How to Build a Profitable Business Based on Servant Leadership

Hello, I’m Simon Lawson. Henry’s explained a bit about my journey; I’m absolutely committed and devoted to building compassionate business models.

We have a family business and I’m absolutely certain that families and businesses have a great interface together. We all love our families, but somehow when we leave them at home we go and arrive at work, and some different values tend to happen; so I’m keen to explore how we get those to work together. So, I’m going to ask you a question: ‘Has anyone been in a job where they just wanted to get through the day?’ We discussed a bit about that and there’s quite a lot of people who have done that.

I was there, many years ago, and I decided to change that; so I did a degree at Bristol University and then wanted to change. I wanted to move to a place where we could get – being in a big corporate business I just found so alienating and so suffocating – so I looked at issues of staff morale, and where staff turnover was a problem, and where there was low engagement. I wanted to do something about that and my Dad said to me, many years ago, “Do you want to join the business and build something completely different?” and I said “Great, I’m on it”. I joined Lawsons aged about 29.

It’s a family business, fourth generation, and we supply building materials in the London area. We employ about 450 people and we turnover about 100 million pounds today. The overview of my talk is: I’ll talk about the facts that make good business sense, looking after your people makes really good business sense. I’m talking about the values of myself, my roots in Quakerism, and then how we developed the ‘Lawsons values’ and that impact and outcome.

So, what’s the evidence? We’re quite a fast growing business within the sector. In 1993 we had two depots and 50 staff and now we have 17 depots and 450 staff. Our profitability, which the accountants always tell me is important, we run at about 8.4% – Travis Perkins, our nearest competitor runs at about 6.1%.

Some key ratios: staff turnover is always important, we talked about it’s importance and Dom has just talked about the importance of getting good staff; in our competitors we know it’s about 30%, in Lawsons it’s about 13%, and in retail it’s about 45%, so we’ve got good stats in that. The lowest paid to the highest paid – I’m very committed on not having too big a differential, at Lawsons the difference between the lowest paid and the highest paid is a factor of ten and in the recent Oxfam Global inequality report, that figure was about 183. So in the issues of pride: 20% of employees are proud to work for their organisations, on our report in 2015 and in the recent Lawsons survey where 72% of our staff took part, that figure was 90%. In trust: the ‘Trust Index’ i.e. employees who trust their organisation, that fell to 52% in 2014 and in Lawsons that figure stands at 85%, so we have really high trust and pride in our work.

So, a bit about my story: I left University in 1982, I did an MBA at Cranfield Business School, got thoroughly bored with KPIs and then, as Henry’s alluded to, I did my Masters in 2010 and I focused on a 15,000-word dissertation on love at work – ‘What would that look like?’ That took me a whole year to do and it was great fun. I looked at Quakerism, the Rowntree story and the Cadbury’s and they were, in the 1850s, really revolutionary in introducing great work practices. They got doctors into the workplace when there were no doctors, they had libraries to teach people how to read and they built a sense of community, which I think is so important. Cadbury’s as we know got sold in 2009 and that’s interestingly to me, the last time they paid any corporation tax, so there were some real ethical issues for me in there. One of my questions was ‘If Joseph Rowntree or George Cadbury were alive today, what would it look like?’

On with my journey. In my dissertation I looked at questions like, ‘Can the employee and employer serve each other for the greater good?’ ‘Can we make a profit?’ ‘Can we have a social impact?’ and ‘Can we have an environmental impact?’ This is very much Lawsons philosophy: we have a ‘triple bottom line’ view to the sort of impact we want to make.

On environmental impact: we’ve got the first zero emission HGV lorry arriving in about a month’s time, which is an electric crane operated, and a gas powered vehicle. We hope to get the Mayor along, but we’d be really instrumental in pushing that with our body builders. Then I ask questions: ‘Can we focus on others rather than ourselves?’ The essence of spiritual love. I think one of my concerns if you look at business, particularly the stories coming out of Hollywood last week, particularly the egos and the narcissism of certain individuals in business and in the world. A very important element of that was leadership, which I’ll come onto in a minute, but Thomas Aquinas said, “There can be no joy of life, without the joy of work” so how do we bring that all together? Another interesting quote: Einstein said “The significant problems we face today cannot be saved at the same level of think thinking that we were when we created them. Work and love define our humanity”.

How do we become more human at work? Leadership I think is absolutely critical in this, and I looked a lot at myself in this, and interestingly the Benedictine monks of the sixth century looked a lot at how do we behave as leaders, they had 76 rules and one of the big ones was about humility. They had courses every so often at the Monastery, and one of the exercises was that they had to outdo each other in humility. Can you imagine a leadership course today doing that, as a part of mature leadership?

You have to be open to mistakes. If you look at companies like Enron, there’s lots of examples of companies who just want to cover up what they do. Margaret Heffernan wrote a very good book called Wilful Blindness, which talks about how as power and prestige comes into their life people tend to block off certain things. It happens in businesses, and it happens in countries if you look at the 1930 with Nazism. She interviewed one of the train guards at Auschwitz and she said it was a very interesting interview – he ran all of the train networks in and out of Auschwitz. He was totally aware of what going on but just didn’t want to acknowledge any consequence. Leadership has to really look at who we are, and how we behave.

Lord Acton said, “Power tends to corrupt and absolute power corrupts absolutely” – power feeds on itself if not checked. So if we’re all leaders, if we’re all in businesses, we all have a responsibility in terms of how do we check ourselves. With power comes the love and interestingly for me, as Martin Luther King said, “Power without love is reckless and abusive. And love without power is sentimental and anaemic” and Edmund Burke said “The only thing necessary for the triumph of evil is for good men and women to do nothing”. So how do we balance power and love? We have to do both of those in leadership and show the compassion that we do.

A couple of questions for you: ‘How do you check your own power?’ and ‘Do you have people who do that for you?’ And secondly, which I’ll come onto in a bit, it’s a bit of a curveball one: ‘How do you use hospitality within your business to create greater values?’ And I’ll talk a bit about what we did to do that in part two. I’ll give you a few minutes to discuss and we’ll go from there.

Okay, so hopefully you’ve had some ideas about checking your power. I’m just going to tell you a bit about how I check my power and also the other bit is how we got the culture right at Lawsons.

I started about five years ago: because I love to cook I decided to hold lunches at my house for my staff. I think Henry, in the introduction of his book (The Happy Manifesto), talks about servant leadership and so the idea was for me to serve my staff a lunch for them to talk about what they value. We called them ‘Values Lunches’ and they’ve been going now six or seven years. I get 20 staff, who aren’t management, who aren’t directors, they come round and I cook them lunch; and they can talk about whatever they want. There’s no agenda, they can talk about football, whatever, they can talk about work and it’s not compulsory so they can come and go whenever they want. I must admit it’s been absolutely fantastic. It’s become a really good talking shop, you can go round to the Chairman’s house, have lunch and you can tell him what you really think.

My role, which I ask permission to do, is just to keep some notes, so I can make sure I record what they do and talking about power, with the suggestions that come up, I needed the power to make sure those things happened within the organisation, which they did. For me that part of the power is very necessary.

This next slide shows a picture of some of the staff that have shown up for one of the lunches. It’s a whole cross-section of staff, we have 18 sites across the South East, so they come from all over – generally one person per site, there’s no management and no Directors there, and they’re waiting for their lunch as you can see.

What were my observations about this? I’ll talk about my ‘checks on power’. One of the things that happened with me, I decided to make myself quite vulnerable in this – I talked about all my difficulties of life, including my divorce, I’m a single parent, I have an alcoholic ex and coping with alcoholism and my children, so I brought up four children on my own, and all of that, over time, really lowered the barrier between me and the staff. I was seen very much more as a human being who had suffered in various ways, and I think we all suffer in different ways. I think the more open we can be about that, the greater empathy we have with people. And it’s interesting, one of the things I note, I don’t know what the stats are about divorce, but it’s one in three or whatever, so when people go through divorce or single parent issues, it really resonates with myself, I’m a lot more sensitive to those people’s issues. So some of the values that have built up around that are that we have a 24-hour counselling service for people and that’s been driven by people being much more open at these lunches, where all our values are starting to come up.

The values aren’t prescriptive, they’re all about where people are on their journey through life. What’s great is it all comes up from the staff. A chap called Andy Law’s book called Open Minds, this quote I think is very important he says: “It’s reflection. It’s unless you give up something about yourself and be stripped down, you will never develop or change. The baggage of your past will emerge as the biggest driver in your decisions”. Making yourself vulnerable, while very challenging, I think has great benefits because we’re all human and we all have issues with our lives. That for me was a good check on power and it was a good basis to get values moving up through the company.

Other things I noticed: I moved from making and looking for absolute truths in things. We love that in management don’t we, ‘that’s where we’re going to go because that’s the right decision’. In my experience now that’s very rarely true. I moved to more contextually negotiated forms of truths, which really brought people on within the organisation. It was a really good shift for me. In my 20s and 30s I was black and white about most stuff, now I’m much more about negotiating outcomes, very important – and the dangers in employee silence. I’m very aware, when I go around organisations, that people what to tell you what you want to hear. The trick of leadership is how do you break that barrier down? How do you really get to the truth of what someone is saying? And most people will tell you something they want you to hear or to protect their own self-interest, quite understandably, but what’s the truth?

As leaders you need to ask that, so I also looked at my shadows in terms of power. Is anybody not familiar with that? There’s lots of psychology around everything that we do has a reaction behind us, or has a part of us behind us, so we may want to control things but there will be issues behind that. It may be for the right reasons, but we might have a history of wanting to control that outcome, and I think if you look at certain issues within male political leaders at the moment, there’s a lot of that going on.

Spiritual growth for me was also putting down my ego, so dissolving my power within the organisation was very important, because I didn’t want it to be led by me, I wanted it to be led by everyone, so I became much, more consultative in my role, rather than actually giving direction. I think I’ve only made two decisions in the last ten years, the rest of it has just been an evolving collective movement. Listening more, and dissolving my ideas was key.

The other great thing, the staff talked about their own difficulties, so when you really get under the veneer of most people’s lives there’s a lot of stuff going on there that is just messy, and bloody difficult to be honest. People will talk to me a lot more about the challenges of work and what’s going on outside work. It’s unbelievable what people get up to outside of work; gambling, drinking, it’s extraordinary once you get into the nature of who we are as humans. One of my conclusions is there is tragedy in all our lives, and we’re all broken in some way, so good leadership, I think, recognises that: make yourself vulnerable, create some empathy and then you can move forward together. Because life, believe me, is quite hard at times.

For me love at work in essence is nothing more, nothing less than a mutually support environment for the physical, mental, emotional and spiritual needs of its employees: it’s power and passion expressed safely. For me that’s the biggest challenge of business today: ‘How do you get to that point?’

Some of the things that have come up that we do, just a bit more life stuff: we have big ‘Family Fun Days’, where up to 1,200 people come along, we invite all the families and their friends and we have a theme park we tend to hire out, we have picnics and all that sort of stuff. All the children and of all our staff at Christmas have a big gathering and we give out 200 to 300 presents to all the kids or anyone under 10. We have lots of gatherings of people. And a lot of those ideas come out of those ‘Values Lunches’.

One of the staff wrote to me about the Family Fun Day, he said:

Hello Simon, it’s Dan Stanley [he’s a Yard Foreman from Belvedere]. I would just to take this opportunity to thank you on behalf of my wife and kids, and myself, for an amazing day out with my kids. Having spoken about it for days and we made some great memories from this. I think you and your dad for putting on such a great day for Lawsons’ families. Lawsons has changed my life for the better, for myself and my wife feel better as I’m part of something. Now I have a future and not only does this make my home life better but I can’t wait to get to work, thank you again.

Now that’s been pretty key from these lunches, people want to feel part of something that’s quite secure. I think it’s a very transient world out there, people moving jobs quickly, and if you’ve got families that’s difficult.

Daniel Stokes, who joined us and he wrote this, Daniel Stokes had only been with us for two months and said “it’s amazing, I’ve never been to the owner’s house of someone I work for, let alone have them cook for me”, so that was his reflection.

And on some of the more tricky stuff, one of things that’s happened in the last few years, we’ve had illnesses within the organisations, two people have died and when it’s been appropriate I’ve followed up with the spouses of the people that have died. Nigel’s wife wrote me this:

I’d just like to say thank you for all the support and kindness everyone gave Nigel throughout his illness. It brought Nigel a huge amount of comfort to know everyone was rooting for him to overcome his illness. Nigel loved working for Lawsons and even though he had not been to the branch since before Christmas the visits, the phone calls, texts and emails he received made him feel that he was still very much part of the family.

That was some of the more difficult issues, but you have to really face those, because it does happen. The more staff you get, the more you realise that sort of thing does go on.

So our values, our Mission Statement is this: ‘To make work as interesting and satisfying as possible’. Have a lot of fun, enjoy it, communicate what makes fun and what are those values?

So these are the Lawson family values and this is very much driven by them: Job Security & Honesty, Empowerment & Delegation, Training, A Sense of ‘Belonging’, Good Working Conditions, Fit for Purpose Equipment, A Fair Package, Job Rotation & Promotion Prospects, Sponsored Events: Family Day, Children’s Christmas Party, Improved Communication, Give Something Back To The Community.

Now some of these seem quite generic but they are very much part of what they value, it’s not what I feel is important, it’s what they feel is important; so for me that’s the most important thing. I’ll just highlight that fourth one, a Sense of Belonging. The more I do these lunches the more I realise in a fast changing world, 80% of people want security, they want routine and they want safety, whether it’s family or at work. I think that’s a big question mark for leadership, so that for me is one of the most important things.

These are our staff benefits that have come out, again it’s all been driven by the ‘Values Lunches’. We have a profit share scheme as well. As the company grows, we’re very profitable. Last year we gave 20% of our profit to all of the staff, that was divvied up into a big pot, and everyone’s part of the profit share scheme. There’s bike to work schemes, death in service, pensions, but these are all the things that they (the staff) value, and so that’s all the sort of stuff we decided to move forward on.

Lastly, this is from an eight-year-old girl who’s not very well.

I went to the allotment today and my Mummy thought that you might want to hear about it. So when 4b (our class) when to the allotment today we got put into groups. I was with some of my friends named Serena, Alison and Zeina. We all pulled out the weeds together, everybody got a lot of jobs to do. Surprisingly we saw a maggot, a spider and a worm, it was very disgusting! But because we are workers we got through it. The next bit we had to do was put soil in for the pumpkin seeds (that was what our group were growing), it was fun because we sprinkled it everywhere. I got very dirty silly. Next when that was roughly finished it was the planting time. I was really excited plus nervous because I didn’t want to hurt the beautiful seeds. We all carefully put the pumpkin seeds in. I made sure they were perfect. The fourth thing we had to do was water them. Some of the boys were squirting water at me and my friends, I was laughing so much. We happily managed to get it done. Finally we had lunch, it was very yummy and delicious. When it was over the boys had a battle against the girls with the wheelbarrows, who can get the most weeds into the wheelbarrows. In the end it was a draw. I was sweating hard, we started pulling more weeds out and soon we had to go back. I was a little sad but joyful at the same time because I had done so much work. Whoo! Yippee!

We went to her school, and we rebuilt the school playground for her, and her friends, and that’s from the heart and it says what a difference you can make if you really push out into community, and help people on their way. So that’s Lawsons.