whole part of a car, which is something that is satisfaction, that if you do the whole body, if you do the interior, if you do the mounting of the engine and the transmission, that is a full cycle of work, and it’s meaningful, compared to having a simple tool and just mounting something that you know what it would become, but it was meaningless.”
Pehr understood that employees completing a mundane, partial job would cause frustration and boredom. And when people are bored quality declines.
Another thing Pehr made sure to do as a CEO was to have a presence with his employees. He didn’t hide away in a corner office, he walked through the factory and talked with individuals. And he says this is important not only for factory settings, but for a CEO in any industry. Take the time to get to know your people.
Advice for leaders of the future
In his upcoming book, Pehr reflects on what he learned as CEO of Volvo. He says, “In reflecting on what has been formative in my own life, I consider the consequential parts, not to be things or titles, but people. When a company or an organization has been the most rewarding, it has always been due to the people that the company or organization brought into my sphere, people I had the privilege of getting to know.” This quote really speaks volumes to who Pehr is as a leader and his belief in putting people first.
When asked for advice on how to implement this way of leading, Pehr said he thinks a lot of it has to do with a person’s upbringing and attitude about life. It’s not something that can easily be taught, but more so something you have to have from within.
He says leaders have to have sympathy with their whole team, regardless of what role they have. You can’t play favorites. He also believes it is a mistake to hire only people who think and act like you do, even if you get along with them best. “If you don’t have people that are unlike you and that bring something to you, then it won’t work well. To have pals around you is not the way to run a business and the people who are underneath the top management, they will see it very quickly.”
If you want to hear more from Pehr and learn how he handled competitors, stories about historical figures like Henry Ford II, how Pehr went through a corporate mutiny and much more, than make sure to listen to the full episode below or click here to listen on your favorite player.
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