Good morning.
Most corporate directors I speak with these days say they face rapidly rising expectations. Overseeing succession, strategy and financial performance were the board’s traditional triad. But now, directors must master a host of new technology challenges as well as issues of corporate culture, talent, diversity and inclusion, climate and public trust. For them, stakeholder capitalism is tangible.
That’s why Fortune recently launched The Modern Board, in partnership with board software company Diligent—to focus on the board’s changing role. As part of that partnership, I recently interviewed a trio of business icons: former Best Buy CEO Hubert Joly, former Infor CEO Charles Phillips, and current Alphabet, Honeywell and Salesforce board member Robin Washington—for Diligent’s Modern Governance Summit. Some excerpts below:
On changes in business:
“Everything I learned in business school was either wrong, dated or incomplete… There’s a shift, a realization that whatever we’ve been doing for the last 40 years has caused a lot of the problems that we have now, and we have this urgent need for the reformulation of business.”
—Hubert Joly
“The opportunity for corporations to be part of the change we want to see is great. It’s never been greater. And I think we as board members, we’re not management, but we should come in and hold management accountable to those goals and also bring perspectives that they may not see.”
—Robin Washington
“I was on the board of the Business Roundtable when we were working on the whole stakeholder issue. I think one of the changes in thinking is that these things aren’t as separate as we used to think of them. We were focused only on shareholder returns. But employees, customers, suppliers, lowering attrition rates, having workers more engaged and higher performing… these factor into shareholders returns. So these things aren’t unrelated.”
—Charles Phillips
On culture and the war for talent:
“I think figuring out how you get a pulse of an organization in its culture in terms of attracting new talent is important. Culture is hard to measure, but it’s more important than ever to think about it, relative to the role of the board.”
—Robin Washington
“I think another driver is the shortage of talent. That’s shifting the power to employees. We have 61% workforce participation, which is a record low in the last 25 years. A lot of people just don’t see the value or the purpose of working, or they don’t think they’re making enough money to make it worth it… And so if you want talent to be available, you’re going to have to treat people differently.”
—Charles Phillips
“With the pandemic, so many people have been reconsidering their lives. When people talk about the great resignation, I think that for businesses, it’s a big re-recruiting effort. And whether it’s in person, remotely, hybrid, reaching out to employees, understanding where they’re at, what they’re struggling with…here’s the scoop: everybody is struggling. There’s fatigue, there is stress. And so I think it’s a sea change in how we approach this.”
—Hubert Joly
On diversity and inclusion:
“When it comes to D&I, I think a lot of times we focused on hiring. Clearly, that’s important. But the most important thing… is how do you create inclusive cultures?”
—Robin Washington
“There’s a realization that we have the imperative and the opportunity, in my view, to end systemic racism in this country, not in the next month, but in the next five or 10 years, if we stick with it. And I think that one of the changes is that you see management teams all across the country now articulating goals in this area, and boards holding management teams accountable and spending time on this.”
—Hubert Joly
“Companies are very good at creating jobs. They’re just not creating them in the Black community as much as we would like. And so (with the OneTen initiative), we challenged them: Can you hire a million Black people over the next 10 years?… But people without college degrees, people who have aptitude, just need access and skills training… And the companies are following through. All the CEOs show up at the board meetings, and they’re taking it seriously. Our fear was that they would do this one announcement nine months ago and that would be the end of it. But they have stayed engaged.“
—Charles Phillips
Other news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Google fine
Google has been hit with a $177 million fine in South Korea for forcing the likes of Samsung to avoid loading their phones with non-Google forks of Android. The South Korean Fair Trade Commission, which levied the fine, also ordered Google to drop the practice. Nikkei
Mailchimp sale
The ubiquitous email marketing firm Mailchimp has sold out to the small-business software firm Intuit for $12 billion in cash and stock. It's a sweet payout for Mailchimp founders Ben Chestnut and Dan Kurzius, who apparently never brought in outside funding or venture capital. Fortune
Apple vs spyware
Apple has patched a bug in its Messages app that the Israeli spyware vendor NSO Group was exploiting to, well, spy on people. John Scott-Railton of Citizen Lab, the University of Toronto research unit that found the flaw: "What this highlights is that chat apps are the soft underbelly of device security. They are ubiquitous, which makes them really attractive, so they are an increasingly common target for attackers." Fortune
Australian reopening
Accenture has won the tender to create an Australian digital border pass showing the vaccination status of travelers, so the country can move towards reopening. Home Affairs Minister Karen Andrews: "This will help us to welcome home increasing numbers of Australians, and welcome the tourists, travelers, international students, skilled workers and overseas friends and family we’ve all been missing during the pandemic." Fortune
AROUND THE WATER COOLER
Morning routines
How do this year's Fortune 40 Under 40 cohort start their day? Routines vary from hiking to cooking steak for dogs. Many find mornings to be something to endure, though. Fortune
Zambian plans
Zambia needs to get out from under a gargantuan debt pile—with around a third of it being "Belt & Road" borrowing from China—and new President Hakainde Hichilema has revealed his plan for doing that: stop spending and borrowing so much, and mine more copper. Fortuitous timing for the latter part of the plan, with copper having appreciated so much in value in the last year or so. Fortune
SpaceX tourists
SpaceX will tomorrow night launch the first private space flight that takes only tourists—and no professional astronauts—up into the heavens. The two men and two women (led by 38-year-old payments billionaire Jared Isaacman) will fly 100 miles higher than the International Space Station, i.e. way, way further out than fellow amateurs Richard Branson and Jeff Bezos. Fortune
Social security
Many young people fear they won't be able to claim Social Security one day, particularly with a recent report showing the fund will be depleted sooner than previously estimated. But Ritholz Wealth Management's Ben Carlson says not to worry: "If you're a young person, you may assume you'll never see a dime of Social Security money. I don't believe that for a second…This program is not as well funded as it once was, but Social Security will be just fine for many decades to come." Fortune
This edition of CEO Daily was edited by David Meyer.
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