"The usual corporate-culture buzzwords, like engagement, productivity, and performance, are self-serving to companies," says Bob Chapman. "We want to release human potential." Chapman is the 68-year-old CEO of Barry-Wehmiller, a $1.7 billion diversified manufacturing technology and consulting company based in St. Louis that can trace its roots back to 1885. He is an indefatigable advocate for what he calls "truly human leadership," or THL.

Chapman argues that the goal of management is not boosting the bottom line but fostering a better world. That isn't to say that THL can't boost the bottom line. Since 1988, the privately held company has achieved 15 percent compound growth in its share value. Thanks to the acquisition of dozens of underperforming companies, Barry-Wehmiller now manufactures a variety of items, including food packaging, labeling equipment, and conveyor belts. "When people thrive, companies thrive," says Chapman. He spoke with Inc. about his vision for leadership and why he thinks it's so important.

I became CEO of the company in 1975, at the age of 30. We had some challenging times, but we turned it around by 1989. The problem was that our growth in the '80s and most of the '90s was largely driven by acquiring struggling companies that had the same financial or market problems we had learned to overcome. It was all strategy and no culture. That began to change in 1997, when I had an epiphany. I was visiting a company we had just acquired, and I was hanging out in the kitchen before work started. The team members were all talking about March Madness and how they were doing in the office pool. They were having fun. You could feel the energy. But the closer we got to the start of the workday, the more the joy went out of their bodies. I found myself asking, "Why should people have to leave work to have fun?"

I had been taught, both in school and in my first jobs in public accounting and the business world, to see people not as people but as functions: "That person is a receptionist, that one's an engineer, that's an accountant," and so on. I didn't realize what an impact that has on people. As I spent more time thinking about this, I found out that the vast majority of people--about 80 percent--feel they work for an organization that does not care about them. That's a startling number.

We created some friendly contests at a couple of our plants that really got employees fired up. As we did that, we realized there was something larger going on. We had discovered something important about the value of helping everyone feel more fulfilled. So we developed our "Guiding Principles of Leadership," where we defined some of the things we wanted our company to be about. This was right around the time of Enron's collapse, though, and people said, "Enron had some beautiful statements on their walls about their principles and beliefs, but obviously those didn't mean much." So I said, "We're going to put this in people's heads and hearts, not just on the walls."

I began to meet with employees at our locations, and I learned a lot about some traditional aspects of manufacturing life. For instance, office workers could pick up a phone and make a personal call whenever they needed to, while people in the factory had to wait for an official break and then use a pay phone. They had to punch time clocks and ask permission for everything, but the office staff didn't. To the factory workers, it felt like they weren't trusted. So we got rid of time cards, installed free phones, let people get coffee anytime they wanted to. We did everything else we could think of so that no one felt less equal just because they worked in one part of the building and someone else worked in another.

At the core of THL is the belief that leaders shouldn't manage people; they should steward them. After all, who in your life do you "manage"? Your spouse? Your children? No, you care for them. You acknowledge the deep responsibility you have for them. We wanted to be sure THL became permanently embedded in our culture, but we knew we couldn't achieve that by sending people to any university or graduate education program, because they all teach management. So we launched our own university to create leaders who can become good stewards of the lives entrusted to them. Our target audience is not senior leadership but frontline leaders, the people to whom about 80 percent of our staff report. We focus on them because that allows us to touch as many lives as possible.

Academics from two graduate business programs wanted to validate what we were doing, so they surveyed our team members, and 79 percent said they believe the company actually cares about them, the complete inverse of how most workers feel. Another thing they discovered, and this even surprised us, was a sense of altruism within the company. What happens is, if I can send you home fulfilled, knowing that who you are and what you do matters, then pretty soon you start caring more about the people you work with. Caring becomes part of the culture.

I'd like to awaken this country to the fact that we're destroying the very thing that we should value: the opportunity to live together with meaning and purpose. Leaders have to step outside the daily issues surrounding profitability and say, "What's this all about?" I talk to CEOs all the time and everyone agrees with me, but they say it sounds too hard. I say, "You bet it's hard to be a good steward of people, but what's the alternative? This is the fabric of life."

As told to Inc. editor, Scott Leibs