By many references, Charles Schwab was the first company President to be paid over $1M annually. This was back around the early 1920’s. He was selected by Andrew Carnegie to run the United States Steel company and paid a tremendous amount for one primary reason. It was not his genius, or his knowledge of the steel industry that put him in this position with Carnegie. As Schwab defined it, it was his ability to deal effectively with people. “The greatest asset I possess, and the way to develop the best that is in a person is by appreciation and encouragement.”
An often repeated story about Schwab begins with his visiting one of first steel mills that were operating well under expectations with production. He spoke with the mill manager and asked why his operations were lagging behind others when he was such a talented and knowledgeable manager. The manager responded that he had tried everything, but nothing was working. They closed up their meeting at the end of the day shift walked off the manufacturing floor. Schwab paused, grabbed a big piece of chalk and scribed a large “6” on the floor. This indicated the number of “heats” the day crew had completed that day.
As the evening shift came in, they noticed the “6” on the floor and asked what that was for? They were told that the big boss had been in the mill and they assumed it was the number of “heats” that the day shift had produced.
Schwab walked back into the mill the following morning and a large chalk drawing of the number “7” appeared on the floor where the “6” had once been. So the night shift thought they were better than the day shift? The day crew would have none of this and when they quit for the day, they drew a large number “10” in chalk on the floor and things were stepping up. This mill, shortly after that day, was consistently leading the country in steel production. All from his stimulation of competition. Schwab had again demonstrated the discovery of the best that is in a person with his appreciation and encouragement approach.