Andrew Carnegie hired Charles M. Schwab to run US Steel in 1921 and paid him $1 million per year. That was $3,000 per day, when people who made $50 per week, were considered well off. He was not hired because he knew more about steel than anyone else. Carnegie hired him because he was a genius at dealing with people. There was a book written about Mr. Schwab back in 1912 entitled Succeeding with What You Have. I would like to pull a short excerpt from the book that gives a great example of how Mr. Schwab was able to motivate his people to accomplish more without threats, condemnation, fear, criticism, intimidation, or pressure.

When asked for the secret of his success in the steel industry, Charles M. Schwab always talked about making the most with what you have, USING PRAISE, NOT CRITICISM, GIVING LIBERAL BONUSES FOR WORK WELL DONE, and as he stated; “Appealing to the American spirit of conquest in my men, the spirit of doing things better than anyone has ever done them before.”

He liked to tell this story about how he handled an unproductive steel mill: He said he had a mill manager who was finely educated, thoroughly capable and master of every detail of the business. But he seemed unable to inspire his men to do their best. Mr. Schwab asked him one day … “How is it that a man as able as you, cannot make this mill turn out what it should?” “I don’t know. I have coaxed the men; I have pushed them and I have sworn at them. I have done everything in my power. Yet they will not produce.”

The night production supervisor and his team could never produce as much steel as the day production team, EVER, and the day team wasn’t doing that well, either. It was a few minutes before the night production crew was to arrive, so Mr. Schwab asked the day supervisor how many batches of steel his team produced that day. The supervisor replied “6.” Mr. Schwab asked for some chalk and in the front entrance of the steel mill, where everyone had to walk past to enter the steel mill, he wrote a giant 6 and then walked away saying nothing.

When the night shift came in they all saw the giant 6 and asked about it. They were told that … “The big boss was in here today and asked how many batches of steel had been produced on the day shift, and then HE chalked down the big 6.” The next morning when the day-shift showed up they saw that the 6 had been rubbed out and a big 7 was written instead. The night shift had beaten them (something they had NEVER done before) … and also had thrown down a challenge at the same time. When the day-shift saw the 7 boy did things start happening. By the end of their shift the 7 was rubbed out and a 10 written in its place (something they had NEVER done before).

Thus, a fine competition was started, and it went on until this mill, formerly the poorest producer, was turning out more than any other mill. No one was coaxed, pushed, cursed, intimidated, yelled at, threatened, nor was fear used to get them to produce more. No threatening memos were issued or jobs on-the-line to get production up. A simple 6 was written where all could see … and things like competition, resourcefulness, teamwork, rivalry, ingenuity, maximum effort, determination, and pride kicked in.

Mr. Schwab once said … “I consider my ability to arouse enthusiasm among my people the greatest asset I possess, and the way to develop the best that is in a person is by APPRECIATION and ENCOURAGEMENT.”