Faith at Work, Part 4: Turning Corporate Leadership Upside Down
Ken Melrose is well known for employing a model of servant leadership to turn around the Toro company when it was on the verge of bankruptcy. Earlier this year, he returned to Princeton University, his alma mater, to talk to Laity Leadership Institute Senior Fellow David W. Miller about the circuitous path he took to becoming a servant leader himself.
An Inauspicious Beginning
Melrose told Miller's Faith and Ethics in the Executive Suite audience that his dream was to make $50,000 a year as a marketing manager.
“If I could have done that, I would have been a happy clam for the rest of my life,” said Melrose.
He went to work for Pillsbury after earning an MBA at the University of Chicago. Then his boss talked him into starting a technology business together. The business went bankrupt.
“When the Toro job came along, I didn’t want to get into the lawn care business, but I took the job.”
Not exactly an auspicious start to a stellar career.
Work as a Meaningful Experience
Miller places Melrose’s style of integrating faith and work in the Experience category of The Integration Box (TIB). In God at Work, Miller says these believers view work as a calling that has “both intrinsic and extrinsic meaning and purpose.” Thus it’s no surprise Melrose sometimes talked about his work in terms of his personal dissatisfaction with it.
“The particular work someone does, in and of its own right, is of theological value,” Miller wrote. “Work has the larger role of serving greater societal purposes and needs. Discovering that work can be a calling, and finding meaning and purpose in work are often significant motivators that draw business people to the [Faith and Work] movement,” he wrote.
While accenting one's calling is a healthy, exciting, and biblically sound way of integrating faith and work, it is not without its risks. Some who fall into the Experience category of The Integration Box might “place so much emphasis on what we do and whether it is a calling that it can overshadow how we do it and who we are as people,” Miller said. Additionally, those who exclusively identify their work as their calling can be traumatized when they lose their jobs or are unable to work. And some misinterpret experience to presume that a calling must be stimulating, or a socially admired position, or that it must utilize one’s gifts and talents.
“This view forgets that many in the workforce have limited career or occupational choices” when, in fact, “jobs of a routine nature and even mundane tasks have the potential to be experienced as callings even if someone’s potential isn’t being maximized,” he said.
In time Melrose experienced his job at Toro as a calling, but he was initially given responsibility for a failing Toro subsidiary called Game Time. The subsidiary had been run by a man Melrose described as a “benevolent autocrat” because employees were in the habit of clearing all decisions through this person.
“Toro in the 70s was very top down, not about servant leadership at all. It was all about the executives. The employees kind of felt downtrodden and put upon,” said Melrose.
“It was a very dysfunctional environment,” he said.
Melrose was “confounded” about how to handle his first leadership role. As a result, he developed a strategy of coaching and supporting employees rather than consolidating power in the executive suite.
“I’m serving you all and it’s your decision, but if you make a mistake, it’s okay. We’re going to learn from it and get better,” he said of his approach to nervous subordinates.
He turned Game Time around, but when the division was sold in 1976, Toro was on the verge of bankruptcy. The Board of Directors hastily called Melrose and asked him to become the new CEO. The first two years were painful ones, as Melrose had to lay off a significant number of employees and close plants to save the company. But he knew cutting expenses was not the long term solution.
“We knew we needed to transform the company in a way that was sustainable and durable, and we knew what we didn’t want. I thought now we could try this model of servant leadership where the organization chart is upside down,” said Melrose.
Experimenting with Servant Leadership
As the company returned to profitability, Melrose began to experiment with creative servant leadership ideas. One of the things he and his team did was to stop laying off manufacturing plant workers in the off-season, as was typical in the field. Instead these employees were dispatched to repair equipment on golf courses around the country.
“When they came back after two months, they were really proud,” Melrose said. “Productivity and quality went out of sight.”
He also altered the company’s purpose statement from being about building lawn mowers to this: Our purpose is to help customers beautify their outdoor environment.
“That’s very engaging, aspirational. I want to be a part of that,” he said. So did employees.
Another motto implemented under Melrose’s leadership was Genuinely Valuing Others (GVO).
When Toro’s safety engineer informed Melrose that roll bars would increase commercial mower safety, Toro didn’t just install them on new units. At a cost of $25 million, Toro voluntarily installed them on old units as well. The company’s stock went down temporarily, but rebounded after 3-4 months and Wall Street learned to look at its prospects through a long-term lens.
“On the positive side, the employees started talking about it, because it surprised them,” said Melrose. “The values on the wall are the way we do business,” he said.
Toro also radically changed the way it dealt with customer injuries.
Typically the company’s legal team would brace for 100 potential lawsuits each year. Motivated by their faith, two paralegals suggested that Toro take an approach to customer injuries that reflected its GVO motto. They and the safety engineer began visiting customers as soon as they heard about an injury to express the company's regret—even if a Toro product was not at fault—and to see if the situation could be resolved amicably. Since 1991, there have been 1700 cases and only one of them has resulted in a lawsuit, Melrose said. This alternative dispute resolution approach has resulted in a 75 percent cost reduction and these customers turn out to be some of Toro’s best.
“Even when we won these old cases [in court], we lost,” said Melrose. “We lost customers.”
Identifying a Higher Reason for Doing Business
When Melrose was a student at the University of Chicago, he took a course taught by Milton Friedman. The economist said, “The only purpose of business is to reward the share holder.”
“That’s blarney,” said Melrose. “We’re paying for it through this recession. ”
The model Melrose developed at Toro puts the employee first, the company second, and the shareholder third. Although he left the company five years ago, it’s still operating from this model and doing “terrific,” he said.
In a 2006 interview with The High Calling, Melrose said a person’s spirituality contributes to his or her wholeness and the whole person must be present in the work environment.
“This does not mean going to work as an evangelist. But it does mean being able to exercise one’s own ethics, integrity, character, humility, caring, and valuing of others. These should mesh into our activities and behaviors toward accomplishing the business goals and our performance expectations,” he said.
Ken Melrose may not have always felt intrinsic satisfaction in his work, but who does? Every job has its mundane elements. In the end, his career at Toro served greater societal purposes, and, as is typical of those in the Experience box, he found a sense of calling in it.
Laity Leadership Institute Senior Fellow David W. Miller is founding Director of the Princeton University Faith & Work Initiative and an Associate Research Scholar at the university's Center for the Study of Religion. Dr. Miller spent 16 years in senior executive positions in international business and finance before entering academia and receiving his M.Div. and Ph.D. in Social Ethics. He is the author of God at Work: The History and Promise of the Faith at Work Movement and writes for The Avodah Institute's Faith & Work Blog.