David Steiner, Part I: Saving Waste Management

By restoring worker pride—and finding his best 17 executives—David Steiner turned around one of the most troubled companies in U.S. history. In part one of our two-part interview, he talks about the mess he found, and how he tackled it.  

When David Steiner joined Waste Management as deputy general counsel in 2000, the company was still reeling from accounting and insider-trading scandals. Working with then-CEO Maury Myers to bring the garbage-hauling and disposal enterprise back on track, Steiner moved swiftly up the ranks to become its GC and then CFO, before succeeding Myers in 2004, just three-and-a-half years after coming into the $14.9 billion revenue company.

As CEO, Steiner restored flagging employee morale, delivered strong financial performance and repositioned the company as a leader in the growing recycling sector before stepping down in 2016. During a recent interview with Chief Executive, he shared lessons from his 12-year tenure. Excerpts, edited for length and clarity, follow. 

How do you think about disruption as a leader in this state of the world? What aspects of it do you really feel are more difficult today than 10 or 15 years ago?

I think that the American businessman has to realize that the outside environment has changed. In my dad’s generation, if you ran GE, you made a little bit more money than all the other people who worked there, and you were revered as a business leader. Today, you make a lot more money than the people who work there, and you may not be revered as a business leader. The current environment in the U.S. is not necessarily business-friendly. You need to realize that. The Business Roundtable letter on the purposes of a corporation was actually very well done. It really makes a CEO sit back and think, “How can I make this corporation work for all of the constituencies?”

Coming out of World War II, you had a very hierarchical society. You had a hierarchical business setup. You gave an order, and people went and did it. Now that just doesn’t work. You have to figure out how to get all the people within the company to work for you. Then, how do you get that company to work for the other constituencies? It’s a complicated world. But it’s a world that you have to learn to deal with as a leader. It really all comes back to what I believe is the fundamental principle of leadership: It’s not about you. It’s about how you make a company succeed.

Waste Management, prior to you arriving, got into trouble for effectively cooking the books. Eventually, the top officers had to pay fines of over $30 million personally, and the company suffered a $1.7 billion earnings restatement.

Waste Management was one of the top growth stocks in the early ’90s. What happens with a lot of growth companies is once they can’t grow anymore, they try to find other ways to grow earnings. Sometimes they go down paths that probably aren’t the best. So it was basically three years where there was absolutely no stability and two different management teams that ended up with two of the three largest write-offs in the history of corporate America.

How did you end up at the company?

I was actually a practicing lawyer in New Orleans. A friend of mine said, “Look, why don’t you come talk to this company in Houston? They’re always looking for lawyers.” So I went and talked with them, and they offered me a job. I thought, “Well, gosh, if I’m gonna take a job in Houston, I probably ought to interview with more than one company.” So I did.

Then, the recruiter called and said, “Look, we want you to come talk to Waste Management.” By this time, I had three job offers, and I was going to pick one of them. I said, “No, I think I’ll pass. They’ve got SEC issues. They’re a garbage company. Why would I wanna go there?” And she said, “Look, we’ll have you back at your desk in New Orleans by noon. You come over and interview with the general counsel, for the job as deputy general counsel.” And I said, “Okay, I’ll do that.”

I interviewed with him, and he was very impressive. He was either going to do something bigger at the company or at another company. So I thought I could go in as deputy general counsel, maybe in 5 or 10 years, I could become general counsel of Waste Management, a Fortune 150 company, a nice way to end a legal career.

So I took the job. Six months later, they promoted him into operations, and I became general counsel. Fourteen months after that, I became CFO, and a year after that, CEO. So basically, in three and a half years, I went from deputy general counsel to CEO.

I tell everybody that I am the living, walking embodiment of better-lucky-than-good because the company that I turned down in 2000 was Enron.

So all of a sudden you’re the CEO, thinking about the path forward. What’s that like?

My greatest weakness when I took over Waste Management was I had no idea what I was doing. I’d only been in corporate America for three years, and I certainly didn’t expect to become CEO three years after I joined the company. My greatest strength was that I had no idea what I was doing. So I could look at all of those white elephants and ask, why are we doing it that way?

I realized very early on that if you were going to have a strategy that worked, you better have a strategy that folks bought into. How in the world do we get all of the input that we need from all of those levels to come up with a proper strategy and to come up with what the company stands for? Very early on, I developed action teams, about 8 to 10 people in each team. They were about 8 to 10 teams, so roughly 100 people throughout the company, and then the senior leadership team.

We basically started the process of first getting to know each other, because these were 100 people that had never met each other before. Then we started to say, okay, what is it that we want to build here? You know, what is it that we want to stand for? What are we going to do from a strategic point of view in the next five to seven years?

The first 18 months, we spent a lot of time together debating these types of things. You get in and you run a company, and you realize that a mission statement and a need to have people want to go to work every day are really core to running the business—more important than the strategy.

What we get paid for as a senior team is to make big change, not incremental changes. How will we think differently to do that? Obviously, some people were never going to buy in, and you have to change those folks out. But we spent a lot of time giving everyone a chance to vocalize their concerns. I tried as hard as I could to allow that freedom of speech.

One time, I was in a business meeting, and I did something to someone that shut them down. It was clear that I had bullied them into my opinion. My CFO came to me afterward and said, “Look, I just want to let you know that in that meeting you sort of bullied that person into your position and shut them down, and I don’t think that was healthy.”

I was going to argue, and I thought, “You know what? If I argue with him, he will never give me that feedback again.” So I said, “I appreciate that. That was wrong. I hope you’ll point it out to me again the next time I do it.” That night, before I left, I left a note on his chair, saying, “Thanks for correcting my bad behavior. If you ever see it again, here’s your free pass to tell me I did it again.”

The point is, it doesn’t matter if you’re right. What matters is: Are you getting honest feedback? I was never going to get honest feedback if I tried to tell him I was right and he was wrong.

Transparency is so important to any CEO. How did you set up an environment that enabled that?

It was interesting, when I would walk into a party here in Houston, Texas, and someone would ask, “What do you do?” I’d go, “I’m the CFO at Waste Management.” They’d go, “Okay, great” then move on to talk to the guy from Continental Airlines or, you know, a more interesting company. Then, when I became CEO, I’d walk in, and they go, “What do you do?” And I’d go, “I’m the CEO of Waste Management,” and they’d go, “Oh, I wanna talk to you.”

I wasn’t a different person 18 months later or a year later. I just had three different letters behind my name. So I tried as hard as I could to not bring those three letters with me when I went into a room. I’m not going to tell you I was always successful. The reality is even if I tried to leave those three letters behind, the people in the room still saw those three letters, right?

But I can tell you that over the 15 years that I was CEO, it got to the point where I could sit down with the top 300 people in the company and feel like I was getting—you never get 100 percent unvarnished truth—but I always felt like I was getting 80 percent to 90 percent. As a CEO, boy, if you can get to 80 percent, 90 percent, that’s a huge win.

What was your experience in terms of getting the right people on the bus and having to move some people out?

Waste Management was a very distributed business. We managed it a little bit, we developed strategy at the corporate level, but the rubber met the road at places in the field.

When I took over, there were about 125 people in the field. Imagine trying to meet with and get your message to 125 people. It’s really, really hard. When I look back at it, the more important thing that we did—more important than trading out people because we certainly didn’t immediately do that—was we went from 125 in the field and about 20 corporate officers to 17 managers in the field and about 10 or 12 corporate officers. You could get in a room, have a conversation and get stuff done. That’s 30 people out of 55,000 employees. It really allowed us to get focused on what we wanted to get done. When I traded people out, it wasn’t firing someone and bringing someone else in. It was in iterations. We went from 125 to 100, to 80, to 60, to 47, to, you know, 28 to 17.

Every time we would go through that list and say, “Okay, who are our 100 best? Who are our 60 best? Who are our 40 best?” We ended up with the 17 best operators that we had in the business. It wasn’t “let’s fire a team and replace the team.” It was “let’s take a big team and make a more efficient, smaller team with the best people on the team.”

How did you manage your time and your schedule?

Every quarter, we would close the books on the 10th of the 3rd month and, as soon as those books got closed, we had about 17 days before we reported earnings. We would back off and say, “Okay, from the release of earnings, we need about a week to prepare it. Then the prior two weeks we’re going to go through with our business leaders face-to-face and talk to them about their business.”

In 15 years, we probably did 10 or 12 different iterations of what those meetings looked like. We were always trying to improve them. I’m not sure we ever quite got it right. But it was a chance for us to spend two weeks sitting with our people in the field. We would have a particular topic. “This quarter, we’re also going to talk about HR, so bring your HR team. This next quarter, we’ll talk about operations so bring your operations team. We’re going to talk about finance, bring your finance team.”

I’d spend about an hour-and-a-half on the business, then an hour-and-a-half meeting people, saying hi and thanking them for working with us. As I was leaving a waste-to-energy plant, the fellow giving me the tour said, “You know, this is the first time that a senior manager has ever come to our waste energy plant.”

I said, “Really?” He goes, “Well, you know what, that’s wrong. A long time ago, some guy that was president of the company came, but he just sat in a room with our business guys for about 20 mimutes and left. He didn’t really talk to anyone.”

And I thought, holy cow, here’s someone who just took an opportunity to connect with the business, and instead of turning it into a positive, turned it into a negative. They remembered that he didn’t talk to anybody. That was a big [reminder] for me. You have to connect with the business, but you also have to connect with the people.

We had a gentleman by the name of Jim Schultz, who was a showman. He was a former Air Force pilot. We’d have these big meetings of 1,500 folks in the company. He’d ride in on a white horse and go, “The safety patrol is here.” He developed something that really became the focus point for our safety at Waste Management.

We had an incident that still chokes me up. We had a driver in the Bay Area, which is where I grew up, who had taken some medication and was drowsy. On a major freeway, he hit a car. He didn’t even put on his brakes. The gentleman in the car was a former 49er football player, now working for a health club. His license plate was L-I-F-C-H-N-G-R. We killed him. Jim met with his widow and she said, “I don’t want this to be in vain,” and he became the face of our safety program.

We had an award that we call the LifeChanger Award. Every year, when we had our big meeting and gave people accolades, that was the award that everybody wanted to listen to because Jim had done such a great job of making it personal. I had a sister who got killed in a car accident because she wasn’t wearing a safety belt. So I stood in front of those folks and told that story about how important it is to wear your safety belt: “I’m not telling you this, because it’s in a manual, and I’m not telling you this because it’s company policy, I’m telling you this because I want you to get home safe.”

Never talk to people in terms of “here are the rules. They are one, two, three, four.” Talk to them in terms of “here’s how you can make your life better.” People remember stories. They don’t remember rules.