Businessweek Extra - Pehr Gyllenhammar

new book out it's all about leadership and character. But in our conversation he really took us to task in many ways, to think about the worker, not just the white collar workers, but the blue collar workers, well, their importance in the economy, not just now but going forward. What does character mean to you? Character remains to me, you know, to be independent, to understand what's happening in the world, to be tough when it is necessary, and

to be supporting your people whenever. And so how much has that put This has this epidemic put that rather vaunted view to the test. If you are sitting in a boardroom right now, you're sitting We're probably not in the corner office. You're sitting in your home office trying to run a company. Yes, well I'm not running a company now, but I have had. I have been with not less than five companies in my career and the

longest one was Volvo twenty four years. And so as you think about this on behalf of other chief executives, what do you think they're feeling right now having gone through I mean, you managed through crises, but you know this is a big one. Yeah, this is a big one. But I must say that the early nineties were difficult, and the seventies before you were born probably were also

very difficult. So I've been I've been through two crop recessions and now I'm witnessing the press and one well, and so tell us you know, I do agree with you that in I certainly on a personal and a professional level, moments of crises have taught me an awful lot. And I do wonder what you have learned, you know, take us back to one of those difficult times. What was going on, and what what you had to do

and what you learned from it. Well, what I had to do was to be convinced that I should keep the blue collar workers completely and not have any layoffs. Although the recession in the seventhies was we're deep and all. In the early nineties so, and I thought that the blue color workers were really the spine of the company and if they did well and were productive, we would do well. Well. You know, this is so fascinating because if you look at what we're going through right now,

those you know, key workers, right, those frontline workers. Okay, we get the healthcare workers, how important that's been through the pandemic. But who would have thought, right, folks who work in supermarkets where all of a sudden, you know, those necessary workers that needed to be in place to take care of the rest of society. And I do think about blue collar workers, workers you know at the bottom of or or you know, at the lower end of the ccio economic scale. You know, we haven't always

treated them with much respect. And I do wonder if we're going to learn something, I mean, tell us about how important that is. And I do wonder, you know, if you think that there's something on the other side of this virus where we treat workers all along the scale better. Well. I think that in the United States, which is a country that I have admired and love except the last three years, and the layoffs are plenty, and they are gross, and the people are unemployed, and

they are the first to go. The top. People that never go, perhaps one or two one might be fined if they are not doing a good job at CEOs. But I I always have thought that the blue collar worker is the stamina and the card of the company, and I've always protected them. But Pere, is that capitalism or politics? Sorry? Is that capitalism or politics that the blue collar workers? I think it's it's neither. I mean, I've never been political in my way of managing a business.

I've always been looking at the shareholders and their interest the employees and their interests, and I think that the without good employees, you cannot have good productivity and good quality. Well, Pear, one of the things that has exacerbated this, certainly, this divide is the dividing compensation. And I know that this

is something that that you've thought a lot about. And when you think about the massive gap, the growing gap between CEO compensation and frontline worker compensation, that is a big contributor here. How did that happen? I don't know how it happened, but it has happened gradually, and towards the end, the last the last percent or less than one percent are executives. Top executives, and they have a median term obvious, say four and a half or five and a half years. I was with my company almost

twenty four years, and I never gave up. What do you mean you never gave up? I never gave up by stayed there. I stayed there. And then also I had a council of blue collar workers and white collar workers, but majority blue collar workers already after my first year at Volvo, because we were in a recession, and I said, now I will bring the blue collar workers and the white collar workers to a council that is not just an advisor, but it is a real body. They thanked

me for that. There. I have to ask you, you know, when you think about the car industry specifically, and Volvo even more specifically, what did you learn that maybe you think about during this time of upheaval, either about the industry or about sort of how you ran that particular company. Well, I my experience is fairly long, as you understand, and it's been up and down, up and down. And I was there during two sharp recessions, and I had patience.

I kept my blue collar workers, I kept all our employees, and if they wanted to leave, that was their business, not my business, and I thought that to have a card of people who are productive, who understand quality, and where I started a whole new type of factory for for my employees and in in in the best case, it was not much longer cycles than the one and a half to two minutes. It was about twenty minutes, and that improved our quality and the safety of our

people and the motivation of our blue color workers. When you see a situation like this, knowing social distancing and manufacturing processes and everything else, do you think we will have to radically rethink how cars are made or is it just going to be sort of tweaks on the margins. Well, I don't think it will be tweaks on the margin,

but I think that it's a good lesson. And I think that unfortunately, everybody thinks that we're going back to normal now, and that's that is wrong because if you look at the United States, I mean, the the the the the top is not over yet of difficulties. And I think that with with now about hundred thousand unemployed and also gone, it is more or less a disaster. And I think this will be worse. I don't think

it's over. I think that in a couple of months it will be more difficult and less salutes on good times. Why have we become so bad at taking care of workers, whether it's blue collar and below. Well, I think that one of my old friends who who is gone, Henry Ford too, he and that he came over to visit my most rational and modern factory and he was delighted. And then when I came over to him, because we

made good friends, he they laid off people. He said, well, you know, I'm sorry, I can't really can't really accept your model. I think it's too difficult, it's too radical, and that that was it. Whereas he the head of ua W at the time, Leonard Woodcock, who then became Ambassador to China although he was not didn't have that title, he loved the the cyclist that we had in our manufacturing.

And so as you think about the car business and even the car consumer coming out of this, it seems like such an interesting moment when you think about Tesla, you think about the trials and tribulations that many global automakers have gone through. How do you think this will change the car consumer in many ways and their expectations. Well, I think that they must be fairly disappointed because there

is very little innovation in the car industry. And I think that Tesla has been a disaster at least financially, and I don't know how they will recover and if they will ever come into a profitable position. So when it comes to shareholders, I think that they have been extremely optimistic if they invest in Tesla, and I think that it's not over yet. I think that they will

have much more problems prepare. What do you think of him kind of up ending the model and and and safe to say that his person e vs. Electric vehicles has really made kind of all of the old line auto manufacturers kind of step up and take notice and amp up their efforts. Yes, no, I totally agree. And I think that the technology it's it's still factories, you know, bactories that start the engines before in the past, and I don't think they've taken the step that a new

type of fuel and contraction is. It's not done yet. Still early days. Interesting, still very early days, and the old technology that they use as modern technology. He wasn't just got about forty seconds here one quick question. I mean the balance between making a profit but also taking care of your workers. What would be your advice to CEOs out there. My advice to CEOs is take care of your blue color worker. They are the blue color workers. They are the most productive core of a company that

you can have. And that was pare yillen Hammer. He's the former CEO of Volvo. He was there for about twenty four years. Jason, his book that's just out is called Character Is Destinate, reflects on innovation and integrity during his tenure at the Automaker. There's a line that um I saw in a review about him, but he said, you know, companies are not only laying people off, but they're doing it brutally, and that's not the way to lead.

So some great leadership lessons from him. Yeah, pause and reflect on that as we think about what we're all like on the other side of this. Well, you've been listening to Bloomberg Business Week Extra for sure to tune into Bloomberg Business Week Radio Live Monday through Friday at t pm Wall Street Time. I'm Bloomberg Radio. I'm Carol Masser, and I'm Jason Kelly. This is Bloomberg