Tag Archive: Seth Goldman

Tone at the Top

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Following a session on how to build a high-performing board, a Monday plenary session at the NACD Board Leadership Conference took the discussion a level further to what that board can do. Moderated by Bob Hotz, chairman of Pep Boys, director of Universal Health Services, and senior managing director of Houlihan Lokey, the session focused on tone at the top and how the board can act as stewards of corporate culture.

The panel brought together three executives with a wide range of experiences in bolstering effective corporate cultures. As a director of Hewlett Packard and General Motors, Patricia Russo was charged with transforming cultures that had proven to be corporate liabilities. At Honest Tea, founder, president, and CEO Seth Goldman was able to establish his company’s tone from the ground-level. Dr. Ralph Sorenson, director of Whole Foods, has first-hand experience with the company’s very unique culture.

From Russo’s perspective, at companies with a dysfunctional tone, it is critical to set a culture that exemplifies what the company needs to do to get back on track and how it will do that. The board has a very important role in this process. First, the board needs to get behind the CEO and support that person in every way possible. In times of change, it is critical that the board is more active, more engaged, and even more visible in its support for the CEO. Russo also stressed the importance of clear, constructive communications. It is essential for directors to be clear about their alignment with management.

TeaEO Seth Goldman contrasted his experiences with merging Honest Tea’s culture following its acquisition by Coca-Cola. His situation was unique: For the first three years, Coca-Cola was a minority shareholder of Honest Tea, allowing the smaller company’s culture to flourish. The company was still able to experiment with innovative marketing strategies, including establishing pop-up “Honest Stores,” which sold tea for $1 per bottle based on the honor code. Today, Honest Tea has been able to maintain its original tone, while utilizing Coca-Cola’s organization to expand its reach significantly.

Sorenson praised Whole Foods for its strategy of placing employees and customers at the center of its culture. From his perspective, the CEO’s most critical job is to create a culture that is designed to bring out the best in everybody associated with that enterprise. Although he has served on 15 public company boards, Sorenson noted that he has learned more from serving on the Whole Foods board than all the other boards combined.

According to Sorenson, Whole Foods’ success starts with its tone at the top. Established by Co-CEOs John Mackey and Walter Robb, the organization is based on a culture of “shared fate,” commitment to honesty, leading by example, transparency, and an embedded fundamental respect for all team members. Autonomy and responsibility are pushed down through the organization: Team members are hired by peers not team leaders.

Although not every company can follow the Whole Foods model, Sorenson recommended its use. “It’s almost like Camelot. I’ve never seen anything like this company.”

NACD Featured Conference Session: Tone at the Top

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What sets great companies apart? Executives and directors at the most admired corporations in the world call it strong corporate “culture.” That means everyone–employees, investors, business partners–embraces the same values and principles. They share a unified sense of how success is identified, and of the kind of impact the company should have.

Culture, thus defined, is essential to marketplace success.

At the management level, executives should exemplify the culture through both actions and words. Although directors are not typically viewed as arbiters of corporate culture, in fact, leading boards also exemplify and demonstrate those shared values.

As boards and individual directors help set the “tone at the top,” they influence how the company is perceived by investors, regulators and other stakeholders, thus significantly impacting the company’s performance, reputation and value.

Four veteran directors from leading global companies will join a panel discussion at the upcoming 2012 NACD Board Leadership Conference to talk about the vital role directors play in establishing a culture that motivates the workplace:

Seth Goldman

Seth Goldman, president and TeaEO of Honest Tea, provides keen insights into how he created a company now viewed as a beverage industry innovator–and how leaders can imbue their organizations with a spirit of just such innovation.

Robert Hotz

Robert Hotz is a senior managing director and co-chairman of Houlihan Lokey. He is also the global co-head of corporate finance and a member of the board of directors and operating committee. Hotz serves on the board of directors of Universal Health Services and is chairman of the board of Pep Boys.

Patricia F. Russo

Patricia F. Russo is director, General Motors, Merck, Hewlett Packard, Alcoa and KKR. She was named by Forbes as one of the ten most powerful women of 2006.

Dr. Ralph Z. Sorenson 

Ralph Sorenson is managing general partner of the Sorenson Limited Partnership. He is also president emeritus of Babson College, professor emeritus and former dean of the University of Colorado Business School, and former professor at the Harvard Business School. Dr. Sorenson serves on the board of Whole Foods Market, where he chairs the nominating and governance committee.

Don’t miss out on the unique perspectives these experts bring to the director’s role in shaping corporate cultures. Join us for this featured session, “Tone at the Top,” at the 2012 NACD Board Leadership Conference.