Accumulated Wisdom

Cutler Dawson, Former CEO, Navy Federal Credit Union and U.S. Navy Vice Admiral (Ret.)

In this new regular feature of my Substack column, I will be sharing the accumulated wisdom of CEOs, board members and members of senior teams. These remarkable individuals have spent their entire careers in search of leadership perfection, and thus the advice they have to share is definitely worth a listen. I’ve interviewed each person, summarized our conversation, and checked it with them for accuracy before publishing it here. I’m certain you will enjoy learning from them as much as I have.

Cutler Dawson is a hero to many, including me. He has had two extremely successful careers; the first in the U.S. Navy, reaching the rank of Vice Admiral before retiring and starting his second career as the President/CEO of Navy Federal Credit Union, the country’s largest credit union, from 2004 to 2018. He also chairs the board at the world-renowned Center for Creative Leadership, having once attended the Center’s Leadership at the Peak program and declaring it the best leadership training he has ever received. What did he learn? That he didn’t need to have all the answers himself. That there are people around him who can help provide the answers and that things actually go much better when he listens to what they have to say. Whether captaining a ship or running a huge organization, Cutler contends that if you take care of your crew, they will take care of you. Sounds simple, but it’s not. Making your crew believe that you really care about them is what often goes lacking when leaders prioritize their own desire for glory or the pursuit of profits over the well-being of their people.

I asked Cutler how he accomplished minor miracle of getting his employees to trust and follow him, whether into combat or through organizational change. The first point he mentioned struck me as central to his approach; “You have to go to the deck plates.” If you are not a Navy veteran, that advice needs a little explanation. The deck plates on a ship are where people work, where the action happens. If, as captain, you remain on the bridge rather than going down to the deck plates on each deck, you won’t understand the work your people are engaged in. In Navy Federal, the same behavior meant visiting branches and observing employees in interactions with customers. Whether visiting the deck plates or branches, Cutler says the goal is to ask questions, listen and learn. That’s what demonstrates to people that you care about them. Or at least the first part of demonstrating that you care. The second part is acting on their inputs and doing so in ways that don’t alienate middle managers or punish people who make mistakes. If you want to keep the channels of communication open, you don’t create problems for employees by angering their bosses or penalizing them for being truthful.

At the Naval Academy, Cutler learned that there are only four acceptable answers to a question asked by a superior; “yes sir,” “no sir,” “I’ll find out, sir,” and “no excuses sir.” One of his junior officers made what would have been a fatal mistake during an exercise at sea; fortunately, it was only an exercise. When the junior officer spoke up to volunteer that he had been responsible for the mistake that would have resulted in the ship being sunk, Cutler didn’t put him in the brig; he asked the junior officer if he would get it right on the next run through. He did. At Navy Federal, an employee failed to catch an incident of fraud that cost the organization a significant amount of money. The employee took full responsibility for the failure. Rather than firing her, Cutler withheld her bonus for the year. She worked twice as hard to be certain the mistake wouldn’t happen again and the next year, Cutler granted her a spot award that made up for the bonus she lost. If you want to create a safe harbor for information sharing as CEO, you don’t shoot the messenger.

Cutler emphasized to his people that the one thing he expected from them was to do the right thing. Again, something deceptively simple but difficult to put into practice when strong competing forces are acting on people to do the opposite. Cutler used the example of doing right by customers, even if it involved incurring some additional costs. Navy Federal doubled its membership under Cutler’s watch in part because of the way customers were treated. We chatted about how health insurance companies are routinely getting bad press for refusing to approve procedures, invoking anger from those who pay premiums and expect better. Cutler pointed out that Navy Federal is a not for profit and that its board members serve without compensation, including retired admiral John Lockhard who guided the organization as chair of the board for 25 years. Doing the right thing comes more easily when board members share your values and don’t have to endure quarterly calls from shareholders demanding higher returns on their investments. But even under that kind of pressure, does it ever really make sense to do the wrong thing by customers?

In the spirit of the Navy’s practice of granting its commanders at sea the latitude to make local decisions – known as “UNIDOR” – Unless Otherwise Directed - Lockhard allowed Cutler the discretion to make the calls on the field and made it clear to his fellow board members that only he was allowed to provide direction to the CEO. That kept Cutler out of the middle of disagreements with board members who disagreed among themselves. In return, Cutler made certain he kept the board informed of the good, the bad and the ugly rather than waiting until he had time to formulate specific recommendations. The board trusted his honesty and treated him with respect in return. The same went for sharing information with employees; if they asked Cutler a question, they got an honest and truthful answer, sometimes along with a request to keep the information confidential until it was ready for public release. Cutler trusted his people and they safeguarded that trust.

Do you really know and care about the people you lead? Cutler discovered that one of his employees was working a second job after a divorce to provide for her children. She was quilting baby blankets and selling them on ETSY. When Cutler found out, he commissioned her to make baby blankets for newborns of Navy Federal’s employees with the Navy Federal logo on them. To get one, the only requirement was that the parents needed to come to Cutler’s office to receive it so that he could give it to them personally.