David Steiner, Part 2: Rebuilding The Culture To Save Waste Management

David Steiner turned around one of the most troubled companies in U.S. history. In part two of a two-part interview, he talks about rebuilding the culture, transitioning to the next CEO and how to prepare for a downturn.

This is part two of a two-part interview—read part one here.

It sounds like the culture really did change over your tenure at the company. Is that the case, and if so, how did it change?

Absolutely no doubt the culture changed. But the one thing that we had going in was what I call the fabric of America. We have these folks who drive a garbage truck, work on the back of a garbage truck slinging garbage, work at that landfill or work in that accounting office. These are the folks who made America what it is, right? They got a job so that their kids could live a better life than they lived. When you look at what makes America great, you don’t have to look a heck of a lot further than Waste Management, right?

Let’s not kid ourselves, it’s not the sexiest industry in the world. We were at a place where all they read about in the paper was how horrible their company was because their senior management was committing fraud and this and that. But they still had pride in what they did every day, which was go out and keep America clean. The core belief: I’m going to do a hard job for the sake of doing a hard job. And I will go home tired so that my kids can live better lives than I live. We always had that. What I needed to do was make them proud of that again.

How do you get it to when this person goes to their PTA meeting and someone says, “Oh, you work for Waste Management. I’ve seen what they do. They’re pretty cool,” rather than, “Oh, you work for a garbage company.” So that’s what we were trying to do.

When we first started out with our branding campaign, people go, “Oh, you’re looking to reach customers, you’re looking to reach different groups.” Yes, of course, we’re looking to reach those different groups. But our employees were always at the forefront.

Was there a moment where you thought, hey, I feel like we’re out of the woods?

Remember, I took over in 2004, coming off of the recession of 2003. We started to get some traction. We had pretty much gotten everyone’s buy-in, and we were ready to sort of break out when the Great Recession hit in 2008. Obviously, we had to do a lot of different things during that period. And in 2011, we had a pretty bad year, 2011, early 2012.

I went to my board, and I said, “Look, I thought I had this thing to where it sort of almost ran itself. It’s clear to me that some of the old bad habits are creeping back in. So I’ll have to sort of put the whip to the organization over the next 12 months. If the organization doesn’t respond, then we’ve got a problem. Then we’ll have to maybe look for someone else to do this because if it doesn’t respond, maybe I’m the wrong guy.”

I’ll never forget, I was out with an investor and told him that story. He said, “Wow, you must be under a lot of pressure from your board.” I laughed, and I said, “I’m not under any pressure from my board.” I said, “The day my board puts more pressure on me than I put on myself, is the day I walk away from the business,” right? This has nothing to do with external pressure. This is the pressure I’m putting on myself.

We took that 12-month period, and that’s when we got down to the 17 folks and had our best years. You take a look at the stock price or earnings or however you want to measure it, employee satisfaction, after 2013, and you’ll see a new record every year. To me, that was the most gratifying. It was the hardest part of my career for sure.

My goal in 2012 was to say, “Okay, do I really have the hearts and souls of these folks? If I don’t, then we’re going to have to do something different.” Those 17 folks who were managing our areas, they knew exactly what needed to be done. We also put some nice financial incentives in there. Sure enough, they performed. If you mix a little bit of cohesive teamwork with a little bit of financial incentive, you can create some pretty great stuff.

How did you handle the succession process, up to and including the transition to a new CEO?

Gosh, it wasn’t really so hard. You know, the CEO before me had a five-year contract, and after four years, he said, “I’m not gonna be back after the fifth year.” He had three imperfect candidates for CEO, one of whom was me. I certainly knew I was way imperfect for the job.

I was CFO, we were on the road together a lot, and one time I said to him, “Maury, why don’t you just extend for another year, and it gives you another year to figure out who your successor is and make the right decision?”

“David,” he said, “I’ve done this a lot of times, and after about five years, your stuff starts to get stale. People stop listening to you.” And that always stuck with me.

Given that, I always thought “where is the prime time for a leader?” In other words, a new person comes in full of vim and vigor. They’re just going to change the world, but they don’t know anything about the business. So they need a little bit of seasoning before they can really change the world.

Then, after a few years, it becomes your program. And that new guy or new gal with vim and vigor comes in and goes, “Hey, why don’t we change that program?” And you go, “Wait a minute. That’s my program. You can’t change that.” So after a certain number of years, you become stale, a defender of the faith. It doesn’t matter if the faith is right or wrong, you defend it.

So every five years, I would look at myself and say, “If I can’t reinvent myself, then it’s time for me to go.” After my third five-year plan, I said, “No one should probably do more than three five-year plans. I better really get to work on developing a successor.”

I got it down to a few candidates, moved them around into a number of jobs to see how they performed. In my mind, at the very end, it came down to a very obvious choice. It was a pretty easy transition. He had become my CFO, so we spent a lot of time together.

I’ll never forget when I became CEO. I thought, I’m going to be calling the old CEO every day because I don’t know what I’m doing. Then you get the job, you sit in the chair, and you never call. You are busy doing your own thing your own way. Once you step out of that role, you gotta move out of the limelight. My predecessor taught me that you can’t have two leaders in the company. After he left, I didn’t know what I was doing, but I muddled my way through. You’ve gotta let people learn their own way.

So it was a pretty easy transition. I think the results spoke for themselves. Although I do say that—good God—how easy is it to be a CEO from 2016 to 2019? They cut the tax rate in half, your company is growing. I never had three years like that in my 14 years as CEO—I never had two years like that.

Clearly we’re at somewhere near the end of the cycle, right? Yet, few current public company CEOs have been CEO during a recession. Any words of wisdom?

The reality is, you can never see the next disaster, right? Generally, you will get blindsided by something that you never saw. I can’t tell you what the situation will be, I can only tell you it will surprise you. The people who win when they get surprised are the people who can turn to the troops and say, “Okay, we have to change the strategy and do something different. Let’s get it done fast.”

I was at a company event in Oakland, California, where a big tent was set up for lunch. So I went and sat at a table of drivers and said, “How are y’all doing?” They go, “We’re doing good.” They said, “Who are you?” And I said, “Well, I’m Dave Steiner.” They said, “Well, what do you do?” And I said, “I’m the CEO.” They said, “Oh.” They asked, “What does the CEO do?” I said, “Well, I guess I run the whole company.” And one of them looked at me and said, “You don’t run the company here.” He pointed to his manager and says, “He’s the guy that runs the company here.”

You realize if that local manager doesn’t understand what we’re trying to accomplish, the strategy, and hasn’t heard how to treat his or her employees, it’s gonna fail. So I didn’t run the business. I happened to have these three little letters. The people who ran the business were the managers out in the field. Realizing that’s where the real power, the real performance is, is crucial to running any business.

You’ve been out for a few years now. What do you miss?

You miss being around the people, going to those driver meetings and having them tell you their issues. Then going back and saying, “Hey, look, I heard this from the driver. Tell me how we can fix this.” What I realized is I like to solve people’s problems, and I like to see people become the best people they can be.

What I tried to do was show the people who worked for me that, look, business is important. We all have a commitment. We have to do our job. But our first job is to be a good friend, a good parent and a good spouse. Let’s never lose sight of that. I think that what people would say about me at Waste Management is, “Oh, he was a nice guy, and he was a family guy.” How can you be any more successful than that?