Diversity in Corporate Boardrooms

Brittany S. Hale 0:32

Hey Brittany , Hi Karen , how are you ? I'm good . How are you ? I am doing well . I've got some peppermint hot cocoa here with my Santa .

Karen McFarlane 0:43

With your black Santa Claus .

Brittany S. Hale 0:46

I love it . You know , there are some spaces that still value diversity , and my home happens to be one of them . There you go .

Karen McFarlane 0:59

Which is reminding me of that recent controversy with the Boots commercial with the actress from Bridgerton . I can't remember her name right now , but she's playing Mrs Claus and I thought it was a great commercial .

Karen McFarlane 1:11

It was you know commercial for the boots she had on right Like a shoe commercial Right and people were up in arms that there was a commercial for the boots she had on like a shoe commercial and people were up in arms that there was a Black Mrs Claus , never mind the fact that Santa Claus was still white in the commercial .

Brittany S. Hale 1:24

Interesting . Yeah , santa doesn't have the freedom to choose whom he loves ? I guess not .

Karen McFarlane 1:33

And you know what ? Here's the thing . I think there can be white Santa , black Santa , green Santa , purple . Santa yeah , I agree , because children are not listening to this . Santa isn't real , correct ?

Brittany S. Hale 1:49

wait what he's not . Children aren't listening , but Mina is , you know I'll cover her ears .

Karen McFarlane 1:54

Sorry , mina , but you know Children aren't listening , but Mina is . Oh sorry , Mina , I'll cover her ears .

Brittany S. Hale 1:57

Sorry , Mina .

Karen McFarlane 1:59

But you know , our imagination is free to run wild , that's true , you know .

Brittany S. Hale 2:07

So it doesn't have to be wild . That's the best part about having an imagination is there are no rules . Exactly , exactly . Santa can be whoever , and I agree with you Exactly , exactly . Santa can be whoever . And .

Karen McFarlane 2:30

I agree with you . I love the idea of having Santa reflect your own ethnic to come to town , right , and be like , hey , this is my address for real , for real , right , you can find me here . This is my family . Then you know , I've been doing this for I don't know , hundreds of years . I think people will be more focused on how he's lived so long .

Brittany S. Hale 2:52

All right , we might want to follow his skincare regimen Exactly , rather than the color of his skin Right .

Karen McFarlane 3:05

So anyway , super interesting .

Brittany S. Hale 3:09

It's also a weird movie .

Karen McFarlane 3:12

But I'll talk to you about the weird movie later . But so this week week a new ruling came down . So we have been seeing , you know , week after week after week . You know this , I guess it's , you know we can definitely call it a backlash against diversity , equity , inclusion , and just it keeps spiraling in a negative direction .

Brittany S. Hale 3:38

So we need like a sound for every time there's like some sort of DEI policy that gets you know I'm going to find a sound .

Karen McFarlane 3:49

We have sounds on here . Okay , yes , you know , but maybe next time . Yes , you know , but maybe next time . But the US Appeals Court in New Orleans . They rejected NASDAQ's diversity rules for company boards .

Brittany S. Hale 4:29

I saw that . I want to reiterate why it is so critically important for executive leaders , specifically the president , to appoint federal judges in different circuits around the country , Because if you are , you know a lot of these federal judges . They're tenured right . These can be lifetime appointments , and so you want to ensure that your specific policy and , by extension , your perception of America , what it should be , what we're working toward is protected .

Karen McFarlane 5:17

That's absolutely right and that's actually , you know , one of theoring up the judicial system with judges that might have a particular point of view , and so , just as you said , they have these long tenures and they may or may not be amicable to be , you know , amicable to , you know , dei , right , in its original form , right .

Karen McFarlane 5:41

And so then we see decisions like this , you know , trickle and we trickling down , especially since the Supreme Court set aside affirmative action rules , right , we've seen that reaction to what happens next , right ? So you know , this is to me like a big deal , right ? Just for a little background , I think it was in 2020 , but NASDAQ put together a proposal that was approved by the SEC , proposal that was approved by the SEC , which basically asked huge corporations I think they were in the Russell 3000 , I think to ensure that their boards included at least one woman and at least one person who represents an underrepresented group or LGBTQ , right ? So , basically , in their words , like two diverse board members , and if they didn't , they needed to explain why not , otherwise they could be kicked off the exchange .

Brittany S. Hale 6:55

Interesting .

Karen McFarlane 6:59

Yeah right , they'd be kicked off , they could be kicked off the exchange . So , yeah Right , it's like the ultimate accountability . So , okay , you can , you don't , you don't do it . But why ? And it has to be a reasonable explanation , and I'm sure there you know , from a board perspective , in terms of their documentation they have to . They would have to show you know what steps they went through to secure these board seats , who they interviewed , all the details to show that it just wasn't possible to obtain the necessary skill sets to fill whatever gaps or needs were required for the board . And I'm sure that's a difficult thing to do , For sure .

Brittany S. Hale 7:36

For sure , and I guess I'm also just thinking really kind of about the rationale behind this , which is when left to their own devices . We understand that these business leaders are not going to do this on their own Right , as much as we may want them to . As good as it can be for business , we recognize that it's not something that people are doing on their own , and so there's an effort to create requirements to incentivize people to move forward , and this isn't unique in American history because , I mean , we had integration right . We've seen time and time again that , unfortunately , we need a little bit of a legislative push .

Karen McFarlane 8:39

Yeah , on all subjects , right , because you know , at the end of the day , all businesses want to be profitable , right , and so it's about their vision of what , of how profitability will be obtained , and that vision , you know , historically has been , you know , white males , right , that's how the system has been set up . So I think it's a little . It's hard for organizations that have these , you know , these margins that they have to make every single year and responsibilities to their stakeholders and their investors , to focus on things that they may not feel are a direct line to profitability , although you know that has been proven in many different ways . So , for example , in the original proposal , nasdaq cited a report from the Carlyle Group , which is an investment company , that having at least two diverse board members have nearly 12% companies that have that have nearly 12% more earnings growth per year than the average company that lack diversity . 12% growth is significant , significant gains . Yes .

Brittany S. Hale 10:04

Yes , I would never say no to a 12% increase in my business .

Karen McFarlane 10:09

Right , exactly , that was back in 2020 . So it's a little shocking , right , and outside of the earnings , which I know that's the most important thing , right , but outside of that , it just kind of shocks me that people today , people in any business , don't think that it's important to be reflective of the broader community . Right , women are half the population , right , at the very least . Why aren't there more women on boards ?

Brittany S. Hale 10:46

right .

Karen McFarlane 10:47

At the very least . And then , of course , we add in the different . You know , I don't want to call us minorities , because we're becoming a majority .

Brittany S. Hale 10:59

We'll come back to that in a moment . I have a very interesting stat for you .

Karen McFarlane 11:05

Okay , good , all right , but why non-white groups are not part of the ? Shouldn't be part of the equation ? And so , just in general , from just an intellectual perspective , it just still boggles my mind . I know we've talked about this , but I just can't wrap my head around it .

Brittany S. Hale 11:21

Yeah , and I have to say so . When I started in law school as you know , your law school summers are really important my first summer I started at a financial services firm and one of the things that I had to do was scour the Securities Exchange Act of 1934 and draft an insider trading primer for my supervisors . Oh , interesting . So this is very interesting to come at it from this perspective . And so at least the judges are saying that these rules don't further the Exchange Act , because the Exchange Act exists as a quote , primarily to protect investors and the macro economy from speculative , manipulative and fraudulent practices and to promote competition in the market for securities transactions .

Brittany S. Hale 12:17

Mm-hmm , it is fascinating that they , knowing the data that you just shared , see this as an obstructionist take , when we know that this is going to promote competition in the market . Right , if we see that businesses are more successful . Um , I am trying to reason with that . And again , for people who I am assuming that these judges at least have a conservative slant , but again , conservatives are about limited government , ostensibly right , right , small government . And so this , uh , at least the , the judges who dissented and this is a nine eight opinion right , this was , it was not . It was very close , um , but they're saying that the court is overstepping its authority because nasdaq it's a limited liability , it's private , right Right , it is one thing if there is a public not appropriate for private organizations to how they choose to run their businesses and what they choose to require of the companies that interact with them .

Karen McFarlane 14:28

I agree . That's totally another reason why it's shocking . And how will this have an effect on other things that companies require in going to be appealed and appealed and all that good stuff ? But it's , it's . I feel like it's very short-sighted from that perspective because of the domino implications that this could have .

Karen McFarlane 14:42

Right , and again , just unpacking that , that definition , that definition around competition and fraud . Of course it depends on every organization what those words mean . Banking , right , there could be fraudulent practices against the consumers that may disproportionately affect underrepresented groups . Right , and so , assuming none of that is intentional , right , when you have a diverse board , they can surface some of these things based on their experiences . And when you surface some of these things , sometimes it's not like this big aha .

Karen McFarlane 15:34

Right , it is a small action that leads to another action that leads to another action . So it can go unnoticed for a very long time . But it's that one person that's like hey , you know what . This thing happens right in this community , or it happens to me , right , and it can have a negative effect that has larger implications for families , has larger implications for families . Maybe we should explore that from this business angle and see if there's something that we could change in our practices . That either doesn't cost us any money , or it's a minimal cost because investment in the community or the greater good , or it actually makes us more profitable by changing a couple steps in our process .

Brittany S. Hale 16:32

Right .

Karen McFarlane 16:33

And it's that thoughtful analysis that comes from people and people's experiences that can make your organization more consumer friendly in some cases , more consumer-friendly in some cases , and so obviously we weren't in the courthouse to hear these arguments , but from my layperson's perspective , I don't understand how something like this detracts from the definition of what NASAC and the SEC rules combine , what they're supposed to mean for organizations .

Brittany S. Hale 17:18

Absolutely . Can I ask you some marketing questions ? Yeah , how important is marketing and business growth ?

Karen McFarlane 17:32

I think it's the cornerstone of all business growth . That's you know , you know I you know from my perspective . You know , honestly , it's , at the end of the day , it's about the brand right and marketing is the is the steward of the brand right , and that brand incorporates messaging and how we go out to the world and how we relate to our customers or buyers , depending on B2B , b2c or whatever and it's your persona , it's how people perceive you . So , at the end of the day , I think that it is the primary function , although sometimes it's not seen that way .

Market Trends and Corporate Diversity

Brittany S. Hale 18:15

Okay , and is it beneficial to try to keep up to date with your target market in terms of demographics , consumer behavior , that type of stuff ?

Karen McFarlane 18:31

Absolutely your current and your target , the ones you have and the ones you want . So right , extremely imperative .

Brittany S. Hale 18:40

So I know it seems like I'm cross-examining you a little bit . I'm coming with the leading question . Can you explain to those who may be listening and aren't aware ? Can you explain what Nielsen's ?

Karen McFarlane 18:55

is oh , basically it's a measurement organization that really tests consumer interactions with you , right ? So I think the most traditional form of that is with , say , television , right , who's watching , how long are they watching ? And those data points are used to basically secure advertising , more advertising dollars , because if I can prove that 52 million people are watching this show , right , that has value to advertisers who want that reach . But it also is used across digital media as well .

Brittany S. Hale 19:29

OK , are they ? And I understand this may be kind of a biased question , but are they relatively relied upon , do they do ? They have a pretty good reputation throughout the market .

Karen McFarlane 19:45

I think they have an excellent reputation throughout the market . I think they have an excellent reputation throughout the market . I think it has changed over time , right Because of the nature of media , right ? So , whereas in my view and also just as a caveat , I'm more B2B than B2C , which is where I see Nielsen mostly playing , but people can measure for themselves using different technologies and stuff and get a more accurate point of view I think Nielsen does now provide more in-depth and detailed data than they did , say , back in the day when you had to have top boxes and things like that . It's a different way to leverage them now .

Brittany S. Hale 20:31

I ask because I attended a presentation led by an executive at Nielsen , which is unrelated , but what I saw was that minorities , or at least the global majority , account for 100% of US population growth since 2010 . Damn , that shocked me . 54% of US population growth since 2010 . Asians about 23% , Black Americans at 17% and non-Hispanic white population declined slightly from 2010 to about 2022 . And then , of course , when it comes to people who identify as biracial or multiracial , about 42% of the you know part of the population growth that shocked me .

Karen McFarlane 21:42

Wait , this is since when ? Since 2020 ?

Brittany S. Hale 21:46

Minorities account for 100% of US population growth since 2010 .

Karen McFarlane 21:53

2010 . Okay , 2010 . That is , those numbers are incredible . They're not necessarily shocking , and I'll just tell you this little story . Okay , how long ago was this ? My son is 21 . So , maybe 10 years . Yeah , maybe 10 years ago , something like that . Right , he was going to school and DEI , in a way I don't think it was really called that was starting to emerge right as a topic for the school , and they brought in some consultants to talk about this and how we could , you know , be more inclusive and things of that nature .

Karen McFarlane 22:38

And I remember I was part of the Parents Association . I didn't see this , I didn't see the slides prior to the small group presentation . There's going to be a small group and then a larger group presentation , but I didn't see the slides . But one of the slides talked about the US population and the data showed something similar , not said exactly that way , but basically said you know , the world is browning , okay , and it will be brown all the way , brown by 2030 . It was either 2030 or 2040 , but I think it was something like that , okay , okay . And again , there's like 10 , 12 years , something like that , and the school was majority white , you know , parents . And I remember saying to myself probably shouldn't have put that slide in , because the parents , the small group , that was in there lost their minds .

Karen McFarlane 23:38

There was too shocking of a statistic for them to hear , cause it would be the first time that they were hearing it . Right , they weren't eased into the fact that their group okay was , you know becoming a minority essentially , and so it's not shocking to me , but I mean the shocking . It's not shocking because I knew it was coming for a very long time . To hear the numbers is like whoa okay .

Brittany S. Hale 24:07

Exactly , exactly , and so I bring all of that up . I laid the foundation to share that stat , to reinforce that for these organizations you know that choose to be listed on NASDAQ and choose to interact with NASDAQ , nasdaq is seeking to reflect the changing of the tie , right , they're seeking to continue to be relevant and so doing , incentivizing businesses that also want to seek to continue to be relevant .

Karen McFarlane 24:44

Agreed , it was a good and bold move for the times , yeah , but it's suffering at this point and so I think , kind of like we talked about , companies will have to reinvent how they approach this subject Right , because , like you said in the beginning , we wouldn't need this if people were just going to do it on their own without needing to be incentivized . I don't know if this is really an incentive .

Brittany S. Hale 25:21

Yeah , it's more A mandate Exactly Implementing punitive right .

Karen McFarlane 25:30

Right , and it's interesting why they even took that tact . I'm sure that there were conversations about this prior to , and it was determined that they had to mandate it in order to get people to comply . And it's interesting , they're only asking for two people . They didn't say 50% of your boards , right , they said two people , and one of which , again , is a woman , which should just be a given Correct . I don't know who the others can do for me , but I'm just saying like , well , damn , right , right . And so , really , at the end of the day , you're asking your bigger shift around race , which is a harder thing for people to do . Right is one person , right , because I don't understand why women are a problem . And look , you know , I don't know how the math works for this right , like if you had a Black woman , could you check your box ? I don't know .

Brittany S. Hale 26:36

Right , I was thinking you know a Black gay woman or a Black lesbian woman , right ? Could she then Check , check , check ?

Karen McFarlane 26:46

I don't know how that works , but , hey , I'm sure they would have found some ways to work it out right In the explanation , the notes , but it's scary though it actually is scary to see something like this , and I'm really interested in how companies are going to approach it . Now , that's not saying that some companies weren't going to do this anyway . This is the mandate . They weren't even worried about it . This is part of our culture regardless , right from the top down . So I'm sure there's a good portion of companies where that is already part of their calculus and this is a non-factor . It's probably meant for the ones that are egregious historically and now there'll be no accountability towards it .

Karen McFarlane 27:49

You know , and we as consumers just have to , I guess , just be aware it's really hard . You know , I get how it's really hard to follow these things because that's really on a macro level . Like you , consumers deal with stuff their day to day . Like you know , walmart , you know throwing out their DEI policies . You know there's large swaths of people that rely on Walmart's affordability for food and goods . Right , that can't just easily make the switch to Tarjay . So I get it and I think they know that right , there may be like a dip for a minute , but eventually people will swing back up right . I'm outraged right now from the fact that there's no ginger in ginger ale and there's some lawsuit with Canada Dry or something .

Brittany S. Hale 28:53

I don't know if it's real , it's very upsetting to me as someone who loves ginger ale .

Karen McFarlane 28:59

I love ginger ale right , this is my thing and I'm like it's only soda I drink , and so I was at the supermarket yesterday and I'm like , well , maybe I should just try ginger beer . There's a brand that my friend has . I need to find it . But I ended up buying ginger ale because I didn't see the brand that I was looking for .

Brittany S. Hale 29:21

Now I'm very curious to know the brand . We can discuss offline , but I would love to know the brand , because there's one brand that is a cultural staple in the black American community , so anyway , um .

Karen McFarlane 29:43

So anyway , just to say it's kind of hard to execute in terms of boycotts and things of that nature . It's hard to sustain that on a long-term basis , and I think the companies know that . And so we're in weird times , brittany . We're in weird times I mean I .

Brittany S. Hale 30:04

I am more so concerned about our ability to compete and perform on a world stage because we're in a global market . Now I would even have we , you know our podcast , the . The country outside of the united states that listens most to us is Germany , so hello to people in Germany who are listening , followed by Canada and the UK and Sweden . So that for me is fascinating , it's exciting and at the same time , knowing that if our podcast is , you know , on a world stage , all of these other companies you know listed have to compete and perform globally . How are we , from a legislative and a judicial level , how are we hindering american progress , american success and american business performance on a global scale ? And by american , of course , I mean the united states .

Karen McFarlane 31:18

But I agree with you . I mean , look , just start inside your organization . If you're a global organization , you have employees everywhere and they're more than likely outside of the US , more diverse depending on where you are right and depending on your definition of diversity . But culturally , you have to be savvy to you know create a work environment where people are happy and are innovative and you know engaging with your customers in a meaningful way that's going to create loyalty and sustainability for your company . And so , again , it's just kind of shocking to think that there are organizations out there that don't think in that way . Like I need a board that's reflective of my global footprint , right , right , so I don't know , but what do I know ?

Brittany S. Hale 32:22

A whole lot , Karen A whole lot .

Karen McFarlane 32:26

To me all right . And , by the way , I know stuff isn't easy , right , it's easy to talk about , it's very difficult to execute and there's so many different layers . On an organizational level . On a board level right , so many different layers , but it's not insurmountable . Board level , right , so many different layers , but it's not insurmountable . It just takes , you know , diligence and a strong desire to make it happen , right , and CEOs and boards are very smart people . They can get it done . They can get it done .

Karen McFarlane 33:04

And if boards mandate it to their CEOs , if boards model the behavior in how they select their members , their board members , and they mandate it to their CEOs and they hold them accountable , then you have a really strong trickle-down effect , right ? But if you don't , then you won a really strong trickle-down effect , right , but if you don't , then you won't Exactly . Well , I think we're going to be talking about this more , unfortunately , yes , and we'll continue to try to give you insights on how to navigate , on what you should and should not be doing , and I don't know . We'll just ride . We'll just ride this wave together , all we can do .

Morning Update on Mina

Karen McFarlane 33:56

I didn't see Mina today .

Brittany S. Hale 33:58

She's here , she's napping , but she's got a little bit of bedhead lap head . I don't know Her eyes are wide open .

Karen McFarlane 34:08

Yes , but her eyes are wide open . Yes , her eyes are wide open . So she says hello , you know , talk about the good stuff with mina yes , exactly all right . Well , we'll see you next time , britney , bye .