The ServiceMaster Story: Navigating Tension between People and Profit

The ServiceMaster Story: Navigating Tension between People and Profit (ebook edition)

Copyright © 2020 Albert M. Erisman

Published by Hendrickson Publishers

an imprint of Hendrickson Publishing Group

Hendrickson Publishers, LLC

P. O. Box 3473

Peabody, Massachusetts 01961-3473

www.hendricksonpublishinggroup.com

ebook ISBN 978-1-68307-330-7

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the publisher.

Unless otherwise noted, the Scripture quotations contained herein are taken from the Holy Bible, New International Version®, NIV®. Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™ Used by permission of Zondervan. All rights reserved worldwide. www.zondervan.com The NIV and New International Version are trademarks registered in the United States Patent and Trademark Office by Biblica, Inc.™

Kind permission granted by Seattle Pacific University and the Institute for Business, Technology, and Ethics for the use of Ethix interview material.

Due to technical issues, this ebook may not contain all of the images or diagrams in the original print edition of the work. In addition, adapting the print edition to the ebook format may require some other layout and feature changes to be made.

First ebook edition — May 2020

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In this foreword, several former ServiceMaster leaders offer their perspective on the company and what it meant to them to be a part of it. Their perspectives here will set the tone for the rest of the book.

Our objectives—to honor God in all we do, to help people develop, to pursue excellence, and to grow profitably—have had a great influence on my development and the way I have sought to serve and live my life. For me, the ServiceMaster years were a continuing learning experience as I was mentored by those I worked with, served, and led. It was a time of rapid growth for me as a person and for our business. I am indeed grateful to Al Erisman for writing this book. He has captured both the spirit and soul of the company I knew.

C. William Pollard (1977–2003)

CEO (twice) and Chairman

It was early May of 1963. I was looking forward to my college graduation and my wedding in June. I needed a job. I talked to my senior class advisor and he gave me a good lead. It seems he had invested some of his savings with a man named Marion Wade. Mr. Wade had given him debentures that would later become ServiceMaster stock. I learned later that my senior class advisor had greatly benefitted from this transaction. He encouraged me to call a fledgling company called ServiceMaster. I called and was put in contact with Ken Wessner, a vice president with ServiceMaster.

He came to my college apartment to interview me. At the end of the interview I remember him saying not to look at this as just a job, but he thought it could be a career for me. I certainly didn’t think of it as a career then, but forty years went by and I retired in 2003. This book covers the period of time that I had the privilege of working at ServiceMaster.

The leaders of ServiceMaster—Marion Wade, Ken Hansen, Ken Wessner, Bill Pollard, and Carlos Cantu—were my bosses, my mentors, and later became my good friends. I look back on these wonderful years, realizing these men were not just good businessmen, but they were also loyal husbands, good fathers, and great life models for me, men of integrity, possessing great character.

When I started, I had no idea I would spend forty years in this great company. We were encouraged to recruit our friends who were looking for opportunity. Little did I know that working with so many of my friends as teammates, we would develop a way of life. Working hard, learning our jobs, and teaching and mentoring others taught us leadership.

It was an amazing journey and career from all aspects. One of the greatest unanticipated bonuses of my career was that many ServiceMaster customers became lifelong friends! I am so grateful for my career with ServiceMaster.

Chuck Stair (1963–2003)

Vice Chairman (retired)

Al Erisman has written not only a business book with lasting leadership, management, and business lessons of leading with purpose and passion, and a wonderful history of what was named the most respected company in the world by the Financial Times, but he has also written a love story of leaders who shared a love for God, the people they worked with, and the company.

Having spent twenty-five years with the company’s four tenets—To honor God in all we do, to help people develop, to pursue excellence, and to grow profitably—I came to know that these were not only a way of working, but also a way of living. With the starting point that all people are created in the image and likeness of God, it set the foundation of inclusion. When I left ServiceMaster and went on to lead other companies, I took these objectives with me, and they will remain in my leadership DNA.

Patricia Asp (1978–2003)

President, Compass Executives

This book is about real faith in the workplace. You’ll learn how people at all levels of leadership at a rapidly expanding Fortune 500 company lived out, every day, that company’s first objective: To Honor God in All We Do. The ServiceMaster story is unusual, because it finds that the key to success in business grows from the leaders’ commitment to live out their faith in the workplace.

Among the extraordinary people who led ServiceMaster through decades of double-digit growth, two men most impacted my faith and leadership: Marion Wade and Bill Pollard. I never met Marion Wade, but my life has been forever impacted by his quote (and commitment to the motto), If you don’t live it, you don’t believe it. His approach was much simpler and straightforward than so many of today’s faith-in-the-workplace seminars that spend a great deal of time on political correctness. When I served at ServiceMaster, there was no concern about political correctness—just a diverse group of men and women doing their best to live out the four objectives.

Bill Pollard’s investments in my life made me the man I am. He led me as a student when he was my church youth group leader. He mentored me during my non-ServiceMaster career and served as my boss while at ServiceMaster. Most of all, Bill has been my great friend. Bill taught me (and thousands of others) by being an example of what it means to honor God in the workplace every day. He is the most brilliant man I have ever known, yet Bill is humble and eager to teach others. He has always been an excellent example of real faith in the workplace.

I am not a prosperity gospel devotee, but I do know that 2 Chronicles 26:5 (KJV) played a big role in ServiceMaster’s success: "As long as he sought the L

ord

, God made him to prosper." If you are interested in living out your faith in your workplace, read this book! You’ll save time and money wasted on just another business seminar—and you’ll prosper from what you learn.

Rob Keith (1985–2001)

Former Group President, Management Services

Led Management Services at Aramark

after that division was sold (2001–04)

This book captures the essence of achieving success in the service business. ServiceMaster embodies what servant leadership is about, which was evidenced by the success of our CEOs in leading the company. They understood the work and the impact it had on the personal development and the lives of our associates.

While I never met Marion Wade, I did meet the Kens [Ken Hansen and Ken Wessner]. My interactions with them gave me a sense of the history and culture of ServiceMaster and the role the four objectives played in the growth and success of the company. I did serve under Bill [Pollard] and my father [Carlos Cantu], and it was evident they understood that the effectiveness of our four objectives was measured not only by the financial success of the company, but more importantly by the impact on people’s lives. They were role models in living what they believed.

ServiceMaster acquired the majority of the companies that comprised the consumer services business, with Terminix being the first major one. These acquisitions theoretically presented a challenge as to how they would be integrated culturally. In actuality, they all assimilated and thrived. What each of these businesses had were leaders who knew the work and the connection it had to the service worker. In addition, they were in some form or fashion already practicing the four objectives. It wasn’t a stretch to know what ServiceMaster was about.

I consider myself fortunate to have worked in the same organization as my father and to have witnessed close-up his vision, leadership, and practical application of our four objectives. I periodically run into current and former ServiceMaster associates, and to this day some will share with me a story about an event or encounter they had with my father and how that impacted their career and/or life. On a personal level, it gives me great pride to hear these stories as his legacy lives on. On a professional level, it proves that humble servant leadership stands the test of time.

I am grateful for my time at ServiceMaster and appreciative of all on the ServiceMaster team who helped shape me and my career.

Albert Cantu (1986–2006)

Former President and COO, Terminix International

Founder, Cantu Enterprises Holdings

The story will be told in the changed lives of people was a statement heard often at ServiceMaster. Fortunately, my life was one of those changed. I first met Bill Pollard during an interview in the fall of 1987. I came prepared to learn about the vision and strategies that would perpetuate the company’s great success and how my experience and skills might contribute. I also came needing to understand the company’s unique culture and whether I could comfortably fit in.

Bill’s very first question was whether I had ever fired anyone. It threw me off guard, which is one of Bill’s many talents, but it eventually led to a fascinating discussion about the company’s four objectives, and (as this book so vividly describes) the tension that sometimes existed in trying to keep them in balance. I heard several incredible success stories involving the development of people. But we also discussed ServiceMaster’s responsibility to provide appropriate returns to its shareholders, and how that occasionally required a painful parting of ways with individuals or businesses.

When I left ServiceMaster over twenty years later, I was committed to exploring opportunities both inside and outside of business, and to bringing the best of ServiceMaster with me wherever I went. Since leaving, I have served as pro-bono president and chairman of an inner-city Catholic high school in the heart of Chicago’s troubled South Side. I have found the best of ServiceMaster to be relevant to our efforts in faith-based education, as we strive to overcome economic challenges and develop six hundred young men to their full and unique potential.

What did I see as the best of ServiceMaster? It started but did not end with the company’s objectives and culture. Initially concerned about whether I would fit in, I ultimately embraced them and they changed my life. We made mistakes, but I do believe our batting average was relatively high as a result of our focus.

To Honor God in All We Do. Recognizing that in a world of gray, there is a fundamental right and wrong, and that leaders are accountable for doing the right thing, especially when it is hard and no one is watching. We are human and sometimes we fail. But failure is not hypocrisy, unless it is intentional.

To Help People Develop. Recognizing a responsibility to help people develop. Not just enabling them to do their best, but to be their best. A dramatic difference. Building on their strengths and developing their weaknesses. Providing them with the opportunities, tools, and mentoring they need to grow. I benefited significantly from the mentoring, opportunities, and support I received from all those I worked for, including Bob Erickson, Bill Pollard, Carlos Cantu, and Jon Ward; but also from those who worked with and for me, such as Mike Isakson, Scott Cromie, Ed Dunn, Deb O’Connor, Eric Zarnikow, Jim McMahon, and so many others. I am forever grateful.

To Pursue Excellence. Recognizing that in any service business (including education) relentless pursuit of excellence is a mandate. Success requires us to regularly exceed expectations. Good enough never is.

To Grow Profitably. Understanding that profits are the means that enable the pursuit of the end goals of the organization and its people.

ServiceMaster’s Best went beyond a strong culture. It included exceptional vision, which enabled several successful transformations of the company—from a franchised cleaning business, to a provider of housekeeping management services to hospitals, to the extension of management services to other functions and industries, and to the acquisitions-enabled expansion that helped ServiceMaster become the world’s leading provider of home services.

The company also demonstrated exceptional creativity, as illustrated by the change from a corporation to a master limited partnership, which was almost unprecedented for an operating company. This was very complex, but over time it saved more than a billion dollars that was reinvested in the business or returned to shareholders. Another example was the unique and complex structure that enabled the company’s game-changing acquisition of TruGreen and a large pest control business from Waste Management, in exchange for a minority equity interest in ServiceMaster’s nonpublicly traded Consumer Services subsidiary.

Finally, exceptional service delivery by well-trained and motivated service workers led by talented and committed operating leaders. Nothing was perfect, including ServiceMaster. There are things that I wish we had done differently or better. But overall, it was a remarkable company and a life-changing experience.

Ernie Mrozek (1987–2008)

President and Chief Financial Officer (retired)

The executive who is concerned only with current success is going to pass from one crisis to the next, until his head is reeling.

I did try to build a business that would live longer than I would in the marketplace that would witness to Jesus Christ in the way the business was conducted.

Don’t expect to build a super company with super people. You must build a great company with ordinary people.

If you don’t live it, you don’t believe it.

—Marion Wade

Managing multiple objectives is like pulling an elastic exercise strip to the point of tension. It’s hard to do, but you had better hold on to both ends. If you don’t, the tension will be released, and you will get hit on the head!

Anything worth doing is worth doing poorly—to get started.

Sometimes you need to move sideways, like a crab.

—Ken Hansen

I’ve never hired a gentleman because he was a Christian, and I’ve never not hired one because he wasn’t. But we do insist that a man be of high moral caliber.

"I am pleased, but not satisfied."

"We need to help a person be before we help them do."

—Ken Wessner

One should not expect or promote financial success or gain from seeking to honor God.

My leadership responsibility was not about me or my feelings. It was about what should be done for our business and for our people.

People work for a cause, not just for a paycheck.

The awesome responsibility of leadership. . . . A leader has only one choice to make—to lead or mislead.

—Bill Pollard

In order to be an effective leader, I had to be prepared to serve. That required being constantly willing to listen and learn from every relationship.

People develop when they catch a vision and take responsibility for making it happen.

Leadership must help anticipate future opportunities and prepare the organization for change.

—Carlos Cantu

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Can a business be successful if it focuses primarily on the growth and development of its employees? What if those employees are manual laborers? And what if that company is publicly traded and global? For many years, ServiceMaster forged this path, creating success for both the employees and the business.

From 1929 through 2000, five leaders of ServiceMaster built on the work of one another to create an unusual business, rooted in the value and dignity of its front-line workers. When most of the service business was competing on the basis of low-cost labor, with an annual turnover of 100 percent to 300 percent per year, ServiceMaster created a career opportunity for those who did the work—beyond a job and a paycheck.[1]

As the company grew from a few people working from a home office in 1929 to a $6 billion global, publicly traded company by 2000, each leader refined and sharpened what had come before. They pushed back on one another and worked collaboratively. The results, by many measures, were astounding.

Along the way, in 1985 and 1995, ServiceMaster was honored by Fortune magazine as the number one service company in the United States. In 1998, it was recognized as one of the twenty most respected companies in the world by the Financial Times. Its third CEO, Ken Wessner, was elected to the Health Care Hall of Fame—the ultimate in customer recognition—for his leadership in the housekeeping work ServiceMaster provided for hospitals. For a long period of time, the company set a target of promoting 20 percent of their front-line workers to leadership positions. In 1988 and 2000, Harvard Business School created two case studies about the company.

Between 1970 and 1999, the company experienced growth in reve­nue and profit every quarter and every year—which was the result of many decisions and details coming together to create this success. Understanding how this accomplishment worked requires understanding the details that matter, but there is a big picture conclusion. The success of these leaders was rooted in a set of principles that centered on serving God in the marketplace, on integrity, and on the dignity and worth of every service worker and the work that person performed. The leaders of this era saw their work as more than a job or a stepping stone to the next position; they saw it as a mission and a passion, and a response to a deeply held belief. The financial performance and customer satisfaction that ServiceMaster generated was a result of these commitments. Although some critics[2] suggested the workers were valued in order to produce these results, they didn’t seem to look deeply enough at what was really going on. This commitment often showed itself in unexpected ways for a company at this level of accomplishment.

Dave Aldridge had earned his MBA degree, and was working as a manager at ServiceMaster. Like other leaders, he participated in We Serve days, during which senior company leaders worked as front-line employees to experience the physical and emotional experiences of those they led.

The hospital was opening a new wing, and I was helping to prepare the birthing suites. I was on my hands and knees cleaning baseboards. An excited group of nurses who would be serving in this new area walked through. As they walked by, I looked up and said hello, and no one responded. I wanted to cry out, Hey, I have my MBA, and my wife is a nurse! But the reality was, no one cared or thought I was worth acknowledging.[3]

How did this service help Dave and other such leaders, and why would ServiceMaster require this of its executives? For many companies, managing labor-intensive work is simply a cost issue. ServiceMaster, however, wanted those who were leading people to understand firsthand what the work was like and how it felt to be treated as if they were invisible. It shaped their management.

Dave went on to say of this experience, I have learned about the ‘heart’ of our business and about the feelings and emotions of the routine and mundane that are often involved in serving others.[4] This was not just a lesson in humility but was deeply rooted in what the company was trying to do.

In addition to knowing what this kind of service work is like, the company researched how to create a better work environment. It is rare that a company like this has a research department, but ServiceMaster wanted to find the best techniques for performing tasks and the best tools for the jobs. The company also wanted to support its employees in finding meaning and purpose in their work. At the hospitals, for example, they would bring doctors and nurses in to talk with their service workers, helping them to see the connection between their cleaning work and the health of the patient.

Equally unexpected is James Heskett’s story. In the mid-1990s, he was a Harvard professor, visiting ServiceMaster in preparation for writing a case study on the company. He wrote:

At one Board meeting, the case writer observed Chairman Pollard, having spilled coffee on the boardroom carpet prior to the meeting, down on his hands and knees cleaning up the mess with chemicals brought from the laboratory. Just as surprising, directors in conversation over their continental breakfast hardly appeared to notice. It was the ordinary or expected thing at ServiceMaster for a leader to be serving.[5]

From early in the company’s history, successive leaders laid out what they thought was the right way to run a business. They believed strongly enough in this mission that they were not distracted by short-term pressures. That started with seeking to understand both the dignity of the workers and the dignity of the work they did. This included servant leadership. Heskett, who wrote extensively on the service industry, said that ServiceMaster has broken the cycle of failure, and has basically reengineered jobs, provided training to people, and attempted to deliver a level of self-esteem that many workers have never had in the past.[6]

To be clear, early ServiceMaster leaders did not set out to break the cycle of failure in the service industry. The foundation, laid early in the formation of the company, was more simply to value the people because it was the right thing to do. While achieving these results in the service industry is unprecedented, it is clear that what ServiceMaster accomplished is not limited to this industry. When people are part of a company that recognizes each employee as a person, rather than a unit of production, they respond positively. Supporting meaning and purpose for the employee brings ownership and passion to the work, which results in greater customer satisfaction. The lessons from this story can offer valuable insight for any business.

The exact way ServiceMaster went about its mission is specifically due to those leading the business. Starting from a foundation of Christian faith, these five leaders of ServiceMaster were rooted in an understanding of the value and dignity of every person and a commitment to the highest level of integrity. This is also what helped them separate foundational principles from practices that might need to be adapted as circumstances and business climates changed. This rootedness allowed them to hold on to the core, even when times became turbulent.

This book traces the history, challenges, and the developing understanding of what it is to run a company rooted in the value of the individual worker. Each leader built on what the previous leaders had done, adapting the company along the way.

An amazing part of the story is the way these successive leaders added something to the company in just the right order. An ethical foundation for the business, along with an idea for the business, was laid first, even before building a strong financial foundation. Then the business structures were put in place. After the business structures were in place, processes and systems were added to allow the company to operate efficiently and in the right way. With this platform, the company was able to achieve significant growth through the acquisitions of other companies, adding to the three layers of this foundation. Over the period of 1929 to 2000, the company followed this path. At each stage, the various leaders adapted to changes in culture and the economic environment, refining what had gone before while also building upon it.

There was no grand plan for the ServiceMaster leaders to build the company the way they did. Each successive leader connected a deep understanding of what had gone before with their own insights and skill set for achieving further growth. In addition, they found a fascinating way of operating through this growth. Each new leader was empowered to do new things, but he was also challenged to remember what his predecessors had done earlier. They referred to this unique way of working together as shingles on a roof. Overlapping, covering, encouraging, and challenging occurred as previous leaders stayed engaged in the ongoing work of the new leader. It took significant humility for each of them to build while continuing to listen.

Cumulative Effects of the Different Leaders

In 1929, Marion Wade founded the company. Coming out of the Depression, he simply needed a job and an income for his family. He had only an eighth-grade education, but his practical foundation in ethics caused him to think about business in a way that always directed him to do the right thing. He had been, and continued to be, a front-line worker through much of the early stages of growth, and he carried this experience with him for the rest of his life. He also was an inventor, and his discoveries provided both the ideas and the discovery mind-set that continued as a foundational element of the company. He adopted the goal, To Honor God in the Marketplace. Rooted in his own Christian faith, it meant to be accountable beyond himself to do things in the right way, to treat people in the right way, and to value every person made in the image of God. He became known for his statement, If you don’t live it, you don’t believe it, reflecting his goal of connecting words with actions. His story and work are developed in chapter 2.

Despite all of these significant contributions to the company, Wade didn’t have strong financial skills and the company could not grow without such skills. Wade recruited a man named Ken Hansen to join the company in 1946 and fill in what he was unable to do. Hansen also came without obvious credentials, since he had studied philosophy and theology and was an interim pastor when he was recruited. But he had a knack for business that allowed him to structure and grow the business, while his faith and his training allowed him to interact on a very deep level with the ethical and philosophical foundation that Marion Wade had built. Ken led the process of incorporating and naming the company, Wade, Wenger and Associates at first.

Ken put the financial systems in place. In 1962, he took the company public after he had been named CEO and Marion had changed his position to chairman. The company grew rapidly, and Hansen went back to the University of Chicago to get an MBA so he could acquire some new tools for his challenging work. In 1957, the company was at about $1 million in revenue when Ken took the lead, and it grew to $70 million by the time he stepped back from the CEO role in 1973. Ken had a bias for action and frequently said, Anything worth doing is worth doing poorly, to get started. Practically oriented, he didn’t want to spend too much time studying, but rather learn quickly when things didn’t work. In our modern tech world, this is called fail fast. His story and work are developed in chapter 3.

Working together in a collaborative fashion, Wade and Hansen recruited Ken Wessner to join the team in the mid-1950s. Wessner quickly demonstrated a skill for processes. He developed and created a structure around the business of managing the cleaning of hospitals, which grew to become a substantial part of the overall business by 1973 when he became the third CEO. He also created training and educational programs that were supportive of both the person doing the work and aspiring leaders.

But his processes were not at the expense of people. In fact, he deeply owned both the ethical and business foundations of his predecessors, working closely with Wade and Hansen. He expressed several key things that had been done in practice but had never before been clarified. One was his frequent statement about people in the organization: Training is not so much about what we want people to do, but rather what we want people to be.[7] He also clarified the four objectives of the company that had been lived but not written down before:

To Honor God in All We Do

To Help People to Develop

To Pursue Excellence

To Grow Profitably

He loved to talk about the inherent tension between these objectives that forced discussion and creativity toward finding good solutions to any issues of the company. Under Wessner’s leadership, the company revenues grew to $700 million. Ken Wessner’s story and contribution to the company are the subject of chapter 4.

In 1977, Ken Hansen and Ken Wessner together hired Bill Pollard, a lawyer by training and practice, as executive vice president. Bill, like his predecessors, brought a strong Christian faith into the work. He quickly owned the four objectives, speaking about them with Wall Street leaders within a year after joining the company. But since he lacked experience as a front-line worker, he spent his first six weeks at ServiceMaster performing cleaning tasks such as mopping floors.[8] Urged by Ken Wessner to help the company find its next growth curve when Bill became CEO in 1983, he used his legal skills to begin acquiring other service companies. Bill’s unique skill set made this path possible, as did the strong foundation built by the earlier leaders. It became his passion and mission to provide a work environment for other service workers, so that they too could see dignity and value in the work they did. The acquisitions also created the imperative to train and develop the people in acquired companies, from front-line workers through leaders, in this new way of operating. By this time, Marion Wade had died, and Bill worked closely with both Ken Hansen and Ken Wessner through his leadership period. He frequently made the statement, People want to work for a cause, not just a living. By 1993, ServiceMaster was a $3 billion global company. The story of his leadership is developed in chapter 5.

In 1986, the first major acquisition that Pollard made for ServiceMaster was Terminix, where Carlos Cantu was the CEO. Carlos was a thoughtful leader, and he worked closely with Bill through the years. Carlos saw the value of the ServiceMaster way early in the acquisition process, but grew over the years in his understanding and