Perspectives from the Public, Private, and Non-profit Sectors
An Interview with Rod McCowan

Interviewed by Pamela Gerloff

MTM: You have an interesting history with regard to money and leadership. Would you talk a little about that?

McCOWAN: My own socio-economic journey has profoundly shaped my relationship to money and leadership. I grew up in a low-income home. My mother ran away from the cotton fields of Louisiana when she was 13 years old. I never knew my biological father. I had two stepfathers, both of whom were enlisted men in the Army. I was the first person in my family to graduate from high school, let alone get the chance to go to college. By the time I was 20, I was a father and had a family. I spent the next two decades, from ages 20-40, completing three academic degrees while working to support my family and achieve financial freedom.

One of my overarching objectives was to achieve sufficient financial independence to ensure that the people I felt most responsible for in the world-my wife, children, mother, and sister- would be taken care of whether I lived or died. My other primary objective was to accumulate the capital and skills I believed I needed to make the kind of contribution I hoped to make to society.

I have always had a strong desire to make a difference. However, I have also always gravitated toward private sector leadership because of my need to provide for my loved ones, and because of my desire to contribute to society from a position of strength and independence. Only now am I approaching the point of being completely free to fulfill my ultimate dream of making the kind of leadership and service contribution to the world that I want to make.

MTM: So you have actively pursued wealth in order to be able to lead more effectively.

McCOWAN: In a capitalist economy such as ours, the reality is that money is the ultimate medium of exchange. This fact, of course, has many consequences. One is that wealth profoundly influences who rises into positions of leadership in all sectors of our society. It also affects the character and decision-making of leaders once selected. I believe that, in some ways, it is easier for people with means to withstand the temptations and pressures that individuals necessarily confront once they are in positions of leadership in any sector. I also think that individuals with means have a better chance of remaining true to their original intentions for service.

MTM: Why do you think that?

McCOWAN: Early in my career I was selected for a White House Fellowship and, as a result, had an opportunity to meet and observe hundreds of leaders from all sectors of society and from all types of socio-economic backgrounds. Working that year as special assistant to the head of the U.S. Agency for International Development also allowed me to witness firsthand the relationship dynamics between donor and recipient nations throughout the world. I concluded that: first, at the individual, organizational, and national levels, money truly is power. Second, in order to position myself to make the kind of difference I wanted to make, it would be prudent to first achieve financial independence. It just seemed to me that the politicians and other leaders who spoke with the greatest integrity and freedom were financially independent. They didn't need anyone else's money, so they could speak and lead according to their consciences.

MTM: But can't we all point to examples where that isn't the case?

McCOWAN: Of course it goes without saying that character will always trump money when it comes to one's ability to lead effectively. I believe money is an important factor, but I do want to allow for the Nelson Mandelas and Mother Teresas of the world. Leaders who have very strong moral centers will always be able to be effective, regardless of their financial situation. And hard-nosed capitalists who care only about money will not care about it any less just because they have more of it. However, my observations led me to conclude that, all other things being equal, the likelihood that I would be able to resist special-interest pressures would be greater if I first became financially independent.

MTM: Would you say more specifically what those pressures are that you have observed or experienced in the public sector?

McCOWAN: It is well known that in the public sector special interests have enormous influence, especially on elected politicians, where campaign donors expect favors and special access in return for their contributions. However, I believe the influence of money is even more profound and pervasive than that. It seems to me that all policy debates are significantly shaped by wealth in some way. But I guess none of this should come as a surprise: after all, the founding fathers designed our democratic capitalist system so that the landholders and merchants (i.e., those with wealth) would have the greatest influence on our government.

MTM: What about pressures in the private sector?

McCOWAN: The leadership challenges and pressures that arise from money may appear to be different in the private sector, but under the surface, they are similar. The primary difference is that, in the private sector, the most powerful "special interest" seeking to influence corporate leaders-namely, shareholders-has the legal right to do so. The main similarity stems from the fact that in both public and private sectors, money is used aggressively to motivate and shape human behavior. Corporations, of course, are much more transparently able to offer their members significantly higher levels of compensation and opportunities for wealth accumulation than their public or nonprofit counterparts.

The shadow side of this is that when you work in a corporation, the high compensation can cause you to experience a subtle but powerful temptation to adopt its cultural norms, rather than hold the corporation or yourself to higher ethical standards. You're tempted to honor the rewards you are receiving by demonstrating high commitment to the particular corporate tribe to which you belong. This is not necessarily a bad thing-in fact, most companies work very hard to achieve that kind of loyalty. And, in highly ethical companies, you aren't likely to run into problems. However, in companies where the ethical standards are not so high, accomplishing the business mission and having loyalty either to the company, your immediate team, or shareholders, can become more important than allegiance to universally accepted moral principles. Additionally, of course, the opportunities to amass extraordinary levels of personal wealth can distort the judgment of individual leaders and cause them to make continued on unethical choices in the pursuit of personal gain.

MTM: Some people who aren't in that culture wonder why it gets such a hold on people.

McCOWAN: I've talked to a number of people who have never been in the corporate game and who can't understand why business leaders who have accumulated a certain amount of money aren't able to say, "enough is enough," and stop chasing ever-higher levels of net worth. But here's the problem: sometimes, by the time a business leader reaches that point, he or she can be so caught up in the game and the competition for success, or can have so thoroughly absorbed the values of the corporate culture, that there is no personal sense of where the line is anymore.

Individuals who are successful at playing the corporate leadership game tend to be Type A, alpha personalities with extremely competitive temperaments. If you are not careful, before you know it you're not looking at how you compare to the 99.9 percent of the population you have already passed in income; you are focused instead on the .1 percent of those who are still ahead of you. Relatively speaking, compared to that reference group, you may still feel "poor." Additionally, because of your competitive temperament, it can be difficult to just stop playing the game in the same way that professional athletes often find it difficult to walk away from their sports.

Furthermore, one of the realities of the corporate game is that the amount of money you make is in fact one of the most reliable indicators of how much the organization values your contribution. You may have a fancy title or a big office, but you quickly learn that if you really want to know how you're doing, you have to look at the relative value of your compensation package. It tells you your true internal and external market value. That is why, when an executive search firm calls you looking for an executive for one of their clients, one of the first questions the interviewer will ask you is: What is the value of your current compensation package? If your number is too low for what the client is willing to pay, it tells the search firm that you probably don't have the qualifications to fill that particular role. Money is therefore a key indicator in signaling the type of leadership opportunities for which you are ready to compete. Given that reality, you can understand why people who are ambitious and competitive by nature would want to drive their compensation number as high as possible.

MTM: In such an environment, what happens when, as a leader, you're confronted with ethical questions? What do you do when you have to choose between "playing the game" and following an ethical course of action?

McCOWAN: I've been in that spot a number of times. Even in an ethical company, reasonable people may disagree on ethical issues. In such cases, if you're not the CEO, you face a choice: Do you feel so strongly on that particular issue that you can't acquiesce to the CEO's wishes or the decision of the team? When that happens, I ask myself, What can I do to move this in a different direction? Can I persuade others to my point of view? If I conclude that creating a different outcome is not possible, or I've tried and it didn't work, then I need to decide if it's time for me to leave the company. Or I may decide that this is a battle I'm going to lose and I let this one go for some greater good. Maybe I've won three out of the past five battles. These decisions are very personal. The choice you make has to do with which choice will allow you to look in the mirror and feel O.K. with yourself. It's why I say that you need to develop a strong ethical sense before you get into the business world. Every decision has an ethical dimension to it. If you have a heightened ethical sensibility and the ability to reason your way through an ethical problem, you will have the tools you need to navigate the territory.

MTM: Would you also talk about the pressures of leadership and money in the nonprofit world?

McCOWAN: At first glance, you might think that leadership in the nonprofit world would be all about pursuing a social mission and making a difference. Yet, I challenge you to show me a topnotch, nonprofit CEO who doesn't spend at least 50 percent of his or her time figuring out how to get more money from wealthy people or organizations. Donations are the lifeblood of most nonprofits, which is why fundraising is such a highly valued skill.

On a more personal level, the opportunity cost in terms of personal compensation for leaders in the nonprofit sector is high. Generally speaking, an outstanding nonprofit leader could be making significantly more money in the corporate world, yet his or her job is just as difficult as a comparable job in the private sector. Social pressures on compensation in the nonprofit world have essentially required those who work there to forsake equitable compensation in order to prove they are working for altruistic reasons. They're trapped. They're trying to do the right thing, have basically taken a vow of asceticism to pursue a noble mission, and then have to spend much of their time chasing after people who do have money to get contributions so they can help their organizations fulfill their mission. This situation heightens the leaders' dependence on the continued good will of those with deep pockets, and places them in a profoundly subordinate relationship. Exceptions, of course, may be leaders who are already wealthy themselves.

MTM: Are you saying that the nonprofit world revolves around money more than it often appears?

McCOWAN: Yes, and that is why I find it unfair, and perhaps a bit lacking in integrity, when individuals and organizations in the nonprofit sector criticize or disdain the relentless profit orientation of the private sector. The truth, of course, is that most nonprofit funding comes either from some form of commercial activity, or from some source in the private sector. Even in instances where the donor gives from inherited wealth rather than from wealth they themselves created or earned, the inherited money was originally made in the private sector.

All of this brings me back to the fact that while people of good heart and moral conscience might not like everything I've said, for the foreseeable future, this is the world we live in. Money plays an enormous role in our society and exerts extraordinary and inescapable pressures on leaders in all three sectors.

MTM: How, then, do you deal with those pressures?

McCOWAN: For me, the fundamental question is: Are you going to reject the capitalist game and become so estranged from the system that you allow yourself to become marginalized, thereby reducing your potential opportunity to do good in the world? I don't believe I personally will be able to change the fundamental nature of the game. Some people may feel compelled to try to change the democratic capitalist system, but that's not my calling. Moreover, I would argue against attempting to do so because, in my opinion, humanity has yet to come up with a morally superior form of political economy.

Instead, I choose to pick my battles and to choose carefully the sectors I want to play within to achieve specific objectives. I ask myself, How can I take the hand I have been dealt (both good and bad) and work within the rules of the game and the rules of each sector to effect as much social good as I can? I think that whether you're at the top of a corporation, an entrepreneur creating your own corporation, the leader of a nonprofit, or an elected politician, the question is essentially the same: How can you render unto Caesar what is Caesar's and unto God what is God's? so to speak.

MTM: With Caesar representing the world that revolves around money and God representing a higher value and purpose?

McCOWAN: Yes.

MTM: How do you do that?

McCOWAN: The answer, for me, lies in the biblical parable of the talents. Each of us receives a set of gifts and we are called to use them well (to the best of our abilities and toward good ends). I believe that at the end of our lives, God-or Allah, or the Force, or whatever you choose to call the divine power in the universe-will measure each of us and what we did with our lives using a factor that I like to think of as "degree of difficulty." In Olympic diving competitions, the judging factors in the degree of difficulty of the dive. If entrants attempt a difficult dive and do O.K., they will fare better than those who perform an easy dive very well. As I see it, the question for each of us is: While accounting for the degree of difficulty you faced, did you optimize the talents and potential for good you were given? A second, related question is, Despite whatever flaws you may have had as a human being, were you consistently trying to do good-trying to do the best you possibly could?

MTM: It goes back to the old adage: To whom much is given, of him (or her) much is expected.

McCOWAN: Exactly. So, for example, the more money I have, the more good I can do through the allocation of capital. The less money I have, the less I'm expected to accomplish based on the pure allocation of capital. Similarly, the more talent I have, the greater good I'm expected to accomplish with it. That says to me that a woman born into a village in Rwanda who daily encounters a daunting matrix of hardships and constraints has as much opportunity to do good as Bill Gates does, with all his money and privilege, once you take into account their individual circumstances and respective degrees of difficulty. She may have the potential to have a profound impact on her immediate family and others in her village. He, of course, has the potential to exercise a different kind of influence in a much larger sphere.

MTM: You seem to be suggesting that having more money gives you a larger sphere of influence to work in. But it seems to me that there could be a problem in seeking to accumulate money so that you'll have it to do good. What if you die before you get to that point?

McCOWAN: There is certainly that risk whenever you delay doing good for whatever reason. I guess it comes down to a very personal decision about what resources you believe are necessary and sufficient to prepare you to do the kind of good you would like to do. How much education, training, money, experience, and other types of preparation will it take for you to succeed? Your answer can only be determined on a case-by-case basis, in the face of uncertainty, with incomplete information.

Not long ago this truth was brought home for me when I was diagnosed with prostate cancer. It caught me completely by surprise because I had always worked hard to stay fit and, at that time, was in the best shape of my life. I had surgery and am now cured, but the message, for me, was: Your life can end at any moment. Therefore you have to be an effective steward of your time, talents, and precious life essence. Don't waste time engaging in endeavors where there is not a complete congruence between your mission and values, what you want your legacy to be, the work you're doing, and the organizations with which you're working.

MTM: How has this affected your pursuit of wealth and leadership?

McCOWAN: It has helped me identify and define the types of leadership roles I will choose to assume going forward. For example, recently I was talking to the head of a major nonprofit that sponsors educational programs for students in inner cities about serving on his board of directors. As we talked, I realized that current board members didn't really have a strong impact on the program or the organization. I decided instead to work directly with the kids on a volunteer basis to motivate them and help with career development and coaching. I have also reduced the amount of board work I do, in general. I am in the process of selecting just a few boards to which I will give my attention, so I can concentrate my efforts more effectively.

This past year I was able to take some time away from the corporate game. This gave me a chance to get very clear about my own personal sense of calling. My goal now is to find leadership opportunities that are more directly aligned with my calling and that simultaneously allow me to continue taking care of my family. I believe my purpose in life is to help individuals, teams, and organizations identify their core purposes, and put together powerful strategies for realizing those purposes and fulfilling their dreams, regardless of the obstacles they might face.

MTM: In a few words, what would you say is the main role of a leader in all the sectors?

McCOWAN: I believe that whatever sector you're in, the charge of leadership is essentially the same: It is to harness for good the talents, imaginations, and motivations of the human beings that make up the organization. The leadership question is, How do you maximize the good you can achieve?

Rod McCowan's private sector leadership experience includes working as the executive vice president for human resources and corporate communications worldwide at Herman Miller, Inc. (a 1.8 billion- dollar office furniture company), and most recently, as president of Herman Miller East Asia. In the public sector, he was chosen in 1991 as a White House Fellow and served in the first Bush administration as special assistant to the administrator of the U.S. Agency for International Development (USAID). He later served as an assistant secretary of education in the Clinton administration, where he was responsible for general management and organizational strategy at the U.S. Department of Education. McCowan's previous nonprofit leadership includes service on the boards of Episcopal Divinity School and the Terry Sanford Institute for Public Policy at Duke University. A graduate of both Yale University Divinity School and the John F. Kennedy School of Government at Harvard University, he spent his early career working in marketing and information systems consulting with IBM, and as an investment banker with Merrill Lynch Capital Markets.

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