Shades of Leadership

Women's Choice: Career OR Family?

The recent news about the Harrison Butker commencement speech at Benedictine College has caused an uproar in the popular press. My inbox has been blowing up from people who know me as an avid Chiefs fan and a professional woman, asking me how incensed I must be that “Butker is telling women to stay home”, and that he was “boo’d by the audience”. I have to admit I got on the “WTF Harrison Butker” bandwagon for a few days, but this morning decided to listen to the speech in its entirety, and here are my takeaways on the topic of women:

 

• A very small portion of his comments were on the topic of women and their responsibilities/choices; most were comments on the role of leaders and the role of the church.
• He does not “attack working women” as headlines state.
• He does state that in addition to thinking about their careers and promotions, most women are probably looking forward to marriage, kids, and family.
• He pays emotional tribute to his wife who chose to be a homemaker after getting her college degree.
• There were a few boos, but far more applause after he spoke of his wife.

 

Harrison Butker is very open about being a conservative Catholic (attends only Latin mass), so I was certainly not surprised that he made very conservative comments to an audience of a very conservative campus. I’m not going to debate positions on every topic he mentioned in his address (I’m not Catholic so certainly can’t comment on the division in that faith on political issues of the day).

 

As this is a blog on leadership, I’m choosing to share my thoughts on the leadership, or lack thereof, in the field of journalism in reporting and writing headlines, and the biases those continue to fuel regarding the choices women have.

 

The press vitriol regarding the Chiefs’ HOF kicker demonstrates the desire for today’s media to fuel a divided nation by misrepresenting and lying about what public figures say. They count on social media addicts, who only read headlines, to push these lies further, fueling division, hate ,and disdain. More importantly, the false media headlines further ossify a dangerous bias in our society, that if a woman enjoys being a mom and wife that we must not be committed to a professional career.

 

Shortly after we got married and moved into our first home, Joel and I attended a neighborhood party. I was speaking with a woman who was probably in her 50’s then, who asked about what we did. I told her my husband and I had just started our careers…he as an engineer for a Chicago consulting firm, and me as a salesperson for Amoco.  She seemed intrigued and asked me how long I planned to work. I told her I was hoping it would be a fruitful career. She then made the bold statement, “Well, women like you don’t deserve to have children.”

 

Wow.

 

That was my first introduction into the “either/or” mentality of what women should be able to do.

 

Similarly, as I began my career, I came across people in the business world who believed in the popular 80’s narrative of Mommy Track which believed that working women who chose to have kids should be put on a slower track at work because of their commitment to family.

 

Wow again.

 

(Ironically, “Daddy track” seemed to be an accelerated career path as men who weren’t married at the time were not considered as stable and committed to their careers.)

 

I know many women who have achieved a great deal of success both at the office and in their homes. When we get together, we speak about our professional challenges in the workplace as well as what we are cooking for Thanksgiving! We ask one another about our kids and grandkids and are excited about mutual professional promotions and appointments, and doors we can open for professionals – both men and women. I would say that to a person, each of us gives credit to the supportive spouse and/or family that has helped along the journey, and privately we can cite many personal sacrifices made and risks taken to achieve our current lives. We share in our concerns that although progress has been made for women in the workplace, there are still many biases, conscious and unconscious, that we must continue to fight. I believe our society needs both men and women in the professional workplace, but that does not excuse us from being fully engaged parents at home.  

 

Since when did we decide our personal choices on how we live our lives need to pass the scrutiny of popular press? Why do we allow the media to dictate that women should only choose one path when we’ve never held men to that same standard? It's not an either/or. It's a "what and how". What a woman chooses to do should be her choice. What a couple chooses to do should be their choice. My role as a professional woman and experienced mother is to help create options so that people can make those choices and have opportunities to succeed on the paths they choose.

 

As I now watch my two children start their families and careers, these are the kinds of conversations they must have with their spouses. I’m thrilled to know they are making these decisions together, and mutually supportive as they choose the path is best for them. There isn’t a right or wrong answer. They only thing that matters is that they contribute to society through their professional choices and how they raise the next generation.

Leadership and AI Governance

This week I had the opportunity once again to attend the annual 2023 NACD Summit in Washington, D.C. It’s something I attend every year, schedule permitting, to learn from amazing plenary and breakout speakers, reconnect with colleagues, meet new directors, and speak to aspiring directors who will sit in boardrooms of the future. Of the 20,000+ members of NACD nationwide, we generally have around 1,500 attending every year in person, and a few hundred who sign up for the virtual option.

In addition to hearing from leaders of the organization, plenary speakers on Day One included Matt Devost who spoke on tech disruption, Ian Bremmer on timely topic of geopolitical recession and crisis, serial entrepreneur Jon McNeill who inspired the audience with his thoughts on board excellence and management interaction, and Doris Taylor who floored the group with her story of growing a human heart. Each topic, as disparate as they might have been, drove home the immense responsibility board leaders have in how we guide, coach, challenge, and support our organizations in the world of public, private, and nonprofit companies.

Every year I attend and participate in this Summit, I find myself inspired by the incredible level of commitment these directors have toward continuing education and learning. Key to excellence in board service is the ability to stay current and relevant about today’s challenges so that we are best equipped to bring an informed and valuable perspective into the boardroom. CEOs and executive teams today are faced with significant challenges. Shifting workforce demands, strategic complexities, and digital innovation are taking place against a backdrop of exponential change and disruption. The days of board meetings consisting of a line of management presentations each followed by short Q&A on only the slides presented are short-lived if not extinct. Instead, fulsome conversations, grounded in current perspective and experience, are needed to help senior executives make the right decisions around strategy, talent, and capital allocation.

I had the pleasure of participating in a panel that covered the topic, “How Boards Govern Artificial Intelligence”. The panel included Helmuth Ludwig, Benjamin van Giffen, Debra Everitt McCormack, and me, representing the perspective of academics, professional services, and of course, directors in the boardroom. Engagement in the standing-room only session was lively, and Q&A was energetic as we addressed some important aspects of how AI impacts organizations. Some highlights:

Strategy and Risk

As machine learning and generative AI influence data that we collect, analyze, and from which we draw conclusions, there is no doubt there are business models that will be significantly altered or perhaps even eliminated. We are all inundated by inbound suggestions for products and services based on our past behaviors. The concept itself is nothing new…companies have been buying mailing lists for decades, hoping that the predictive power of data can increase hit rate on sales. What is new is the speed at which information can be gathered, the type of information that is now available, and the low barriers to entry that now exist thanks to the digital world. In manufacturing environments, AI will be a powerful predictor of equipment downtime, supply chain management, and obsolescence due to incredibly fast pattern-matching that human judgment might preclude.

The architecture of a company’s business model could/should fall under strategic scrutiny in examining the impact of AI. Are the changes incremental or is the business itself threatened? Does the advent of machine learning threaten the nature of what we do (is this an Amazon moment) or do we harness it to improve on a strong architecture that is sustainable?

Workforce implications

A June 2023 McKinsey Global Institute Report indicates that by 2030, activities that account for up to 30% of hours currently worked in the US could be automated. Alternatively, in that same period of time, the study suggests that more than 5 million more health care positions will be in demand (approximately 3 million on top of today’s 2 million shortfall), as well as an estimated increase of 23% in STEM related positions. AI will also likely create new positions that don’t exist today.

Organizations will undoubtedly be faced with the task of retooling the workforce as more mundane or repetitive tasks become automated, and higher-value activities requiring collaboration, problem solving, or innovation are more in demand. This will also have a huge impact on hiring practices as more companies are reportedly dropping requirements for a college degree. Against a backdrop of shifting workplace culture, these changes will elevate the importance of the CHRO in the organization (much more than just covering compensation and benefits) and increase the value of having that perspective in the boardroom. If you haven’t already, I’d put “human resource experience” on that board skills matrix!

Compliance and Internal Control

As the value of generative AI is considered in our enterprises, there will no doubt be an increased concern around its use and access. Cybersecurity risk will elevate and, in some instances, result in increased regulatory control and compliance requirements. There is no doubt that the quantity and sophistication of hacking and phishing scams will increase in both our professional and personal lives.

Companies and boards need to also understand the implications of using tools like ChatGPT. After all, generative AI by definition learns, and so it will include record of its actual use by individuals and organizations (i.e., do you allow employees to use it while at work?). Protecting IP and sensitive data will be paramount to maintain a competitive edge and retain critical talent.

The question of bias is also one that warrants increased focus. Software that is biased will only exacerbate inequities that might currently exist. If the reliance on AI goes unchecked, organizations can unexpectedly “hardwire” bias into decision making regarding strategic options, compensation, and talent selection.

Capital Allocation

One of a board director’s greatest responsibilities is helping to prioritize and allocate the use of capital. As generative AI opportunities arise, there are no doubt efficiency projects that need investment; current IT systems and plant/equipment must be adequate to integrate AI input. Systems required to forfend increased cyber-attacks will need to be installed. Additionally, there are areas of growth and experimentation that organizations should explore to understand the potential that AI can bring. Businesses and functional departments alike should think about how machine learning can improve decision making. Can a manufacturing plant better predict maintenance downtime as a result of AI input? Can the HR department use AI to better anticipate unwanted attrition based on workload, absences, or decreasing engagement? How can marketing better understand changing consumer habits and emerging preferences? In many instances AI can uncover patterns and trends that aren’t picked up due to complexity, time, or bias.

As with all other capital allocations decisions, projects need to be prioritized so AI is not seen as an ancillary activity and first to get cut when the budget cycle faces challenge. If AI is seen as strategic rather than tactical, the likelihood of giving it the right priority level increases.

Our panel was only one of dozens, in addition to plenary sessions, where directors got our brains stretched and our paradigms challenged at the NACD Summit. Continuing education for directors is no longer a luxury we enjoy, but a responsibility we have in order to best serve our boards, investors, and stakeholders. I so appreciate being surrounded by professionals who are equally committed to continued learning and support for one another!

Until next year!

The Importance of Discomfort

I recently had the pleasure of moderating a fireside chat with Toby Redshaw on an NACD Philadelphia Chapter program entitled, “The Acceleration of Tech and its Impact on the Board”. The topic of technology has been in the boardroom throughout my 20+ year tenure as a director. What started as a conversation around systems integration moved to that of cybersecurity. Today, with the advent of generative AI and 5G, that conversation now moves from the functional role of technology to one of becoming a strategic driver. There is no doubt in the next 10 years technology will create tectonic shifts in strategy and displace many of today’s successful companies.

The challenge in boardrooms is how to facilitate the dialogue and create a culture around the board table of learning, curiosity, challenge, and excitement around the role that technology has on our companies. The pace of change in what is being called the 4^th Industrial Revolution will undoubtedly sharpen understanding of customers, redefine relationships with suppliers, overhaul logistics planning, and identify new efficiencies in organizations. All of this requires a different conversation (and perhaps participants?) in the boardroom and a willingness to wade into uncharted waters.

It won’t always be comfortable.

It got me thinking about the role that “discomfort” plays when it comes to learning and leadership. Ever since childhood, we’ve all known that discomfort is what causes growth; when we learn, fail, visit new places, or meet new people, we are thrust into feelings of uncertainty and discomfort as we grow. For those of us who have raised children, we know that watching a child fall off a bike is always followed by the words, “just get back up and try again”.

We are conditioned to accept that there are stumbles along the way.

When our kids complain that they can’t do their homework, good parents work with them until they clearly understand the content being taught and watch them emerge feeling satisfied and even confident of the mastery.

We accept that learning requires struggle.

Yet as we advance in our professional lives leading companies as executive and board directors, things often change. We strive for success, and once we have achieved it, we often find ourselves creating environments of familiarity and routine that gives a sense of security and comfort as we examine strategy and measure performance. Particularly in successful companies, we tend to reward steady incremental improvement, provide assurance to investors of expected results, and punish those who make mistakes when they try new approaches or hold new ideas. The term “if it isn’t broken, don’t fix it” is a mantra that underscores this default behavior…and keeping the ship on an even keel pays the greatest literal and figurative dividends.

This new age of technology is going to change things. If it hasn’t already, it will cause great discomfort in boardrooms as competitors and new entrants define new products and ways to market. With the advent of AR/VR and generative AI – available in record time – new products and offerings will challenge legacy business models. Access to receiving information and ability to quickly disperse it will challenge reputation management and stakeholder communications. Some jobs will be eliminated, some new ones created. Evolving technology coupled with seismic workforce changes will wreak havoc with those boardrooms hanging on to the way things have always been done, and to the comforts of how strategy has been discussed in the past.

The landscape is littered with companies run by those who failed to recognize the need to be “uncomfortable”. Examples of this are numerous as we’ve seen many leaders fail to accept changes taking place. Industry behemoths like Kodak, Sears, Motorola, Borders, Nokia were toppled as they failed to accept the sunsetting of a successful business model or product. Leaders got comfortable, and legacy company boardrooms, often filled with directors who had significant industry experience, were accustomed and far too comfortable with how the business had become successful.

The importance of welcoming “discomfort” is key to any boardroom wishing to be successful in their endeavors. The understanding of technology cannot be outsourced to experts or even to one single “technology expert” on the board. The advent of generative AI and machine learning requires a level of tech literacy that will be critical to set strategy and to compete effectively. It will indeed force many to step outside of our comfort zone and learn new things. For those directors who are hoping just to hang on long enough to meet their “mandatory retirement age”, I suggest earlier board refreshment is imperative. Investors and stakeholders cannot afford to have boards that are too staid and unwilling to accept discomfort in this period of seismic change.

The Key Ingredient to Expat Success

I had a wonderful reunion last evening in Honolulu visiting a former colleague with whom I worked in China almost three decades ago. At the time we had just completed negotiating a joint venture in the PRC, and I needed to identify someone who could work with the JV partner (a Chinese electric company) in a structure where we were the 49% minority partner of an LPG import terminal. I looked at a list of folks in my company who had the right skills (worldly different than mine), and who possessed the right mindset to work with our JV partner.

Over a delightful dinner conversation with this friend and his wife (whom he met in China during his assignment) we reminisced about our experience as expats, the early days of the joint venture, subsequent challenges, and how, after more than twenty-five years, we looked back on one of the most formative experiences in our professional careers with great appreciation. This morning, upon reflecting on our conversation, I found myself feeling tremendously grateful, and happy to know that decisions made so long ago contributed not only to my friend’s very successful career, but to a retirement he is now so well-deservedly enjoying.

When I think back to those days when I was deciding on “which name to pick” to join me in China, I realize that above all other characteristics, I leaned toward “attitude” even more than “aptitude” when it came to my selection. In all cases (I chose three expats to join me in our first venture in the PRC) individuals were smart and experienced, but above all, possessed some important characteristics that were key to success as an expat.

Innate curiosity/Appetite for adventure

The willingness to embark on an overseas assignment requires a level of curiosity and adventure outside of one’s comfort zone. As exciting as it might sound, there are very few people who are willing to leave the comforts and stability of life in the US, board a plane (in some cases such as mine with a family in tow) and set up life in a location that doesn’t have the conveniences or trappings of life back home. If married, this requires a spouse or partner who is willing to do the same -- as a foreign assignment is experienced by more than employees themselves. Oftentimes the challenges experienced by a spouse are far greater than those of the employee as networks, support, and friendships have to be rebooted in the new location, not to mention language and culture barriers that the office environment can help overcome.

Respect for host country culture

As a guest in a foreign country, the importance of respecting the host country’s culture cannot be overestimated. This is particularly true for western business operating in the east, but even nuances of English-speaking countries can be underestimated by American expats. Nothing sets you up for failure more than demonstrating ambivalence for a country’s culture or disrespect for social norms. Taking time to genuinely understand culture, showing respect for history, having patience to hear and appreciate stories goes a long way in establishing much-needed trust to forge strong business relationships.

Adaptability

One of the most important characteristics of being a successful expat is adapting one’s style and business thinking to an approach that works in the new location. How business strategy is formulated, approved, and operationalized can be dramatically different than how it’s done back in the headquarters country. This is probably one of the greatest challenges for expat executives as in many countries the “road to success” can be tremendously opaque and legal constructs and regulations can significantly impact approval processes and market access. Oftentimes those back in headquarters can’t understand why things take so long, or why expats seem to face challenges that to them should be easy to overcome. As expats, the importance of adaptability, thinking on the fly, and adjusting our approach caused us to serve as “translators” far beyond those issues involving language.

In selecting candidates for expat assignments, many executives turn toward aptitude and experience, but in my case, all whom I chose had never lived outside of the US. In hindsight the characteristic that made difference to their success was the attitude they brought on the journey to learn, to explore, and to grow. If I had to do it all again, I don’t think I’d change a thing. Attitude trumps aptitude every day…you can train for the latter, but not the former.

The Importance of Board Refreshment

I recently stepped off from a large public board. Some question my judgement – after all, getting on a board is something so many are trying to do. Why would I ever decide to exit voluntarily? The answer is simple: I’d been a director on the board for 16 years, and although the company had changed significantly (4 different CEOs, numerous changes in directors, a large successful merger, and countless small bolt-on acquisitions and divestitures), it felt as though it was time to step aside and let others serve. As one who speaks publicly very often about the importance of board refreshment, it also seemed like it was time to practice what I preach.

The topic of board refreshment is one of the most important subjects of excellent board governance today. As companies face exponential change through technology and digital disruption, increased societal expectations of enterprise, and shifts in workforce dynamics, boards of directors should be constantly evaluating whether those sitting around the table have the best collective set of skills to serve the stakeholders and advise the executive team. Refreshment, however, is the most difficult thing to do because of one reason: It’s virtually impossible to ask a director to step down.

In addition to increasing the size of their boards to add new directors, many boards employ one of two tools to help them refresh their membership. According to a Fortune article, 70% of S&P 500 companies (up from 50% in 2015) use mandatory age limits to sunset director service. 6% of the group use term limits to facilitate board churn – a number that has stayed relatively flat over the same period of time.

Both tools, however, are suboptimal, and are likely used to avoid that difficult conversation – suggesting that a director’s skills are no longer as valuable to the board based on the direction of the company. I say they are suboptimal because times have changed, and the use of “mandatory retirement” carries over from a model of board service that is downright antiquated.

As one who has been a board director for almost 20 years, I’ve seen a great deal of change. We aren’t too many decades removed from the days when sitting or recently retired CEOs in the same city often sat on one another’s boards. Directorships were a sign of mutual respect and admiration, and a natural outgrowth of executives who ran around in the same social, philanthropic, and civic circles.

In a world of incremental growth and expanding global opportunities, this model seemed to work. There wasn’t much strategic disruption, M&A was not nearly as common, and boards were essentially “rubber stamp” meetings as evidenced by the preponderance of golf and/or fishing afternoons, and board meetings often held in enviable locations around the world. When directors joined boards toward the end of long and successful careers (around age 65) this probably made sense; 10 years on a board preserved independence and leveraged relevant, current executive experience.

However, in today’s environment, the practice of using age limits to refresh boards seems outdated and not fit-for-purpose. As some directors are now joining boards in their 40’s and 50’s, using a 72 or 74-year age limit to mandate board retirement means that people could serve on a single board for decades. It also assumes that once someone achieves that age, they are no longer fit to serve or valuable to the conversation in the boardroom. Frankly, this age limit seems not only irrelevant but ageist.

Similarly, board tenure policies are also a one-size-fits-all approach. Instituted primarily to ensure director independence, it assumes that over time, directors get too stale and perhaps too comfortable with the CEO and executive team. However, in the age of disruption and significant M&A activities, there are seldom companies that look the same as they did 10 years ago – with the same leadership and business portfolio. With the amount of change that companies experience, it may be wise to have some institutional knowledge that longer-serving directors can bring - particularly if there have been numerous changes in the executive suite.

I don’t get to just point out the problems. As a former boss once told me, “Anna, if you take a brick out, you have to put a brick back in.” So, here’s my brick back in.

Adjustments need to be made in two areas: (1) The expectations of director candidates themselves, and (2) The intentions of the board and governance committee.

Director Expectations

Put simply, directors should not expect board service to be the equivalent of Supreme Court appointments. We are not on for the rest of our lives (or until we are deemed physically or mentally unable to serve). Directors should join boards with the understanding that they will likely serve  a number of years – until the strategic needs of the enterprise require new skills around the table.

Board directors should continually work to sharpen their skills as directors. This is particularly true for directors such as me, who have retired from full-time work. We are not “in the game” on a daily basis, and the world is changing significantly. With the pace of disruption, the impact of technology, the focus on sustainability and social imperatives, directors who are not lifelong learners will find themselves unable to add much value going forward. The good news is that through many professional publications and organizations such as NACD directors can sharpen their toolkit through in-person seminars and virtual webinars where they can network with subject matter experts to help them stay relevant and impactful in boardroom discussions.

Board and Governance Committees

A board and its governance committee should commit to maintaining a board that is designed for balance between fresh perspective and institutional knowledge. To achieve this, governance committees should consider the model of thirds: One-third of the board having less than 5 years tenure, one-third between 5-10 years, and one-third over 10 years. By doing this, the board can be deliberate about bringing in new perspective while maintaining institutional knowledge to ensure investor confidence.

This elevates the importance of board and director evaluations . A board should have a structured process for directors to provide input on the board management process, how every director contributes, and what additional skills might be needed. Doing this every year (or every other year) prevents the sudden realization that there is a gap. Such a process, coupled with a strong strategic understanding, informs directors of whether they have the optimal set of skills and experiences in the boardroom.

A strong governance process also necessitates communication of what board leadership requires of its directors. When a director is onboarded, it should be clearly communicated that although their experience and skills are highly valued, they are expected to continue to grow their capabilities as directors over time. Adequate funds should be set aside for director education and membership in organizations to improve director effectiveness.

As with all good teams, the true value of a board is measured in times of difficulty and challenge. Those events can happen suddenly, and when they occur, those sitting in the chairs around the table are responsible and accountable for helping steer the ship wisely. In my experience, there is nothing better than looking around the table in those moments and think, “this is the right group of people to handle this”. I’ve also felt the opposite, when in a difficult time, I’ve thought “I wish we had a few different brains around this table”.

Board refreshment requires outstanding leadership that is willing to institute a healthy board structure and culture, and courageous leaders who are willing to have those difficult conversations of asking people to wind down their service. With heightened scrutiny on board governance, expectations of directors both individually and collectively, and increasingly complex strategic challenges facing organizations, the collective talent around the boardroom is becoming ever more important.  Although change appears to be happening slowly, I have no doubt that strong board leadership is on the rise today as more directors weigh in on this important topic.

Self-reflection

The cleanest state you’ll ever find my house is on the day before I leave on a business trip. On that day, you’ll find me emptying out the laundry bins by working the washer/dryer all day, vacuuming the floors from grass clippings and leaves that the dogs have brought in, clearing the dishwasher of any clean dishes and loading it with anything remaining in the sink, and dusting furniture. As I made this observation last night (I’m on a plane to NYC as I write this) to my husband of almost 40 years, he curiously asked me, “Why do you do that?” I’ve had the luxury of being married to a stay-at-home dad since our kids were 6 and 3, and he has done more than his fair share of the housework. But for some reason, I still possess some degree of guilt that I’m off on a business trip to New York today, so yesterday I spent much of the day cleaning house.

As one who speaks regularly about the unique challenges women have in the business world, one of my greatest bits of advice is for women to be forgiving of ourselves. However passionately and convincingly I might be about this message, I realized last night that I fall under the same patterns that I try and coax other women to escape.

I could blame my late mother – who never seemed to stop, cooked like a gourmet Chinese chef, and whose house was always immaculate. But my mom also worked outside the home, has been gone for over a decade, and I’m sure there were days where the house wasn’t perfect. As far as I recall, she doesn’t visit me in my dreams asking me why my linens aren’t pressed and why we eat out so much. Furthermore, I’m over 60, so at some point I need to own my behaviors, right?

What I suffer from is a self-imposed expectation that I believe many women possess, which stems from some latent guilt about the following: I chose to have a professional career – but that should not excuse me from the role of homemaker.

I don’t think men do this. If I were to poll the men I see tonight at a business function, I seriously doubt many of them (if any) spent Sunday cleaning house. If they did, I doubt it was because they thought, “Oh I’m leaving on a business trip tomorrow, so I better get my house chores done!”. Maybe it’s just me…I don’t know if other women have these issues (or if you’re a man, if you notice your wife does this). We are known to exhibit this behavior during the third trimester of pregnancy… nesting, they call it, as our biological selves prepare for the birth of a child. But I’m a grandmother now, so that’s no excuse. I need to take a page out of my own book and listen to the advice I give to young women at the start of their careers.

This strange phenomenon I seem to experience every time I plan a trip is primarily a personal issue I need to work through. I have not only the means to hire help, but more importantly, the wherewithal to keep from driving myself (or my husband) crazy. But it does give me pause to think about why we continue to find challenges for women who choose to work outside of the home, and why many of these challenges are unique only to us? We’ve had many examples of success, and increased role models over the years, and businesses show improvement when women are at the table. So why are there still struggles, feelings of guilt, and continued debate over how to overcome the odds?

A woman’s career is not ancillary by default. Choosing to have a career is a personal decision. It is an outgrowth of a belief that due to your investment in education or experience, you can contribute to society outside of your home, and that by doing so, you will reap monetary rewards that will give you more life options. If you are a single parent, you have no choice. Until your children are old enough to support themselves, a responsible adult finds a job to earn a wage and provides for the family. If you’re in a marriage or partnership, the choice of whether both of you work is a joint decision. If one person works, the other assumes the lion’s share of the chores at home. Note I didn’t say all – because the stuff at home never really ends and requires more than one to keep everything going. If both people work, then both manage a home, and both raise the kids. Sounds simple, right? But it doesn’t always work that way. As evidenced by the disproportionate number of women who are opting out of work in the post-pandemic era, it seems in many cases the women’s career is considered “ancillary” even if she has equal or higher earning potential. If you find yourself in this situation, have an honest conversation with your spouse or partner. Be careful not to let your career disruption/termination be a default decision.

Stop trying to be what the outside world tells you to be. If you believe everything you read and watch, women are expected to be nothing short of a superhero. If we have professional careers, we should be as outstanding as the most successful Fortune 100 CEO (note that women who fail are always singled out because there are so few). If we own a home it’s supposed to look like it came out of Architectural Digest, or better yet, you built it like those people on HGTV on which the women somehow sport perfect manicures as they nail 2x4s into the wall. If you have a family, you should emulate Martha Stewart and be making bread from scratch, and helping your kids with holiday crafts (don’t you dare skip Easter eggs or holiday cookies even for a year). All the while, your face and body need to be worthy of appearing on the cover of Cosmo Magazine, or you have “let yourself go”. Ridiculous, right? But I assume most women reading this are nodding their heads. The important thing to remember is that each of the above media links targets a specific audience…we’re not supposed to be ALL of them at the same time!! We need to give ourselves a real break…

Stop trying to prove yourself to anyone.  Whether it’s proving yourself to your parents, alive or deceased, other family members, friends, or even naysayers, let it go. Define what happiness is for yourself or yourselves and make that your goal. When my husband quit his career to stay home with our kids, there were undoubtedly people who were disappointed and even those who snickered. We didn’t care. It was the best decision for our family, and we never looked back. With the exception of my strange house-cleaning ritual, there are no negative residual effects, but only happy choices we’ve made ever since. In my experience, watching those who seek only “success” as defined by others seems to almost always result in dissatisfaction and regret. Don’t fall into that trap.

So as I wing my way to my business meeting in New York today I have time to reflect on my own advice. I will refrain from feeling a need to get all my chores done on the day before my next trip. If I’m successful, I’ll at least work it over two or three days before I hop on the plane!  

Overcoming rejection and negativity

I recently went through a box of keepsakes from our storage unit. The box was one I had forgotten about – one of those things I’d been comfortable doing without, but once opened, transported me back to a time in my life I’d missed for decades. I found my old scrapbook. Among the pictures, high school speech scripts, and newspaper clippings, I found two letters. I hadn’t seen them in years.

College rejection letters. One from Yale (which I remembered) and the other from Princeton (I didn’t even remember I had applied). As I read them, the 62-year-old in me chuckled, but that latent 18-year-old brain recalled the feeling of failure I felt at the time. As things turned out, I had a wonderful college experience at the University of Illinois where I met my husband and where I established a connection that led to my career, so in retrospect, there’s no doubt these two letters were a blessing. But as with all things we reexamine with hindsight, it’s easy to see that. How do we allow ourselves to get through that stressful moment to understand that negative events in our lives are pathways to success?

As indicated by today’s rise of mental health issues, the notion of “not measuring up” seems to plague our society. With the media taking an increased level of interest reporting lifestyle rather than news (it’s easier to find out what Taylor Swift wore to the grocery store than get an update on a natural disaster in Southeast Asia) and the access to social platforms that give us the means to share our daily lives, we often find ourselves comparing our lives to those of others. (In actuality, we are most likely comparing our lives to the “posts” of others!)  Fifty years ago, our friends were people we saw every day, and if we wanted to know about celebrities, we had to buy magazines. Today, with click on our devices we can check in on “friends” across the world and can find thousands of current photos of anyone in the public eye. The accessibility to information is wonderful for people who are confident about who they are and how they live their lives, but to those who are insecure and facing challenge, it’s a dangerous path to increased anxiety.

The importance of how we raise children has always been a priority to me. In fact, I often remark that we can essentially change the world in one generation if we just raised all our kids well. As adults, we play many roles that influence how the younger generation feels as they are growing up, and whether they are equipped to take on issues of rejection and negativity. On a macro scale in our professional lives, we find ourselves in positions of making decisions that influence wide segments of the population. On a micro scale as parents and adult relatives, we influence individually, and help children grow their feelings of self-worth and confidence. 

Our Macro Influence

Leaders in both the public and private sector of enterprise play a big role in crafting societal touchstones. In August of 2019, the statement made by the Business Roundtable sparked strong reactions that continue to fuel debates today. The products we make and services we offer help shape the way people live, work, interact, and learn. In recent years, there have been countless articles written about the responsibility of business on the topic of physical and mental health.  Obesity is blamed on the fast-food industry, violence on gun manufacturers, and opioid addiction on the pharmaceuticals. The WSJ article in the Fall of 2021 revealed that Facebook is aware of the toxicity Instagram can bring to the mental health of teenage girls. In all these cases, business leadership needs to be aware of whether a company might be contributing to societal challenges and understand how these issues play on the success of their enterprise.

At the same time, responsibility for how people feel and behave cannot rest solely on business.  The full responsibility of a young girl’s mental health, a community’s indignation about racial equity, or a child’s obesity cannot and should not be placed on the doorstep of corporate boardrooms.

Our Micro Influence

Our ability to handle and move through rejection and negativity in our life rests primarily on the resilience that we learn as children. All those involved in teaching/raising children have a role to play in how we deal with rejection and unhappiness. The world can be unfair, and will likely remain so at times, regardless of how hard we might try to legislate it away. As hard as we try to rid the world of bullying, there will always be that kid on the playground that makes fun of how we look. How we are taught to handle it at age 10 is a pretty good predictor of how we deal with the same human 40 years later.

There are some fundamental cornerstones of this resilience that we need to build in young people as they come across discomfort in the world.

Accepting that the world isn’t always going to be fair.

There are always people who are going to win when you believe they shouldn’t. It’s hard to understand in the moment but having the ability to move on and not stew or hold a grudge is important for one’s attitude and confidence. How an adult responds when a child says, “that’s not fair” (or perhaps when a child hears an adult utter those words?) defines what that child thinks an appropriate reaction and behavior should be. Sometimes things just happen. Sometimes even though you tried the hardest, you didn’t win the game. Sometimes, no one notices a cheater. If you believe in karma, like I do, you’ll have an easier time moving on. If you believe that a closed door leads to an open window, it’s even easier.

Focusing on context.

Recognizing that most people don’t set out to ruin your day is important. Kids are never too young to understand the importance of context. Helping them understand that peoples’ actions are often based on what’s going on in their lives (or perhaps what happened in their past) builds levels of patience and empathy that can overcome difficult situations. The first time I drove with a carful of breakable crystal, I realized the importance of taking corners slowly. Ever since that day, whenever I drive behind someone who seems to slow to a snail’s pace while turning a corner, rather than immediately assume that they are a terrible driver, I imagine that perhaps they are carrying something (or someone) breakable, and it causes me to be just a little more patient.

The more kids are exposed to a variety of environments and people, the greater they will think about context when something unfriendly is said or an unfriendly action is observed. They will learn that those who come from less fortunate backgrounds might harbor resentment. Those who haven’t had the opportunity to travel might have a misplaced bias about different parts of the world. Those who are in difficult circumstances might behave in an unusual way. In most cases, there is an opportunity to have a dialogue, to grow one’s experience, and to uncover generosity.

Realizing that the harder we work, the more we learn.

When I complained to my mother that kids on my grade school playground made fun of my ethnicity, she said to me, “You’re Chinese, and you’re a girl. As a result, you will probably have to work twice as hard to get what you want. But remember…if you work twice as hard, you learn twice as much.” It was her practical realism that I loved so much; that in the long run, rejection that pushes you to work harder might not be all that bad. I learned to make the best of it, and perhaps that’s why I didn’t even remember the Princeton letter.

Elbert Hubbard coined the phrase, “when life gives you lemons, make lemonade”, which has long been used as advice in times of adversity. Rejection and failure cannot be avoided, and as in the case of my scrapbook discovery, are often defining moments in our lives. Our role as leaders in business and adults raising children are critical in helping young people learn to deal with negativity in a productive manner as they grow to become constructive members of society.

 

 

 

Leadership and the Great Resignation

In May 2021, Anthony Klotz, Associate Professor of the Mays Business School at Texas A&M coined the phrase “The Great Resignation”, speaking of the unprecedented number of resignations due to the impact of COVID-19. An article published by Harvard Business Review cited that approximately 4 million Americans -- primarily mid-career employees -- quit their jobs in July of 2021. The highest departures were in the technology and health care fields. Since that time, departures continue across many industries, but primarily in white-collar jobs that have perhaps felt the greatest impact of the pandemic.

On the morning of January 20, 2022, the NACD Texas TriCities Chapter held a virtual program to discuss this topic, and the role that leaders in organizations play at a time when the war for talent reaches a crescendo. A panel of experts was moderated by David Bixby, Partner at Meridian Compensation Partners. Panelists included Dave Pruner of Heidrick & Struggles, and Directors Carol Hess (Wi2Wi) and Bill Easter  (Delta Airlines, Emerson Electric, Groupo AeroMexico, Memorial Hermann Health System). The panelist dialogue, followed by small breakout conversations, yielded insight into what executives and directors can do to understand the causes and monitor/measure to forfend unwanted departures.

Why is this happening?

The Great Resignation is caused by several factors which have culminated in the past two years.

A virtual workplace

The COVID-19 pandemic forced companies to quickly shift into a virtual environment. Almost overnight people stopped business travel and worked from home utilizing technology to meet with colleagues/clients and sell to customers. Much of this has proven to be effective and has provided a degree of flexibility that has perhaps been needed far before the onset of the pandemic. For many employees who live in large metro areas, the end of the daily commute resulted in less expense and stress (and more time for productivity). Many relocated from crowded urban areas to quieter suburban or outstate locations or moved into second residences.

Families at home

With children also schooling from home, family routines and dynamics changed. Parents became more hands-on working with younger kids, and families interacted and shared more meals together. Restaurants were closed, so people cooked more meals. DIY projects skyrocketed as people made use of their time and home to embark on improvements. The initial hardship of sorting out homework, Zoom calls, and chores were resolved, and resulted in newfound family connections that perhaps young families never before experienced.

On the other side of the same coin, the stress of having families at home is significant. A recent McKinsey report reveals that the pandemic’s impact on women has been disproportional and nets off substantial progress made in recent years. Women who often carry the larger share of household/childcare/eldercare duties are experiencing burnout at a much higher rate than men, driving perhaps decisions for them as well as their spouses in a need for occupational change.

Personal health and safety

As people contemplated the personal risk of contracting COVID-19 in their daily jobs, positions in healthcare, hospitality, and travel became far less attractive than other industries. As these industries either shut down (hospitality and travel) or ramped up (healthcare), employees more carefully examined their options, actions of their employers, and made decisions about personal priorities.

Millennial and Gen Z priorities

As people began realizing the workplace could and would likely continue to be different, decisions were made. We have known for years that for millennials and Gen Z employees, the definition of “great place to work” challenges traditional paradigms. According to a Deloitte survey on these their priorities, these two groups have strong opinions about topics of work/life balance, flexibility, climate change, and organizational purpose. The topic of shareholders vs stakeholders is not up for debate, and young employees expect their employers to have a productive and positive relationship with the wider community.

What can be done?

As a result of these factors, the implications of Great Resignation need to be considered in boardrooms around the nation. As the success of organizations lie in their ability to compete for the best talent to attract and retain, it is essential that leaders consider what can be done to minimize the wave of departures impacting so many companies. The program’s panel and subsequent breakout conversations yielded some productive ideas of what directors need to consider.

Be clear on strategic priorities

Examine the priorities that have been driving the business today. Are they still relevant? Were they made priorities due to shareholder preference without consideration for stakeholders? Are there changes that need to be made to address a wider community of interest? Priorities should be clearly communicated, and their purpose understood. People are less likely to leave if they feel their interests and those of the enterprise are shared and aligned.

Innovation in compensation and benefits

Although the importance of a competitive C&B package does not diminish, companies are innovating around the benefits topic given recent changes in healthcare policy and to address the changing desires of a new employees. The emergence of benefits such as unlimited vacation, sabbaticals, mental health days are seen as ways to create more flexibility and demonstrate an understanding of the need to create down-time in a 24/7 connected world. Educational benefits are also on the increase as topics such as foreign language lessons are included in some employee development benefits.

Examine the sacred cows

In every long-standing organization, there are policies and practices that are hardwired into the enterprise. Some of these can be found in HR practices, others in the operations themselves. These can manifest in leadership who are never questioned and behaviors that are overlooked. Particularly in companies that have experienced past success, it is important to visit this topic and see if the “non-negotiables” are causing people to question whether the organization is right for them.

Focus on ESG

A deliberate effort to align ESG interests to business strategy is important to most of today’s workforce. The purpose of a business can no longer be solely aligned to short-term shareholder interests. In today’s environment it is essential for organizations to commit to environmental, social, and governance standards held by the wider society. Employees today not only want their leaders to say the right things but also demonstrate through investment and action that the commitment is real. Compensation committees that align remuneration to ESG goals can further reinforce the priority.

Measure who and how many

As talent development is one of the primary responsibilities of compensation committees and full boards, it is imperative that directors understand the variables of the mass balance over time. A historical level of attrition should be compared against actual numbers, and a demographic breakdown of those leaving should be closely examined. Attention should be focused on particular demographic segments if they appear to be departing at a higher rate. This could be the result of specific operational, policy, or cultural issues that need attention.

Culture matters

Many are concerned that a hybrid work environment with employees who only gather in the office on occasion will struggle to build culture. Work culture, which describes how it feels to work in an organization, is the glue that keeps people together as it defines how things are done both formally and informally. It’s important for leaders today – many of whom are Baby Boomers or Gen Xers – to realize that how we define “healthy culture” will not likely be how future generations of workers see as a sensible and effective culture. Technology, increased flexibility, and less importance placed on facetime will bring about different ways to collaborate, challenge, and build camaraderie between co-workers. Boards need to be aware of and support how culture is transforming in an organization.

The COVID-19 pandemic and associated incidents that took place between 2020-2022 accelerated change that was already taking place in the business world. Directors serving on boards should be careful to dismiss this as “something that will pass” with a belief that the world will soon return to a more recognizable model. Increasing vacancies in commercial real estate, sustained remote work, and the continued usage of videoconferencing are indications that this is not a passing phase, but that the business office of the future looks significantly different than that of the past.

As employees carefully examine options, driven by a different set of values, there will be great companies who find ways to retain a strong and productive employee base. Directors play a critical role in driving conversation in the boardroom to focus on creating the environment that garners loyalty and commitment. Strategic clarity, aligned values, and flexible work arrangements to provide balance are key to winning the war for talent.

Leadership and Courage

As we usher in yet another New Year, a story hits the airwaves this week that causes me to believe that 2022 should be a year dedicated to seeking courage in the boardroom. We have spent a great deal of time in recent years talking about the importance of empathy, compassion, and listening – all of which are important leadership traits. Equally important is knowing when to take a difficult position – one that bucks that system, causes discomfort, and perhaps results in conflict and disagreement. Without courage change doesn’t happen. Without courage complacency can take hold. Without courage, the wrong people can stay in power.

The first Theranos trial is concluding. As of today, Elizabeth Holmes is found guilty of 4 of the 11 charges filed as the jury continues to deliberate. How did this woman successfully deceive her investors, her board, and her business partners? The trial is about her, and the alleged crimes that were committed. But where is the accountability for others? Titans of industry and politics who sat on her board never questioned her lack of data and her secrecy. Not a single director challenged or questioned her integrity. In spite of individual achievements in politics, military, and business, none of them cared enough to have the courage to ask uncomfortable questions. Had they done that, damage could have been mitigated, careers resurrected, and even lives saved.

As one who has served on numerous boards, I believe in the importance of collegiality. It’s important for directors to have trust, respect, and generally like one another. In times of challenge, camaraderie is important to weather the storm. Equally important is the character trait of personal courage. There have been many instances where crisis has been averted because someone at the table dared to say, “Is it just me or does this seem strange?”. Chances are that concern is held by more than one person. Being that one person who possesses the confidence and courage to speak up is never easy.

The higher you sit in an organization, the more difficult this becomes. I’m not surprised that the whistleblowers in this situation (as is most often the case) are those in lower levels of the enterprise. They see the real day-to-day. They know how people behave and when they are allowed (and not allowed) to know details. Board directors show up 4-6 times a year, listen to  prepared presentations, and can be comfortably made to think that everything is on track and headed for success. The Theranos board was made up of people who should have known better. They were duped. So how does a board prevent this from happening?

Leadership

Strong board governance recognizes the importance of balancing collegiality and challenge. Pre-meeting communication and preparation facilitates the right kinds of conversation and active understanding of the organization that can mitigate being “blindsided” as the Theranos board embarrassingly experienced.

• Whether you are a Board Chair or a Lead Independent Director, the importance of having one-on-one conversations in between board meetings is crucial. We all know that outcomes can be different when someone has an opportunity to bring up an idea in an individual conversation versus in a group. Teasing out concerns and hearing speculations can often be much easier in a private phone call than while sitting around a board table.

• When a concern is expressed by multiple directors privately, it needs to be addressed on the agenda. This could be a deep dive into a topic that requires more understanding. This could be a walk around an office or plant to examine working conditions. This could be a dinner with executives at different levels to test organizational culture. Shared concerns that are ignored create the sense that some opinions matter more than others.

• On the topic of culture, this is an obvious area where Theranos directors failed. It wouldn’t have taken much to figure out something was amiss. I’d venture a guess that they rarely met with executives other than the CEO and COO. Some companies I work with institute mentoring relationships between directors and executives. Others create special committees to address operational issues, which leverage directors with specific expertise to spend time with operational leaders dealing with particular business challenges. Both of these offer an easy opportunity to get a sense for how it feels to work in an organization.

Board Makeup

I’ve always told my CEOs that their Board of Directors are their most important (and least expensive!) group of advisors. With the right people sitting around the table, there should be no business challenge someone hasn’t gone through or thought through. Having the right set of skills and perspectives around the boardroom is essential in providing support, encouragement, inspiration, and challenge to an executive team.

• Theranos’ board of directors, assembled by Elizabeth Holmes, was a who’s who in powerful men at the time. And yes, they were all men. Kissinger, Shultz, Perry, Nunn, Frist, Kovacevich, Foege, Roughhead, Bechtel, Mattis were all blue-chip names that attracted confidence and investment. None of these individuals had experience in the field of pharmaceuticals, and none of them had experience in how start-up businesses worked in Silicon Valley.

• Pulling together a list of blue-chip CEOs and leaders ensured for Holmes that the “default” of the collective group was to keep the conversation at a very high level. I doubt any of these men had spent much time with the “rank-and-file” of their organizations in a very long time. It is doubtful any of them made time to mentor Theranos executives or have conversations about anything in detail who was more than one level below the CEO. They likely had no interest or understanding of the working culture.

• A lack of diversity of the board assures a board culture of mutual comfort and collegiality but maximizes the probability of “groupthink”. The men on the Theranos board were probably thrilled to be in one another’s company and didn’t have to deal with anyone who hadn’t achieved the level of orbital success that they had. Being the “odd man out” in a conversation would have been uncomfortable and questioning anything presented by the CEO would have made one unpopular in the fraternity.

Importance of stakeholders

I always believe that as a public company board director, I have an accountability to shareholders, and a responsibility for stakeholders. As a result, I’m tremendously interested in how shareholders are faring in the performance of the company, and I dedicate equal time to the interests of stakeholders. 

• Creating regular means of connecting with employees – via employee meetings, mentoring programs, speaking to special interest groups creates opportunity for two-way dialogue between directors and employees. Building that trust and creating forums for transparency gives insight into the culture and areas of priority.
• Learning of how talent development is managed and measured provides an understanding of the importance being placed on long-term strategic success and succession. If this is lacking and empty executive positions are always filled by outside candidates, there is undoubtedly an ambivalence about career satisfaction and upward mobility.
• Asking for metrics regarding customer satisfaction in an organization can inform a board about attention being placed on service and quality control. Revenue retention and customer loyalty measures are great indications of this stakeholder satisfaction.
• Partnership evaluation for strategic alliances provides a window into how well an organization is working in channels of strategic growth and revenue expansion. Theranos’ alliance with Walgreens/Boots was always tenuous at best. A simple request to probe this relationship could have indicated red flags.

In any situation where bad leadership results in people getting hurt, the absence of these above-mentioned governance practices can still be overcome by personal courage. Being willing to be the “lone voice” that questions a comfortable narrative isn’t easy, but tremendously important. In an ocean of conformity and comfort, it’s essential to have at least one person who is willing to question and challenge. The value of that individual is tremendously high and can begin conversations that others want to have but who feel less comfortable to initiate.

Be the brave one in your boardroom.

Leadership and ESG

Written for NACD BoardTalk, July 14, 2021:

Investors Have Spoken: What Can We Learn About ESG from the 2021 Proxy Season?

 

The 2021 proxy season marked the apex of a tumultuous year in which companies tackled pandemic mitigation, work-from-home environments, and urgent conversations around racial inequity and the climate crisis—meaning environmental, social, and governance (ESG) issues reached heightened importance in every boardroom.

The corporate ESG focus culminated in the theater that took place at the Exxon Mobil Corp. annual meeting in late May. On that day, a small but impactful activist organization teamed up with three large institutional investors to take on what was once the most powerful company in the world. When the dust settled and the final votes were tallied, three of the board’s longstanding directors were unseated.

Changing attitudes around the role of enterprise in our society mean that board directors and executive leadership across the business world must engage on ESG. During the recent NACD Texas TriCities Chapter webinar “2021 Proxy Season & ESG: What Just Happened?” speakers Anne Sheehan and Kris Ramesh addressed the reasons for ESG’s elevated agenda position, the challenge of measurement, and the consequences of thinking of ESG as a blip that will go away.

Here are some key insights from the webinar, which was moderated by chapter board member Travis Wofford.

Having Deliberate Conversations

Commentary during the webinar emphasized one key point: although ESG is here to stay, how we measure both inputs and outputs has yet to be decided. Organizations such as the Value Reporting Foundation and the Task Force on Climate-related Financial Disclosures are attempting to create standardized reporting, but with multiple players in the game, the waters are muddy.

That being said, having deliberate conversations in our boardrooms is paramount. How we address ESG at the board level impacts not only a company’s license to operate—in many industries—but can also provide strategic clarity and competitive advantage. Two questions that all directors should consider: What inputs will result in measurable outcomes? What ESG metrics are critical and material to our company’s operations and strategy?

Looking individually at “E,” “S,” and “G,” directors should also consider the following questions:

• Environmental:
  • Based on greenhouse gas and carbon footprint measurements, how are we achieving carbon neutrality?
  • How are we measuring water use and waste?
  • On the topic of our environmental narrative (which everyone has seemed quick to develop), do we have metrics to back up our progress?
• Social:
  • How are we measuring the achievement of diversity in our organization?
  • How is management impacting the processes that result in those outcomes? Are they examining opportunities for promotions, especially into positions with profit and loss responsibility?
  • What is our impact on local communities?
  • Do those in our supply chain reflect the values of our organization?
• Governance:
  • Do we have transparency on how our board governs?
  • Have we set targets on board diversity?
  • Do we have the right set of skills in our boardroom to provide the best independent oversight of the organization and its strategic imperatives?
  • Is there transparency in and a performance orientation to the compensation structure for the CEO and executive leadership?
  • Are our compensation practices aligned with investor and stakeholder interests?

Companies’ Progress on ESG

Over the past year, increased investor, activist, and regulatory focus has resulted in significant progress by many boards relative to ESG. Of 456 new directors who joined S&P 500 boards in the past year, 72 percent are women or people of color. Meanwhile, major oil companies, for example, have shifted strategy relative to net-zero carbon emissions targets and investment in alternative energies.

Some of the largest car manufacturers have declared electric vehicle production goals. Many corporations—across numerous industries—have committed to significant investment in historically Black colleges and universities and community programs to serve underrepresented populations.

There is no doubt that the private sector is accepting a larger role in creating opportunity and equity across our society—particularly during a time when the pandemic has highlighted inequities of access.

Avoiding a Confrontation

For boards wishing to avoid an Exxon-type confrontation with investors, our panelists offered the following advice:

• Actively engage in conversations with shareholders. The days of keeping board directors away from shareholders are over. It is particularly important for compensation and nominating and governance committee chairs to engage with key investors in order to create a common understanding of various ESG concerns and to demonstrate transparency in the board’s oversight of strategy.
• Focus significant energy on the firm’s capital allocation. How much money is spent on maintaining legacy strategy, and is there an appropriate amount spent on innovation? A strong narrative around the capital allocation strategy can put investor concerns at ease if they believe the board is focused on the company’s future impact.
• Remember that having a good narrative is important—but not enough on its own. If the company wants to make a commitment, be sure that it’s backed up with facts and measures. Empty promises can easily be called out as greenwashing.
• Don’t underestimate the impact of passive index funds. They are entering the ESG conversation and can play a big role in shifting not only funds but also mind-set.

A decade from now, we will look back on the 2021 proxy season as a pivotal time in corporate history. Shareholders are now holding boards accountable for the wider environmental and social impact of enterprises—and they are willing to challenge any director they deem unfit for this new purpose.