CEO Corner

Improving Emissions Targets: “If Trump Won’t Do It, We Will,” CEOs Say

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More U.S. organizations—including Adobe, CVS Health, Gap, Nike and Merck—are taking climate change seriously and have committed to emissions reduction targets in line with the Paris Agreement, according to Picking up the pace: tracking progress on corporate climate action by CDP, a nonprofit global environmental disclosure platform.

This year, 151 corporates, representing 14 percent of a sample of 1,073 responding companies, have committed to science-based targets, an increase from 94 companies in 2016. An additional 30 percent—317 companies—anticipate setting the targets approved under The Science Based Targets initiative, a collaborative effort between CDP, World Resources Institute, the World Wide Fund for Nature, and the United Nations Global Compact.

Existing targets take the sample of companies almost one-third (31 percent) of the way to being consistent with the Paris Agreement’s goal of keeping global warming below 2 degrees, a notable improvement since last year (25 percent).

“Two years ago, the Paris Agreement fired the gun in the race to a low-carbon economy,” says CDP’s chief executive Paul Simpson. “This year, the recommendations from the Task Force on Climate-Related Financial Disclosures accelerated the pace.”

The most notable examples named in the analysis are:
AkzoNobel: The Dutch chemicals company will source 100 percent of energy from renewable sources by 2050 and introduced a carbon pricing policy including a ‘social cost of carbon’ of €135/tonne of CO2e.

BT: The UK telecom giant has set ambitious science-based targets to reduce its direct emissions by 87 percent by 2030.

EDP: The Portuguese energy company produced some 65 percent of its electricity from renewable energy in 2016; by 2020, that figure is forecast to rise to 75 percent. It is projecting that its relative CO2 emissions will be 30 percent below 2015 levels by that date, on course to meet its 2030 science-based target.

Nissan: The Japanese carmaker aims to be the leader in zero-emission vehicles. Since its launch in 2010, Nissan has sold more than 240,000 electric vehicles (EVs) around the world, becoming the number one provider of mainstream, mass market and affordable EVs.

San Diego: The U.S. city is working with GE Current, AT&T, Intel and others on its $30 million Smart City initiative, which aims to improve the region’s energy independence, to empower consumers to use EVs, to reduce greenhouse gas emissions, and to encourage economic growth.

Unilever: A member of RE100, the Dutch-British consumer goods company is committed to sourcing 100 percent of total energy across its operations from renewables by 2030.

More companies also are now mapping out their low-carbon future—89 percent have emission reduction targets this year (up from 85 percent in 2016 and 57 percent in 2010, though CDP’s sample and methodology was different in 2010, so the differences between that year and 2017 reflect a general indication of trends, rather than an exact comparison).

A majority (68 percent) of companies this year have set targets to at least 2020 (up from 55 percent in 2016), and 20 percent have longer-term targets to 2030 and beyond (up from 14 percent in 2016).

In addition, over a third (36 percent) of companies are offering low-carbon products such as electric vehicles and zero-energy buildings (up from 30 percent in 2016). Three-quarters (75 percent) say their products and services enable third parties to reduce emissions, up from 64 percent in 2016. The number of companies with a renewable energy consumption target has increased by 23 percent in the last year, with companies including BT and Unilever committed to sourcing 100 percent renewable energy by 2030 as part of the RE100 initiative.

“The majority of the large corporations we analyzed do not yet appear to have the right, science-based targets in place to successfully transition their business in line with the Paris Agreement, although many have ambitions to take this step in the next two years,” he says. “We strongly urge them to follow through and align their targets with climate science, to ensure their resilience in the transition to a well below 2-degree world.”

In a separate analysis, CDP ranked 160 companies as A-grade for their approaches to climate change, water and deforestation. Unilever and L’Oréal lead the way, both achieving As across all three areas on CDP’s 2017 Climate, Water and Forests A Lists.

“Climate change is already affecting companies – both through the direct impacts of steadily rising global temperatures and through the policies that governments around the world adopt in response,” says Unilever’s CEO Graeme Pitkethly. “At Unilever, we reduced CO2 from energy in manufacturing by almost two-thirds over the past two decades and have set a bold target of being carbon positive by 2030, committed to sourcing 100% of our energy from renewable sources.”

Click here for the full report.

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2017 CEO Talent Summit Presentations

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Move The World Out of the Stands and onto the Playing Field

Omar Soliman, Co-Founder & CEO, College Hunks Moving Junk

 

 

 

 

 

Lessons from the Front Lines Cisco’s TA Transformation

Jill Larsen | Senior Vice President of Human Resources & Talent, Cisco

 

 

 

Engage: The Workplace of the Future

Gale Moutrey | Vice President of Global Communications, Steelcase

 

 

 

 

Changing the Conversation

Lori Trawinski, Ph.D., CFP ® | Director, Financial Security Team, AARP Public Policy Institute

 

 

 

 

10 Key Recruiting Trends for 2018 and Beyond

Tony Lee | Vice President of Editorial, SHRM

 

 

 

 

White Paper:

Disrupt Aging in the Workforce

AARP

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Cybersecurity Due Diligence: 6 Key Questions To Ask Your CIO Before An Acquisition

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Given the current cyber environment—with companies of all types targeted by hackers, and with large, sophisticated organizations reporting major data breaches—one would expect cybersecurity assessment to be a standard component in the M&A due diligence tool kit.

Surprisingly, that’s not always the case: one recent industry study found that 78% of deal makers believe that cybersecurity is not a risk that’s currently analyzed in-depth, or even addressed properly in the due diligence process.

For buyers and sellers alike, expertise in assessing data-related risks must be applied at the front end of every transaction and throughout the deal, to gain a reliable and complete assessment of the target company’s cyber exposure and readiness. This will ensure that deal terms and deal value are equitable, and that post-closing opportunities to strengthen security can be implemented. applied.

Here are a few critical questions that buyers should ask, and that sellers should be prepared to answer, in the due diligence process:

What’s the nature and risk profile of the data? The target company should clearly articulate what IT systems, data sets and business processes are most valuable and vulnerable, and explain how the company protects and exploits them. This review is only partly about data privacy, as contractual rights and IP protection can also affect the data’s valuation.

What cybersecurity controls and crisis management plans are in place? The target company should summarize administrative, technical and physical information security controls that safeguard its most critical data sets. These include technical controls—boundary and malware defense, data encryption, intrusion detection systems, etc.—administrative measures and physical security. A documented crisis management/incident response plan should also be in place.

How cyber savvy is senior management? If the target company’s senior leadership does not demonstrate a sophisticated understanding of data security risks, that suggests the responsibility is siloed within the IT or information security functions. If the entire internal culture is not focused on data security, the company is at much higher risk.

What’s your 3rd party exposure? If vendors hold or have access to sensitive data, the target company should have a formal vendor risk management program, as well as detailed agreements and supervision disciplines that address a broad range of legal, liability and procedural issues.

What does your cyber insurance really cover? Most cyber insurance policies cover expenses related to data breach and privacy crisis management, but buyers need to closely examine policies for details, such as exclusions, deductibles, coverage periods and limitations.

Can we stress test your security protocols? A target company’s evidence in due diligence can sometimes be aspirational, rather than reflective of operational reality. A primary due diligence objective should be to probe and test, within reason, whether the target company’s representations stand up to scrutiny.

Most officers and directors understand the impact of software application and data security vulnerabilities on their organization’s profitability and reputation, as well as the disruption to productivity and business processes. However, M&A practices are only now beginning to adopt the rigor and sophistication required to properly evaluate those assets and risks prior to a transaction.

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How To Help Your Senior Team Rediscover Its Core Purpose

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Research conducted by both Harvard and colleagues at Korn Ferry has demonstrated one unsettling fact: senior teams are often the worst performing teams in organizations. But why? There are many possible reasons, but one of the biggest is a lack of shared purpose.

I’ve lost track of the number of times an experienced CEO has approached me wondering, “Why isn’t our senior team more engaged with the new strategy? What we need to do and how to get there are crystal clear. But the more I push, the less motivated people seem to be. What’s missing?”

Senior teams face three big realities that have to be placed in meaningful relationship for our enterprises to thrive:

  • The big ‘what’ question (vision): What is possible for us to become?
  • The big ‘how’ question (strategy): How will we get there?
  • The big ‘why’ question (purpose): Why is it so important that we exist in the world?

Unfortunately, too often, teams deal with these three realities in the wrong sequence. We largely over-focus on the what and the how and under-focus on the why. While it may be counterintuitive to many leaders, the most strategic and energizing place to begin is Purpose: the Big Why. Through the lens of purpose, we focus on a compelling reason for being and can then envision a future worthy of collective talents, energies and resources. By focusing on purpose—an aspiration that lifts us and infuses significant meaning in our enterprise—we catalyze our courage and authentic influence to create enduring value.

“What we need to do and how to get there are crystal clear. But the more I push, the less motivated people seem to be. What’s missing?”

Paul Van Oyen, CEO of Etex, a $3 billion global building materials firm, put it this way: “For purpose to be purposeful, it needs to guide the daily decisions and daily behaviors that fuel the enterprise. Purpose is merely a concept until it guides all team decisions and team behaviors.”

Once purpose begins to guide behavior, the results are clear. In a new study, “People on a Mission,” Korn Ferry consultants Elaine Dinos, Janet Feldman, and Rick Lash found that companies focused on purpose and values reported annual growth rates of 9.85 percent, compared to 2.4 percent of the entire S&P 500 consumer sector— more than four times the growth rate.

Stuart Parker, CEO of USAA, found a way to remind his team of their purpose. Stuart had personal challenge coins made, similar to those used by military leaders to recognize excellence in members of their command. One side is engraved with Stuart’s personal purpose—“Mission, Trust, Freedom”—along with pilot wings he wore during his career in the United States Air Force. On the flip side are the USAA eagle and the company’s values: “Service, Loyalty, Honesty, Integrity.” He wanted to convey a powerful reflection: How can your purpose serve our collective mission?

To help your senior team rediscover its core purpose, ask a series of questions. What are the distinguishing differences your group has? What is the big impact, big service, or big difference that you are going to collectively achieve? Why does this team exist? Imagine a team of leaders clear on both their individual purpose and their collective purpose. Sound like a great place to be? This could be your team. Connect your individual purpose to the broader mission, and tremendous energy and engagement will be unleashed.

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It’s Time To Let Your Women Leaders Lead

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Last month, I was consulted by a large international client. They were launching a thoughtful and contemporary worldwide multicultural and generational mentoring initiative and wanted to do some additional programming for their high-performing, successful women. The ultimate goal was to increase the number of women in their leadership ranks, which had dismally been hovering at the industry average of 13% for a very long time. So why was this important to them?

Average performance was not in this client’s DNA. It was instead a matter of pride. They saw a metric (percentage of women in leadership positions) that was under-performing, and they wanted to fix it. They were market leaders. Given this drive and their general knowledge of the increasing focus on women leaders as a meaningful business performance differentiator, the embarrassing issue of gender under-representation in their leadership ranks was finally on some executive’s to-do list.

I attended this meeting with a handful of high-level women who were the few that had managed to crack the leadership barrier. As if they didn’t have enough to do, they had been tasked with the responsibility to create and champion this “extra” program for women. Their enthusiasm to do so was clearly mixed, but their A+ achievement orientation was nonetheless driving the process forward. They had a current plan, but wanted to be sure. As a boutique player from a majority female owned and operated firm, I was there to give a second opinion.

The current plan had been put together for them by a leading, global consulting giant. They slid the two-day “Women’s Mentoring Program” in front of me. I carefully reviewed the proposal and immediately resisted the urge to blow the metaphorical dust off the outdated approach. It read like a 1990s era canned training manual for women in the workplace. The itinerary stuck in my throat just reading it. I could not help to despair. Was this truly all of the ‘progress’ we had made in the last 30 years? I could not imagine sitting through the proposed training, let alone feeling energized and engaged by it. It was particularly baffling given the progressive global mentoring program they were developing for the entire high-potential population.

“You are going to have all of your highest performing women together in one place for the first time. Is this really what you want to do with them.”

“So, can I clarify something?” I asked. “Of course,” they said. “This program is for the women in your company who are already high-performing and successful?” “Yes,” they said. I took a deep breath. “May I be a little provocative here?” They exchanged nervous glances, but told me to proceed. This was, after all, the reason that they had sought a second opinion.

“So, let me see if I understand. You are going to bring all of your highest-performing women together in one place for the first time in the history of your company. You are then going to provide these successful women with extra training, which you are not providing to the high-performing men. Let’s stop and think for a moment what message this sends to the rest of the organization. You are going to teach them how to be confident. You are going to teach them how their female approach might be viewed by the male leadership. You are going to teach them how to overcome (clearly known) obstacles to their advancement in the work environment (instead of committing as a company to identify and remove the obstacles). And, when you are done training these high-performing women, you are going to give them a networking and mentoring opportunity, where you parade them in front of all the men for a dinner?”

For an uncomfortably long time, the room was pin-drop quiet. I resisted the urge to vent my frustration and just let this sink in. Then, I said, “You are going to have all of your highest performing women together in one place for the first time. Is this really what you want to do with them?”

Honestly, my client and I couldn’t rip up that outdated programming proposal fast enough and we’ve never looked back. That meeting was the start of a collaborative and creative journey to customize energizing global programs designed to harness the unique business perspective of these high-performing women and engage them in the business discussions they come to work every day to tackle and solve. While we are at it, we also are taking the opportunity to ask these women what they need to be successful, which includes identifying the corporate obstacles and seeking commitment from the leadership to find ways to remove them. We also are exploring organizational flexibility and vitality as key drivers for sustained performance, retention and success. As it turns out, even the process of creating this programming has been energizing for all of the business leaders involved.

Is your company in need of a leadership development makeover? I recommend you take a moment to look at how women are being utilized in your firm and ensure that they are being given all the opportunities to get involved in business decisions their position affords. It’s time to let your women leaders lead.

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Resilience On The Job: Five Ways To Improve It

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This is a two-part series that looks at resilience on the job—why it is important and five ways to improve it.

What is resilience?
The American Psychological Association (APA) defines resilience as “the process of adapting well in the face of adversity, trauma, tragedy, threats or significant sources of stress” (The Road to Resilience, APA, Washington DC, 2010). We know it when we experience it and see it in others.

Neuroscience tells us that genetic factors play an important role in an individual’s response to stress as well as in exhibiting resilience. Based on genetic research, we know that some people are more vulnerable to depression and post-traumatic stress disorder.

In addition, neuroscientists have also been able to influence the shaping of our neural circuits that regulate our ability to respond to stress. Specifically, prolonged episodes of uncontrollable or overwhelming stress during childhood can lead to “learned helplessness.” However, exposure to mild to moderate stressors that have a positive outcome can help children become more resilient in the future.

“It’s important to take a holistic approach that addresses cognitive, emotional, social, physical, and biological needs.”

Even though genetics and early childhood development play a role, research also clearly demonstrates that resilience-promoting interventions can be beneficial for adults throughout their life span. In fact, these interventions can be even more helpful for those who have less-than-average resilience to begin with but it’s important to take a holistic approach to resilience. Here are five ways to improve your resilience.

1. Cognitive training. Research has shown that cognitive training methodologies improve resilience. The first is called “cognitive reappraisal” and the most effective type of cognitive reappraisal is a practice called “distancing.”

Distancing involves training participants to view their circumstances as if observing themselves to learn from the situation and then reframing the event in positive rather than negative terms.

Coping self-efficacy training has also shown promise in building resilience. Coping self-efficacy involves practicing and receiving feedback on dealing with stressful scenarios through real or simulated exposure (e.g., role playing).

Training in problem solving has also helped some people to improve how they frame problems and improve cognitive flexibility to learn to address issues in new ways that reduce stress.

2. Emotional regulation. Mindfulness training, including reflection and journaling, has been shown to have a significant positive impact on resilience by helping participants to focus on positive memories and emotions rather than constantly dwelling on negative events.

Exercises such as keeping a gratitude journal help individuals to start and maintain the “upward spiral” of emotions that go along with improving resilience.

3. Social support. Research shows that strong and deep connections with friends and family improve resilience. Having people with whom you can share and talk through troubles with supports positive emotions and clear thinking that underlie resilience.

Programs such as the Penn Resilience Program train people to build relationships by challenging beliefs that hinder good communication and build skills that improve communication.

For example, participants are taught to focus on giving praise, to increase their ability to have active and constructive conversations, and to improve communication flexibility in response to the situational demands.

4. Physical health. Much like the relationship between resilience and emotion, the relationship between physical health and resilience goes both ways. To improve resilience it’s important to begin a virtuous cycle by working to improve your overall physical health any way you can.

Getting enough sleep, exercising, and eating right are factors that can improve resilience. Additionally, research has shown that getting less than six hours of sleep a night is tantamount to not sleeping at all and creates a downward spiral in cognition, emotions, and overall performance.

Likewise, exercise and diet impact the physiology of the brain in ways that can either support or undermine an individual’s ability to deal with stress.

5. Neurobiological training. Meditation is one of the best ways to enhance our brain’s abilities to deal with stress. Neuroscientists describe mindfulness as nonjudgmental, present-moment awareness and recommend meditation as one key to practice mindfulness.

They encourage mindfulness training to help keep our brains healthy, to support effective decision making, and to protect ourselves against stress—all key components to improving resilience.

Conclusion
In her book, Bossypants, comedian Tina Fey explains resiliency as being “blorft”. She defines “blorft” as “an adjective I just made up that means ‘completely overwhelmed but proceeding as if everything is fine and reacting to the stress with the torpor of a possum.’ I have been blorft every day for the past seven years.”

While this approach may work for famous comedians, blorfting your way through each day is not an effective strategy for dealing with the constantly changing nature of today’s business environment. But there is hope. There are ways to learn to manage through constant stress and changes which will allow leaders to grow stronger and better at dealing with ever-increasing levels of challenge into the future. It’s important to take a holistic approach that addresses cognitive, emotional, social, physical, and biological needs such as Johnson & Johnson’s Premier Executive Leadership™ program.

As Winston Churchill said, “Success is not final, failure is not fatal: it is the courage to continue that counts.” In different words, be resilient!

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It’s Cahillane’s Kellogg’s Now. Will An Industry Outsider Prove To Be The Healthy Choice?

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Kellogg’s and other cereal makers have struggled in recent years—in large part because of changing consumer tastes that are shifting away from sweet cereals and processed foods and toward what they see as healthy alternatives. Kellogg’s itself has had two and a half years of declining sales. Former CEO John Bryant fought back against these trends with cost-cutting and the addition of more healthy snack foods to the company’s portfolio, including the acquisition of the Pringles chip brand. Earlier this year, he wrote in an op-ed piece that Kellogg’s “will always be a cereal company at heart. However, changes in food industry dynamics and consumer needs in recent years have required us to think differently about our business, how we operate and the foods we make.”

That trend may have been his undoing, when, in a somewhat surprising move in September, Bryant announced his retirement as CEO of Kellogg’s for personal reasons. The snack and cereal company’s board decided to replace him with Steven Cahillane, an industry outsider—a choice that suggests how the company might respond to a changing industry.

Bryant, who turned over the reins of the top job on October 2, was with Kellogg’s for two decades, and its CEO for the last seven. He will stay on as chairman until March 2018, when Cahillane will assume that role as well.

For his part, Cahillane brings a wealth of outside experience to the job. Much of his career has been in the beverage business—including stints at Coca Cola and beer giant Anheuser-Busch InBev, and the founding of State Street Brewery in Chicago. Just before coming to Kellogg’s, he spent three years as the CEO of The Nature’s Bounty Co., the global manufacturer, marketer and distributor of vitamins, supplements and other health and wellness products. In that job, he was credited with keeping the company in touch with evolving trends in the field, and building an e-commerce division.

“Steve will need to be bold and work with his board to embrace a transformational agenda commensurate with the challenges.”

“Steve clearly has had a distinguished career leading successful CPG businesses throughout the world, including his terrific work recasting Nature’s Bounty as a consumer-facing health and wellness company,” said Donald Knauss, lead director of Kellogg’s board of directors.

“The food industry is undergoing a big transformation these days with changing consumer trends, omni-channel distribution and small specialized companies who are challenging the big food companies,” says Paul Winum, senior partner and co-practice leader of Board & CEO Services at RHR International. “Steve certainly understands these headwinds from his time at Coke and will bring lessons learned there to his leadership chapter at Kellogg’s. He will need to be bold and work with his board to embrace a transformational agenda commensurate with the challenges.”

The Kellogg’s board presumably tapped an outsider for the CEO role because it was looking for change—and Cahillane’s health-focused background could well be an indicator of the kind of plans he will be bringing to the company as he looks to turn things around.

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The Administration’s Pick

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Paul Trombino III is President Donald Trump’s choice to lead the Federal Highway Administration. In his last public sector role, as director of the Iowa Department of Transportation (Iowa DOT), Trombino was a champion of big data, private sector collaboration and new thinking about infrastructure investment. From road diets and supply chain mapping to autonomous vehicle testing, Trombino helped place Iowa at the forefront of transportation infrastructure in the 21st century.

First Ever Statewide Supply Chain Optimization Study
Iowa is the only state that offers a supply chain model to help in-state businesses and those looking to expand into Iowa the opportunity to optimize their supply chain and reduce costs. The Iowa Economic Development Authority and the Iowa DOT developed a model of the state’s major supply chains. With public and private freight data, the predictive computer model can forecast demand, transportation and inventory capacity, and quantitative performance data. The model will also provide an analysis across a company’s supply chain and pinpoint optimization opportunities.

This advanced model informed Iowa’s plan to build a new logistics park in development in Cedar Rapids. This is the only place in the country that can serve Chicago, Milwaukee, Minneapolis, St. Louis and Omaha by freight carrier in a one-day round-trip as permitted by federal regulation.

While big data is guiding smart infrastructure investments, Iowa is also leading the charge with driverless vehicle safety research.

“Iowa is the only state that offers a supply chain model to help in-state businesses and those looking to expand into Iowa the opportunity to optimize their supply chain and reduce costs.”

No State Has Gone Further To Advance Autonomous Fleets
The U.S. Department of Transportation recently named the Iowa City/Cedar Rapids I-380 corridor one of 10 automated vehicle proving ground sites in the nation. Unlike other proving grounds, the corridor features weather, road users and roadway landscape varieties. Plus, the National Advanced Driving Simulator—one of the nation’s largest virtual reality simulators—is located at the University of Iowa.

This announcement came after the Iowa DOT partnered with HERE, a digital mapping company owned by Audi, BMW and Daimler, to map the I-380 corridor. The Iowa DOT is now offering this data for free to private companies that would like to test advanced vehicle technologies in the area.

Iowa has smart plans and funding in place to improve the state’s 3,851 miles of rail and the highways, bridges and connections along major U.S. interstates (I-29 / I-80 / I-35). Plus, a unique plan to modernize the upper Mississippi River navigation corridor was presented at the White House earlier this year. It’s the latest progressive move for a state focused on innovation and dedicated to maintaining a competitive edge for Iowa companies. Learn more at iowaeconomicdevelopment.com.

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What To Know About Proxy Access As The 2018 Proxy Season Approaches

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If one of your largest shareholders asked your company to join the more than 450 U.S. public companies that have adopted proxy access, would you know how to respond? Would it surprise you that since the beginning of 2015, the percentage of companies in the S&P 500 Index that have adopted proxy access has risen from less than 5 percent to more than 60 percent?

A hot topic at shareholder meetings for the last three years, proxy access is likely to impact corporate governance for years to come. With the 2018 proxy season quickly approaching, now is the time for executives to catch up on major developments from the last year and consider what your company should do to be prepared.

Proxy access is a method for shareholders to gain representation on the boards of public companies. Unlike a waging a proxy contest, utilizing proxy access does not require shareholders to bear the cost of preparing and distributing their own proxy materials. If your company does not already have proxy access procedures in place, a shareholder may propose changes to the company’s governing documents. Alternatively, your company could proactively amend its bylaws to provide for proxy access. In either case, once procedures are adopted, shareholders may demand that their director nominees be included in the company’s proxy materials (though no one has successfully had their nominees included using proxy access).

“Consider how open your company is to SHAREHOLDER suggestions. Have you communicated your willingness to engage? Can you demonstrate that you are listening?”

Here are the most significant trends and developments to keep in mind:

· More than 60 percent of the S&P 500 Index and more than 10 percent of the Russell 3000 have adopted proxy access. We expect the trend toward adoption to continue.

· The vast majority of proxy access bylaws require the nominating shareholder (or a group of up to 20 shareholders) to hold at least 3 percent of the company’s shares for at least 3 years in order to nominate up to 20 percent of the board. Many companies that initially adopted more onerous requirements have since amended their bylaws to align with these terms.

· Activist investor Mario Gabelli became the first known shareholder to attempt to use proxy access. Gabelli withdrew his nominee shortly after the company rejected his nominee for failure to meet the procedural requirements of their proxy access bylaw. It remains an open question under what circumstances proxy access will be used.

With these new developments in mind, we recommend taking the following steps:

· Stay apprised of where your shareholders stand. Many institutional investors support proxy access, but views are still evolving. For example, Fidelity Investments, which previously opposed all proxy access proposals, reversed its position in 2017.

· Evaluate your level of shareholder engagement. Investors championing proxy access often complain that their opinions on the selection of directors are not being heard. Many criticize the companies they target for not giving proper attention to issues such as board refreshment and diversity. Consider how open your company is to suggestions from shareholders. Have you communicated your willingness to engage? Can you demonstrate that you are listening to suggestions?

· Formulate a plan with your board. Be prepared to make a recommendation to your board on whether to proactively adopt proxy access. Regardless of what you decide, be sure you are prepared to act quickly if a shareholder raises this issue.

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How To Become A More Balanced Leader

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With so many current examples of unbalanced leaders in the world, the idea of becoming a balanced one sounds appealing. But it also sounds a little boring. Must one lack passion or even be inauthentic?

No. To me ‘balanced’ is quite different: it means having plenty of passion and energy, but being able to bring them to bear in the right way at the right time.

The balanced leader is self-aware. In the past, inner reflection was derided as ‘navel-gazing’. But the best leaders know themselves, and spot when their emotions are getting the upper hand. They have ways of dealing with this, of internally stepping out of whatever situation is causing this.

Self-aware people learn to spot physical signs of growing stress and can put a stop to it before it goes too far. Many feel tension in a particular part of the body: this can be a message from our subconscious mind that we are overlooking something with our conscious mind. Financier George Soros claimed that pain in his back meant that he needed to look at whatever trades he was doing at the time.

“Self-aware people learn to spot physical signs of growing stress and can put a stop to it before it goes too far.”

Our minds also can fill with overdramatic and critical self-talk, which we can learn to spot. We have the choice to turn these tape-loops off, detaching from both the situation and a pre-programmed reaction to it that is no longer helpful to us.

The above are all about stopping imbalance. How can we actively become more balanced? I am a great believer in mindfulness, which is achieved through practicing meditation. Once regarded as ethereal, this practice is fast becoming mainstream. One can acquire sufficient skill at it without too much effort – though some, of course, is required. The mindful leader can keep cool in a crisis and manage and maintain their energy (and thus their emotional wellbeing and resilience). Mindfulness provides a ‘space’ where the leader can choose the right role in any given situation. They can avoid relying on old habits acquired during their old, pre-leadership job – they can instead act with balance and poise.

If you want to be a balanced leader, it is wise to lead a balanced life. I advocate taking an hour a day working on yourself. This can involve a range of activities: meditation, exercise, listening to music, reading (especially on personal development). These activities have nothing to do with work, but are actually essential to working well, giving you the time to develop the deep reserves of energy you will need in difficult situations.

The material above might make the balanced leader appear too inward-looking. But the good leader balances their self-awareness with a keen awareness of other people’s emotional states. Coaching skills such as building rapport and asking open questions help build this awareness, which soon becomes second nature.

Spot rising inner tension and learn how to stop it. Meditate; lead a full life outside work; and hone your ability to intuit what other people are feeling. You will find all these give you more passion and energy, not less.

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CEOs: “Have the Courage to Speak Your Mind,” Says Father of PR, Harold Burson

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Long before PR became a marketing tool, it had two basic functions: As a vehicle to communicate what a company stands for—its value proposition to customers, suppliers and the public—and as a monitor of how well the company was living up to those values. Harold Burson, the founding chairman of public relations giant Burson-Marsteller, feels both of those missions have been largely forgotten.

After being demobilized from the U.S. Army at the end of World War II, Burson started his own public relations firm specializing in B2B. In contrast to today when everyone understands what public relations is, many companies in that era had only a vague notion what PR was about. In his recent memoir, The Business of Persuasion, the 96-year-old founding chairman of Burson-Marsteller confesses that, at the time, he had never heard the term differentiation, let alone its role in marketing, but this is what his fledgling firm was all about.

Burson regrets that there are fewer and fewer CEO-statesman whose voices others respect and who can speak on behalf of the business community. Citibank’s Walter Wriston, DuPont’s Irving Shapiro, AT&T’s John DeButts and GE’s Reginald Jones once strode the business landscape each as a colossus and spent as much time in the U.S. President’s office as any cabinet member. Whenever they spoke on issues of the day, people listened. Today, few CEOs dare to raise their heads above the parapet lest they be the target of arrows from Twitter or Facebook. Among the few CEOs who do have the courage to speak their minds, he feels, are Starbucks’ Howard Schultz and Chase’s Jamie Dimon.

Given the turmoil in business and the diminishing trust the general public has in many companies today, he wonders why more CEOs aren’t speaking up on issues that matter to them. “I have found that corporations have the same capacity for contradiction and paradox as people. And why not? “ he writes. “Contrary to popular conception, the corporation is a collection of flesh and blood people. The corporation cannot feel, think or act. Only people can act responsibly.”

“INVESTORS HAVE LOST SIGHT OF THE LONG VIEW.”

Digital has changed the game
He points the finger at social media and digital communications, which has changed the nature of public discourse, making any communication by business leaders risky. Shifting cultural values combined with a total collapse of privacy has set the stage for a crippling communication environment for business leaders.

Burson also notes the fear and loathing generated not just by Amazon but by the tech quadumvirate of Google, Twitter, Facebook and Apple. Increasingly, they are seen as information gatekeepers to millennials and others who are cord-cutters and don’t rely on traditional newspapers or media for their news. The fact that Facebook has removed certain postings and that Google has deleted videos that they deem offensive has raised questions of who gets to decide which messages are appropriate.

Are shareholders in control?
But it’s been the rise of shareholder supremacy, in no small measure by the emergence of activist investors, that troubles Burson the most. “People once recognized that all business is cyclical,” he says. “Yes, business should maximize returns for shareholders, but it’s not realistic to maximize returns for every quarter, quarter after quarter indefinitely.” Shareholder value, viewed in its current form by activists like Trian’s Nelson Peltz, can be pushed to extremes where ultimately shareholders may lose. “Folks like Nelson Peltz are treating their portfolio like trading chips at a casino. I saw it with Gulf & Western,” he notes, “where ultimately, it tore the company apart.”

He may have revolutionized the delivery mechanisms, Burson argues, but its essential purpose has remained constant. The trouble is that CEOs today, says Burson, are in a much more difficult environment than they have ever been. The primacy of shareholder capitalism has raised expectations of performance to unreasonable heights. Where CEOs were once expected to produce a good product at a fair price and treat suppliers and employees fairly, today they are expected to maximize returns and shareholder value every quarter without fail. “The trouble is that most businesses are cyclical,” Burson says. Investors, he thinks, have lost sight of the long-view.

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How Boards Should Handle a CEO Scandal

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It used to be that a founding CEO could be excused all manner of misbehavior by his or her board, as long as it was kept quiet and the bottom line was not negatively impacted. In my 20 years as founder and CEO of a boutique crisis management firm, I have dealt with well over 60 cases of CEO dismissal. It used to be that the board might either tolerate bad behavior, or publicly support a CEO while privately chastising him relentlessly. Regardless, he or she would stay.

More recently, however, given the outsized attention to serious CEO misbehavior, boards really have little choice—they must react, and act, quickly and decisively. In the brave new world of 24-hour news cycles and social media commentary that transits the globe at the speed of light, no CEO is invulnerable or—once found to be guilty of ethical violations—irreplaceable.

Boards need to keep ahead of the public humiliation and loss of reputational equity caused by major CEO misbehavior or malfeasance. If they deny, or stall, they run the risk of ruining their company and turning themselves into the targets of shareholders’ and the public’s bloodlust.

That a preponderance of recently ousted CEOs were caught up in sexual scandals has made the situation even more unsupportable for boards. No one, and certainly not corporate boards, can tolerate rape or other grossly criminal behavior by their chief executive. Already in the case of the Weinstein Company, and others, the board is implicated in letting the abuse continue for so long, and for sanctioning such extravagant sealed settlements. The sooner the offending CEO is out of the equation, the better it is for the company, and for the board. Denial is clearly the enemy.

“boards must think thru protocols BEFORE a crisis hits. Crisis tabletop discussions simply do not work—role play works far better.”

But the biggest complication is when the founding CEO remains one of the company’s largest shareholders: witness Uber’s Travis Kalanick. Then the board’s job becomes even more uncomfortable, complex, and often, untenable.

Following are some questions for boards who may be considering the ouster of their CEO, for cause:

  • Do the facts of the case warrant ouster? Are they criminal in nature?
  • Is the CEO aware or in denial of the seriousness of the situation?
  • Is the board aware or in denial?
  • What are the ethical, legal and reputational repercussions if the CEO stays? Or leaves?
  • Where is shareholder and public sentiment trending? Are you monitoring public reaction, social media and traditional media continually?
  • How vocal are the antagonists, how public are the lawsuits and their repercussions?
  • Can the company afford the reputational risk of delay?
  • What kind of fight will the CEO mount if dismissed?
  • Are you prepared? Have you amassed all of the right resources—legal, crisis, IR, communications—to help?
  • Is your succession plan up-to-date? Is your “ready-now” CEO replacement really ready, or will you need to do a search?
  • If you’ll need to do a search, what is your interim plan?

Today, the public has a bias toward action, and it therefore behooves boards to move quickly, yet wisely. This is often why recent dismissals have come in two steps. First the CEO is put on leave, or sabbatical, while an interim head is put in place. Then, often, as the evidence of culpability mounts, the CEO is fully separated from the organization. The first step can be done and announced quickly, while the second takes more time, negotiation, and notification. So, this two-step process is rapidly becoming best practice.

Other best practices I have seen (or implemented) include:

There is no time for deep strategic thinking after an “event” occurs. Public pressure to condemn and act is too great. So, boards must think thru protocols BEFORE a crisis hits. Crisis tabletop discussions simply do not work—role play works far better.

Public and shareholder scrutiny of governance decisions is greater than ever before, as is the pressure to make public statements. Be prepared to “justify” your board actions, when you never had to before.

Do attempt to keep your board disagreements private, however. Nothing is ever gained from going public with them. That said, be prepared to respond persuasively if a competing board or executive faction goes public.

Assume the players, even at the highest levels, are not rational. Under stress, no one acts completely rationally. Be prepared to take steps first, before they are demanded by shareholders or the public. Get out ahead of the issues.

Public interest is peripatetic—my rule: If you want them to notice, they won’t. If you don’t want them to notice, they will! Hire the best advice possible. Governance judgment is not fungible.

Don’t Tweet! No matter what the situation, the board must keep its dignity. And always ask yourself, what is the morally right thing to do?

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Four Strategies For Overcoming Obstacles To Digital Transformation

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For a hundred years, Henry Ford defined our image of business: highly-specialized assembly line production with a clear division of labor producing mass scale products (“You can have the Ford Model T in any color as long as it’s black”). The Taylorist system that focuses entirely on specialization and efficiency has given us affordable cars, washing machines, and holiday travel.

And it is this very model of success from the 20th century that has now become the obstacle to the successful digital transformation of companies. Indeed, organizations that are built for efficiency fear that change brings disorder, and instead tend toward incremental adoption of innovation in tightly defined niche projects so as not to halt the well-oiled corporate machine. Unfortunately, those who hesitate to take this leap will lose in the long term. Those that want to successfully lead their company into the new digital age need to rethink all structures, processes and products at scale across the board—that is, Digital@Scale.

Companies that are doing good business find it very difficult to suddenly reinvent themselves in order to ensure sales and profit tomorrow; early indicators of change are often overlooked or seen as unimportant. Even today, we see experiences with the digital revolution—managers should take heed of the example of Blockbuster Inc.

In 2004, Blockbuster was the largest video rental company in the US with 8,000 stores and revenues of $6 billion. No-one on the board of the powerful market leader took Netflix seriously, a rival company where customers could rent DVDs online and which offered attractive subscription models. Today, Netflix is the market leader while Blockbuster filed for bankruptcy in 2010.

“The question that CEOs should ask themselves is: is our current business model obsolete, or will targeted changes suffice?”

The lesson from this example is clear: regardless of how well positioned a company is, if the management underestimates the potential for change that digitization poses to its business model, they run the ultimate risk. And those who see the change, but delay their response so as not to jeopardize their current revenues are taking a virtually suicidal stance.

Creating a sense of urgency: the key challenge
Fundamental renewal demands strength, conviction, and in most cases, a trigger. A little fear—even existential fear—is a good thing. Fear spurs you on. In established companies, it creates the pressure to act and the willingness to embrace innovation—crucial for digitization. After all, it’s about developing new products, services, and processes that enable attractive prices. In short: a completely new value proposition. Those who fail to implement the transformation across the board (@Scale) will fall behind. It is simply fatal to underestimate extent of the pending change.

Bosch CEO Volkmar Denner put it like this: “There are many things that just make it easier to order a pizza or call a taxi. But don’t underestimate the influence of such solutions on society; people are changing their consumer behavior.

Determining the nature of the change requirements
Digitization affects everyone, just not necessarily to the same degree. The question that CEOs should ask themselves is: is our current business model obsolete, or will targeted changes suffice?

For example, at Schindler, over 50% of the staff are field services. This staff performs activities which are largely manual, and heavily reliant on expertise. In addition, the time to resolve an issue was often impacted by the fact that the field service staff had limited facts on the issue prior to the site visit, and therefore may not have required tools/parts on hand. Finally, part reorders created extra costs and revisits. Schindler was able to simplify this whole process by automating diagnostics, applying predictive analytics to preemptively address issues and order parts in advance, and enabling field services staff with iPhones and supporting apps to help simplify in-field activities. All this has helped significantly improve service efficiency, as well as customer and employee satisfaction.

Identifying barriers to change early
Traditional organizations have high levels of inertia. When business is going well, managers and employees generally only pay lip service to change requirements. Any manager that still wants his company to change therefore needs to analyze and eliminate the barriers.

Efficient organizations in particular tend to prove especially resistant to change. They follow their own logic: any change to the existing system costs efficiency and must therefore be avoided. And it is particularly the most successful managers that often slow down transformation efforts behind the scenes. They calculate that they have little to win personally, but much to lose. They are often the opinion-leaders and belong to the inner circle—making twice as difficult. After all, doesn’t the team still need these managers? Perhaps not.

Identifying relevant assets and setting the aspiration level
Those that want to propel their company from the analog present to the digital future should first focus on the strengths: what sets the company apart from the competition? The technology in the product or service? The strong customer loyalty? The attractiveness of the brand? All of these strengths also count in the digital world. And while they may count differently, whoever retains them will have an advantage. Without a clearly defined objective, the journey into the digital world can easily become an odyssey. The company management should therefore formulate its quantitative or qualitative objective, and communicate this to the employees. Interim goals—depending on whether and how they are achieved—are also helpful in determining whether the project is on track.

In all of the above points, from generating awareness of the need for action, determining the change requirements, identifying the greatest obstacles and the greatest strengths, through to formulating objectives, responsibility rests with the company management.

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My First Job: Everything I Need to Know About Management I Learned Driving a Zamboni

Chief Executive Magazine -

Bob speaks to employees

When I was a kid, I was a ‘rink rat.’ If you play hockey, then you know what I mean. I found every excuse I could to spend time near the ice – playing, watching, helping, refereeing… Then, when I was about 16, I was offered a dream job: helping to run the local rink in my town. I was getting paid to do the thing I loved.

As much fun as it was, and I enjoyed every moment of it, it was also very formative. Responsibility. Organization. Conflict resolution. People skills. I could go on. The short story is this: Almost everything I needed to learn in management, I learned at the rink. In fact, there’s a lot that still applies to my job, as CEO of a company that’s in the business of people – recruiting.

Here are just a few of those lessons I learned while driving a Zamboni.

1. Preparation is key. I learned on my feet that preparation is key. When it snowed, you need to be in early and ready with a shovel to prepare the parking lot. You also needed to be self-sufficient, anticipating and preparing for setbacks. Will the snow cause delays and throw off the rink time schedule? If the Zamboni breaks, can we fix it? If refs can’t come to the game, will the games be able to continue? The fundamentals of preparation and anticipation were learned in
that rink.

“Being able to manage expectations and mediate requests in real time taught me how to talk to people under pressure.”

2. Time management. Not just my time – others’ time, as well. Like most businesses, rinks are run on a schedule. So occasionally people and teams would overlap. Being able to manage expectations and mediate requests in real time taught me how to talk to people under pressure.

3. People skills. In a rink you interact with so many people throughout the day: referees, coaches, fans, parents, kids. I learned very early the importance of listening, of showing that you understand and that you really hear concerns and problems. In doing so, you can work to find compromise and solutions, often by motivating people to do something they may not necessarily want initially – but something they see as a viable solution and one that serves all involved. These are skills that I use almost every day, skills that I think can help any manager – whether you’re overseeing one person or 100.

4. Conflict management. In any people business, conflicts will arise. In my time at the rink I received a valuable lesson in high-stakes conflict management. During a peewee game, two coaches got into a fight. Luckily some parents helped me separate them, but not before I was punched in the face trying to stop them. Inevitably people will quarrel and sometimes there isn’t much you can do to stop it. But I learned over time to stay focused and manage a level head.

5. Importance of a good work ethic. Simply leaving your space nicer than you found it is one of the best pieces of advice I can give. Not everyone is going to take a job as seriously as you might, but that shouldn’t deter you from giving it your best. And if someone else drops the ball, all you can do is roll up your sleeves and pick up from where they left it. I remember one day when no referees showed up and we had games scheduled back-to-back. So I grabbed skates out of my car, threw on a shirt and jumped on the ice – while cleaning the ice between the games. It was a long, exhausting day, but the satisfaction of getting it done on my own and the appreciation from the teams and rink owner was well worth it.

When you invest your time and energy in something, especially if it’s something you have a passion for, it’s amazing what you can take from it.

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How Mobile Behavior is About to Change Your Company’s Valuation

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In a world where word of mouth spreads at the speed of mobile, opinions matter more than ever. Customer experiences can make or break a brand in 140 characters or less. And the way companies are valued is also about to fundamentally change with profound implications for leaders.

As I saw in my former life as a Goldman Sachs partner, setting the initial price range for an upcoming IPO or negotiating the value of a merger involved a combination of science and art. The basic formula driving any company’s valuation is the product of some nearer-term financial measure like earnings per share times “the multiple”. But given a lack of quality data to predict the multiple, the value of a company often varied by hundreds of millions or billions of dollars based on limited information.

However, I believe “the multiple” is due for an extreme makeover. The multiple (or terminal value in a merger) is driven by the estimated longer-term growth rate of the core financial metric used in a particular industry. In practice, this often comes down to an estimate of future sales growth because the top line tends to drive the bottom line over time. Sales growth in turn is a function of retaining existing customers and acquiring new ones, with the former being more profitable than the latter. This is where we are seeing an emerging predictive breakthrough.

In a mobile versus word of mouth world, it is increasingly hard to recruit new customers when existing ones are unhappy. There has been an age-old discussion about whether it is more productive trying to recruit new customers or retain existing ones. That debate is rapidly being settled in favor of retention because existing customers are the key to recruiting new ones as the collective wisdom of the crowd becomes more transparent.

“Today’s digital era makes assessing customer outcomes increasingly possible for those companies and investors that learn how to listen at scale and organize their decision-making accordingly.”

So we can simplify and now predict the right multiple by zeroing in on existing customer outcomes. Today’s digital era makes assessing customer outcomes increasingly possible for those companies and investors that learn how to listen at scale and organize their decision-making accordingly. This doesn’t mean using big data to predict next quarter’s results sooner, but rather a more fundamental understanding of a company’s longer-term customer and employee value propositions, related strategies and potential competitive moats.

In 2012, I founded a technology company based on a simple observation: Companies that connected with their customers and built a great team almost always won. What we have since learned is that there are two primary predictors of future revenue growth and the right multiple: 1) What are the customer/employee outcomes and 2) How committed is management to listening and acting upon them?

One fascinating by-product of this shift in valuation methodology is that it should curb some of the short-term quarter-to-quarter pressure and provide a defense against activist shareholders when a company is doing the right long-term things at the expense of current earnings.

We are at the beginning of a once-in-a-generation change in the way companies are valued. The right multiple will become understood by observable customer and employee outcomes. This creates an opportunity for innovative leaders and investors who develop listening skills and get there first.

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FedEx Founder, Chairman, CEO Fred Smith Still Going Strong After 46 Years on the Job

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(L-R) FedEx Corporation Chairman, President and CEO Frederick Smith talks with House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA)

The bright idea for FedEx came from a college term paper that founder Frederick W. Smith’s wrote while at Yale in 1965.

After graduation and then serving in Vietnam with the Marines, Smith returned to the U.S. and launched FedEx in 1971. The fledging startup lost lost $29 million in its first 26 months, but Smith found a way to keep the company afloat by winning $27,000 at the blackjack tables in Vegas.

Flash forward 46 years, and FedEx reported a record $60 billion in sales in fiscal year ending in May 2017 after recent acquisitions, including TNT Express, and an $1.8 billion investment in aircraft.

Smith told Fortune that the key to his success is “having an effective strategy and everyone understanding what that strategy is.” Part of that strategy is fostering a culture of innovation at FedEx so that every one of the company’s 400,000 employees understands that “you have to change constantly.”

“There’s an old saw, I don’t know who said it but whoever it was, was pretty smart,” Smith says. “If you don’t like change, you’re going to hate extinction.”
Since founding FedEx in 1971, he has been an active proponent of regulatory reform, free trade, and “open skies agreements” for aviation around the world. Most recently, he has advocated for vehicle energy-efficiency standards and a national energy policy.

Smith is co-chairman of the Energy Security Leadership Council, a trustee for the United States Council for International Business, and a member of the Business Roundtable. He served as chairman of the U.S.-China Business Council and is co-chairman of the French-American Business Council.

He’s No. 59 on Chief Executive and RHR International’s CEO1000 Tracker, a ranking of the top 1,000 public/private companies.

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New Helpshift CEO Takes Gender Bias Head-On

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Helpshift CEO Linda Crawford

I am encouraged by the brave women who have recently stood up for women and for themselves at Uber, Google and elsewhere. Being in tech for 30 years, I have personally experienced some overt harassment and gender bias. I deeply regret that I didn’t stand up more assertively at the time it was occurring.

I recently became the CEO of Helpshift, a Silicon Valley startup revolutionizing the customer support industry through messaging-first and AI-powered consumer service. I am thrilled to be with a company that appreciates my experience and embraces my perspective as a woman in a male-dominated industry.

Earlier in the year, I decided to retire from full-time corporate life and sit on a few boards.  I felt good about bringing diversity to the board room. But something was nagging at me. I kept thinking that I needed to do more to advance the representation of women in tech. It was time to be a CEO. Becoming a CEO allows me to make diversity a top priority at our company. More importantly, as a CEO, I have a “megaphone” and the opportunity to influence other executives to do their part.

“I urge my former colleagues to come back into the workforce as CEOs.”

As I was networking and interviewing for the CEO role, I quickly realized that the overwhelming majority of people sourcing and hiring CEOs are men. I tallied up the people I met along the way—recruiters, corporate executives, board members and venture capitalists. Of the 80 people with whom I met, only seven were women. How do we change the course if we don’t have more women in decision-making positions? I urge my former colleagues to come back into the workforce as CEOs. I also encourage my fellow female senior executives to step out of the number two and three positions and become a CEO.

As CEO, we can mandate an initiative for fair pay. Let’s pay fairly for those in our organizations making the largest contributions. Often women are poor negotiators on the way into a company, so from the very beginning they are behind in pay. We can stop penalizing people for being poor negotiators. When a candidate has the experience and skills to join your organization, pay them fairly from day one.

Additionally, we need more coaching and performance management training for men and women. I recently sat through a performance calibration session. I noticed a pattern of women being categorized as high performer/moderate potential. When I probed, the feedback was shockingly consistent—these women were the star performers on the team. They volunteered for the tough projects, mentored new teammates, were innovative, were the proxy for their managers, and on and on. So why weren’t they considered high potential? It was their lack of confidence, their inability to brag, and their willingness to give others too much credit. They never took the stage. We need to teach women how to say “I” more often, to take the microphone in an all-hands meeting, and to celebrate their accomplishments in public. Let’s help these high-achieving women execute a personal marketing plan.

As CEOs, we can reshape the board and demand diversity. I have an extensive network of female executives that would be incredible board members. Most of these women need sponsorship to get into the right circles and encouragement to go for it. I’ve started making it a practice to bring up two to three names of “diverse” candidates every time I speak to an executive recruiter, venture capitalist or fellow executive. Working together, we can change our industry—for the better.

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