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Corporate directors face rapidly rising expectations

September 14, 2021, 9:42 AM UTC

Good morning.

Most corporate directors I speak with these days say they face rapidly rising expectations. Overseeing succession, strategy and financial performance were the board’s traditional triad. But now, directors must master a host of new technology challenges as well as issues of corporate culture, talent, diversity and inclusion, climate and public trust. For them, stakeholder capitalism is tangible.

That’s why Fortune recently launched The Modern Board, in partnership with board software company Diligent—to focus on the board’s changing role. As part of that partnership, I recently interviewed a trio of business icons: former Best Buy CEO Hubert Joly, former Infor CEO Charles Phillips, and current Alphabet, Honeywell and Salesforce board member Robin Washington—for Diligent’s Modern Governance Summit. Some excerpts below:

On changes in business:

“Everything I learned in business school was either wrong, dated or incomplete… There’s a shift, a realization that whatever we’ve been doing for the last 40 years has caused a lot of the problems that we have now, and we have this urgent need for the reformulation of business.”
—Hubert Joly

“The opportunity for corporations to be part of the change we want to see is great. It’s never been greater. And I think we as board members, we’re not management, but we should come in and hold management accountable to those goals and also bring perspectives that they may not see.”
—Robin Washington

“I was on the board of the Business Roundtable when we were working on the whole stakeholder issue. I think one of the changes in thinking is that these things aren’t as separate as we used to think of them. We were focused only on shareholder returns. But employees, customers, suppliers, lowering attrition rates, having workers more engaged and higher performing… these factor into shareholders returns. So these things aren’t unrelated.”
—Charles Phillips

On culture and the war for talent:

“I think figuring out how you get a pulse of an organization in its culture in terms of attracting new talent is important.  Culture is hard to measure, but it’s more important than ever to think about it, relative to the role of the board.”
—Robin Washington

“I think another driver is the shortage of talent. That’s shifting the power to employees. We have 61% workforce participation, which is a record low in the last 25 years. A lot of people just don’t see the value or the purpose of working, or they don’t think they’re making enough money to make it worth it… And so if you want talent to be available, you’re going to have to treat people differently.”
—Charles Phillips

“With the pandemic, so many people have been reconsidering their lives. When people talk about the great resignation, I think that for businesses, it’s a big re-recruiting effort. And whether it’s in person, remotely, hybrid, reaching out to employees, understanding where they’re at, what they’re struggling with…here’s the scoop: everybody is struggling. There’s fatigue, there is stress. And so I think it’s a sea change in how we approach this.”
—Hubert Joly

On diversity and inclusion:

“When it comes to D&I, I think a lot of times we focused on hiring. Clearly, that’s important. But the most important thing… is how do you create inclusive cultures?”
—Robin Washington

“There’s a realization that we have the imperative and the opportunity, in my view, to end systemic racism in this country, not in the next month, but in the next five or 10 years, if we stick with it. And I think that one of the changes is that you see management teams all across the country now articulating goals in this area, and boards holding management teams accountable and spending time on this.”
—Hubert Joly

“Companies are very good at creating jobs. They’re just not creating them in the Black community as much as we would like. And so (with the OneTen initiative), we challenged them: Can you hire a million Black people over the next 10 years?… But people without college degrees, people who have aptitude, just need access and skills training… And the companies are following through. All the CEOs show up at the board meetings, and they’re taking it seriously. Our fear was that they would do this one announcement nine months ago and that would be the end of it. But they have stayed engaged.“
—Charles Phillips

Other news below.

Alan Murray
@alansmurray

alan.murray@fortune.com

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This edition of CEO Daily was edited by David Meyer.

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