Cheryl Header Image

Category: CEO Leadership

Walmart’s Doug McMillon Can Lead the CEO Charge Through Transparency

Memo

To: Doug McMillon, President and CEO, Walmart Inc.

Re: Appointment as Chairman of Business Roundtable

Congratulations on becoming the chairman of the Business Roundtable. As the new face of the CEO group with more than 180 members, you have an extraordinary opportunity. Don’t squander it.

A couple of weeks ago, the Roundtable put out a new Statement on the Purpose of a Corporation. Although covered widely by the media and the consultants, it was a painful statement of the obvious. Yes, businesses must conduct themselves with the interests of all stakeholders in mind. Caring for employees, including listening to them with respect, builds longevity, productivity and tamps down the likelihood of your own staff picketing against you. Dealing fairly and ethically with your suppliers creates trust, goodwill and commitment to mutual success, all of which likely leads to better deals and profit with reduced risk. Invest in your communities and they will welcome you to their town. Or at least the next town you want to open in might be less likely to block your zoning approval. Give customers value? Why is this even on the list? Treat your customers poorly and you don’t have a business. You know this already.

Do all these things right, and you will make money. The shareholders will be happy. This is not an either or.

The Roundtable’s statement shouldn’t really have been news; the reason it was is because people don’t believe any of you. They don’t trust CEOs. 

 

You have the opportunity to change how people think about CEOs. Here’s how.

Keep using Walmart’s economic might to pressure suppliers to reduce packaging and waste. Use your economies of scale to push suppliers to pay their own employees around the world a living wage and create safe working environments. Choose products for your customers that are sustainable, healthy and aren’t planet-killing. Continue to reduce the pollution that you create in communities around the world.

Your company has been vilified for using its power to squeeze profits out of suppliers, for killing Main Streets in small towns, for underpaying employees. Yet as CEO you’ve made real efforts to lead for good, on wages, pollution, and gun violence, with some hard decisions in recent weeks.  At the same time, Walmart just reported its 20th quarter of sales growth. 

As the Roundtable chairman, here’s how you get economies of scale from your colleagues. Keep pushing for societal improvements with Walmart’s might. And then give your colleagues the data they need that shows purpose and profit can walk hand in hand. Your colleagues need case studies, proof points, and air cover from you so they can fight off doubt and dissent from controlling and activist shareholders, and from risk averse boards. The Roundtable’s statement means nothing if the individual CEOs who signed it do nothing. 

Walmart’s power, by virtue of its reach across 28 countries and 11,700 stores, is to make a positive impact on people’s lives without the need for governments around the world to legislate, and to set the standard for smaller, less powerful companies to follow, without fear of Walmart taking advantage of their risk-taking. Through transparency and leadership, you can help, cajole, even shame, if necessary, the other 180 members of the Business Roundtable into doing the same. 

 

CEOs Taking on Doug Ford in Fight for Universal Basic Income

Floyd Marinescu had been studying the idea of universal basic income for a couple of years when Doug Ford took over the premier’s office in 2018 and cancelled Ontario’s pilot project. The CEO of C4Media saw how a guaranteed basic income could help abused women, exploited workers, and the sick and encourage entrepreneurism. And he saw how his own successful business was disrupting the labour market, over time making it harder for Ontario workers to survive. So he publicly challenged Doug Ford, something most CEOs were loathe to do about anything. In doing so, Marinescu and the more than 120 CEOs who signed an open letter supporting universal basic income changed the policy narrative, helping to build grassroots support for a program that government would be hard-pressed to enact alone.

Marinescu and Pythian CEO Paul Vallée, who co-led the CEO group, are among a new generation of Canadian CEOs who believe they have a role in civil society, and as owners of their own companies are unhampered by many of the risks with which  CEOs of publicly traded companies grapple.

Through their advocacy, this CEO group is changing the narrative of universal basic income. By presenting a business case for it, they have made it harder for governments to dismiss the idea, and armed politicians who support the idea, arguing that what is good for the poor can also be good for business. And if that’s the case, exactly whom is Doug Ford protecting by cancelling the pilot project before the data is even in?

Universal basic income is just one of myriad issues that would be more richly discussed if CEOs spoke up publicly and challenged the common narrative. But it takes a commitment to the greater good and broader economic prosperity from CEOs mired in short-termism, and the courage to challenge government leaders prone to vindictiveness to get to better outcomes.

Because most of the CEOs who joined Marinescu and Vallée own small to mid-sized private companies, they are also free of shareholders, boards and other stakeholders that stop leaders of bigger public companies from stepping into the fray of a discussion that doesn’t directly affect the success of their business.

There are signs that more CEOs are getting on board with a growing trend of CEO activism, though. Witness the discussion RBC CEO Dave McKay and Enbridge CEO Al Monaco had at the Canadian Cub in Toronto this week about energy policy. They discussed the opportunity of national prosperity that would come with a proper national strategy on energy, and the consequences of not having one. Yet McKay and Monaco’s call to action is more easily dismissed than that of Marinescu and Vallée, because both of their companies’ fortunes are directly tied to building pipelines.

That is not to say that McKay and Monaco should not be speaking out – quite the contrary. But we also need CEOs from consumer goods companies, manufacturing and agriculture to speak out about energy policy. Energy and transportation infrastructure matter to all businesses and people. CEOs from other industries are thus less easily dismissed in the discussion because they are advocating for a more successful society for everyone.

Too many of our public debates pit interests of people against the interests of business. Yet so often, what’s good for business is also good for people. We need more CEOs to follow the lead of Marinescu and Vallée and explain why.

Read more about Marinescu’s op/ed on UBI  in the Financial Post here and the launch of the CEOs’ initiative last fall here, in the Toronto Star.

Trust = Power. But Canadian CEOs are Wasting The Opportunity

Edelman Canada President and CEO Lisa Kimmel presented the Canadian results of the annual Edelman Trust Barometer at the Toronto Board of Trade this morning. Having worked with the data closely when I worked with Lisa, launch day is a bit like Christmas for me, and has strongly influenced my thinking.  

This year’s data reinforced for me both the business imperative and the opportunity that Canadian CEOs have to change the way our country talks about public and social policy, along with news of the day.

Consider a few stats and findings side by side.

  1. 50% of the mass population* say the system is failing them
  2. Trust in business is ≧ trust in government

3. Trust in regular employees (55%) > trust in CEOs (41%) > trust in government officials (38%)

4.  67% of respondents agreed that “It’s critically important for my CEO to respond to challenging times”, such  as industry issues, political events, national crisis and employee-driven issues.

So you have a huge proportion of the country that feel the system is failing them, suggesting something has to give. We have to change how issues are debated and how policy is made. They trust business  as least as much as government, and expect business leaders to be part of the solution. CEOs are more trusted than government officials, who are dead last in the trusted spokespeople category when forming an opinion about a company. And employees both expect the CEO to engage in the conversation, and are more trusted than the CEO in building company reputation.

And yet. CEOs, for a whole host of very valid reasons (including a difficulty in measuring risk), some poor excuses (e.g. it’s not my job), and a systemic lack of courage, have been completely absent in some very important political events over the last few months.

Ontario Premier Doug Ford fires Hydro One’s CEO Mayo Schmidt, forces out the board, effectively kills Hydro One’s deal with Avista, creating a hundred-million-dollar-plus break fee. The impact is a poisoning of the business climate in Ontario that (if we’re lucky) will outlast Ford. CEO collective public response? Crickets.

The Trudeau government sets out a plan for a carbon tax designed to curb pollution, and over time change business behaviour, in an effort to protect the environment. Collective business response? Crickets. Really? No one outside directly affected business had anything important to say?

(I will give a pass for the moment that CEOs aren’t speaking up about the SNC Lavalin/Justice Minister affair. That one is a hot mess.)

CEOs are simply absent from the most important public debates of the day, all of which are important to business. They are afraid. They believe it’s not their job. And they have enough on their plates without being told their employees expect them to wade into the headlines.

But. There is so much white space for the first few CEOs who are willing to speak up, take risks, and say out loud what they are saying behind closed doors. And that can provide them a competitive advantage that is good for business, including that their employees might stick around.

 

*See the Edelman Trust Barometer for definitions and survey methodology. It matters.

Larry Fink, The CEO Activist’s Father

The annual missive from the CEO of the largest money manager in the world is out today. Simply addressed “Dear CEOs” these letters read a bit like a letter from your dad, with “suggestions” on how to be a better CEO. It’s advice that you can take, or…take, given that with about $6 trillion in assets under management, Larry Fink wields a wee bit of power. While much of BlackRock’s money is invested in index funds (and thus not directed subjectively,) the impact of Fink’s disapproval of your firm is one not to be tested.

CEO power extends far beyond the confines of the job description. The job includes decisions on whom to partner with, where to invest and create jobs, who to hire and fire. But with each of those decisions, a CEO implicitly or explicitly reinforces a company’s values and purpose. They can choose to use that power to make the world a better place or not. They can choose to be activists or not. Larry Fink is using his power to push CEOs to use their power. (It’s all very meta.)

Over the years (past letters are also on BlackRock’s site), Fink has pushed CEOs to think about governance, prioritizing long-term strategy, and the theme of this year’s letter, to build social purpose into the company’s fabric.

He calls on business leaders to step in where governments are failing.

“Stakeholders are pushing companies to wade into sensitive social and political issues – especially as they see governments failing to do so effectively.”

“As CEOs, we don’t always get it right,” he writes. “Companies cannot solve every issue of public importance, but there are many – from retirement to infrastructure to preparing workers for the jobs of the future – that cannot be solved without corporate leadership.”

Moreover, “Unnerved by fundamental economic changes and the failure of government to provide lasting solutions, society is increasingly looking to companies, both public and private, to address pressing social and economic issues.”

It’s this failure of government to make substantive progress on the issues of our day that we need CEOs to both partner with and challenge government, whether it be on universal basic income, pipelines, or homelessness. While Fink hasn’t explicitly called for CEO activism, he’s leading by example.

He has been clear that he’s not going to tell CEOs what their companies’ social purpose should be, just that he expects them to have one. And in that way, Fink is using his personal clout, backed by the weight of his company, to push for good.

Of the many ways that CEOs can be activists, this is one of the most powerful. Fink has effectively created an urgency, an impetus, and air cover, for CEOs to have conversations with their management teams, their boards and their shareholders about how to build social purpose into the fabric of their company. He’s even giving them the language to use (and he put it in bold font so you don’t miss it): “Profits are in no way inconsistent with purpose – in fact, profits and purpose are inextricably linked.”

Help Refugees to Boost Business – NYU Stern Report

Hamdi Ulukaya bought an abandoned yogourt factory in 2005. Today, Chobani is a $1.5 billion company, maker of the best-selling Greek yogourt in the U.S. Ulukaya’s path, from the son of nomadic Turkish sheep farmers to yogourt king is interesting in its own right. But it’s the success of Chobani twinned with Ulukaya’s work supporting refugees that makes him a different kind of CEO. Thirty percent of Chobani’s 2000+ employees are refugees.

To get other companies to commit publicly to supporting refugees, Ulukaya started Tent Partnership for Refugees. This morning, Tent released a research report authored by researchers at NYU Stern to give other businesses a good shove to take their own action on refugees. The study found that on the whole, you’ll have a net gain of customers if you take some action to support refugees, whether it be donating money, providing support services, or hiring them, as Chobani committed to do.

The online study of 7,139 U.S. respondents noted that women, non-whites, and Millennials were all more likely than the average to support you if you support refugees, findings that are in line with many other studies.

Knowing though, that not all businesses depend on the average American as their customer, the study noted that supporting refugees abroad, rather than in the U.S. was less polarizing, giving those companies that want to help but are afraid of a backlash, a way forward.

Source: How Helping Refugees Helps Brands, 2018, NYU Stern

As with most research on consumer attitudes towards corporate and CEO activism, this study asks about buying intentions rather than actions, so there’s a significant caveat to the findings. Chobani itself probably has some of the best data on the impact on sales from the efforts of its CEO, but as it’s a private company, we’re unlikely to see it. And given how ingrained Ulukaya’s activism is embedded in the company brand now, it would be hard to extract the impact in a definitive way.

The data in Canada on attitudes to refugees and immigrants is all over the map. A Pew Research Center report in September said 74% of Canadians support taking refugees. By contrast, the live poll within a resulting Toronto Star story showed that 55% of the 1761 respondents did not. An Angus Reid poll in August said that they want the federal government’s 2018 target for immigration dropped, compared with 36% in 2014.

Suffice to say that if the data is so conflicting, it’s hard for a Canadian CEO to really know how customers are going to react if the company pledges support for refugees. (There’s an entire other question about how support for “refugees” and “immigrants” differs.) Perhaps that’s why the few CEOs (founders, really) willing to take public action to support refugees lead private companies. 

Mohamad Fakih took the risk. The Lebanese-born immigrant started Paramount Fine Foods in Mississauga, Ont., and turned it into a 60+ Middle Eastern food restaurant chain. Like Ulukaya, Fakih has committed to hiring refugees, more than 150 in 2017.

Fakih is now working with the UNHCR to find more ways to help refugees build new lives in Canada, focused on employment and supporting new business launches.

“The private sector has a huge role to play in fostering better prospects for refugees in Canada – and it makes good business sense, too,” Fakih said in the news release. It’s fair to say that his activism has at least not gotten in the way of building his loyal customer base.

Without research that demonstrates more clearly the link between customer buying intentions to buying actions, however, public companies will be reluctant to take action, particularly given the incredibly risk averse profile of CEOs and boards in Canada. More to come on that another day.

Powered by WordPress & Theme by Anders Norén