Archive for the ‘Corporate Governance’ Category

Servant Leadership: An Interview With Wawa Chair Richard D. Wood Jr.

September 29th, 2015 | By

What happens when a company places service before leadership? Wawa Inc. did just that, and its chain of convenience stores has soared as a result. Jeffrey M. Cunningham, founder of NACD Directorship magazine and professor of leadership and innovation at Arizona State University, spoke with Wawa Chair Richard D. (“Dick”) Wood Jr. on the main stage at NACD’s 2015 Global Board Leaders’ Summit about the inner workings of the regional convenience-store chain that has grown into a $9 billion empire.

Richard Wood from Wawa

Originally an iron foundry established in New Jersey in 1803, the Wawa company has weathered many rounds of disruption to become one of three genuine cult businesses in the country, the other two being In-N-Out Burgers and Chic-fil-A. Wood ascribed his success at the privately-owned company that he has served since 1970 to the concepts of servant leadership and being a steward of investment in advanced technologies and innovations. A member of Wawa’s legal counsel at the beginning of his career, this descendant of the founder now serves as non-executive chair of the company’s nine-person board.

For the first half of the event, Cunningham interviewed Wood about the history of the company and Wood’s commitment to the philosophy of servant leadership. In a business context, this philosophy puts service to every stakeholder before any other facet of the enterprise. Wood takes justifiable pride in Wawa’s commitment to its 26,000 employees, including their ownership in the company. Wawa’s Employee Stock Ownership Program (ESOP) has created such value for employees at every level that the organization last year received 300,000 applications for its available 3,000 open positions. The Wawa model has proven to be profitable not in spite of but because of its commitment to family and service.

Once the conversation opened up to questions from the floor, Wood described some of the business challenges he’s faced over the years and how he has surmounted them. When asked about his reputation as “Chief Paranoia Officer” and how even good CEOs often misread the signs, Wood said, “Every time it comes back to hubris. It always comes back to hubris. CEOs didn’t have enough paranoia.”

Wood’s observations on a form of CEO self-awareness that some dub paranoia was fascinating in relation to the earlier keynote presentation by Kwame Anthony Appiah on honor’s place in business. One way that Wood practices honor in his business is to ensure that Wawa’s six core values—Value People, Delight Customers, Embrace Change, Do the Right Thing, Do Things Right, and Passion for Winning—are so thoroughly woven into the company culture that every employee can recite them; and dozens of times each month, Wawa employees recognize their peers in writing for exemplifying those values day to day. Wood’s leadership of Wawa illustrates the type of professional ethics that Appiah touched on in his keynote speech.

Before closing, Wood addressed Wawa’s next step in its innovation cycle: a move toward diesel fuel. “Two big products are going to disappear,” Wood declared. “One is cigarettes, and the other is gasoline. We’re looking into alternatives to replace a commodity we think will disappear.” To support diesel as the anticipated new market source in fuel, Wawa plans to retrofit its filling stations.

Katie Grills is assistant editor at NACD Directorship magazine.    

Identifying Obstacles to Board Diversity

September 29th, 2015 | By

The final session of the Diversity Symposium at NACD’s 2015 Global Board Leaders’ Summit focused on the Report of the NACD Blue Ribbon Commission on the Diverse Board and how directors can implement recommendations from that report in their own boardrooms. Kapila Kapur Anand, a partner at KPMG LLP and the firm’s national partner-in-charge of Public Policy Business Initiatives, led the discussion with panelists that included Anthony K. Anderson, retired Ernst & Young LLP vice chair, executive board member, and Midwest and Pacific Southwest managing partner; The Hon. Cari M. Dominguez, a director at ManpowerGroup, Triple-S Management, Calvert SAGE Fund, and NACD; and Karen B. Greenbaum, president and CEO of the Association of Executive Search Consultants.

The Diverse Board: Moving from Interest to Action

As the Blue Ribbon Commission that produced this groundbreaking 2012 report observed:

[A] company’s ability to remain competitive will rely on its understanding of global markets, changing demographics, and customer expectations. Diversity is a business imperative, not just a social issue. The new business landscape will require boards to cast a wider net to find the very best talent available. As a natural corollary, the board’s mix of gender, ethnicity, and experiences will likely increase.

Dominguez noted that structural, social, and habitual barriers may prevent boards from becoming more diverse, and she offered this key advice: Don’t rely solely on the company’s CEO to lead this conversation. It’s the responsibility of every director to move the discussion forward.

So why aren’t boards as diverse as they could be? Greenbaum addressed this question by referring to data she collected via a survey of both boards and search firms. Her findings surfaced five issues:

  1. Candidate pool. Boards contended that it was difficult to find diverse candidates. Horn countered this claim by asserting that a failure to find qualified candidates is more a function of boards not searching correctly. Boards should demand that search firms provide a diverse list of candidates. Conversely, search firms take their cue from boards and expect them to be vocal about the importance of having a diverse candidate pool.
  2. Term limits. A lack of term limits results in a situation in which boards cannot be routinely refreshed with new directors. If term limits are restricting opportunities to bring on new talent, consider expanding the board.
  3. Experience: Boards resist adding members who are not current CEOs or CFOs. Boards need to be open to first-timers and should develop strong mentoring programs to bring newly minted directors into the fold.
  4. Succession planning: Build a pipeline of diverse talent in your own company so that these leaders can serve not only in your boardroom but also in those of other organizations.
  5. Status quo. Boards can become complacent about how they operate, especially when they feel no pressure from shareholders or other stakeholders to change.

“All of us must be conscious that this is a leadership issue,” Anderson said. “If the leadership of a company doesn’t believe in diversity initiatives, the ability to make much happen is grossly inhibited.” Companies with a diversity strategy that touches on leadership, employment, and procurement are reinforcing the importance of diversity as part of company culture, Anderson added..

Creating change takes time, effort, and formal processes. Putting diversity on the agenda may require a shift in thinking and habits, but, as all of the panelists agreed, diversity is a business imperative that will only grow in importance over the coming years.

Beyond the Sidelines: The Impact and Legacy of the Rooney Rule

September 27th, 2015 | By

The sidelines of a football field may seem an unlikely place to look for governance best practices, but the policy implemented to diversify the coaching staffs and senior management of National Football League (NFL) teams—known as the Rooney Rule—has applications far beyond the world of sports. In the second session of the Diversity Symposium that opened this year’s NACD Global Board Leaders’ Summit, Jeremi Duru, sports-law expert and author of Advancing the Ball: Race, Reformation, and the Quest for Equal Coaching Opportunity in the NFL (2011), joined Robert E. Gulliver, executive vice president and chief human resources officer of the NFL, and Cyrus Mehri, co-lead class counsel for some of the most significant race and gender cases in U.S. history, to discuss the Rooney Rule, it’s impact on the NFL, and the lessons it has to offer companies in all sectors.

Rooney Rule panel

Although the NFL formed in the early twentieth century, it wasn’t until 1989 that the league hired its first African-American coach, Art Shell. Over the course of the next decade, a few other African Americans held coaching and managerial roles in the NFL, but diversity remained an issue for the league. Then, in 2002, two African-American NFL coaches with winning records were fired: Tony Dungy, whose team had reached the NFC championship playoffs in each of the three previous years, and Dennis Green, whose team was experiencing its first losing streak in 10 years.

In response, Mehri and attorney Johnny Cochran released a study demonstrating that African-American coaches were statistically more successful because by the time they were hired, these men had already spent years honing their craft in apprenticeship positions. However, African-Americans were less likely to be appointed to higher-level coaching positions and more likely to be fired when their team hit a losing streak. To address this situation, the NFL in 2003 established the Rooney Rule—named for Dan Rooney, who was then coach of the Pittsburgh Steelers, a team that historically had created opportunities for minority players and coaches. The rule requires management to interview minority candidates and give them equal consideration when hiring for particular job categories.

Being attuned to diversity issues is key to attracting the best leadership, according to Robert Gulliver. As a former wealth, brokerage, and retirement HR officer at Wells Fargo & Co., Gulliver might have seemed an odd choice for a role at the NFL, but the skills he developed in the financial sector transferred easily to his work for the NFL. Gulliver emphasized that, in addition to diversity of background, diversity of perspective allows the company to connect more strongly with its consumer base.

One area in which the NFL acknowledges the need for more work is that of gender. While approximately 45 percent of football fans are women, only 30 percent of NFL employees are female. By bridging this gender gap, the league can ensure that thought leadership within the company will better reflect its customers.

What is the lasting legacy of the Rooney Rule? In the decade since the rule was adopted, the NFL has developed a culture in which diversity has become a critical element of creating a sustainable business. NFL clubs that initially resisted the rule now recognize that they would fall behind in the market if they didn’t draw from the broadest possible pool of candidates. The message is clear: make your processes inclusive, and make sure that talent rises up. In short, the Rooney Rule has proved that the more inclusive an organization is, the more it and its stakeholders benefit.