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The tao of Paul Polman

Unilever's CEO on trying to bring purpose to business, being 'ashamed' of his pay and having the company's 'simplest job'

Unilever CEO Paul Polman in Washington, D.C., on May 14, 2015 (Photo by The Washington Post.)

What do Ben & Jerry’s, Dove, Hellmann’s and Lipton all have in common? Each is among the 400 brands owned by Unilever, an Anglo-Dutch company run by CEO Paul Polman that brought in more than 48 billion in revenue last year.

When Polman took over in 2009, he made several bold decisions for the consumer goods giant. Among them was a major commitment to sustainability. He vowed to cut Unilever’s environmental footprint in half by 2020, and to double the size of its business at the same time. Neither of those goals is particularly easy when 2 billion people around the world already use your products every day.

To focus on these long-term objectives, Polman also did something rare—to shareholders’ shock, he announced his first day on the job that he was going to stop issuing earnings guidance and stop full quarterly reports. He has also been outspoken about the excess of CEO pay, telling The Washington Post that he is “ashamed about the amount of money I earn.” For 2014, the value of his pay package was estimated at close to 10 million.

Though some analysts have been disappointed the company’s growth hasn’t been faster, comments like these have bolstered Polman’s reputation as a global business leader with a conscience. He spoke with The Post about his leadership style, his approach to managing Unilever and the motives behind several of his decisions that have run against the grain. The conversation has been lightly edited for length and clarity.

What would you say was a key to your career success, and how you reached the very top spot rather than plateauing at a mid or even senior level?

The first question is always: What is success? I think the most important thing is to achieve what you set out to achieve. Just being a CEO in itself is not success. I would not relate success to a title or a position.

My career has been a level of serendipity all along. I've never planned anything out more than a few years. All the places we lived—the 12, 13 countries—and the companies I worked for were a combination of circumstances.

What do you think the ideal young job candidate looks like today?

This world is changing enormously. In any position in the company, including mine, you need to work very hard on learning new skills every day, but you also need to unlearn some of the old skills from the past. So we look for people who have the agility to do that and a certain level of resilience, curiosity.

But above all, when I interview people—and I try to interview at least one or two a week to stay close to this process—I look at their values. I always say that the best chance of success is if the individual's values are aligned with the corporate values. Then people feel at ease. They fit in. They are accepted. They also strengthen the values of the company, and they tend to be more successful.

Less than 30 percent of people are happy at work nowadays, which is a frightening statistic given the time that we spend there. And often that is because the values that you permeate at home with your family are not the same as the ones at work. That's sad, because it means you either have to wear a mask or you have to be a good actor, and that's going to catch up with you at one point in time. People disengage from corporations, big corporations especially.

"There's no reason you are special because you happen to have this job," the Unilever CEO tells The Post. (Video: Lillian Cunningham, Jayne Orenstein, Randolph Smith and Julio Negron/The Washington Post)

You try to interview one or two people a week. Is that even for entry-level jobs at Unilever?

Oh yes, at any level. We only have five layers, actually. I was just in the Netherlands at a university last week, and I interviewed people myself. It's the same reason we often have these little focus groups or dinners or lunches with people in the company at all different levels. You have to be connected. We're all working for the same course. It's not that one job is more or less important.

I probably have the simplest job of them all, and that's why it's important to reach out— because I basically get paid to make sure they are successful.

That's rare, for a global CEO to interview entry-level candidates.

Well, it keeps you young as well, and it makes you realize how fortunate you are that at one point in time you got hired. You see the bright young people coming in. With our qualifications at that age, we would have never been hired today. I'm a little bit lucky that I was ahead of that trend. There are some awfully smart people out there now.

You say workers often feel like they put on a mask to do their jobs. Do you think many CEOs also wrestle with that feeling?

You see how many companies are searching for purpose, and how many have a short existence. The average length of a U.S. company is now 18 years. The average length of a CEO is less than four years.

Many companies have difficulties attracting people, for example, and you have to wonder why. Is it because of salary? Often not, because anybody can ultimately pay what needs to be paid.

It's not just about making money, especially for the millennial generation. They want to make a difference in life, so they look for companies that have a strong purpose. This is a big challenge in many companies. Trust is low in business. Trust in CEOs is even lower. Many companies in the private sector are disappointing the citizens of this world by manipulating LIBOR rates, foreign exchange rates, putting horse meat instead of beef out there, or thinking that it's totally acceptable to make a t-shirt from a collapsing factory. Increasingly, people don't want to work for these companies anymore, and consumers don't want to buy from them.

We have 175,000 people who are directly on our payroll. Our total salary bill, everybody included (myself as well), is less than the bonuses that were just paid to the financial industry in London. And I'm just talking the bonuses.

The financial industry talks about not being able to attract talent, and how they’re worried about all the restrictions on that compensation. What they really should be worried about is communicating and lifting the purpose for that industry. If that purpose is strong enough, you'll be able to attract the right people.

Do you think companies are smartening up to this?

We’re looking ourselves to strengthen and continuously work at that. But, for example, if you work at an insurance company that sells premiums you wouldn't even sell to your wife or your mother, how happy would you feel to work there? It's going to eat you up over time. It might last a few years, but it doesn't attract the best people, and it certainly doesn't create the energy and engagement that you need to be a long-term performing company.

I don't have that many worries, but my biggest fear is that we at one point in time will not be able to attract the best and brightest. I don't worry so much about the business, the strategy. If we are able to continue to attract the best and brightest, I know that they will ultimately figure out how to run a company like this in a very tough environment.

One of the things you famously did was stop issuing guidance and full quarterly reports, so you could shift the focus to long-term goals. If another CEO came to you tomorrow and said, "I would love to do this too," what advice would you give on how to make transition?

The issues we are trying to attack with our business model and that need to be solved in the world today—food security, sanitation, employment, climate change—cannot be solved just by quarterly reporting. They require longer-term solutions and not 90-day pressures.

I saw a recent study that 75 percent of U.S. chief financial officers would take the wrong decision in the quarter over missing their guidance. You can see how that leads companies to a shorter existence or to making the wrong decisions. In the latest survey of the World Economic Forum, a majority of CEOs said the pressure they’re getting from the board is more about the short term than the long term. So the challenges are there when you do this.

The first day I became CEO, I stopped guidance. I figured the first day they hire you, they're not going to fire you. The share price went down 8 percent, because people thought there must be bad news coming. But I figured if we continued to do the right things for the business, the ultimate valuation would be what it should be.

And interestingly, if you don't give guidance, or quarterly reporting, then also you tend to attract the right shareholder base. You get into a better rhythm to develop the right long-term relationships and the right communication.

What's the single biggest leadership frustration you have today?

Oh, I don't have any frustrations. It sounds a little silly, but life is too short for me. I don't worry about all the things that happen, I just think about what to do with them. I work a lot with blind people in my spare time outside of Unilever, and I count my blessings every day. I'm very fortunate to be where I am in this position, and educated, and free to do what I want. So there are very few things that I worry about.

What if I asked it a different way: What’s a challenge you spend a lot of time thinking about?

Obviously the world is moving fast, so you really have to think about the leadership you need in 10 or 15 years, which is quite fundamentally different than perhaps the leadership we've had until now. One of the reasons why you see such a short tenure of CEOs is perhaps because a lot of people were not prepared for this increasingly volatile, uncertain and ambiguous world.

My own fear, if I have one myself, is a fear of being obsolete. This is a world that changes very fast and one of the main human desires is to belong to, to be part of, something. It's probably one of our greatest needs next to oxygen. My biggest fear is that I become useless or less useful by not being up to date—be it with technology, be it with changing consumers, be it with changing global situations. You continuously have to have a little level of paranoia that forces you to set the bar higher every day.

Has your own leadership style changed over the years?

Absolutely. When my father died, I started thinking about all the things he taught me. Things you experience in life—sometimes pleasant, sometimes not—form part of your character. That is a journey we go through until the day comes.

I've never been the CEO before. I certainly don't think I was well prepared, but for some reason I ended up getting this job and it's been an enormous learning curve. If I look at my initial attempts to try to do it right versus what I do now, they’re obviously different.

The moment you discover in life that it's not about yourself, that it is about investing in others, I think you're entering a steadier state to be a great leader. Because above all, I think the main quality of a leader is to be a human being. There's no reason you are special because you happen to have this job or this office or these responsibilities.

What is something in particular your dad taught you?

My parents grew up in the war, and my father never went to school because of that. I have six brothers and sisters, and he insisted that we would go to university. He had two jobs his whole life, and probably literally worked himself to death, so one of the things I definitely learned from him is not to be too lazy.

One of the things in my part of the country we say is: "Don't forget your house number." It means don't forget where you came from and keep your feet on the ground. I come from a part of the Netherlands where people stay relatively modest and normal.

You froze your pay when you started at Unilever during the recession. You also have criticized executive compensation. Are you comfortable with your own pay package, or do you think you shouldn't be making the large amount you are?

Definitely the latter. I've never earned so much. I never thought I ever would. When I came into the company, I never asked for a salary or negotiated my salary. I've never asked for a job in my career. I've always just worked hard and trusted that the system around me would do the right things. When I came to Unilever, I felt that offer was already rather generous, and since then I've never changed it. And whatever it is, by the way, it's always too much compared to the people who work very hard as well and don't have these opportunities.

People at our level shouldn't be motivated by salary. If you would pay me double, I'm not going to work twice as much, because I'm already probably maximizing my time available. And would it change the way I do things? Not really, because I try to do the right things for this company for the longer term. So, yes, I am fortunate, and I am sometimes ashamed about the amount of money I earn. It's important that you then put it to good use. That's the minimum you can do.

I've often said that even if I didn't get paid, I would still do the job. I'm still ashamed when the topic comes up. I always feel embarrassed, to be honest. The board is trying to change the compensation and move it up, and we have steadfastly refused to do that—not for heroic reasons, but I think there has to be some sanity.

It is affecting the behavior of CEOs, where people think if they don't get a salary increase, or if they don't earn a lot of money, they are not being seen as good-performing CEOs. This peer pressure drives dysfunctional behavior.

I would not advise regulating the market. I think it's much more powerful that we just set the right example.

Why does the board want to raise it? Just because they think that’s what they are supposed to do?

Most companies have salary policies that say, “We want to attract the best CEO, so we need to be in a top percentile,” and then you get a race to the top. That is really what has happened over the last decade or two. You have to break that. You don't have to just go with the waves. I've always felt, as a philosophy in life, it's better to make the dust than eat the dust.

You never win that battle. As long as you have a billion people who go to bed hungry not even knowing if they’ll wake up the next day, this discussion is difficult. All you can do is be sure that you don't make it worse and that you change the trend—and hopefully that permeates to others in the industry as well.

What's your best piece of advice?

It is not about yourself. If you are fortunate enough to be in our position, you probably belong to the 2 percent of the world population that is well educated, financially independent, can do what they want, can live and work where they want. If you belong to that 2 percent, then it is your duty to put yourself to the service to the other 98.

Watch the video with Paul Polman:

Video: Being CEO doesn't make you special

Read also:

Shareholders are less and less happy about JPMorgan's executive pay

Tim Cook tells graduates to find work with meaning

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