Alcoa Chief Klaus Kleinfeld Talks about the Importance of Values to Business Performance

Klaus Kleinfeld, chairman and CEO of Alcoa, told a Yale SOM audience on March 28 that business is "all about performance." But, he added, when it comes to leadership, performance alone isn't enough. "You have to have the component of values," he said. "This is the most important thing if you want to develop or identify good leaders."

Kleinfeld, who delivered the annual Gordon Grand Fellowship lecture, then took the audience through the hypothetical situation of managing a top performer who lacks the "social dimension" and treats everyone in the office terribly. What do you do with someone who is tops on the team but hasn't responded to repeated feedback about his poor behavior? Do you look the other way or take that person off the team? After hearing from audience members on what they would do, Kleinfeld offered his recommendation: "It's much more difficult to develop values than performance," he said. "You have to get that person out. If you don't, the entire team will fail."

As someone who has experienced great success both in his native Germany and in the United States, Kleinfeld has come to believe that you can ultimately judge a leader more by the value side of the ledger than the performance side. He described a conversation he had with a cleaning person at Alcoa headquarters, where the person commented to Kleinfeld that "when you're poor, people look through you." Kleinfeld added: "There is nothing to justify not showing respect to any individual on this planet. If you give that principle up, I believe you will not succeed in life."