Stewardship is a Precursor to Leadership

This article was written prior to the merger with Think Shift under its previous name, LogiStyle.

This month's Food for Thought has been inspired by Warren Buffet's article "Stop Coddling the Super-Rich" that appeared in The New York Times a couple of weeks ago. Buffet argues that the rich people in the US have a stewardship responsibility to carry a larger share of the federal tax burden and that the legislators in Washington, D.C. have a stewardship responsibility to require that of the rich. Independent of your political views on whether the federal taxes in the US are already too high or not, Buffet's argument is that the tax loopholes that have been awarded to the rich have caused people with lower incomes to carry a disproportionate share of the taxes being collected by the government. So, at a minimum - he would argue - even the current amount of taxes being collected should be redistributed.

Our interest in this article is not a political debate on taxation in the United States. (Almost half of our readers live outside the US and could care less on that topic.)

Rather, we argue that demonstration of stewardship is a fundamental requirement for people to acknowledge and respect leadership.

This applies to political, business, sports, civic, religious and other leaders. We will focus our conversation on business leaders - both corporations and individuals.

Hold on, you might reply; isn't your claim, "stewardship is a precursor to leadership," motherhood and apple pie? (See Food for Thought April 2007 for a definition of motherhood and apple pie.) Aren't these Food for Thought articles supposed to be controversial and provocactive? Yes, indeed. Few would argue with the title of this article. But we intend to raise some poignant questions forcing you to ask yourself: Are you discharging your stewardship responsibilities?

Has General Electric demonstrated its stewardship responsibility to the communities it serves when over the last three years it has reported a total worldwide tax provision of $1B on a total three year income of $44B, a meager 2% annual rate? Or, should one argue that GE has fully discharged its stewardship responsibility to its shareholders by creating a very tax efficient financial structure, and thereby maximizing its return to the shareholders? Buffet asks if he discharged his stewardship responsibility last year when he was only required to pay 17% of his earnings in taxes, while each of the other 20 people in his office paid somewhere between 33% and 41% of their income.

Has the leadership of a corporation that proportionately paid lower bonuses to all employees during a less than stellar year discharged its stewardship responsibilities, when the leadership had more to do with the poor performance than lower level employees?

While both Wal-Mart and Dell put a lot of pressure on their vendors to reduce prices, Dell insists on knowing how the vendor is going to accomplish that by taking costs out of the supply chain. Is Wal-Mart discharging stewardship responsibility to its vendors or is it just squeezing and recycling its vendors? Are companies like Starbucks (that has a generous health insurance policy), Pret-a-Manger (that empowers its in-store employees with cash and non-cash incentives) and Chik-Fill-A (that demonstrates its Christian values throughout its operations) demonstrating stewardship and is it at a cost to the shareholders and/or employees? Lest you should think we only throw stones at others, let this glass house be shattered as well. In a society like the US, where the structure of the healthcare system is for the employers to provide health insurance, has a small company, like LogiStyle, that does not offer health insurance to its (3, in LogiStyle's Case) employees, discharged their stewardship responsibilities?

Is stewardship a voluntary cost you incur to be a good citizen and better the society? We argue otherwise.

Starbucks and Pret-a-Manger come out ahead with their more expensive employee policies. Just compare the workforce morale and the employee turnover of those companies versus your average fast food establishments. You don't have to know the numbers - as a customer, you can just see it in the spirit of the employees! Dell comes out ahead by insisting on knowing how the vendors take cost out of the system. Buffet's argument is that when exhibiting stewardship is not in the leader's self-interest, such as for GE and Warren Buffet who are required to maximize their benefits by taking advantage of all legal and ethical means, the society - i.e., the government - has an obligation to structure the laws to impose such stewardship.

Stewardship gives leadership higher leverage to accomplish their purpose. And when good stewardship is not in your self-interest, leaders have the stewardship responsibility to ask the society to impose them, as demonstrated by Warren Buffet.

The purpose of this article is to cause you, as a leader, to ask and ponder such questions of stewardship relevant to your situations.

We even suggest that you discuss the issue with your constituents for whom you are a steward. If you are hesitant to discuss these issues with your constituents, ask yourself: what do you fear? Open conversations on these questions can only heighten the sensitivities of the constituents and the responsibility of the stewards. At LogiStyle, we intend to do just that, relative to the issue raised above.

Food for Thought is our way of sharing interesting concepts on corporate leadership and management with others who might find it useful. The thoughts offered are intended to be controversial and thought provoking. They are intended to help our readers intentionally realize their potential, what we call Potentionality.