Gail J. McGovern: Leadership at the American Red Cross

American Red Cross (ARC) CEO Gail J. McGovern visited the University of Miami Business School in March of 2018 to discuss the journey of transforming the American Red Cross, and what she learned about leadership throughout the whole process.

Transformation Timeline

With the ARC plagued by numerous scandals, when McGovern was tapped to become the new CEO in 2008 the organization was operating at a $209 million deficit with a total of $612 million debt. The ARC was in complete disarray with 720 chapters each with different back office operations. There were over 4,000 separate bank accounts, separate procurement and marketing channels, and zero communication of best practices between chapters.

By 2010, McGovern had made numerous changes to improve the ARC’s operations. Back office processes were consolidated (saving $5 million), procurement and marketing were centralized (another $50 million in savings), 10% chapter reduction, and 30% staff reduction at headquarters. Though difficult, all the changes proved successful. The ARC finally had an operating surplus over the next four years with which to pay off its debts.

While the ARC experienced a short rough patch during 2014-2015, the organization was able to accomplish a $400 million reduction in expenses. Reduced costs, increased services, and additional fundraising able to get back on track by 2016. McGovern credits much of the operational success due to stronger utilization of technology.

Lessons in Leadership

McGovern learned a lot about leadership and had a great deal of wisdom to share on the subject. Here are my top take-aways from listen to McGovern present.

Talent Acquisition

Attract, retain and motivate the very best people. McGovern and her team will only accept the best of the best. 1% imperfection is grounds for not being hired, and this imperfection may have nothing to do with a candidate’s skillset. The idea here is that a potential hire should not only have all the tools required to succeed but must also mesh well with the team. If there is even one person in leadership that does not like a candidate, they will not be hired. However, this does not mean you must only work with likeminded yes men. A team should maximize chemistry among diversity for the best results. And do not be afraid to leave a position vacant waiting for the right person for the job. In the long run it is much easier to deal with a vacancy than with a position filled with the wrong person.

Do It for the Greater Good

For any institution to thrive, there can be no selfishness, and this is extra true for a non-profit. At every decision point, the you must consider what is best for the institution as a whole. When selfishness creeps into decision making, the organization will begin to wither and ultimately be unable to provide for anyone.

Embrace Change

All too often it is said that people do not like change. That is actually a myth! In fact, most people actually do like change. What people do not like is uncertainty, everyone fears the unknown. When attempting to implement change, always communicate your ideas completely and rationally. Doing your homework and presenting complete plans will go a long way in gaining other people’s confidence in change. Also, do not be afraid to fail. Embrace mistakes, fail fast and learn. You will develop a much stronger trust of those around you by admitting mistakes quickly and learning from them then if you are too afraid to act.

Model Optimism

This piece of advice is much like Dr. Ruelas-Gossi gave my class on our final day. You must be resilient to troubles and maintain a firm grounding in your emotional state. Everyone around you is always watching. If you are the leader it is imperative that you remain positive, your team will only be as optimistic as you are.

Lead with Your Head AND Your Heart

No matter what job you work or which institution you are a part of, always find the purpose of the work. Everyone wants to be part of a grand cause. Whether that be as investors securing financial freedom for their clients or the ARC providing disaster relief for our world’s greatest tragedies, there is always a purpose. When you lead from this purpose with influence, rather than position those around you will be more than willing to put forth their greatest effort.