Archive for the ‘Corporate Social Responsibility’ Category

Leveraging Social and Demographic Trends

April 24th, 2015 | By

Understanding the behavior of investors, employees, and consumers is a critical success factor for all companies. This can be difficult for corporate directors, however, as America’s demographics are constantly evolving. At this year’s second Directorship 2020® event, NACD partnered with Broadridge Financial Solutions, KPMG’s Audit Committee Institute (ACI), Marsh & McClennan Cos., and PwC to provide an in-depth look at today’s social and demographic trends and how boards can harness the opportunities these often-disruptive forces create.

Doodle_D2020ATL_Demographic Trends_645x281_borderIn his keynote address, Scott Steinberg, CEO of TechSavvy Global and author of Make Change Work For You, affirmed that change is the “new normal.” He emphasized that companies must constantly innovate in order to survive in today’s volatile business environment. Some companies, such as Apple, Amazon, GE, and Samsung, have maintained their competitive edge by mastering the art of “sustainable innovation.” Steinberg pointed out that these companies foster highly collaborative relationships with their employees, who also represent the company’s customer base. By creating avenues for employees to share their observations on emerging threats and opportunities, these organizations are simultaneously constructing platforms to prototype new business products. These collaborative relationships thus enable management to harness the full range of talents that allow an enterprise to continually adapt and grow.

In the second keynote speech, Paul Taylor, former executive vice president of  the Pew Research Center and author of The Next America, focused on two major demographic trends that are happening in the United States. First, the bulk of the country’s population is aging. Older generations have always needed the younger ones to drive the economy; the millennials, however—the youngest generation in today’s workforce—are collectively experiencing great difficulty in launching their careers and remain largely dependent on their forebears. Taylor observed that businesses need to mimic these new domestic norms and similarly nurture and invest in millennials to ensure the success of their firms’ future leaders.

Second, Taylor pointed out that by 2050, immigrants will comprise the largest-ever share of the American population: while 20 percent of Americans were of immigrant descent in 1960, that proportion is projected to climb to 37 percent. Not only will this expand the workforce and brainpower of the American economy, but it will also change the demographic complexity of the country’s consumer base. Furthermore, this modern immigration wave has begun to alter traditional attitudes toward racial and ethnic boundaries. For example, children of immigrants are more likely to marry someone of a different race or ethnicity. These trends are already driving business behavior, as contemporary television commercials clearly demonstrate: in an ad for Coca-Cola, the anthem “America the Beautiful” is sung in several languages; and two recent Cheerios ads featured a multi-racial family.

The presentations and discussion in Atlanta generated three key takeaways for directors:

  1. Assess your corporate culture. Corporate culture can often be a significant roadblock to innovation, and many companies stumble because they fail to periodically rethink their identity. A corporate culture that allows for evolution is, by definition, resilient and adaptable. Regard your employees as a wellspring of innovative ideas, because they have the most direct interaction with your customers. Their insights into evolving consumer demands can, in turn, generate your business’s next game-changing idea. A big challenge for many firms is how to encourage employees to speak up, especially at established companies where a the corporate culture has been in place for some time. (FedEx, for example, has a 40-person team that is charged with driving innovation throughout the entire organization.) By contrast, the smaller size and absence of inhibiting precedents at start-ups enable them to be more adept at mining creative solutions from their entire employee base. Spurring and sustaining innovation is about institutionalizing a love of change within your organization. Create forums through which everyone—from the mailroom to the boardroom—feels free to share ideas.
  2. Make educated bets. A lack of risk tolerance is a major barrier to innovation. For companies that are doing well, staying the course may seem like a safe bet; but as the competitive landscape shifts, this approach will ultimately cause the company to falter Create systems that allow the company to take smart risks. In line with the company’s established risk appetite, it’s acceptable—and expected—that a company will have to weather some level of failure. The board can openly discuss unsuccessful ventures with management, leveraging those experiences as learning opportunities instead of viewing them solely as a misstep.
  3. Embrace diversity of all types. According to the Report of the NACD Blue Ribbon Commission on The Diverse Board:

[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.

In his speech, Paul Taylor addressed the issue of age diversity specifically. Younger directors with relatively little board experience may be passed over for a directorship because seasoned directors perceive them as lacking the experience and credibility necessary to be effective. However, seeking out non-traditional director candidates (whether that status is determined on the basis of age or other criteria) can be critical to effectively managing a board’s talent pipeline. Established directors have the ability to mentor and develop the next wave of board leadership and, in turn, benefit from the perspectives of new directors who bring varied backgrounds and skill sets into the boardroom.

Look for full coverage of this NACD Directorship 2020 session in the May/June 2015 issue of NACD Directorship magazine. For information on future events and recaps of past events, visit the NACD Directorship 2020 microsite.

Diversity in the Boardroom: The Importance of Change

February 23rd, 2015 | By

For years, boards have discussed diversity but little action has been taken. Demographic shifts and the continuing focus on global competitiveness point to change on the horizon.  While it won’t happen tomorrow, all signs point to increasing diversity within the next few decades — when the current millennials are in their 50s, the boardroom will be much more racially diverse.

I recently addressed two highly engaged groups in Washington, D.C., and the attendees reflected very similar attributes and a common aspiration — a desire to gain their first board seat. My advice for gaining that first board seat was clear. It’s all about who — and what — you know.

The first group I met with was from Ascend, and the second group was from Women in the Boardroom. While the composition and mission of the latter is evident, the former may be new to you. Ascend is an association consisting of nearly 50,000 Pan-Asian leaders who are passionate about ascending the highest ranks of business. I spoke during Ascend’s recent global conference of more than 2,500 people.

NACD believes diversity is a global business imperative. I mentioned during my talks that NACD has been a champion of diversity in the boardroom for more than 37 years, dedicating content, events and actions to the issue. Further, we don’t define boardroom diversity as being simply about color or gender. It’s about diversity of thought, perspectives and experience – from a cognitive perspective.  Ideally, the skills, experiences and perspectives of a company’s directors should reflect those required to proactively oversee the company’s strategy.

For more information about NACD’s positon on diversity in the boardroom, please read our Blue Ribbon Commission Report here.

In Conversation with Dona Young and Carolyn Miles

October 12th, 2014 | By

The differences between nonprofit and corporate governance are few and far between when the nonprofit in question has a budget of almost $700 million and operations in more than 120 different countries. But when you are a nonprofit of this size, what should the board’s expectations of management be—and vice versa? Carolyn Miles, president and CEO of Save the Children, and Dona Young, who is a director on the Save the Children board, spoke with NACD Senior Advisor Jeffrey M. Cunningham about how directors can navigate the perils and opportunities of operating around the globe while fostering a top-notch organizational culture.

One of the problems of working in the nonprofit space is controversial topics—for example, immigration, an issue that came to a head with the recent influx of children crossing the U.S. border. For Miles, Save the Children didn’t adopt the attitude of choosing sides, but rather, they chose children. With that mindset, the organization was able to push beyond the immigration debate and focus on the issue of taking care of kids and ensuring their basic human rights. It’s a position that drew criticism but doing otherwise would have been a disservice to the company’s mission.

Both Miles and Young drove home the importance of bringing into the boardroom what’s going on in the field. Young emphasized the need of having a CEO who is continuously communicative with the board. Miles explained a practice she has used of bringing people who are working in the field to attend boardroom meetings and explain their needs to directors. Those lines of communication better inform the board and is a boon to helping the board helping the company accomplish its mission.

Miles also explained how Save the Children’s directors venture out to experience the work that their organization is doing, what she believes is a critical practice. Save the Children’s directors have been to the places that are the toughest—Afghanistan, Liberia, and Iraq. On a recent trip to Liberia, Miles was confronted with about 4,000 cases of Ebola in Liberia, which has created about 2,000 orphans. As a result, Save the Children wanted to consider sending aid, even though the issue at hand was out of the company’s traditional scope.

“We vet the issues together as a board,” Young said. “At the core of our mission, we have to assume risk.” She offered the following process of evaluating resources to ensure that the company can address a certain area of risk.

  • Identify each component of that risk.
  • Identify how each component is to be addressed.
  • Evaluate if the board has the skill sets to attack the issue at hand.

These are tactics that are as relevant for Save the Children as they are for a company such as IBM. Although the traditional scope of Save the Children’s activity did not lie within epidemic disease control, they did, however, know a lot of the pieces of how to assist (e.g., setting up hospital), and the company was able to respond to the Ebola crisis in the ways that it could and in a fashion that was true to its core mission.

Miles also discussed the importance of metrics. From her perspective, it is critical for nonprofits to focus on metrics and not just the “greater good of the cause.” If a company is able to produce palpable results, people who bankroll the organization look to their contributions not as a donation, but as an investment. Young added the importance of the board’s role as a steward of those funds, and the need for discipline and process—if that is not in place, there’s no way company is achieving its goals.