Keeping a Foot on the Gas
By April Hall

This year has brought more challenges than both the Business Roundtable (BRT) and Milton Friedman could have imagined — combined. It’s hard to conceive how much has changed and what will likely develop.

In our editorial meetings we are working through “what’s next” discussions. True, these discussions have been ongoing for months, but that’s because things just won’t stop changing.

In our latest exchange, I asked about the relevance of a changing presidential administration (as I write this, it’s been just days since the final projection was announced — a Biden win) for our readers. Our publishing director, David Shaw, made a good point: “Corporate governance will still need to be addressed. There will still be issues there regardless of the election’s outcome.”

I need to shift my focus from how we can help society in our everyday lives to how directors can make changes for the better through their boardroom deliberations.

I suppose that makes me a “stakeholder capitalist.” And while I don’t know how a focus on environmental, social or governance (ESG) issues will make a true difference in the world for the better, I think it’s worth the try. And I think one year after the BRT’s statement on stakeholder capitalism may be a bit soon to judge its effectiveness. They say Rome wasn’t built in a day. I looked it up — it actually took centuries.

Moving toward a sustainable, equitable and just economy is going to take a while. As we leave 2020 behind, we need to evaluate our priorities.

There is no doubt that profits and dividends are important for investors. However, we must keep in mind that not everyone owns stock. That seems hard to believe in this world of IRAs and 401(k)s and the resurgence of day trading during the pandemic, but it’s true.

According to Gallup data, just 55% of people own stock, and that includes as a piece of their retirement funds. A poll by FinanceBuzz found 35% of people surveyed have no retirement savings at all.

When directors think of their stakeholders, it shouldn’t be all about dividends. It’s also about people in their middle of their careers who need their jobs. Without those jobs they may never be able to afford a place in the stock market that will make them a priority to corporate America.

If you’re looking at the long game, you have to think not only about the shareholders you have, but also about the shareholders you want.

Same book, different chapter

In this issue we continue to follow the story of racial diversity in the boardroom. It’s been months since protests against racial inequality and social justice erupted in the streets, but it seems as though there is now some real momentum in the drive for equality, especially in the boardroom.

As I sometimes do, I went down a rabbit hole while researching and writing this column. This time, I hoped to find out about the history of Black directorship.

In 1971, Leon Sullivan joined General Motors as the first African American member of a major corporation’s board. A Baptist minister, Sullivan was no titan of industry, but a civil rights activist who wanted to bring jobs to his community by opening the first Black-owned and -operated shopping center in the country (in Philadelphia). He also wanted to address South African apartheid. He was on the GM board for 20 years and created the “Sullivan Principles” as an alternative to complete divestment in South Africa. Among other accolades, he was awarded the Presidential Medal of Freedom.

This is a great example of the alternative talent pipeline. Would a board search firm tasked with finding new talent for General Motors look to the faith community today? Probably not.

But perhaps this time we’re keeping our foot on the gas. In September a group of CEOs and directors launched “The Board Challenge,” asking companies to commit to adding a Black director in the coming year — and for boards that already have a Black director to add another.

Among the corporations pledging to add their first Black director are Zillow and Nextdoor. Lyft, Nasdaq and Merck (notable as one of four companies in the Fortune 500 with a Black CEO) are among those companies that already have at least one Black director but are charter partners and “will continue to use their resources to accelerate change.”

Part of that change is a promise from challenge signatories to flood the pipeline with diverse candidates, to mentor and make introductions and look deeper — beyond the C suite — for talent in their organizations.

The challenge launched with 27 corporations and has gathered 13 more partners since. The lofty goal is to have 400 companies on board in the next year. Hopefully, directors will keep their eyes open in 2021, see all the talent that is already out there and bring those people into the fold.

April Hall is managing editor of Directors & Boards. She welcomes feedback at april.hall (@)

2020 Fourth Quarter

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