People are his bottom line

Kerry Killinger, CEO, Washington Mutual

By Jenny Mero, Fortune

(FortuneMagazine) -- AFTER 17 YEARS at the helm of Washington Mutual--where he pulled off 31 acquisitions--Kerry Killinger has transformed what was once a $190-million-a-year regional savings and loan outfit into a $14 billion powerhouse. In the process the maverick exec created not only the nation's sixth-largest bank but also one of the industry's most innovative. Opting for a more inviting design, WaMu ditched the traditional glass that separated teller and customer and introduced an open-space layout, which it patented. Even the usual freebie toaster was replaced with the bank's version of an action figure--a teller doll. Here, the 57-year-old trumpet-playing boss shares with FORTUNE's Jenny Mero his principles for building a better business.

APPLY THE MOTHER TEST. My roots are in the Midwest, and one thing I learned early on is to work hard. I try to maximize what I can get accomplished in a set amount of time. Coming from a little more humble background, I appreciate the importance of keeping some humility and checking your ego at the door. Regarding ethics, I try to do the right thing and use the test of "Am I comfortable with having my mother read this in tomorrow's newspaper?"

WRITE A FIVE-YEAR PLAN. I always have a five-year plan for me personally and for the company. It helps you deal with cycles, especially in adverse times. Beyond five years there are too many unknowns. But you need to update it every year. And you have to completely reinvent yourself and your company within the five years. From a stress standpoint it's liberating, because I've accepted that change is good.

TAKE YOUR WIFE (AND DOG) TO WORK. It's important for leaders to do whatever it takes to connect with their employees. For example, when I visit our financial centers, I'll have my wife with me, and often we'll have our eight-pound dog, Como. It really breaks the ice because so many people have had experiences with pets. Then we go on to talk business.

BE A STRATEGIC SHOPPER. I've been involved with 31 acquisitions since I joined WaMu, and the criterion for every deal is the same: It has to fit our strategy. It can't jeopardize our asset quality, and it has to meet our internal rate-of-return requirement of being in the high teens. And it must be operationally integrated into the company in a timely manner. I remember one large acquisition where we completed our due diligence in three days, and the transaction was announced within a week of starting the process.

CROSS-TRAIN. I play the trumpet and from time to time the soprano sax. When I'm home in Seattle, I practice a couple of times a week. Playing an instrument provides you with an outlet for both discipline and creativity--some of the skills required to be a successful CEO. Earlier this year I played at a company event with 5,000 of our employees and the Blue Man Group.

KEEP THINGS IN PERSPECTIVE. Experience is critical. It helps you separate the challenges that are truly significant from those that aren't. Successful leaders learn to prioritize and focus their attention on a few vital activities. Less successful leaders tend to worry about too many smaller things.

MAKE PEOPLE YOUR BOTTOM LINE. Be casual and keep an open-door policy. That means interacting with employees in the elevator, lobby, or dining facility. All great companies understand that they shouldn't manage just the bottom line. They must start with creating a great environment for their people. Companies that just look to meet short-term earnings expectations lose sight of that.  Top of page