November 17, 2022
TPL Insights: Building Peak-Performance Cultures #145 – Stop Trying to Accomplish Your DE&I and ESG Objectives by Checking Boxes
By Rob Andrews based on a lifetime of study of companies that really have achieved their transformational objectives.
This week I attended a conference put on by a national consulting firm. I had been excited to go because of the people who invited me and the scope and prestige of the organization for whom they worked. While the conference was well organized and held in a beautiful downtown Houston hotel, I was sorely disappointed at the advice given specifically around achieving ESG goals. Two of the presenters literally used the words, “If you do this, you can check this box.” For decades, I have witnessed countless failed attempts to meaningfully transform organizations by checking boxes. In my view, checking boxes is an exercise in futility and a complete waste of money. In many cases, it’s not only ineffective, but also offensive.
It Starts at the Top
I’m sorry CEOs, CXOs, and board members, you can’t avoid the absolute fact that your organization is a direct reflection of you. In one of my first CEO interviews for our TPL architecture, an incredibly effective CEO named Ron, who has built a peak performance culture and posts financial numbers at the very top of his sector, said, “When something is seriously wrong with my company, I go away for a few days with one or two of my closest advisors and figure out what’s wrong with me. As simple as this sounds, it usually comes down to that. Even with 40,000 employees, every dysfunction in my company is my fault. My company reflects who I am. If we have a major initiative that’s stalled, or is being rejected, it’s always because I’m not doing enough to walk the talk.”
In another interview that same month in 2014, I interviewed the chairman & CEO of a 100+ year-old Fortune 500 intrastate natural gas and natural gas liquids company. John had been referred to me by another of my highly respected CEO and board friends. She said he had built a culture of inclusion, mutual trust, and respect, while driving productivity and revenue per employee 30% above the best performers in his sector. I was early in the study and had been encouraged by my advisors to focus on building great cultures, as the only sustainable competitive advantage. After verifying that John agreed with that notion, I asked, “John, what do you think it takes for a CEO to build a great culture?” His answer makes perfect sense now but surprised me at that time. “Rob, it takes a great deal of self-awareness and a mindset that allows you to accomplish what most can’t.
John went on to say that the Oil & Gas business was one of the most difficult businesses around, in that it was cyclical, potentially dangerous, under constant pressure to change and to do more with less. He also said it was a difficult business in which to achieve a truly inclusive culture. Despite honest attempts, the industry lags well behind others in terms of DE&I, and yet John and his company had made solid gains. According to John, he said he needed advice and coaching to change the way he saw himself as a leader. He said, “I had to realize that the way I thought about listening to people with very different views from mine, was not going to come naturally, and was going to be a process. It was unnatural for me to “want” to listen to millennials, people of other cultures, and with different communications styles. It took a total paradigm shift.”
John went on to say that he had to involve his leadership team in the transformation and one out of four members “didn’t make the trip.”
“It all emanates from purpose, mission, and values. Those had to become our guiding star. Sure, we must have metrics, and we do, but it’s not just about the numbers. It’s about attitudes and behaviors, which can’t be faked. The leadership team and I have to walk the talk, and behavior that doesn’t flange up with our stated values cannot be tolerated. One hard lesson we’ve learned is that tolerance of a countercultural behavior is tacit approval. It hurt to have to let a couple of our tenured leaders go, but it had to be done if we were to become the company to which we aspire.”
Historical Context around DE&I
People of a certain age remember affirmative action, which officially began in 1961 when President John F. Kennedy signed Executive Order 10925. While some progress has been made since, we still have a very long way to go to achieve parity. Underrepresented groups, including black, brown and female workers are still not being hired, promoted, and retained at the same rate as white males. Industries like healthcare, education, and retail have made significant strides while industrial, telecommunication, and construction have made very little.
Diversity must recognize our multigenerational organizations. Millennials (also known as Generation Y) are the demographic cohort following Generation X and represent the largest generation in history. Our emerging generation (Gen Z) is the most diverse in history. The only thing that Gen Z notices around diversity is the lack thereof. This generation will not remember a time in which we have not had an African American president, gay marriage, or Facetime. They will not remember a time in which their school didn’t look like the United Nations. To make things even more interesting, we’re now experiencing the “silver tsunami,” with more 60+ workers than ever before.
It’s About the Why
Chief Ethics and Compliance Officers, like Chief Diversity Officers, will only take you so far. In other words, you can’t just hire this done. Even the best senior officer will fail without the proper support from the top. Outlaw the term “checking boxes” in your company. Until the CEO, board and senior leadership team are crystal clear about why DE&I and ESG objectives are imperative, you’ll fall short of your potential. As long as you view any transformation as something you can hire, buy, or implement, your efforts will falter. CEOs and entire industries who continue to make solid gains have made lifelong commitments to a different way of thinking and a completely different way of being. Give us a shout and let’s talk about your transformation.
Consultants in Retained Search & Leadership Advisory