Sheldon Yellen, CEO of $1 billion Belfor Holdings, explains why he’s glad he went on Undercover Boss.

Sheldon Yellen had an inkling that he was out of touch with his 6,400 employees. After all, as the CEO of Belfor Holdings (No. 4,753 on the 2009 Inc. 5000) a $1 billion diversified building services company based in Birmingham, Michigan, Yellen oversees Belfor Property Restoration, the largest property restoration company in the world with 195 offices in 27 countries. With help from the CBS hit television series Undercover Boss, the 53-year-old got the opportunity to go undercover within his own company, joining the ranks of his staff. What he experienced changed his life. Yellen opened up to Inc.’s Tennille Robinson about what he learned about becoming a better leader and what his employees really think.

What job positions did you tackle as part of your undercover operation?
I first did demolition, and then I was extracting water and drying out a property. I was asked to crawl under the crawl space of that home to remove installation under the house. My third stop, I was hanging dry wall; and my fourth stop I did soot and smoke removal.

Were the jobs what you expected?
For 53-years-old, it was all difficult for me—physically and mentally, especially being around people that are in a distressed state of mind after a disaster happens—a flood or fire—and they’ve lost everything. The job task itself, people can do and get done. But doing it, while carrying around the burden of everyday life that everyone has and making sure your mindset is right to bring about order to somebody else’s life when your own life may be in chaos—that is a hard task.

What do you say to those CEOs who believe that profits come before people?
How do you realize a profit without people? Like Maria says to the children in The Sound of Music, ‘Let’s start at the very beginning. A very good place to start.’ People. It’s all about people. The day you think differently should be your last! A lot depends on your personal view as to what and who you are as a CEO. There are a few different types: Those who look to enrich themselves and their management team; those who look to give a fair return to the shareholders and take care of the management team; and those who look for the long-term success and sustainability of a company that can continue to grow. In all cases it should be clear. And in fact, I would argue that by being fair to all three—the people, the management and the shareholders—that’s the only way to be.

What’s your formula for hiring the right people?
I’ve always looked at a person’s heart first. I look for passion and compassion. Those are the two characteristics that I look for in an employee. And all that my experience did was reinforce that those two traits are still the most important.

How important is having a 360-view of your organization?
The closer the top management can be to the people who are doing the heavy lifting every day, the better the organization can be more sustainable. It gives you a real grounded sense of what’s important. And what’s important in an organization, to me, is people. That is your single greatest asset. Employee retention is very important. I think then it breeds a culture of growth from within. You want to see your people succeed and grow as individuals. Our people are promoted from within. We don’t go outside, hire people and put them in positions of authority. Our managers today started out as trade’s people and I think that’s a very healthy culture. And our productivity levels—as we’ve done 80 some acquisitions in this country alone and we’ve looked at the financial statements of over 150 competitors—are four times our competition because our people know that they are a part of something that’s real.

How do you ensure that your managers and executives move forward with your vision?
I spend my time traveling around and meeting with my management team all over the world. I spend an enormous amount of time on the phone. I don’t believe in e-mail. I believe in having a personal touch. I hand write 6,000 birthday cards a year. I probably write an equal number of thank you notes a year. So between my personal handwriting of 12,000 notes and my phone calls—I call my managers on their birthdays, call on anniversaries, I go to weddings, I show up unfortunately to funerals, I make hospital visits—that’s how I stay in touch and communicate with people.

What is the biggest mistake CEOs make in communicating to employees?
Sometimes a CEO will say something that hasn’t been thought through and then takes it upon himself to just renege on what it was that he or she said. And I think that is just a criminal offense. You’ve got to be very careful what you say and you have to know who your audience is, because if you say it, you have to live it.

How often is there disconnect between the employees and upper-level management?
All day, every day. It is my responsibility to stay as close to those on the front lines as I possibly can.  You can’t lead with titles, you can’t lead with rules, and you can’t lead with just words. You lead with trust, compassion and listening. The only way to have these three realized is if you have real, open, sincere, honest relationships that matter. Not work relationships, but all the time relationships.

Why is there such a disconnect?
There’s a big difference between having a title and being a leader. And there’s a big difference between having an education and being a leader. And I think those that believe that their title gives them credibility is unacceptable. To me, you should earn the right to lead other people by doing the right thing and being the right kind of person.

How can any CEO have a similar experience within their organization, sans a camera crew?
The Undercover Boss experience, regardless of whether you’re doing it on TV or in real life, it is an incredible opportunity for a leader to go back to what really counts and that’s getting as close to your people as you really can. I now expect my managers all over the world to spend two days a year in the field with their people. And I believe that that takeaway is incredibly powerful.

By Tennille Robinson |  @TennilleSmBiz