The Definition of Great Leadership

The Definition of Great Leadership

by Dan Hilbert

 

If the definition of great leadership is record-setting industry growth, creation of wealth for employees, changing communities through unprecedented volunteerism and financial donations to the needy, Bill Greehey defines greatness.

 

Greehey, former CEO of Fortune 10 company Valero Energy and now chairman of fast-growing energy company NuStar, builds these successful conglomerates through a simple human capital leadership model that drives business, shareholder, community and employee value. The model is adaptable and repeatable.

 

1. Take care of your employees.

2. Demand that employees take care of the community.

3. The community takes care of the company.

 

The first time I heard Bill say these words, I responded with the obligatory executive corporate response, "Brilliant!" while my mind was saying, "Sure. That's nice. We'll see."

 

Three years later, Valero experienced the third-fastest growth rate in American economic history: $3 billion to $92 billion in annual revenue; 3,000 employees to 28,000; one country to 28; 100 retail stores to 5,000; a low-performing stock to the fastest-growing major energy stock from 2004 to 2006.

 

Greehey's business model is as follows:

 

1. Take care of employees like family.

 

a) Generous stock options for all, free health care, high bonuses, retirement and no layoffs.

b) Thank you e-mails from Greehey upon every Valero success.

 

2. Employees take care of the community.

 

a) Record-setting contributions of employee volunteerism - more than 1 million hours per year.

b) Record-setting monetary contributions to the United Way - the highest per employee in United Way history.

 

3. The community takes care of Valero.

 

a) $19 stock growing through three splits in three years and ending at $82.

b) Wealth created for thousands of employees.

c) Valero reaching Fortune 10 status.

 

The environment was magic. Low performers became solid contributors and top performers delivered results beyond their wildest dreams. Greehey's human capital model is a success incubator. I led all talent functions and workforce planning for Valero. The team I was honored to lead won more awards in 2006 than any entire HR department in industry history.

 

Each Christmas, Greehey visited every cubicle and personally looked each of us in the eye and shook our hands, thanking us for our contributions - all 3,500 of us then flew to the refineries to do the same. Suddenly 70-hour weeks didn't seem that long. The results were thrilling.

 

When Hurricane Katrina hit New Orleans, Greehey and troops literally built a city inside the flooded city for Valero's refinery and retail employees including trailers, roads, generators, doctors, food, medicine and counselors, within four days - while the flooded city was officially closed.

 

Valero took over the failing PGA golf event in San Antonio. In three years, the Texas Open became the highest donator of all 34 PGA events, giving more than $8 million to Children's Miracle Network.

 

Responsibility to shareholders and employees is brutal in tough times. The first instinct in corporate leadership today seems to be to cut employees and costs. Greehey has a no-layoff policy. When times were tough, management bonuses went first and salaries froze. Expenses were cut. But no employee was let go. This policy resulted in stunning workforce performance and loyalty: "Hey, Bill. Do you need us to give a few more hours to Valero and community? No problem!"

 

After retiring from Valero in 2006, Greehey bought Valero's small pipeline company. When Greehey left, Valero was worth $28 billion. His new company, NuStar, was worth less than $500 million. Three years later, through these brutal economic times, Valero is worth $9 billion, and NuStar is worth $3 billion and paying a 7 percent stock dividend. Taking care of your employees really does work - for all. In brutal economic times like these, does your leadership team want to face investors with an AIG debacle story or a NuStar success story?

 

 

[About the Author: Dan Hilbert is CEO of Orca Eyes, a software solutions provider, and former head of global talent management for Valero Energy.]