Why Principled Leadership Brings Profit and Pride to BB&TPublished: June 14, 2006 in Knowledge@Emory
John Allison, who uses philosophy not only to guide his life, but to run a company, could easily be called a “CPO,” or Chief Philosophical Officer. Instead, he goes by the title of chairman and CEO of BB&T Corporation, a fast-growing, highly profitable financial holding company headquartered in Winston Salem, NC.
Allison is not your typical CEO, and BB&T, which touts assets in excess of $107 billion, isn’t your standard corporation. Like its leader, the company utilizes philosophical principles and values as guiding forces. Both are described in a 30-page brochure entitled “The BB&T Philosophy.” Included is not only a quote from Allison, but from Aristotle.
Recently, Allison spoke to a group of students at Emory University’s Goizueta Business School as part of the Leadership Lecture Series. He discussed how “The BB&T Philosophy” helps guide employees to get the most out of themselves by earmarking ten values by which to live and work. Allison reasons that if his employees are getting the most of themselves, they’ll not only be better people, but better employees.
“Values improve the odds,” says Allison, an employee of BB&T since 1971 and chairman and CEO since 1989. “Given the laws of nature and of human nature there are values which are most likely to lead to our success and happiness.”
According to Allison, if BB&T is to attain its stated vision (to create the best financial institution possible) and stated mission (make the world a better place to live by helping its clients achieve success, its employees grow and be fulfilled, the communities it operates in be better places and optimize the long-term return to its shareholders), it needs values. Specifically, ten values which are integrated and consistent with one another. During his talk, Allison explained each of the company’s values.
First and foremost is “Reality,” or what Allison refers to as “fact-based ‘what is.’” “In order to be better, we must begin by understanding what the facts are,” explains Allison. In other words, wishing something is so doesn’t make it so.
According to Allison, there are several common errors people make when dealing with reality. The first is evasion. “When you evade, you’re detached from reality,” he says. “One of the most common reasons businesses fail is because the leader evades the bad news. Everybody evades.” When you evade, explains Allison, you’re not focusing, and when you’re not in focus, you’re disconnected from reality.
As “The BB&T Philosophy” points out, mankind’s ability to think is his specific means of survival and happiness. Therefore, Reason, or Objectivity, is BB&T’s second value. “We can’t sprout wings but we can use our minds to create airplanes,” clarifies Allison. “The human mind is the only ultimate human resource.”
In order to reason or think well, people need what Allison refers to as “the tools of clear reasoning” (sound premises, induction, deduction and integration) to make logical decisions based on reality.
Most people, contends Allison, are good enough at induction (being able to draw general conclusions in a rational manner from specific examples) and deduction (applying general principles to the solution of specific problems). Induction, says Allison, is what makes the human mind so powerful. “It’s about concept formation,” he says. “In one word, such as ‘chair,’ you grasp millions of things.”
Although not everyone can be a genius, people can develop mental habits that ensure that prior to making decisions, they carefully examine the facts and think logically and without contradiction in reaching a conclusion.
“The most successful workers don’t have the highest IQ. It’s not educational background. The high performers learn more from their experiences.” And what’s the best tool for learning from experience? “You have to be willing to admit you made a mistake and not evade the fact that you made it,” he adds.
Although teamwork is a hallmark of almost every organization (and will show up later on BB&T’s list of values), Independent Thinking is value number three. At the level of consciousness, Allison told the audience, we’re all alone and ultimately responsible only for ourselves. “All our employees are challenged to use their individual minds to their optimum to make rational decisions,” Allison says. “You are responsible to teach employees to be responsible for themselves but if you assume responsibility for them, they will fail and you will fail with them.”
Additionally, if you think like the crowd, you’re not going to be innovative and, notes Allison, human progress relies on creativity and creativity is only possible with independent thought.
Productivity is the fourth value. “At the individual level, productivity is a gut level commitment to get the job done,” Allison explains. If the economic value of the products and services BB&T produces is greater than the cost of producing such things, the shareholders win and society wins because BB&T’s healthy profits translate into productive work. “Profit it not a bad thing,” says Allison.
Of course, profit must come through honest means, and honesty is BB&T’s fifth value. “Being honest is simply being consistent with reality. To be dishonest is to be in conflict with reality and is therefore self-defeating,” observes Allison, who added that honesty includes saying what you mean and meaning what you say.
The corporate scandals of recent memory amplify the need for honesty as well as Integrity, BB&T’s sixth value. “Temptations aren’t really temptations, they’re just reasons to fail,” states Allison. “There’s no sacrifice in having integrity.” If people consistently act in congruence with their principles, it will lead to long-term success and happiness.
According to Allison, there is no greater value in terms of human relationships that value number seven: Justice (Fairness): that individuals should be evaluated and rewarded objectively—for better or for worse—based on their contribution to the company’s mission and their adherence to BB&T’s values.
“If there is no reward for superior performance, the best people will leave and the average people won’t be motivated to do better,” explains Allison. “We believe people who make the biggest contributions should get rewarded. That’s what justice is about.”
BB&T defines Pride, its eighth value, as “the psychological reward we earn from living by our values, i.e., from being just, honest, having integrity, being an independent thinker, being productive and rational.” Pride is a psychological reminder to “do good and be psychologically rewarded for doing good,” says Allison, who pointed out that Aristotle believed that “earned” pride, as opposed to arrogance, was the highest of the virtues.
Self-esteem, or self-motivation, is value number nine. Allison sees self-esteem as an expression of self-confidence, which comes from how you live your life. If you live life with integrity, you raise your self-esteem.
Without self-motivation, however, self-esteem may not get you very far. A strong work ethic is part of the fabric of BB&T. Allison believes that you receive from your work in proportion to what you contribute, and he also believes that for BB&T employees to accomplish their long-term goals, they need to be sure that BB&T is the best place for them to do that.
Allison wants all of BB&T’s 28,000 employees to think for themselves, but he also wants them to recognize the value of teamwork. That’s why the list of BB&T values concludes with Teamwork/Mutual Supportiveness.
Allison has identified three aspects that optimize teamwork. One, that each employee do his job extremely well. Two, that employees root for each other to be successful, and third, is to take responsibility for how your job affects the team.
Although not a value, emotions play a role at BB&T. Allison believes people are emotional and most emotions are healthy. However, some are irrational and aren’t conducive to a healthy work environment. “Because emotions are learned, you can change your emotions. It’s a tough process, but it can be done,” explains Allison. “The question is: Are we happy when we should be happy? Are we unhappy when we should be unhappy? Emotions are not a means of knowledge. If there is any conflict between emotion and reason, pick reason.”
It’s not surprising that BB&T invests heavily in employee education. According to Allison, if you want to change the results, you have to change behavior. He believes that’s true not only in business, but in life. “If you’re unhappy with your weight, change your behavior. It you’re unhappy with your grades, change your behavior,” he states. “Otherwise, you’ll get the same outcome.”
For a change in behavior to be sustained, you have to believe it’s right for you. Explained Allison: “The implication for leadership is being sure that you and the people who work for you have the right behaviors that focus on results. It’s about constantly reinforcing those beliefs and being absolutely clear about behavior.”
BB&T’s management appraisals take place twice a year and are based almost solely on the values described above. Even the company’s technical programs incorporate values.
Allison believes BB&T’s values are non-contradictory, integrated, and comprehensive. They’re not something to be framed and hung on a wall, it’s about “living it,” he stresses. Allison believes “The BB&T Philosophy” helps attract the type of employee the company is looking for. As he told the audience: “If you don’t agree with our values, don’t come work for us.”
What BB&T is doing is working. The company is ranked among the 2003 World's Top 50 Financial Institutions for Market Capitalization by Retail Banker International, and over the last five years, BB&T's total compound annual return to shareholders is 8.7% compared with -1.5% for the S&P 500.