Inside WM’s Plan to Automate the Future of Trash

26:37And Maury went on to run a company called Yellow Corporation, which at the time was a LTO business, a trucking business. So afterwards, I spoke with him and he said, why don't you come over and work for Yellow Corporation? So I did in the finance group. And then he left pretty quickly. And Yellow consolidated, and so I ended up being out of a job. And so I was looking for work, and I reached out to him and said, you know, hey, thanks for leaving as soon as I get to Yellow. Yeah, thanks for nothing. Yeah, so what do you have down at – I knew he'd gone down to Waste Management in Houston, and I said, what do you have down there?

27:10And he said, we're kind of restructuring a bit. We have a lot of open positions. Why don't you come down? So I took a manager in financial planning position in Houston, and it was nice. My parents were kind of down the street in Austin. And so I really didn't plan on working in this industry. It's not as if I said, you know, I really want to do something for the environment or I want to, you know, I feel like this is a company that's pretty progressive and I want to, you know, work for that company. I just needed a paycheck. As a young boy, you weren't dreaming of trash. What kept you there then?

27:40Maybe we should say that. Was there a role that you took on where you thought, huh, this really, you fell in love with it? I think when I eventually moved out into our field operations is when I said, okay, this company is doing a lot of good things. Because in financial planning, I mean, I'm not taking anything away from that group. I mean, we have a financial planning group today. They do a fantastic job. But they're a corporate group typically. And so they're doing financial planning and analysis. And they're assessing acquisitions. And so you don't really get to see and feel the operations of the company.

28:13And so Maury had, and he retired in 04, but I started asking him, you know, what should I do? And he said, look, if you work for Procter & Gamble, which is a marketing company, you want to work in marketing at some point. If you work for Goldman Sachs, which is more of a finance company, you've got to be in finance at some point if you're ultimately going to move. Waste management, get on a garbage truck. That's right. So waste management is an operating company. And he said, if you want to give yourself an opportunity to learn the business, then go out and do our operations. Get thee to Pittsburgh.

28:42What did you do? Did you actually get on a truck? Oh, I did until about three years ago. I used to go out probably two times a year. And when I was in the field, I would do it probably once a month. But we moved actually from Houston to Boston, lived there for two years, then moved to Pittsburgh, and then Philadelphia, and then back to Houston. But I've always felt that my father-in-law, who was a pipe fitter in St. Louis, Missouri, and a union guy, and he and I were great friends, and unfortunately passed away too soon. But he said when I was going out to Boston, he said, look, are you union or non-union?

29:18I said, we're union out there. And he said, well, look, there's no difference between union and non-union. They're all people. But he said, my advice to you is to, if they have some kind of meetings, because he said, is your office located on one of the work sites? And I said, no. It's in a kind of an office complex. He goes, well, then go out to those sites. And he said, do it every week. And he said, but if you do it just once, then don't do it at all. Because then he'll say, yeah, okay, Jim came out here one time, and we've never seen him again. But if you do it every week, then you'll earn the respect.

29:49And he said, boy, if you're unionized, you'll really earn the respect of the labor union guys. And he said, you'll earn the respect of the non-union guys too. But so I would go out and ride along on the back of a truck and throw trash with them probably once in a while. I don't know if I'd want my boss riding on the back of a truck because I'm trying to do my job in Boston in the winter. Once I became CEO, they said, you know, probably you can ride around in the front, but I'm not sure I want you on the back. And most of our trucks now, we've transitioned away from those trucks where you have a helper on the back anyway.

30:21Right. For safety reasons. Now, I want to rewind a little bit because you briefly mentioned your college experience, but I know you had quite a herring experience with your undergrad. Is that correct? I did. Correct. Can you tell us about that and what you learned from that experience? So I started out at the University of Texas growing up in Austin. I mean, I was a Longhorn and always had plans to go to UT. And so I got into UT and was going to – an accounting major is kind of a five-year program, not so much a four-year. So in between year three and year four, I went out to visit an aunt and uncle of my mom's.

30:58And she'd been kind of badgering me for a while. Why don't you go visit them? And so I did. And they were living in Scottsdale. And they were elderly. They were in their kind of maybe early 80s. So I went out to visit them in the summer. And I got out there and I started having these fairly quickly. I mean, within about a month, because I was going out there for the summer. So a month into it, I started having these really excruciating headaches. And I didn't know what it was about. And I never had migraines or anything like that. So I ended up going and they took me into the hospital. and what I had was fungal meningitis, which is a bad form of meningitis.

31:33All meningitis is not great for you, but this one was treated with a really strong antibiotic. And so I had to get these spinal taps with this big long needle right there in the base of the skull, called a cisternal spinal tap. And I got that tap, I had 200 of them to purge this meningitis out of the system. So the interesting part and the reason I ended up at Arizona State University actually is because my mom came out and I did not want to go back. It was such a sensitive treatment. She said, do you want to come back to Austin to have a neurologist treat you? I mean, I literally cried. I said, no, I don't.

32:10I don't want to have anybody touch me. Even when this neurologist went on vacation. So you were stuck in Arizona because of this meningitis? Because of meningitis. Wow. And it took me two years to get over it. So three times a week, I would have a spinal tap, and I was completely out of it. I mean, they would give me that spinal tap. They'd give me a shot of Demerol, and I'd be knocked out for eight hours. But the other four days a week, I didn't know a soul out there. My aunt and uncle are way up in North Scottsdale, and I was going to a hospital down in South Scottsdale. So my mom rented a small apartment.

32:42She had to come back to Austin because the rest of my sisters and my dad were back there. So I'm by myself, but we were trying to figure out before she left, how would I get to that hospital because it was a little bit away and I wasn't going to walk. And so there was no such thing as Uber at the time, and I wasn't going to take a yellow cab because I was really pretty out of it after I got that smile to her. So she called Arizona State University and they said, we have a van that's a handicap van that we will send over and we'll take him from his apartment to the hospital and back. But the catch is he needs to be enrolled as a student.

33:23And so I enrolled as a student at Arizona State in their accounting program. And then for most of that time, they sent a teaching assistant over to my apartment to give me accounting classes and to finish my degree. So I finished my degree at ASU. Wow. Wow. Is there anything you learned from that experience and that time that you've kind of taken with you into your leadership role today? I think the main thing I learned from that was patience because when I, you know, we're all as when we're young, we're all impatient. And I think that's just human nature. And I was as impatient as anyone. And so when I first went into the hospital and the neurologist came in and said, well, here's the diagnosis.

34:10You have spinal meningitis. It's not a great form of meningitis. In fact, I was being treated with three other people, and two of the three of them passed away during the treatment. They just couldn't take that. Were they young people too? One of them was young. One of them was a little bit older. Oh, my God. But that doctor came in and said, you're going to have to – I had my first spinal tap, which was not a pleasant experience. And he said – and I'm thinking, you know, maybe I have to – I'll be over this in a month. I mean, I'll have to, you know, maybe four or five spinal taps, but I can put up with it.

34:44And he said, you're going to have to go through this. We'll have to give you a spinal tap. It'll probably be three to four times a week, and it'll take about two years to get rid of this. And I'm 21 at the time, and I'm thinking two years is like 10 % of my life. I mean, I couldn't think. I mean, we talked about how people don't normally think far out. I mean, you know, I'm thinking about what I'm going to do for spring break. I'm not thinking about what I'm going to do two years from now. And so I just had to learn patience. And so every single time I would go into that hospital, and by the way, when I would go in, it was, I still to this day when I smell that kind of alcohol pungent smell in a hospital, it still makes me nauseous because it was like Pavlov's dogs.

35:29I associated that smell with that treatment and the treatment I disliked. I had a spinal tap once. I can't imagine having 200 of them. That's crazy. So I think what I learned from it most was patience. And look, things don't happen in your time frame all the time. And my time frame was not two years, I can tell you that. Well, you mentioned you've got daughters, Gen Z. And what do you think of, let's go back to the talent question, what attracts people now to WM? You know, since that's your most important constituent, what is it that you think gets them in the door? I think, you know, Nicole, our oldest, is going through an interview process right now.

36:13She wants to live and work in New York. And so she's going through an interview process. So I've had this conversation with her about what gets her in the door. And in addition to being well prepared when she goes in for the interview, I do think there's something to be said for your approach. And people tend to gravitate to people that are pleasant, have a pleasant expression on their face. And not everybody. I mean, not everybody has that. But I said, Nicole, even if you're not enjoying the interview, act like you're enjoying it. And so I've had some feedback on her and the interview process that she's gone through.

36:55And she's done extremely well. And she's a smart young woman, but she does have this very pleasant demeanor about her. And I said, you know, if you don't have that, it's a bit off-putting. And so sometimes when – and I don't do a lot of interviews, but I'm mostly looking for that type of people connection when I talk to folks. And by the way, it's not just the interview process. It's when I'm talking to someone at one of these business council meetings, for example. I mean, or any kind of social setting, I want to see, is there some type of, is this person kind of going to be socially agreeable?

37:37And when I say agreeable, that doesn't mean they agree with points that I'm making, but they're, I mean, both of you all have a very pleasant demeanor, pleasant expression. It's our day job, right? No, but I get your point. I do think that's important, though. I get your point. I mean, plus it's a, if you have a team, you want people to be a culture fit. Well, and I think it's important for me. I mean, I think it's important, maybe as important for me as anyone, because when I run into people in the elevator or in the offices, I always make a point of saying hello. And I always make a point of smiling.

38:08And I'm never too busy to, while I have a fairly busy schedule, I don't ever want to be so busy that I can't say hello to you. Now, it doesn't mean I'm going to remember your name and I'm not great with names. and I try, but... Diane and Kristen. Yeah. I've got Diane and Kristen, but... Perfect. But we have 62 ,000 employees and many of them I've met multiple times and sometimes their name sticks and sometimes it doesn't. But I do think it's important, particularly for me, to demonstrate that. If I'm going to tell Nicole she should be that way, then dad should be that way. Yeah. Speaking of people and culture, it just, of course, brings me to AI and the future of that on the workforce because the workforce right now is facing so many challenges.

38:52We've got immigration reform. We've got an aging workforce. WM said that you were going to eliminate 5 ,000 jobs through 2026 through automation. I'd love to hear about that journey and how you're looking at using AI, but also keeping that people first culture. Well, and that always, you know, people do say that sounds counterintuitive if you're going to eliminate jobs, but you want to be people first. And by the way, those jobs that we eliminate are coming from attrition. So I'm not going and doing a reduction in force. I want, yeah, just not how, when somebody leaves, we, if we're able, we just don't replace that position.

39:29And so that's how we're planning to eliminate 5 ,000 jobs. There's a couple of different places where we're doing that. One is, I've mentioned a couple of them. One is these trucks that where we're moving from a traditional rear loader, which is the old style truck. and there's a person on the back and that person is loading trash in the back. And I've been, as we've talked, I've been out there quite a few times on the back of those. And those can be pretty dangerous. I mean, we've had, in fact, what really prompted this whole interest for me to move away from those was not financial, it was safety.

40:03And we had a guy killed in East Texas. and there was a young woman who was texting and ran into the back of the truck while he was back there. And you don't survive that. And it was not the first time that that's happened. And so I told the area, the vice president, the AirVac VP, look, we need to move away from those old style trucks. They're just too dangerous. And this was on a busy street in this town. It was on Martin Luther King Boulevard, which is a busy street in Port Arthur. And so the city said, well, I'll tell you what, We'll put a chase truck behind it, and that'll protect your people.

40:41And we'll do that for six weeks. And so they did. And literally the week after that chase truck dropped off, seven weeks later, we didn't have somebody hurt, but another person, boom, hit the back of the truck. Fortunately, the helper was not back there. So I said, look, we have to move for safety purposes. I do not ever want to have somebody else hurt or, worse yet, obviously killed behind a truck. So we're going to move away from those. And at the same time, you can imagine those positions are hard to fill. I mean, the 50 % turnover. It's a growing job. It's a tough job. Having been back there and done that, it's heavy, it's hot, or in the winter it's cold.

41:21I was back there one time when it was – I went out and it was 10 below zero on the back of a truck. You're climbing over snowdrift. Climbing over snowdrift. Your hands are cold. I mean, it's a hard job. And I can't tell you how much I appreciate the folks that do it. But when they leave, and eventually they do, I mean, you know, with 50 % turnover, we've started to automate those trucks to the truck that has the arm on the side. And those don't require somebody behind the truck. In fact, they don't require anybody getting out of the truck. And the most dangerous place around those trucks is when you're outside of it.

41:55So that's one of the places where we're reducing headcount. And then also these recycle plants, we're automating them. And again, another position that is hard to fill are those pickers. They're sorters. They have a conveyor belt that's coming by pretty quickly. And so they're picking, you know, two-by-fours and things like that that don't go through the recycle equipment off of the conveyor belt. And that can be done in an automated way more efficiently and produces a better product on the back end. It can handle a conveyor that's going faster. So it increases throughput. And at the same time, you have these jobs that are hard jobs that are hard to fill when people leave and people do leave them pretty regularly.

42:39So most of the positions that we're eliminating, and I don't like that word, but the positions that we're eliminating are positions that are hard to fill positions, difficult to hire for positions, and high turnover positions. You know, I think about most CEOs we speak to actually are looking at these reductions in workforce because of AI or other factors. And I think where do you see the opportunities for the next generation as some of those on ramps maybe close a bit? Or, you know, the advice you have to your daughter or what you would be doing if you were starting out now? Well, I think the advice I would give is that because there's always this concern about AI.

43:22You hear a lot recently about AI. Oh, my gosh, AIs can eliminate all these jobs. But technology forever has eliminated jobs. I mean, there's not a job, as far as I know, that's a plow farmer anymore. So what happened to the plow farmer when tractors came around? Well, the plow operator who was doing it with a horse found something else to do. So technology does replace positions, but then they create positions. I'm an optimist, but it feels different when you've got a gentica. And again, I'm not, this isn't, I think there will be jobs. It feels like there's going to be a transition period. I'm sure there will be a transition period, but I'm not sure it's that much different than the Industrial Revolution, which was a massive change from an agrarian society to more of an industrial society.

44:10I would argue that was a bigger change than AI will make today. And with that came a whole different type of job. I mean, a mechanic's job. There was no such thing really as a mechanic on a piece of machinery prior to the Industrial Revolution. So those are jobs that were created by technology. And I think the same will happen. I think you're right. I think there will be a transition period. But, you know, some of the jobs that Nicole's interviewing for are not jobs that would have been around in 1950. Well, and the environment certainly is creating more jobs too. I think that's right. Yeah, exactly.

44:48Climate tech. We were just a trash company in 1970, and now we're a trash and recycling company. So we have an entire division that's dedicated to sustainability that wasn't there 30 or 40 years ago. Is there some other arm of your business that's not happening right now besides trash and sustainability that you think will be the next big thing in, as we said, 2035? I do think autonomy is real. I've got the app on my phone and the Waymo app. And so I've ridden in probably five or six different Waymos in Austin, Texas, in Phoenix. And, I mean, you know, they get out on the freeway and they drive to your exit and they get off and they drop you off at the restaurant.

45:34And it's pretty amazing. You know, and there is nobody up front. And so those – but they do work. I know they're still working through a few. It's hard, I think, for Waymos to navigate snow-covered streets. So you don't see them in Minneapolis, I think, for probably that reason. But they're in – so the places that they are right now are in California, which, you know, on the coast, they don't get a lot of snow. Austin. I saw one in Houston a couple weeks ago. Phoenix. So there could be an autonomous garbage truck, maybe? So there could be an autonomous garbage truck. Look, Caterpillar. I sit on Caterpillar's board of directors, and they have autonomous mining equipment for a lot of their mining customers.

46:12And part of the reason is it's hard to hire out in the middle of nowhere, and these mines are out in the middle of nowhere. So we've been talking to Caterpillar about developing autonomous or remotely operated heavy equipment, and we buy a lot of Caterpillar equipment. And then on the collection side of our business, we think there's an opportunity. I've challenged our team to come up with an autonomous residential contract in the next two years. And will they do it? I don't know. And I think the way that would kind of manifest itself is that you would have somebody sitting up front. And this wouldn't be a huge contract.

46:50This isn't going to be the city of Seattle. This is going to be probably a homeowners association that has a few hundred homes and that we have a contract with. Ideally, you'd have a truck that is that automated side loader. It recognizes the can coming up. We would certainly initially have somebody sitting up front monitoring things, but the truck would be operating itself. That's my goal. And at least initially, you wouldn't eliminate anybody. You'd still have a person sitting up front. And I think it's probably going to be a while before you eliminate anybody. Although, you know, these residential driver positions, they have a pretty high turnover too.

47:34So you could get to a point down the road where you truly have an autonomous truck, kind of like a Waymo, where there isn't anybody in the truck. But I think in the near term, I would envision an autonomous residential truck that has somebody up front. So there still is a job there, but it's testing out the autonomy of a heavy truck. How do you keep people engaged in jobs that most people don't want to do? You've mentioned several cases. I think part of it is, you know, obviously, the obvious part is people want, you know, compensation that is adequate. And so we've raised our compensation for those types of positions.

48:16Over the last five years, we've raised it almost 30%. So that's, you know, an average of about 6 % per year. So that's pretty, that's well above inflation. But typically, that's not the main reason people leave their jobs. Not just those jobs, but any job. People typically leave their job because they're disinterested or they don't feel valued or they don't enjoy who they work for, their boss is a jerk or whatever. And when you do these, when you look at these exit interviews, number 12 on the list or 13 on the list is pay. Because if somebody comes to me and says, you know, look, I love what I'm doing here, but this company, company X is willing to pay me more.

48:59I can resolve that. But if you come to me and say, you know, my pay is fine, but my boss is such a jerk, that's a little tougher resolution. Or the nature of my job is such that my back hurts. That's hard to change too. Or I just don't feel valued here. Yeah. I mean, you know, yeah, the pay is fine, Jim, but I don't feel like I'm valued. I don't feel like it matters what I do. That is a tougher resolution. So that's why I think pay is something that I can solve that. If you came to me and said you're not feeling adequately compensated, okay, fine. We'll work through that. But if you don't feel valued, that's a little different.

49:36How do you get people to stay then to Diane's point? How do you get them to love trash, love the industry? Because it must be hard. Well, when I came into the job in 2016, my goal was to really affect a culture change at the company. and um and so i i kind of have coined the term people first and and and again i didn't come up with the idea really i think herb keller was one of the first ceos to start thinking about this but but i did coin the term people first at wm and i said look it's you know i want people to feel valued in what they do regardless of what the job is whether it's a a driver whether it's a technician whether it's an accountant uh you know whether it's a sales rep whatever it is i want people to feel like that they matter.

50:25And by the way, they matter all the way up to Jim. Jim cares about me. He cares about my family. He cares about what I do every day. He genuinely seems like I matter to the organization. And then I think it doesn't really matter whether it's trash or whether it's heavy equipment or whether it's technology. Whatever the business is, I think is less import. Some people leave because they, okay, it's a dirty job. Most people don't leave for that reason. I mean, they get it when they apply for the company. I mean, you're applying for WM or waste management. They know what it is. They leave because of a lot of other things.

51:03And I think if they feel valued, then they grow to really, really enjoy the company and regardless of what line of business we're in. Well, you've certainly been there 24 years. One question I do have, you're in the business council, right? You know, one stakeholder we haven't talked about is the regulatory stakeholder, because obviously that has a huge impact on recycling, trash, the nature of what happens, certainly at the municipal level. What are you seeing there? Are you seeing, are we moving as quickly as we need to be on that front? Well, I always say about regulation that we regulate, regulation is a good thing for us.

51:42And some people say, wow, really? That doesn't sound right for you. But regulation is a good thing, I think. And part of that is that we regulate at a higher level than the government. No matter who's in office, we've always regulated ourselves at a higher level than the government would otherwise regulate us. And whether it's at a landfill, whether it's collection of landfill gas, whatever it is, we tend to self-regulate at a higher level. And so I look at it as a differentiator. the more regulation there is. Some people, that's tough for them. Some companies have a hard time with regulation.

52:16But are we moving quickly enough on, for example, recycling and some of the climate initiatives around waste? I mean, there's reduce, recycle, reuse, obviously. How are we doing on that front, do you think, as a nation? And obviously, these things are regulated at a local level. Exactly right. I think they're regulated more at a local level. So whatever happens with the White House doesn't matter as much to us from a regulatory standpoint because most of our regulations is either local or state. And I would answer your question, I think some states do a better job than others. Who's doing a particularly good job?

52:53You know, when it comes to recycling, you know, I think California does a pretty good job. I wouldn't say California does a great job on all regulation, not necessarily in our business. I I think California has their own set of problems. But when it comes to recycling, I think California does a pretty good job. I think the West Coast in particular does a pretty good job. I think Oregon does a good job. I think Washington State does a good job. But look, other states are kind of getting on board as well. I mean, Austin, Texas. Houston, Texas has made it important to them. Dallas. I think a lot of the big cities.

53:25Less so maybe in some of the rural areas. But I think it's more critical in the big metroplexes. So, but I could go down a long list of states that do a pretty good job. You know, I think Florida has done a nice job. And, you know, there's 50 states and we're in 48 of them. So we encourage recycling in each one of these states. So that's why I say there's a bit of us kind of intervening and saying, look, how about adding recycling here? And most of the time, the communities or whether it's the community, whether it's the municipality, are willing to take that on. I know we're coming kind of at the end of our time here, Jim.

54:06So I have a really weird question for you that I'm just dying to ask you because I'm curious. What is the most – About my golf game. Well, that, but also what is the most kind of bizarre or surprising thing that WM has ever been asked to process or collect? I, there was a, there was a, um, a boat anchor that came through like a, like a cruise ship anchor almost. I mean, a huge boat anchor that came through one time that ended up on the floor at one of our recycle centers. And this was a long time ago. And pretty clearly that's not like an aluminum can or, uh, you know, how's it get there? Well, it somehow got loaded into the back of a roll-off box and, and, uh, I don't know how much those things weigh, but, but clearly the people that saw it said, well, okay, so So I don't think I can move.

54:52That's not like a two-by-four that I can pull off. It never made its way onto the belt, but it was on the floor. So there's been a lot of crazy things that have come through, recycle plants. But that's the one that kind of comes to mind as being kind of the craziest. Is there any question you wish you were asked more often or don't get asked often enough? I think I wish I was asked more often, particularly by other CEOs, how do I do a better job of taking care of my people? I just think that while the environment's very important to me, I go back to that ordering of constituents. And if you don't take care of your people, then they're not going to take care as well, at least, of your customers, your shareholders, the environment.

55:38If you really make that a mandate that I'm going to take care of my people, they're going to feel. And I think I've been somewhat successful. I'm never going to be 100 % successful in this. But I do think we've made some cultural change at WM. But I wish other leaders would focus on that more. I think in today's world, we don't focus enough on the culture and these jobs. Every job has challenges to it. And all of us are under some form of stress. So if I can take a little bit of that stress away from you in your role and make you feel good about, you know, the alarm clock going off in the morning and coming to work.

56:19And some of these folks come to work at pretty insane hours. Yeah. I mean, they come to work at 2 o 'clock in the morning or 3 o 'clock in the morning. And so if I can make them feel good about the fact that they work for a company that really cares about them and their families, then I think we will have gone a long way to creating a great culture and ultimately a great company. I don't get asked that very often, and that's maybe a question I wish I got asked for. Thank you so much, Jim. We appreciate you being here with us. Thanks for having me. Leadership Next is produced and edited by Jalon Ersoy.

56:51Our executive producer is Lydia Randall. Our head of video and audio is Adam Banicki. Our theme is by Jason Snell. Leadership Next is a production of Fortune Media. I'm Diane Brady. And I'm Kristen Stoller. See you next time. Leadership Next episodes are produced by Fortune's editorial team. The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel, nor does Deloitte advocate or endorse any individuals or entities featured on the episodes.