from the Public, Private, and Non-profit Sectors
An Interview with Rod McCowan
by Pamela Gerloff
You have an interesting history with regard to money and leadership.
Would you talk a little about that?
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.
So you have actively pursued wealth in order to be able
to lead more effectively.
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
Why do you think that?
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.
But can't we all point to examples where that isn't the
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.
you say more specifically what those pressures are that
you have observed or experienced in the public sector?
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.
What about pressures in the private sector?
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.
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.
Some people who aren't in that culture wonder why it gets
such a hold on people.
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.
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
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.
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?
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.
Would you also talk about the pressures of leadership and
money in the nonprofit world?
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.
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.
Are you saying that the nonprofit world revolves around
money more than it often appears?
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.
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.
How, then, do you deal with those pressures?
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
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
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.
With Caesar representing the world that revolves around
money and God representing a higher value and purpose?
you do that?
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:
for the degree of difficulty you faced, did you optimize
the talents and potential for good you were given?
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?
It goes back to the old adage: To whom much is given, of
him (or her) much is expected.
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.
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?
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.
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.
How has this affected your pursuit of wealth and leadership?
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
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.
In a few words, what would you say is the main role of a
leader in all the sectors?
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
How do you maximize the good you can achieve?
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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