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By Root 997 0

orders of how to do their jobs—which frequently led to ill will if not outright conflict—people erupted in free action, brought about by the satisfaction of their key universal need: to be treated as intrinsically equal. With this mistrust overcome, people felt the confidence to express their other—formerly suppressed—needs of growth and of self-direction. So they set out to satisfy these needs in the new environment, striving both for their personal well-being and the company’s success. That’s why our liberating leaders started with satisfying people’s need to be treated as equals and proceeded to transform every aspect of the corporate environment—behavior, practices, and symbols—that denied this need’s satisfaction. Until this need was satisfied and people were no longer treated as “resources,” other important needs that people had could not manifest themselves, and all managers would hear from the “resources” would be their desires to get “goodies.”

We were looking for a word to best characterize the environment that continuously satisfies people’s need to be treated fairly and as intrinsically equal. Bob Koski, Sun Hydraulics’ liberating leader, we think, had the best word for it—grace. Grace, he said, was a guiding principle of everything he did in his company. We think that grace—defined as a disposition to kindness and compassion, benign good will—is a perfect characterization of all the aspects of environment we observed in liberated companies, from the behavior of people with larger responsibilities, to the various business practices, and to the physical working conditions, all aimed at treating people fairly and as intrinsically equal.

An environment that treats people with grace is not merely nice to have. It translates directly into the way employees relate to everyone around them: colleagues, partners, suppliers, and, of course, customers. One day, a FAVI operator at the mini-plant producing gear forks for Volkswagen noticed a defect on one piece—a rare case, since at the time of our visit the company had produced more than twenty million pieces without a defect. He stopped the production and checked to see that there were no other defective pieces in the assembly or in the delivery stock. Having found none—but not yet satisfied—he consulted the mini-plant’s sales leader, and together they decided to drive for more than six hours to Volkswagen’s Kassel, Germany, plant. Once there, the pair simply asked to check if, by any chance, a defective piece had slipped into the recently shipped inventory. They found none. The local Volkswagen managers were astounded by the visit, and made it known to their head of purchasing, who elevated FAVI to a preferred European supplier. Yet, the operator did it simply because, at FAVI, one treats customers with fairness.

Many companies ask their employees to treat customers “well.” But they get neither this behavior nor the business performance they expect because they haven’t done their homework. As Koski wrote in his business plan for Sun Hydraulics, treating people with dignity and courtesy within the company is a key to doing the same outside the firm, leading to repeat customers, growth, higher margins, and other factors of world-class performance.

There are even more ways of demonstrating how treating people as intrinsically equal, with respect, dignity, consideration, trust, fairness, equity, courtesy, grace—whatever words one prefers—contributes to their individual and company performance. Indeed, satisfying this need leads people to trust the company enough to express their other fundamental needs. Satisfaction of these other fundamental needs within the company then leads to an array of behaviors aimed at what psychologists call mastery and happiness—well-being and vitality—and, in its turn, translates even more directly into a company’s outstanding performance. What these needs are, and how their satisfaction translates to exceptional behavior, is the topic of the next chapter. But before you turn to it, consider for a moment a more literary take on the importance