How Ulta’s board adapted and supported CEO Mary Dillon during the pandemic

Six months in, she had to go to the board and explain why resources needed to be diverted to build a stronger e-commerce function. The board room didn’t expect it and some challenged her ideas, though others were supportive.

“It was like, ‘Either we have to do this, or if we don’t, I can’t run this business,’” Dillon shared in the Fortune Most Powerful Women Lead Up Conversation on October 5th. “It was one of those moments that I’d say took me that many years of my career to get to a point where I had the confidence to do that.”

Dillon felt confident in her assessment because of her deep due diligence and essentially staked her job on the need to make this course correction.

Thankfully, for her and the company, Dillon had the support of her CFO and the board and Ulta’s stock price doubled by 2016 to over $200 per share and has been well over $300 for most of 2021.

Dillon is now the executive chairman of the board, leading Ulta through a far different set of challenges amid the COVID-19 pandemic. The company’s swift initial response included shutting down retail stores and maintaining pay and benefits for employees until federal relief kicked in, while also keeping online sales channels alive and setting up office workers remotely.

“Supporting [the executive] team at a time of crisis was the most important thing I think many boards did,” she said, noting the intense coordination required to lead the corporate crisis response. 

During the pandemic, leaders were faced with difficult decisions about paid leave, furloughs, layoffs, worker safety, and supporting working parents, and are still faced with challenging conversations around remote work, diversity, equity & inclusion, and the environment.

“The pandemic I think has placed a spotlight of scrutiny in terms of what makes a good board director today,” Jenni Hibbert, global managing partner at Heidrick & Struggles, said. “A lot of that scrutiny is around skills and experiences and needing the next generation of directors to bring skills and experience that really play into an organization’s strategy for the long-term.” 

Hibbert and other panelists added that these specific skills include marketing, digital transformation, cybersecurity, workforce strategy, and social impact.

The ability to collaborate well is also becoming more important than ever. This helps board leaders learn important information and gain consensus for new decisions, some of which need to be made quickly.

“I think many boards have created a dynamic where the board and the management are far more collaborative and trying to figure this out in a way that I think you’ve never seen before,” Carla Harris, vice chairman, managing director, and senior client advisor at Morgan Stanley, said. 

Dr. Dambisa Moyo, an economist and author who currently serves on the boards of 3M, Chevron, and Conde Nast, explained that data judgement is going to be important, especially with the changes in the type of data companies are now collecting and reporting. As a frequent member of audit committees, she has her eye on the human capital disclosures that the SEC started requiring this year.

Moyo also noted the board push for ESG and the increasingly sophisticated data available on those dimensions. She advocates for more nuanced strategies beyond philanthropic spending or seeing ESG as an investment opportunity. For major companies, Moyo thinks social responsibility requires deeper thought into the economic impact of major business decisions, such as where to host a conference, supplier relationships, and where to open office locations.

“I don’t feel comfortable, as a black woman on a board, that we should have board meetings and be supporting municipalities that have a horrible record on criminal justice, or education, life expectancy, you name it,” Moyo said. “I don’t think it’s that hard a leap.”

“None of it’s hard,” Harris responded. “It’s about will and courage, honey.”