CEOs Have Lost Touch with Frontline Workers

When I was the CEO of Medtronic, I established a 30/30/30/10 target for my time — 30% with customers, 30% with frontline employees, 30% with executives, and 10% with external constituencies. That made me an outlier. According to an in-depth time study by Harvard Business School professors Michael Porter and Nitin Nohria, CEOs spend, on average, just 6% of their time with frontline teams, only 3% with customers, and 72% in meetings. “CEOs face a real risk of operating in a bubble and never seeing the actual world their workers face,” the authors note. “Spending time with the rank and file, and with savvy external frontline constituencies, is…an indispensable way to gain reliable information on what is really going on in the company and in the industry.” Two-plus years of coping with Covid-19 has shown how essential frontline workers are to a functioning economy. But many executives have not yet absorbed that lesson. In my experience, frontline workers are making the greatest difference in terms of customer satisfaction, innovation, product quality, and service excellence. Yet they’re commonly treated as a cost to be managed rather than an asset to empower and support. Instead of building on this asset, managers cut costs by reducing the number of frontline workers with layoffs or through outsourcing and automation, as employers shift production overseas. That strategy backfired for many restaurants and retailers over the past two years, as Covid, stimulus payments, and a tight labor market left businesses understaffed. To change the role of frontline employees and how executives view them, I propose two shifts — one symbolic and one practical. First, the symbolic: It’s time to flip the org chart. Why do these charts put frontline workers on the bottom and CEOs and C-suite executives on top, when frontline workers are making the most difference? It’s because executives and corporate staffers see their roles as directing and controlling the people doing the actual work. Instead, companies should put frontline workers on top with corporate staffers, executives, and CEOs beneath them to reflect their proper roles of coaching and supporting the front line rather than controlling its members. The simple, symbolic, visual change will help everyone in an organization remember where value comes from: customers and the employees closest to them. Second, the practical: CEOs should spend more of their time with frontline workers. I recommend aiming for 30%, as I did at Medtronic. Although it was difficult to maintain that balance, I came close by scheduling customer visits and frontline visits first and then filling in my schedule with internal and external meetings. Why do this? First, because paying more attention to frontline workers brings critical motivational benefits. In Medtronic’s R&D labs I got many valuable ideas for new products and new medical therapies. In visits to its factories I realized that it was the assembly workers — not the quality department — who made the difference in the quality of our products. Second, my time with customers taught me about the company’s product challenges and demonstrated the value of our frontline technical sales and service people. That time helped me be a better CEO, both because I learned what I needed to do to support our employees and because my decision-making was infused with firsthand understanding of our customers and operations. Several of today’s exceptional leaders are shifting their focus from the front office to the front line. Here are a few examples: Former Best Buy CEO Hubert Joly As the new CEO of Best Buy, Hubert Joly spent his first week on the job not at headquarters, where the company faced myriad financial problems, but in its St. Cloud, Minnesota, stores, where he interacted with employees and customers wearing a “CEO in Training” badge. He says, “What I learned…listening to store employees and observing what was going on in the store, I could never have fathomed poring over spreadsheets or sitting in meeting rooms with other executives at HQ.” As CEO, he personally met with thousands of employees to inspire them to engage in Best Buy’s “Renew Blue” turnaround strategy. He also was able to avoid layoffs by cutting overhead costs and partnering with suppliers. After three years, when Best Buy’s turnaround was complete, he created a new initiative with the theme “Build the New Blue” and met with employees to empower them. He says, “The heart of business is the idea of pursuing a noble purpose, putting people at the center, creating the environment where you can release that human magic, embrace all stakeholders, and treat profit as an outcome.” As a result of his efforts over seven years, Best Buy returned to growth and its stock price increased 263%. General Motors CEO Mary Barra Starting as an 18-year-old co-op student, Barra has worked for GM for 41 years, including in frontline jobs as manufacturing engineer, factory inspector, and design engineer before she rose into management. Immediately upon becoming CEO, she was confronted with GM’s ignition-switch crisis, which caused 124 deaths and 275 injuries. She used that crisis and the urgency surrounding it to transform GM’s culture from a slow-moving bureaucracy that denied its problems to a customer-focused, transparent one that owned its challenges. She aligned employees around GM’s Triple Zero purpose of “zero emissions, zero accidents, zero congestion.” Barra challenges every employee to produce top-quality, safe vehicles — and she acts on her convictions. To emphasize the importance of safety to every GM employee, in her first year she committed to establishing a new industry standard for quality and safety, recalling 30 million vehicles. Next she created Speak Up for Safety, a program that rewards frontline employees for transparency. Barra also frequently meets with factory employees to determine whether cultural changes are taking hold and offers to help whenever possible. “If we want to change this elusive culture, it requires changing behaviors, because that defines the culture,” she says. Barra’s efforts have paid off as GM has restored its profitability in all but one of the past eight years. Asymmetric Holdings Founder Jonathan Lee Kelly Kelly, who grew up in a working-class Black family in Greensboro, North Carolina, worked on construction sites as a teenager. There he learned the value of a frontline job. Now that he owns his own food-service business, Asymmetric Holdings, he is creating a culture focused on treating everybody with respect and recognizing dignity in all work. His company has a history of diversity and inclusion: Women, underrepresented groups, and LGBTQ+ employees regularly move from frontline work into leadership roles both at and above the store level, with compensation materially higher than competitors’. When he first acquired a food-service chain, Kelly would leave dinner at home to work with the team to close a store. “The next morning, I was at a store and had to grab feces out of the clogged toilet,” he says. “If I ask people to do it, I have to do the same thing. I want my employees to be able to create a better way of life for themselves. I have people working for me who are thriving and have opportunities they never would have had in other organizations.” As these examples show, a mindset shift is occurring in corporate leadership, and the stakes are high for everyone involved. Most important, recentering corporate leadership on the front lines could help combat the rise of income inequality. In the 40 years from 1979 to 2019, compensation for frontline workers rose only 16%, while productivity increased 60%. In the same time frame, the top 1% of employees saw 160% growth in compensation. Thus the gap is widening between CEOs and frontline workers: In 2020 it was 351:1 compared with only 21:1 back in 1965. Meanwhile, the minimum wage in the United States remains stuck at $7.25 an hour, well below that in most European nations. These trends have left many people in the once-thriving American middle class bitter and angry as they struggle to survive. Public policy has a major role to play in addressing these trends, but corporate leadership can help. Research by MIT’s Zeynep Ton has shown that the way jobs are crafted can affect both productivity and compensation. In short, if companies listen more to frontline workers and invest in them, they’ll get more in return. Companies can benefit through improved employee engagement, reduced turnover, and increased customer satisfaction — which in turn will power revenue growth and higher levels of profit. Too many of my peers in the C-suite still don’t recognize this. Despite the examples I’ve cited, not enough executives have realized the importance of frontline workers and their potential to transform businesses. My challenge to them is simple: Get out of your office and spend more time on the front lines.

CEOs Have Lost Touch with Frontline Workers

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