Thinking Beyond the Shareowners: Companies and Communities
The prime responsibility of directors who sit on the boards of public companies is to create shareowner value, but the efficiency and effectiveness of big business has an impact on communities far beyond those who have invested in company stock.
I am writing this at Dallas Fort Worth airport on my way home from NACD’s Director Professionalism course at Laguna Beach, CA. (I know, hell being me). Airlines have been in the news a lot in recent weeks with miraculous escapes from crashed aircraft, tragic deaths in Alaska, and of course the flight attendant who left his job via emergency chute.
These incidents were in the minds of more than 100 directors attending the Laguna Beach Director Professionalism course as Karen Hastie Williams spoke about the constituencies the board seeks to serve, advance and protect at Continental Airlines. Karen, who is also a director of NACD, has been a board member at Continental for 12 years and takes very seriously the board’s role in creating and advancing a strong corporate culture.
“It’s important for board members not to be in an ivory tower and to demonstrate that they value what operational people do in their day-to-day work to further the airline’s commitment to excellence,” she said. “For board members, talking to customers and employees is the best way of getting to know the business.”
Continental uses a series of metrics to track the performance of each part of the operational team, Karen says. “Employees receive checks in recognition of their commitment to the efficiency and effectiveness of the business. The board approved the CEO to go to our hubs in Houston, Newark and Cleveland to hand out the checks himself. It’s important to be visible. We incentivize and reward the behavior we want to see. Continental has an excellent safety record because we encourage collaboration. All our staff in the air, on the ground and in the back office want to do the best job they can, and they work together to keep our service safe, and to get our passengers to where they need to be.”
Karen believes that Continental’s culture of customer service and the value it places on its employees has contributed to the company’s bottom line.
“I make sure to speak with both pilot and the flight attendants when I fly Continental,” she said, explaining that she believes people work best when they know their skills and commitment are recognized and valued.
As Continental prepares for its merger with United this fall, Karen believes that the culture created at the smaller airline is one of Continental’s most important contributions to the deal. “Together, the two companies can produce cost efficiencies, and provide the most comprehensive schedule for travelers. Led by the principles and practices that have delivered excellent customer service at Continental, the new company can create the kind of frequent flyer loyalty that will create long-term shareowner value” she said.
Mary Pat McCarthy, Executive Director of KPMG’s Audit Committee Institute, an Alliance partner of NACD, also believes that board members should closely monitor the interests of not only shareowners but stakeholders. KPMG is the exclusive sponsor of NACD’s How to Be(come) A Director, a multi-media distance learning product which will launch later this year. Mary Pat is a key contributor. Click below to find out why Mary Pat thinks that a concern for the interests of employees, customers and communities is vital to the long-term sustainability of companies.
The next Director Professionalism course will be held at the Sandpearl Resort, Tampa, FL on December 6 and 7, 2010. How to Be(come) A Director will be available later this year. For more details of 2011 NACD director education, click here.