Alysa Rose, president of Rejuvenation, could feel the culture of her company drifting a couple years ago. She could see it in the lost sense of urgency, and she could hear it in the voices of her employees.

“The most heartbreaking quote I heard from an employee, a relatively new employee, was: ‘When I got offered a job at Rejuvenation, a friend said, Well that’s great. Once you’re hired at Rejuvenation, you’re never fired.’ And I thought, wow, that’s not what a healthy culture is about. It’s about people contributing and making the business stronger and being accountable for that.”

I spoke with Alysa a couple times earlier this month as part of a series of interviews I’m planning with leaders of sustainable, privately owned businesses to gather and share an inside look into operating a triple-bottom-line business. It’s important to understand that Rejuvenation has a well-deserved reputation for its socially responsible business practices, built painstakingly since its founding in 1977. Based in Portland, Ore., the privately held company is America’s largest manufacturer and leading direct marketer of authentic reproduction lighting and house parts. It goes to great lengths to minimize its impact on the environment and support the causes that contribute to livable communities.

In the circles of corporate social responsibility, “doing well by doing good” is practically a business mantra. And under the leadership of Alysa and founder/owner Jim Kelly, Rejuvenation knows what it means to do good and to do well. But as Alysa’s experience in her business demonstrates: Doing good socially and environmentally does not guarantee financial success.

“It’s important to be very clear-headed about it all. You can’t do good unless you’re making money. You’ve got to make money. That’s where you have to start. You have to have an exceptional business plan that drives profitability. Because if you want to give back you have to have a base to give back from. It’s hard enough to run a good business; complicate it by being mission-driven or values-driven and you’ve got to have a damn good business model. I think that’s why Rejuvenation is successful.”

Ass on the line

Alysa and Jim know the importance of profitability; unfortunately, as became evident in 2007, too few managers and employees in their company were as clear-headed on the financial front.

“People really wanted to work at Rejuvenation, not because they were excited about contributing to our growth and profitability, but because we had a reputation for treating everybody so well and they wanted to come along for that ride. It was out of balance. Our performance started suffering.”

That’s when Jim and Alysa added a seventh core value, sans sugar coating. They called it “ass on the line.” They considered calling it accountability but decided that sounded too “corporate” and easy to dismiss. To drive home their message, Jim and Alysa met with every employee in small groups and made it abundantly clear what would be expected of them going forward.

“We asked them to make a commitment. I said, ‘Don’t take this lightly. Take this in. Go home. Think about it, talk about it with your loved ones and make a commitment whether you want to be here or not.'”

As it turns out, some employees and managers were uncomfortable with the much higher expectations of accountability and decided to quit. In hindsight, Alysa says, she and Jim could have presented the information in a less threatening way, “but we are in a much better place now.”

Having halted the cultural drift before the recession took root proved fortuitous. “I can say we are leaner, and we are tougher and quicker,” Alysa says. That has left the company far better equipped to ride out these tough times.

When values collide

While “ass on the line” has had its desired effect in building financial accountability, it doesn’t mean social and environmental responsibilities are any less important at Rejuvenation. When values collide, as they frequently do, Alysa’s team takes the challenge head on.

“The point is we have those discussions. Does it add complexity? Yes. Does it add a degree of difficulty? Yes. Does it add time in most situations? Yes. And that’s just how it is. And I think it’s a struggle for some. I think it’s a struggle for business managers who come from a more straightforward environment. And it might be a little more complex for employees. But it’s also much more rich.”

While the company has worked hard to integrate “ass on the line” into its culture, Alysa says it’s not the company value she holds closest.

“Of all our values, ‘goodness’ is the shortest one. That’s the one that gets me up in the morning. If you’re going to dedicate your life to something or even a few years to something, you want to believe that doing it is going to leave the world a better place. So the goodness is that the world is a better place because Rejuvenation is here. We employ people. We provide great products. We preserve old buildings. We give back to our community financially. We educate our employees.”

And they teach the rest of us in business: Sometimes you have to be tough to do good.