Rashad Robinson from Color of Change and Michael Whitaker from Just Capital, a very warm welcome to you both.
MS. STEAD SELLERS: And a word to our audience before we go any further, you can tweet your questions to Rashad, Michael, or to me by going to @PostLive, tweet them to @PostLive, and we’ll pick up questions as we can as we go along.
And before we start, I’m going to give a brief visual description of myself. I’m an Anglo-American woman. I’m brown haired and brown eyed. I’m wearing a cream-colored short sleeve jacket, and I’m sitting in front of a bookcase.
And, Rashad, maybe you could follow with a visual description of yourself.
MR. ROBINSON: Yes. Yes, I’m a Black man with brown skin. I have a gray suit jacket on, a light blue button up shirt, and I am sitting inside of my living room area with a Color of Change–my organization’s banner–behind me that says “until justice is real” and has our logo on it.
MS. STEAD SELLERS: Rashad, thanks so much.
And, Martin, maybe you can do the same for yourself. Thank you.
MR. WHITAKER: Yeah, of course. So Martin Whitaker, Just Capital. I’m a White man wearing a white shirt. I’m sitting in front of a blue background with some of my children’s artwork hanging on it. I have glasses, and I have far less hair than I’d like to have.
MS. STEAD SELLERS: [Laughs] Martin, thank you very much. And I envy you the children’s artwork.
I want to start with a question from a report that your organization put out. I’m going to read a sentence to you. It is, “Americans want companies to take responsibility for their workers’ economic security.” Talk to us a little about that, how you know that, and what this economic environment means in terms of that sentiment.
MR. WHITAKER: Yeah, sure. So, we have for the last eight years been serving the American public on a–on a fully representative basis around what defines a just company. And in doing so we’ve really gotten, I think, a very strong handle on how people think about the economy, how they think about their jobs, their lives, and what they prioritize. It’s a very strong pulse on America. And I think, obviously, this year, we’ve been very focused on how companies are showing up in this moment.
And so every year workers has been more important. This year has been no different. We’re about to release the details of that polling work. But what I can tell you is Americans across the political spectrum, across economic, race, geographic boundaries, believe that companies really should be investing in their workers, paying a fair, livable wage. And really, the relationship I would say between company and worker has fundamentally changed. And in particular, what we see is an expectation that companies need to do more. They need to invest in their people more. And there’s a very strong business case for doing that, and we can talk more about that later. But I think certainly the signal we’re getting is that now in the moment, certainly when you think about the economic conditions we’re in with inflationary pressures, those who experienced that more acutely than others, communities of color, minority communities who typically have not had the same level of access to pathways to prosperity, these are all things which companies can take more responsibility for, and certainly the public expects that. And in doing so they’re–you know, everybody wins. This is the sort of the just stakeholder approach.
MS. STEAD SELLERS: Just a quick follow-up on that. I want to talk specifically about the pandemic and how some of the top revenue-producing companies actually got richer during this period. How does that shift the narrative about what corporate leaders should be doing to engage and invest in their employees?
MR. WHITAKER: Well, certainly our picture is the way the American people would like companies to behave, what they want companies to do more of and what they want companies to do less of. It’s not a picture of how the world is. And I think that’s a very important distinction. As you noted, you know, during covid the economic shutdown, reopening, the aftermath of George Floyd’s murder, we have, you know, social changes and human changes that are occurring in the country which show up in the workplace. And so companies that are able to respond to that more effectively, we think will do better. We think companies that are able to create value for more of those stakeholders on a long-term sustainable basis in a way that the market can see, which involves obviously data and disclosure and how companies engage their workers directly–all of that we think is sort of part of a new formula for business success.
And I think what you–what you’re referring to there is certainly some companies getting richer, some companies able to have the resources and the responsibility to do more, you know, and how that sort of pie grows. You know, who’s involved in the growing of the pie, and who benefits? Those are the questions, the big questions, I think that obviously we’re trying to answer here and more broadly in society.
MS. STEAD SELLERS: And it brings me perfectly, thank you, to a question for Rashad. I mean, this isn’t about economics alone. Race, as Martin mentioned, has become far more central to these decisions. Talk to us a little about how that has changed since George Floyd’s death and what impact you’re seeing in actual hiring practices, and also the way companies address their employees and make sure that they are representing diverse views.
MR. ROBINSON: In so many ways, I think we’re at the sort of early phases of actually knowing how all this is going to play itself out–right? In the immediate aftermath of George Floyd, we saw big statements from corporations across this sort of spectrum of industries, making deep claims about sort of their commitments, where their investments would go, how they would look internally. And we’ve seen sort of a mix of results following that.
But what we have seen, I think, is a sustained engagement from employees. Now, of course, there was a deep sort of uptick after the murder of George Floyd in the sort of uprisings that occurred afterwards. But we have seen a change in environment. We have not gone back to 2019 in terms of what employees are asking in terms of how their companies are showing up in the world and what they want from their companies. But I do think that I think it’s important that we think of a couple of things as we think about a path forward. A lot of companies made these statements, but they didn’t have any idea of the structural changes that would be required to actually make good on those statements. We launched a program and a campaign called Beyond the Statement to really push companies to make deep concerted sort of efforts. But we see this across the spectrum. We see this in corporations, and we see this in government as well, where you get more presence, then you get power, then you get more–you get more statements and shoutouts from the stages, then you get rule change.
And what we’ve actually been pushing for is racial equity audit so that these companies can actually get clear about all the changes. If they had been going along with their everyday business practices and go to market strategies, creating all sorts of harm or inequity and manufacturing inequality, then all of a sudden, they’re not going to be able to turn on the light and change that. The same people around the table are not going to suddenly be able to do something different without deep levels of transparency, without a plan to move forward, and without a commitment to actually making changes that are not just cosmetic.
And far too often, I think many companies wanted to go for the cosmetic changes. We will hire a person in this position. We will–we will launch some internal programs. We will make some donations to organizations out in the field. But we’re not going to change anything about our business practices. And to really expand, you know, briefly just on what Mark was saying around the sort of impact that companies can have on their employees, it’s not just sort of in terms of pay equity. It’s not just in terms of the sort of ways in which these companies show up in terms of opportunities for employees in their day to day lives. It’s their impact on these employees when they’re outside of the offices. It’s not enough for a corporation to say we are going to help support women who need to make reproductive choices and decisions about their lives that are now banned or illegal in states where we are located if those same companies have been responsible for putting the very politicians in place that have made those barriers, made that inequality happen in the first place.
And so there’s going to be a much more holistic look at what the company’s sort of impact on society looks like, and I think more and more employees are making those demands. And organizations like ours are working to both elevate that and hold companies accountable to actually making changes that are not just about presence but are about actually changing the very structures of how power works inside the companies and their impact on the world.
MS. STEAD SELLERS: And a quick follow on that. We talk so often about things that aren’t going well, but which companies–and very specifically, which companies are doing well, and can you give me a very specific couple of examples of how they’re doing well, just briefly?
MR. ROBINSON: So you know, one example that I do want to give is that a number of years ago, we worked with Airbnb on a racial equity audit. By no means is Airbnb a perfect company and their impact in–on communities is challenging in many ways. But they went into that racial equity audit after a number of things were exposed out in the world in terms of sort of business practices and they took the racial equity audit serious, and they didn’t just hire DEI folks to come in and make efforts around diversity. But they also looked at their sort of business. They looked at how their platform was working. And they put engineers on the issue and they–and which is a gold standard for a tech company, in terms of the type of employees and the type of investment. And they put engineers on the platform to actually make real changes and to put metrics about how they would get to those changes. And we had deep conversations with Brian, the CEO, and others inside the company, and have watched that company as they’ve had other challenges along the way that have been sometimes high profile in the media, they’ve had a framework for how to deal with them and work with them. I don’t think any of these companies can change overnight.
We have had to fight companies to actually get racial equity audits at–you know, at their shareholders meetings and other places. But what we do want to know is that these companies are actually going to travel the road with us, and that they’re going to be committed to making structural changes, not just cosmetic changes.
MS. STEAD SELLERS: Yeah, key points.
Martin, which corporate leaders are you seeing succeeded–succeeding in folding their employees’ voices into their corporate missions?
MR. WHITAKER: So just to pick up a point that Rashad made, I think we have been tracking how 100 of the country’s largest employers have been actually following up on their racial equity commitments, our corporate racial equity tracker. And I think part of our mission as we see it is to try and drive accountability through disclosures. So just supplying the market with the information that the market needs in order to know who’s doing what, to Rashad’s point, who’s actually following through, what are they doing, where are they on their journey, we think that’s really important. And we’ve seen, you know, tremendous interest in that, and that’s also helped us work with PolicyLink and FSG to create a blueprint for what companies can do internally within the community and then also in society at large. So, I totally support that more holistic point of view, if you want to call it that.
So, because of the tracker and because our ongoing work at Just, you know, we’re monitoring what companies are doing across a range of issues. I point to JP Morgan’s work on second chance policy and on its hiring and the amount of attention that it has paid to pay equity analyses. Intel has been a leader for as far back as I can remember on disclosure around very–the details of racial and gender pay levels within its company. I would say that’s probably the best example that I could give anybody watching this on how to disclose across those racial ethnic diversity targets and pay equity as well. Accenture has done a good job. We see Target lifting up wages as an important element. When we’ve in our surveys really identified what can companies actually do to promote more equitable outcomes, pay has been a very central element of that. Paying a fair and living wage we find has been one of the top issues, which also promotes, you know, a company’s equity commitments. So Target has done a great job of that.
So, you know, I could go on, but I think tracking what companies are doing on their journey, I think the headlines from our tracker is some progress, but still a lot of work to be done. If you look at percentages across, you know, even the top 100 employers, it’s still very low in terms of what they say to the world. And I think that’s a really important aspect of trust building when companies are really trying to follow through on their commitments as well.
MS. STEAD SELLERS: We’re going to be running out of time very soon. But, Rashad, I wanted to ask you about one of the headlines, in fact. Governor Newsom of California recently signed a bill that will regulate the fast food industry, including establishing minimum wages. I know that you, Rashad, have worked with McDonald’s on racial justice issues. Do you see this kind of single state legislative move as something companies, the fast food industry will pick up on across the country? Is this a good move for workers across the country in fast food?
MR. ROBINSON: Well, I think in terms of not just fast food but the entire sort of restaurant industry as a vertical, and food in first food service industry, you see deep levels of inequity in terms of pay. You–there’s the history sort of tip wages at restaurants, and so all of that does play in. California is a big state and can have a really sort of deep impact. But these companies have been very good at sort of avoiding and stepping around the sort of–the sort of steps to sort of deal with the inequality. I don’t–I would want to push back on like the kind of term working with McDonald’s. You know, we had pushed for a racial equity audit at McDonald’s, which they were against, and I spoke at and presented at their shareholders meeting in an effort to push for that racial equity audit. We won with 54 percent of the vote with–at their shareholders, so we actually had to go to their shareholders to win that racial equity audit. They still haven’t done the racial equity audit or committed to the terms of it. I do think it’s important for those who are watching to recognize that a racial equity audit is just the first step. It’s like a doctor’s visit. It’s being able to understand sort of what’s actually happening inside the body of a corporation so that they can then properly diagnose steps to make sure that things can be fixed that needs to be fixed, or things can be elevated and done better that are already maybe working. Without that sort of doctor’s checkup, we are expecting the patient, which is the corporation, to sort of diagnose themselves and to determine what they actually need to do to get better. And what we’ve seen time and time again is corporations that have created a lot of harm and create a lot of challenge are not sort of in the position to then determine what they need to do to fix these problems. And that’s why we need outside independent auditors that can help these corporations actually deal with these challenges and to meet sort of the things that Martin was talking about, which are the opportunities that can come from when you actually build companies that are equitable and fair and diverse and are doing the type of things in society that make things better.
And so this is an opportunity for the fast food industry which I think has a deeply challenged history in terms of its impact on communities of color and on poor communities, and an opportunity for these companies to get right. And I hope that they will take it, but we will continue to work with fast food workers and the other folks organizing and fighting for a better tomorrow.
MS. STEAD SELLERS: Just one last word from you, Martin, imagine before we have to stop. We have the midterms, another reckoning coming up. Where do you see common ground between Republicans and Democrats in terms of labor rights? And I’m afraid it has to be super quick.
MR. WHITAKER: I can tell you that in our polling, Republicans and Democrats are agreed on, A, what a just company looks like; B, that workers are the most important stakeholder in that equation; and that, C, matters of equity–pay equity in the workplace, in particular, are common ground. I think that’s a story that’s not been told, and I would love to tell it more. I’m grateful for the opportunity today. But I think we need areas that unite us in this country right now, and this is one.
MS. STEAD SELLERS: Thank you so much to both Rashad and Martin for joining us today and for that strong message at the end of needing unity in this country today.
Thank you. I’ll be back in a few minutes with my next guest.
MR. WALKER: I’m Darren Walker, president of the Ford Foundation. I’m an African American man with a bald head, with glasses on, a blue suit and a checked blue shirt. My pronouns are he and him. I am here today with my friend Pete Stavros, the founder of Ownership Works. Pete, you and I grew up in a time of opportunity in America, and one of the reasons was because American workers were owners. And yet today, unfortunately, American workers have lost track, they have lost income, and they have lost wealth over many decades. In fact, today, the average American household has less than $400 in cash for emergencies. So, let’s talk about this effort you are leading to build wealth among the American workers. Let’s talk about what you’re doing at Ownership Works.
MR. STAVROS: Great, thank you, Darren, for having me. I’m Pete Stavros, a White man sitting in my office in New York City with grayish hair and a blue suit. My pronouns are he and him. And first, I just want to thank you, Darren, for having me. It’s always an honor to get to spend some time with you.
And what we’re trying to do at Ownership Works is really bring back that opportunity that used to exist in this country. You know, my parents, neither went to college. My dad, as you know, Darren, was a construction worker for 45 years. And by the time I was a kid, they had pulled themselves into the middle class. And that is not happening as much anymore. And as we know, it’s happening the least for people of color, and women.
And so what we’re trying to do at Ownership Works is put appreciating assets in the hands of working families. One way to do that is through ownership in their companies. And so it’s basically a way to get profit sharing, if you will, in the hands of blue-collar workers and people who are not members of senior management.
So, Ownership Works is a foundation that was founded by about 60 organizations, and Ford Foundation was the very first outside supporter, beyond my wife and I, so super grateful. You all were a big reason why we got our momentum. And now we’re 60 organizations strong, and we see a real path to getting a hundred-plus companies by the end of next year to have broad-based ownership. And just a second on what I mean by that, that means all members of a company participate in equity and ownership, and then that is paired with efforts around employee engagement and information sharing and opening up the business plan and really making people feel like they’re a part of it. And what we found is, over time, that can lead to really tremendous outcomes, not just for workers, but also for shareholders and for companies.
MR. WALKER: Indeed, I saw recently at one of the portfolio companies that KKR is engaged in the impact of ownership. I’d love for you to talk about that and what it meant for you to really be on that shop floor and experience the difference, this idea of ownership is making in the lives of the average American worker.
MR. STAVROS: So, in that example, that was a company called C.H.I. Overhead Doors, and C.H.I. Overhead Doors is based in Central Illinois, has about 800 employees. We invested in it about seven and a half years ago and then recently sold our investment. And over that period of time, thanks to tremendous leadership at the company, the CEO, an amazing man named Dave Bangert, really the whole culture changed. Safety improved. The injury rate dropped by 50 percent. The severity of each injury dropped by 50 percent. Productivity exploded. Scrap–so revenue grew about 120 percent and scrap grew 7 percent, and that only happens when everyone in the organization on that shop floor is pulling together to make, you know, improvements in the business.
And so to fast forward to the end, all these great things, all these little things added up to something big at the end of seven, seven and a half years, and everyone participated, as they should. So average workers in the manufacturing plants earned about $175,000. More tenured workers earned hundreds and hundreds of thousands of dollars. We had truck drivers make upwards of a million dollars. And it was great for–as I mentioned, great for investors and the company and shareholders, who made 10 times their investment over seven years.
And this is in a garage door business. As I always say, this was not a high growth software company. And so I think it’s a great testament to what can take place here if everyone participates, if people are treated with respect, are acknowledged, are trusted to be brought into the ownership of the company, and then really engaged as people who matter in the business. The sky’s the limit when you can create that kind of a culture.
MR. WALKER: Well, this is a radical idea, Pete, in the face of 50 years of Milton Friedman and Ayn Rand and the idea that the only purpose of the company is profits, and a focus on shareholders as the only stakeholder who matters. So, we’re clearly learning from this example that all stakeholders have to be attended to, especially employees as owners. As you know, my grandfather was a semi-literate man. He had a third-grade education. But he too worked in an environment where he could share in the profits, and he had–because of that profit sharing plan–and he was a lowly paid porter in this company–he had enough stock with his social security together to live a retirement in dignity.
And I think when we think about the average American worker today, who has a benefit program that is not a defined benefit but a defined contribution, and the research around the number of workers who do not have enough money to retire, who do not have the resources to pay for a college education for their children, their grandchildren, some of the stories that we heard that day of people in this company being able to pay their grandkids’ educations, pay off their mortgages, buy a home, it’s a testament that the American dream is possible if we have an economy and we have leaders in that economy who believe in it and we abide by a philosophy that democracy and capitalism must work in an accord, that we can’t have a situation where in the fight between democracy and capitalism, capitalism wins at the expense of participation and inclusion in the bounty of this great American dream and this great American capitalism.
Pete, I’d like you to talk about where you think, this idea of democratic capitalism, this idea that we’ve got to make capitalism work for more people–it works for people like you and me, we know that–but how do we make sure that it works for more Americans?
MR. STAVROS: Well, I think what we’re doing around ownership can help. It’s a step in the right direction. By no means do I think, you know, if we just do this, it solves all of our problems. I’m sure there are changes that need to take place that are much broader and bigger than what we’re talking about. Having said that, I do think this can help. I mean, when I look at some of our big societal problems, we touched on the lack of wealth in the bottom half of the country. I think it’s less than 5 percent of assets are owned by the bottom half, less than 1 percent of stock. Financial literacy is an epidemic in the country. And I think it relates to this lack of participation. If people don’t have assets, why should they have an interest in personal finance? You know, it shouldn’t surprise us that when financial literacy is offered as a training in a company, you’ll get three out of 100 people to take you up on it, because most of them don’t have any assets. They have debt, and they know they’ve got problems. They don’t want to talk about it. So, I think broadening ownership can help. In our experience, by broadening ownership, you can move the needle on financial counseling from three in a hundred who want it and will engage to 50 in a hundred. And that–and that’s huge.
Employee engagement, you know, where the significant majority of Americans don’t like their job, are not engaged on the job, Gallup indicates that it’s 70 percent are unengaged. And of that, of the 70, 15 to 20 are–I think they term it actively disengaged. So, they’re literally throwing wrenches in the machines, they hate their company so much. Part of that is financial, and ownership I think can help there. But part of it is not feeling like they’ve got a real role, not feeling important, not feeling acknowledged, trusted, respected. And there again, the act of extending ownership I think is meaningful beyond the money. And then when you pair it with all of these other efforts, I do think you can move the needle. So not to say this is going to solve all of our problems, but when I look at the lack of wealth in the bottom half of the country, you know, racial inequity, gender inequity, sadly, when you push ownership broad and deep, you do disproportionately benefit female employees and people of color. Financial literacy, employee engagement, I think there’s a lot of things that can be impacted by broadening ownership inside of a company. It’s building unity. It’s pulling people together. I think it can matter.
MR. WALKER: There’s no doubt it could matter. Pete, I’d like as we begin to wrap up for you to just share your journey. I mean, you have been an incredibly successful investor. You’re a leader at KKR, one of the world’s most prominent and successful private equity firms. And you have taken up this mantle and the firm has taken up this mantle. What can we learn as we look back over your journey, the history of the industry, and the portfolios that you have managed? What can we learn that we need to take forward in our practice, and particularly in the practice of private equity?
MR. STAVROS: Well, in terms of my personal journey, you know, this really–the passion for this started with my dad. So my dad, as you know, Darren, was a construction worker and for 45 years operated a road grader, and felt a real sense of misalignment with his employer. You know, if the only way you are paid is by the hour, you really have no incentive for quality cost on time delivery. In fact, if you’re too productive, your wages can go down, because your hours go down. And it drove my dad nuts. And he always wanted profit sharing in his union. And that, for me, was the kernel of this idea of how could we, you know, broaden ownership. And then I got an opportunity to really practice this when I got into a leadership role at my firm at KKR.
Now, when you–your question about the history of the industry, what can we learn, you know, if you go way back when the industry was getting started, it was really about, I would say, balance sheet arbitrage, financial arbitrage. And then we moved into P&L arbitrage, maybe that–profit and loss, you know, income statement arbitrage. Maybe it’s a better way to say it. How can companies purely just become more efficient?
And I think this generation 3.0 of private equity, my hope is it’s about how do you take what is an effective governance model–I really believe private equity is an effective governance model. It’s about alignment. It’s about long term. And how do you use that to move society forward in a productive way? And I think about KKR. We have 900,000 employees we’re responsible for. And when the leadership of the firm gets behind this, as they have, you know, that can be 900,000 families impacted. That’s a big deal. Think about all of the facilities that we are responsible for, where we can reduce carbon, water utilization, waste production, and landfill tonnage and energy usage. I mean, there’s a lot that we can do.
And the governance model, I think, is set up for this. It’s all about alignment and driving change. That’s what the industry was built on. So, as we go forward, I think 3.0 of private equity I think has the potential to not only deliver what our pension fund investors expect of us, and hopefully exceed their expectations, but we could really play a role in moving society in a positive direction, if we can get organized around some of these key themes and key initiatives.
MR. WALKER: Well, there’s no doubt, Pete, that private equity has a critical role to play in the American economy, and there’s no doubt that firms like KKR can provide the leadership and the firepower and the capital to actually transform this economy and make it possible for more American workers to have something that is essential to the American dream and the American identity. That is hope, because it is hope that is the foundation of the American dream, and work is at the center of how and why people find hope in our society. So, we need to pay attention to how do we build a foundation or rebuild the foundation for hope among the American worker so that they can believe that they and their children, like you and I did, could get on that mobility escalator and ride it as far as their talent, their determination, their ambition can take them.
So, Pete Stavros, my friend, I’m so happy to see you, to congratulate you and KKR for this bold initiative that the Ford Foundation is delighted to be a part of, and your personal capital and your personal leadership has meant all the difference. And so I look forward to more celebrations of workers who have opportunity and capital and hope. Thank you, Pete Stavros.
MR. STAVROS: Thank you, Darren. Thanks for all of your support, and it was great spending a little bit of time with you today. Thank you.
MS. STEAD SELLERS: Hello, and welcome back to Washington Post Live. For those of you just joining us, I’m Frances Stead Sellers, a senior writer here at The Post. Here to continue our conversation about the future of work is the former CEO of Best Buy and author Hubert Joly. Hubert, a very warm welcome to Washington Post Live.
MR. JOLY: Frances, so–thank you so much for having me.
MS. STEAD SELLERS: We’re thrilled. We’re going to learn a lot, I know.
So, a word to our audience before we start. Please tweet your questions to Hubert at @PostLive. That’s the Twitter handle @PostLive for anyone who would like to tweet a question. And before we start, I’m going to give a visual description of myself. I am brown haired and brown eyed, an Anglo-American woman. I am wearing a cream-colored shawl jacket with short sleeves, and I’m sitting in front of a bookcase.
And, Hubert, maybe you can do the same.
MR. JOLY: Yeah, I’m Hubert, and I’m an aging White man in my 60s with gray hair a white shirt. Behind me is a bookshelf with a picture of my wonderful wife, and a terrific book “Aligned: Connecting Your True Self with the Leader You’re Meant to Be.” I’m her agent, of course.
MS. STEAD SELLERS: Well, let’s start with a question about your philosophy. We’ll talk in a minute about how it applies to Best Buy, but first, this human-first philosophy. You’ve talked about how top-down leadership doesn’t work. What does human-first mean?
MR. JOLY: So, I think every company on the planet says people are the most important thing they have. The question is how do we make this come to work. So let me make it come to life with specific examples.
One thing I learned from a client a few years ago was he told me, Hubert, start your business monthly meetings with people, organization, and then business, and then financial results. Don’t start with financial results. Start with people. Because he told me it’s excellence on this–on the people dimension that’s going to lead to excellence on the business side, which then turns into excellence on results. So, putting people at the center is what will unleash human magic, which I think is the big antidote to this great resignation or this quiet quitting.
Another example to make it come to life, Frances, I remember learning from our head of stores at Best Buy, Shari Ballard, she would–when she would visit a store, instead of asking the general manager to show me the results, your market share, what’s working, she would go to her or him and say, tell me about you. How long have you been with us? Tell me about your history, your family, what you’re excited about. Oh, and please tell me which of your blue shirts you’d like me to talk to and be introduced to. So building that human connection.
Another last example, Frances, was we had a store manager at Best Buy. He would ask every one of the associates in his store what is your dream at Best Buy, outside of Best Buy, what is your dream. Write it down in the breakroom. And he said my job is to help you achieve your dream. So, if we can build that human connection, understand what drives people around us, their life story and what drives them, then we can help them connect, you know, with the work, and then that work with the purpose of the company. And that’s–this is what is exciting for people at companies that can, you know, ends this epidemic of disengagement that we are all familiar with. I know I need to be more passionate about this, but there you have it.
MS. STEAD SELLERS: No, this is great. But I want to understand a little bit more about 2008 when I think Best Buy was in deep trouble, or looked as if it might be, and how you applied this human-centric approach to turning the company’s fortunes around.
MR. JOLY: Yeah, and because when I joined Best Buy, so it was 2012–right?–when I joined, and everybody thought we were going to die. And the recommendation from analysts and investors was the usual recipe–right?–Frances? Cut, cut, cut. Hubert, you’re going to have to close stores, fire a lot of people. Well, all of the stores were profitable, and firing a lot of people, it’s like people will have been the problem. I thought people would be part of the solution.
So here’s some illustrations of this human-centric approach to our turnarounds. I spent my first week working at the company as the CEO, working in a store in St. Cloud, Minnesota. Bringing my two years, I had a badge with CEO in training, and I would ask the associates in the store, the team, what’s working, what’s not working, what do you need? For instance, they of course had all of the answers. My job was very easy. Listen, make notes, and do as I was told. They had all of the answers because they knew from the frontline. So it was not for me to tell them what to do. It was to listen. So, we co-created this plan. We did cut costs, of course. You know, as we may be heading into a recession, companies do have to be lean and efficient. But for me, headcount reduction is a last resort. Even in a turnaround, you first focus on growing the top line. And as it relates to cost, you first focus on attacking what are called non-salary expenses, which is all of the elements of the cost structure that have nothing to do with people.
So as an example, at Best Buy, we sell a lot of TVs, of course, right? They’re large, they’re thin, so they break. We would break for about $200 million worth of TVs every year. So, if you can reduce that by 50%, it’s good, right? Because we’ve done a survey. Zero percent of customers want to buy a broken TV, right? And so it’s good for everybody.
The other thing is, you see your role as a leader not as being the smartest person in the room, which is the old recipe, but as being there to create energy, right? We are very familiar with an energy crisis now. But if a company is a human organization, you can actually create energy. And our role as leaders is to do that. How do you create energy? It’s by listening to people, feel–making sure they feel respected, heard, co-creating the plan, and then getting going and celebrating early wins. And then if something is not working, you actually say it out loud. Oh, Frances, you and I worked on this initiative together. I think we’re going to have to redo it because it’s not quite working as intended. So, these are some illustrations of this people-first philosophy.
MS. STEAD SELLERS: Well, take–this is so interesting. Take it to me–to the pandemic. I mean, we had this moment of enormous turmoil. What lessons from the periods you’re talking about, the recession beforehand, have applied during the pandemic? And what new lessons are coming out of it in the way companies should respond to the demands of their employees?
MR. JOLY: Yeah, I think that we’ve all learned tremendously during the pandemic. One of the things we’ve learned if we have not learned the lesson before, was that our teams were made of human beings, right? Because we feared for their health and safety as relates to the frontline workers. And then for those who are working from home, we got to know their family, right, didn’t we? We also learned to–about their struggles–you know, health struggles, mental health struggles. I mean, so there was a deeper connection that was–that was built. And we couldn’t just continue as before. We had to rely on building that connection.
The other thing we learned is that we–my favorite phrase now, Frances, is “My name is Hubert, and I don’t know,” right? Because maybe you, Frances, had a–you know, the manual on how to deal with covid or back to the office or how to deal with inflation, supply chain issues. No, we’re in a situation where regularly now we have some unprecedented crisis that’s being thrown at us. And so the model of the know-it-all leader who knows all of the answers and is there to tell other people what to do, [makes buzzer noise] that doesn’t work. So we have to be able to say I don’t know, we’re going to have to figure this out together. We’re going to have to figure out who’s the best equipped, who are the people we need to consult.
The other thing–and that’s going to be my–I mean, there’s so many lessons, but maybe another one was to learn to lead with all of our body parts. I was trained, you know, when I was in business school or at McKinsey in my early years as an executive there to lead with my left brain. Now–and I had my head cut off from the rest of my body for many years. As a leader, I know now that I need to lead with my–of course with my head, but also my heart, my soul, my guts, my ears, my eyes.
And then the last thing I would say is I need as a leader–and all of us are leaders, because at a minimum, we’re leaders of our life–we need to take care of ourselves, right? Remember, Frances when we used to fly around, when the steward or stewardess would tell us if the oxygen masks come down, put it on yourself first so that you can–before you can help others. And if we want to be resilient leaders, spending time with ourselves, taking care of our health, thinking through how do I want to be remembered after this particular crisis and being centered, authentic human leaders I think is a–is a huge lesson—when–you sort of knew that before and now it’s become really obvious.
MS. STEAD SELLERS: Well, Hubert, just as you are not the know-it-all leader, I’m not the know-it-all interviewer, and I’m going to take a question from one of our viewers, one of our–who’s tweeted in, and this is from, you can see it on the screen, Marilyn Williams, who says, Hubert, what would you do differently at Best Buy now that you’ve moved on and haven’t had an opportunity to look back? Great question from @JoyMWilliams.
MR. JOLY: And I know, Marilyn. We go way, way back, and she used to work at Best Buy before my time. A great leader. I think that Marilyn and everyone–I’ve learned so much during my Best Buy years, so I wish I had all of that knowledge. One of the–maybe the thing I learned the most about is how to–so in business there’s the why, there’s the what, and there’s the how. There’s other questions, but let’s just say–let’s say there’s purpose, strategy, and culture. Historically, I was putting a lot of emphasis on the what. You know, ex-McKinsey consultant, let’s figure out what is the right answer. In my view that I’ve learned over the years is that that’s not the difficult part. Putting the emphasis on the why, so the noble purpose was the company purpose and our individual purpose and that connection, and then spending time on the how.
I’ll say this. Our most important role as the leader, as a leader is to make sure we create an environment where others can be their best. So, it’s the leader as the gardener who is there to ensure that we create a fertile soil so that all of these seeds, all of these human beings can blossom. It’s a very different mindset, because it’s the emphasis on culture. And then all of the ingredients of human magic that, you know, I talked about in “The Heart of Business,” so meaning, human connections, psychological safety, autonomy within a frame, but autonomy, and learning mindsets, learning environments, and then a growth mindset. And being the architect of that, to finish answering Marilyn’s question, we’ve learned so much. I wish I knew all of that when I started.
MS. STEAD SELLERS: In your book, you talk about literally being hit by a truck. And I’d love to ask you about what that meant in terms of an epiphany of who you are as a human being and also as a leader. I know you put those two things together, but there are two aspects in your personal life and in your work life.
MR. JOLY: So let’s rewind. I was 16. So not last year, but like many of us I was doing a summer job to buy–in that case it was a bike. So I was working in a supermarket in France putting price tags on vegetable cans and then taking, you know, the boxes and compacting them and so that we could recycle them. And then one day, there was some fighter jets going into the sky, and a forklift was backing up and hit me and hurt my back. And I’ll say this, I was in heaven, because I got, you know, timeouts, you know, to recover, paid timeout, paid time off. And so I was making money without having to work. And the lesson for me there was that I had felt the experience of a frontline worker in a completely underpaid dull job, right? Putting price tags on vegetable cans. And it stuck with me because I said if, one day, I have the opportunity to be a leader, I will want to make sure that I can create an environment where people around me have a more meaningful work experience. And it led me to think deeply about this question of why do we work and what is work. Now, of course, we can see work as a punishment–right?–because some dude sinned in paradise, for those of us who have a, you know, Judeo-Christian or Islamic upbringing, or we can see work as something we do so that we can do something else that’s more fun, like riding my bike. Or we can see work as part of our fulfillment as a human being in our quest for, you know, doing something good in the world. And for me, of course, it’s a choice. Unfortunately, most people don’t see work as a source of joy.
But I think as leaders today–and again, all of us are leaders, because at a minimum, we’re leaders of our lives–we can see the responsibility we have and the opportunity we have in this complicated world to use the platform we have to make a positive difference in the world, for business to be a force for good and to help address all of the challenges that the world has. And frankly, there is no shortage of challenges. And so I think it can be an exciting time for leaders today to feel they have this opportunity to create a future that does not exist yet. But that for sure, needs to be better than what we have now.
MS. STEAD SELLERS: You mentioned quiet quitting earlier on. It’s taken the internet by storm, that notion. You’re talking now about motivating people. We’re also moving into an era when artificial intelligence and other moves are eliminating a lot of routine jobs. Look ahead a little bit for me and explain to me how we’re going to motivate people to stay engaged after all they’ve been through and looking at what they may face in the future.
MR. JOLY: Yeah, so for me–Frances, thank you for this question–you know, purpose and humanity, this focus on unleashing human magic, that’s the antidote to this quiet quitting and to this longstanding pandemic of disengagement, which is not just the last few months. It’s been years, right? And so it’s the opportunity to reconnect with our co-workers at a very human level of what drives them, and working with them to, you know, create an environment where they can be–they can be fully engaged. And if we talk about the back to the office discussion, there has been this emphasis on where to work. I don’t think that’s a very effective way, because companies are getting a lot of pushback. But for employees, if you are trying to dictate where I should work, that’s not very engaging. So, I think it’s an invitation to focus on the why we work, and the how we work. So, you know, every job can be transformed into something meaningful if we spend the time. So, let’s engage our employees on what drives them and creating the environment where they can be the best version of themselves.
And as relates to technology and artificial intelligence, you know, in tech companies, it’s people who are behind technology, right? So, I’m a big believer in the Schumpeterian creative destruction, a view of the world where new jobs will be created. As human beings, I think that we are–we’re the source and we need to make sure that we don’t lose control to the–to the machines. But I think that this is–this is part of our responsibility to create that better future with–where even artificial intelligence is ethical and does not exclude–is not used poorly to exclude others. So, it’s a challenging time, no doubt. But I think it’s also potentially an exciting time where all of us can do our best to make a positive difference in the world around us and then on a bigger scale.
MS. STEAD SELLERS: So to talk about one of the challenges–and it was a great theme of my previous conversation with Rashad and Martin–the issues of racial injustice and rectifying them that have come to a fore at the same time of the pandemic, how would you integrate that into a forward-looking inclusive workplace? What are your guidelines?
MR. JOLY: Yeah, it’s essential at so many different levels. And of course, Best Buy is headquartered in Minneapolis. So, you know, the murder of George Floyd in May of 2020 was very close to home literally speaking. I mean, there’s two aspects, I think, to think about. Diversity and inclusion and creating a sense of belonging is an essential element of creating human magic. You know, I remember chatting with a new employee, a young employee who shared with me his life has changed the day a manager recognized him and took an interest in him, right? And my compatriot Rene Descartes, you know, famously said, “I think, therefore I am.” I think it’s different. It’s “I am seen, therefore I am.”
So, companies have a great responsibility to create this environment where everybody can feel they belong and can become the best, biggest, most beautiful version of themselves. And there’s a ton of work to be done there. And it’s not just, you know, try harder. It’s fundamentally reviewing all of our practices that have led to the exclusion, in particular, of Black African American colleagues when we recruit, when we promote, when we retain. So a fundamental review is in order. And I think following the murder of George Floyd, I’ve actually seen fundamental changes in the focus of companies on that dimension.
And then externally, when the city is on fire, literally, you cannot open the stores, right? You cannot have a business. If society is falling apart, Frances, you know–you and I know this, right?–business falls apart. So, businesses have a responsibility to not only take care of the inside but also look at the outside. And there’s many ways you can do this. It’s your sourcing practices. You know, I remember telling our marketing vendors at Best Buy, you know, if you want to submit a bid, and you have a completely monolithic team, you can save on gasoline. You don’t need to worry about coming to submit your bid, right? And so you can have that influence. And then it’s looking at the community level, and businesses in Minneapolis like Best Buy, Target, General Mills, Ecolab, there’s many great companies. I think I’ve realized how much of a role they could play in addressing systemic inequality issue in the community working across, you know, party lines and with, you know, the governor and so forth, and doing what they can to address inequality. So as an example, which is less about race but maybe more about geography, there’s been initiative that my successor, Corie Barry has initiated, which was to ensure that everybody had good broadband access during the pandemic, because that’s essential for the kids to be able to have access to remote learning. And so businesses today, we need a declaration of interdependence. Businesses–
MS. STEAD SELLERS: What a great line, declaration of interdependence.
MR. JOLY: Businesses cannot be successful in isolation. So, you know, and Martin is a friend, Martin Whitaker, and Darren Walker is a dear friend. I think we all share this view–right?–that it’s our responsibility as business leaders to encompass all of our stakeholders and find ways to simultaneously serve them in a way that’s win-win-win and treating profit as an outcome, not the–not the ultimate goal, and certainly not the only goal. So, it’s a big–it’s hard. It’s a redirection of what we do. But I think it’s exciting. It’s so meaningful.
MS. STEAD SELLERS: Thank you, Hubert Joly, for that wonderful phrase, the declaration of interdependence. We’re going to have to leave it there. Thank you so much for joining us today.
MR. JOLY: Thank you, Frances and everyone. So enjoyed our conversation. Thank you.
MS. STEAD SELLERS: Oh, we did too. And I’m sorry you have to leave that there. There’s so many more questions to answer and to ask.
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