Brittany S. Hale: 0:32

Happy New Year Brittany. Happy New Year Karen. How are you?

Karen McFarlane: 0:36

I'm good. I'm good, I'm having a great start to the new year. Love it Okay, positive, okay, positive. But I think you know it's going to be a good year. How about you?

Brittany S. Hale: 0:51

I agree it is going to be a good year. I actually started the New Year's off sick, so New Year's Eve I was on my couch gross, congested all sorts of things, but it's only up from here.

Karen McFarlane: 1:08

You know what? That's a great way to look at it.

Brittany S. Hale: 1:14

Well, we also started off the year with some good news Did now yeah mina also started the year off well oh hey, mina, it's your first new year.

Karen McFarlane: 1:25

It is mommy she's ready.

Brittany S. Hale: 1:27

I know she's ready for a nap, so she's me too. So she will not be deterred, right, exactly.

Karen McFarlane: 1:37

I could use a nap right now too. As a matter of fact, we need to bring back naps, you know we need to do a day, you know, respite to just recharge and get us going. As a matter of fact, I think if corporations adopted this, they'd get workers to work longer hours. So it has benefits.

Brittany S. Hale: 2:02

I agree, yeah, a nap room incredibly helpful.

Karen McFarlane: 2:08

Exactly exactly. So you know, let's bring back naps this year.

Brittany S. Hale: 2:13

Block them into your calendar.

Karen McFarlane: 2:15

You don't have to name it nap, you can just have a one-on-one meeting with yourself and your eyelids there you go with what it was, the the block they put, like work time or like the focus time, focus time can have a nice little restorative section there.

Karen McFarlane: 2:31

Yeah I've seen those, uh, those things on. I think you can buy them on amazon. You put them under your desk. It's like a little habit for nap time. I like it feels excessive, like you should be able to just go to your bed or a couch, the couch. Invest in the couch is not great for a nap, yeah.

Karen McFarlane: 2:55

Anyway, you know, last year we saw a lot of changes happening, particularly with DEI, and we talked a lot about that and how it relates to leadership and marketing and things of that nature, and so, particularly towards the end of the year, we saw a lot of these huge companies roll back their DEI programs, which, you know, we obviously feel is the wrong move. But we started out the year with one major company, one of the largest in the world, the fifth largest in the world saying no, we're not rolling anything back, we're keeping it.

Brittany S. Hale: 3:45

Yeah, and outside of you know, ideologically speaking, a lot of these companies believe that rolling back these policies are going to somehow ins proponents and shield them from any sort of litigation, which is not actually the case and may have it may backfire.

Karen McFarlane: 4:06

We don't know, we don't know, we don't know, but the Costco board of directors said hey, we will evaluate what you're saying, which you should do, right.

Karen McFarlane: 4:20

And they did evaluate it and they came back and were like no, actually we believe in our DEI program, we don't believe that it's violating any legal rules and regulations and we believe it's good for our business. And so, in fact, they went further and said and we believe that you don't really care about our people and our business, but you more so care about your political agenda, and so we're not going to bend the knee to that. Thanks, but no thanks.

Brittany S. Hale: 4:54

So two things that I want to point out, because this is what you just stated is so incredibly important First, that it was a unanimous vote by the board, right, there was no dissension. One band, one sound, band, one sound. And then the next point that you fleshed out around kind of intention, and it seems that a lot of investors have used a tactic, you know, to kind of to usher in their political agenda, which is to say that DEI raises stockholder risk. Now, stockholder risk is this kind of amorphous catch-all phrase to highlight a number of things and, like I said before, the stockholder risk in this particular be litigation coming from anti-DEI proponents who believe that DEI is creating unfairness or inequity throughout the workforce, despite all of the evidence to the contrary. But it's, I think it's really important that the board called this out, because they didn't just say no, thank you, we're not interested in rolling this back. We've got it boards who may feel similarly and they're giving legitimate business reasons why this isn't appropriate for them and for their business right.

Karen McFarlane: 6:46

Absolutely. And it's so important that it came from the board, right, because the board sets the tone for the organization. That is the CEO of the boss, and so they're basically saying this is CEO's boss. And so they're basically saying, look, we have a vote of confidence in the CEO and everyone that works for the organization. We have a vote of confidence in our policies. We've vetted those. We understand the legalities and more so, we understand the risk right, understand the legalities and more so we understand the risk right.

Karen McFarlane: 7:24

So every business assumes some level of risk and they have to figure out their risk appetite. And that risk appetite, as you know right, is across various different categories. You know, I don't know where DEI sits in Costco's specific risk scorecard, right, but they've made that assessment and they've decided that whatever level of risk was associated with it specifically, even if it was a specific category it might, they have it under. It is acceptable, and if something arises, they will deal with it and they have board support around dealing with it. And that is so incredibly important for a CEO and the entire organization to basically live their principles right.

Karen McFarlane: 8:25

And if your DEI principles are an integral part of your culture, authentically, so ripping it out would have catastrophic effects. Correct. Out would have catastrophic effects, correct. You know, if it's, if it's integrated, if it was just this add on, then some of these companies can just take it out and it feels like potentially, feels like it's, it's nothing, I don't know. So, yeah, I am so incredibly proud of the board for taking that stance and that, and the fact that it was the board, is so incredibly important to the organization as a whole I also want to to highlight or kind of peek behind the veil at how this was brought up.

Brittany S. Hale: 9:10

Right, because this proposal came to the board through a costco shareholder, which is the National Center for Public Policy Research. Yeah, and they're a conservative think tank, right. Like you said, this is proprietary research where the ends or the means really kind of justify the end. The conclusion is always going to be the DEI is bad and, and you know, harmful to business, and so they're working from there. Then they supplement with their alleged research. And so, looking at some of the of the information coming from the proposal, because the DEI roles the policy, it's not just a CDO, right, it's not just a chief diversity officer right, it's embedded, they have people in communities.

Brittany S. Hale: 10:17

That sounds pretty inclusive. That sounds like something you would, to your point, would want to keep and not yank out and rip out of the organization's identity. They're policies. They have goals, right, this is not fluff, this is not about, you know, it's just simply making everyone feel good. Right, there's, there's a mission here to to expand, grow and deepen trust in Costco as a brand, as a go-to brand, both for people who currently work for Costco, people who are interested in working for Costco and people who are interested in buying from Costco.

Karen McFarlane: 11:04

And their community is quite broad, right, it's about being representative of the entire community through various different facets of their people, culture and operations. So you know how do you do that without being intentional about that representation across the board? You know, one of the things that I'm particularly a huge proponent of, when I even talk about marketing, is that there's multiple domains of influence that just marketing has across the organization to impact DEI, right they?

Karen McFarlane: 11:40

just don't always realize that they have this impact. You know around it. So everything from yes, the talent to supplier diversity, to the advertising, to even board relations, right, and so you know if a company is really thinking about those core principles throughout their organization, it's not something that you can just say is destructive when it is in fact been intentionally additive to their growth and prosperity as an organization absolutely, absolutely.

Brittany S. Hale: 12:18

And I was just thinking, uh, as you were mentioning, you know, really kind of reflecting the entirety of the, the community, that's right, here recording. We're a community, right, and we live in two separate states, close, but separate states, right. So I live in a state where there's no, we don't have self-service, right, they say, uh, we don't pump gas, we pump this in new jersey, but so jealous, okay, right, but you live in a state that you know has self, has self-service, right. So if we were to solely go from my perspective, you would be left out of that conversation, right? If I were to say, well, at the E-word, we here, we don't pump our gas, we pump our fists. The next time you're at the gas station, you'll be waiting a while, right?

Brittany S. Hale: 13:19

So when we think about DEI, when we're deconstructing DEI, for those who are listening, first of all, you're probably listening because you're not scared of DEI. But if you're curious, right, if you're unfamiliar, it is not this scary, obscure, guilt-ridden premise about the way that organizations should run their businesses. You just detailed all of the ways that it impacts business and how we see shifts in business operations, how it increases revenue, expands market share, increases business growth, simply because you've reconciled yourself with the fact that everyone who buys from here, everyone who works here, may have more than one interest.

Karen McFarlane: 14:28

Absolutely Right, and it boggles me, boggles my mind that particularly because I think it's like a clear line of sight for retailers, right, who broadly right it boggles my mind that a retailer doesn't see value in the various cross sections of individuals, right, or communities that can engage with their products over the short and long term, right, or communities that can engage with their products over the short and long term, right.

Karen McFarlane: 15:23

And I just want to understand, I really do want to understand that thinking that is the risk associated with with potential litigation around potential litigation around inclusive policies, right, so great that you would basically eliminate, potentially eliminate, certain communities from the equation. Or is your calculus that those communities will still buy from us anyway because we're their only option or best option, and so it'll be a storm for a little while and then it will taper off, which could actually be a legitimate calculus as well? Sure, but that just means they potentially don't see value in cultivating that audience and growing that audience in a much more deeper way to have that longevity over time. So I just think it's a really interesting conversation to understand how they think that consumer behaviors work, right, yeah.

Brittany S. Hale: 16:42

Question for you.

Karen McFarlane: 16:43

Yeah.

Brittany S. Hale: 16:44

May require you to dust off your crystal ball, but we have Costco and we have Walmart, which we've recently spoken about. But Walmart, in shutting down their DEI initiatives, are refusing to commit to about $13 billion in business that they previously committed to. Both are huge brands. Both are huge brands. Both are likely to give rise to other similar brands in the industry doing something comparable. Okay, do you think that Costco or Walmart, the way that either of them are acting, do you think it sets the tone, because we're at the start of 2025. I'm sure we will be surprised by the time we come in next week. There will be more news, but which do you think really has impact, the kind of impact, and what do you think's next?

Karen McFarlane: 18:11

Okay. So this is a really tough conversation because we have this change of administration, right, so I can't even predict around the response to the administration. Let me just take that out of the equation. For a second Playing field is that I believe that that Costco is setting a tone, and I'm hoping that other organizations and their boards see that, because what we have seen around, this push to remove DEI, in some ways, is a bullying tactic. Right, it is just like the board of directors at Costco said it's a political agenda. It's not really a people agenda, right, and so we need more boards to think about their organizations and their people and their longevity and to not be bullied into pulling something that's genuinely part of their culture and their profitability. Right, but sometimes you need someone to lead the way to see that this is the way to go and that we're going to stand up and we're going to fight for it. And, yes, there might be some litigation around it, but we are the titans and that we can make a difference going forward. Right, because know that our consumer is, is diverse in, not just race and ethnicity, which is what this, this push, is about Like.

Karen McFarlane: 19:59

For whatever reason, dei has become synonymous with primarily Black people and some Latino people, right, and that's not even what it's about. Right? When you succumb to those types of pressures, you are actually taking away opportunity from more than just Black and Latinos, right, it's a huge cross-section of individuals, right, and so we need more board members to stand up, to be brave, and I'm hoping that Costco, doing this, is leading the way you are not supposed to be worried about. You need to be cognizant of how the political landscape is going to affect your organization and the long-term effects of that. So I'm not trying to discount that, but how can you be brave in the face of what you clearly see is not an agenda for the people right Now? I also want to be somewhat fair in the concerns around why some of these cases are being won. Right, it's basically saying that when you have these programs, it is racial discrimination reverse discrimination which I was just going to say I know that's your favorite term.

Karen McFarlane: 21:25

I'm sorry to have a response to, but let's just let that sit there and simmer for a second as if it's real. And so I can see where there's an argument for saying, hey, there should not be any race-based decisions. This is part of our laws. But we also have to address the systemic inequality that has been caused by our historical past, and so some of these programs are there to right those wrongs. And so what are we going to do? Yeah, what are we going to do to fix it, because we can't ignore it. And so, if you're going to make shifts in your policies, still act with the intention you originally had and what does?

Karen McFarlane: 22:17

that look like for your organization intention you originally had, and what does that look like for your organization? I don't know if that was a true crystal ball but that's my question.

Brittany S. Hale: 22:26

No, that's helpful because when I think about what's to come, the question that comes up for me as you were speaking was well, how do we know who to believe? Which is another group right A board at Walmart might like to hear, because it supports their premise, which is that we don't need DEI, we don't need the trouble, right? And then you have other think tanks that will come out with research saying the opposite. So DEI is itself, in and of itself, a vehicle for fostering trust, but so is the information around it, right? So are the the, the research that we have coming out about it, and it's going to continue to be this space of wondering you know who's right and its impact on business and what do we do about it. So, I guess, for people wondering, you know which reports do I read? You know which conclusions do I come to? I would think it comes back to the organization's vision and mission. But, um, sorry, she's coughing, I will, but yeah, but then that just makes me.

Karen McFarlane: 24:25

Yeah, I'm, I'm wrestling with that you know, Well you know from my experience, right, this is, this is the job of the board. They are there to gather, research, collect and interpret information and come up with the best answer for their organization, which is tied back to their mission, vision and values. Right, and so you know. However, they tackle this situation, whether it's a task force or committee, like whatever they need to gather all the information, both sides, middle sides, read it, interpret it, discuss it and vet it against what it means for Costco, walmart, whatever right and what they come up with should be right for the org, it should not be too filtered People are individuals but too filtered through their own personal lens of what they want?

Karen McFarlane: 25:29

right, because they're not there as a board member personally, right, they're there for growing the organization. So, no matter what their political or personal views are I'm not saying it's not going to filter in, because you have board members there for their intellect and their experience and their critical thinking skills, right. But you want people that are open to gathering and researching information and making meaningful decisions, right, and then you come to a conclusion together. And so that's where I think you know boards got to put on their you know board PhD hats, okay, and be able to defend their position when asked as well, because you have to. You not only have to defend it to your shareholders, you have to defend it to your organization, because you need all of those people working in tandem and believing. And so if you create systems and policies and structures that are against the people that are actually working for you, right, what kind of experience are you delivering?

Karen McFarlane: 26:45

Now, you may be a company that doesn't need to provide the best customer experience, that doesn't thrive on customer loyalty. That you know. Just, it has a different calculus and therefore DEI is not as important to you versus another company where that customer experience is of greater value. And so you're going to put deeper meaning onto it, and so I don't think there's ever there's like one. Unfortunately, there isn't a right or wrong across, say, the United States of America, for example, but there is a right or wrong for the individual organization, which makes it very difficult because we often don't hear the backstory around why these decisions were made and we often don't know the inner operations of any one organization to understand what makes it tick and how they actually truly extract value from their customers.

Brittany S. Hale: 27:37

So it sounds like this is also an argument and petition for each organization to have their internal DEI team.

Karen McFarlane: 27:50

I would agree. Dei team I would agree, okay, but you know, I think the ones that again value it and they do, and the ones that don't, obviously they've been like cutting those teams, or. What's kind of interesting, though, is like some companies, they're they're, they're going stealth in a way. Right, they still believe in it, but they don't want to say it out loud because they don't want to risk anything, and so what I find pretty hilarious is that you'll have companies that are changing their DEI officer titles to say inclusion and belonging, so it's taking the word diversity out and equity out.

Brittany S. Hale: 28:31

Apparently, inclusion is fine right which, although you know, inclusion means that you would have to perceive and appreciate on some level the differences yeah, and that's the stuff we're doing.

Karen McFarlane: 28:50

Yeah, it's like, yeah, we don't have dei anymore, we have inclusion, so we're not just not saying dei, those people will go away, which I don't. I don't, I don't have the words for that, but I guess I'm happy that some companies, at the very least, are keeping them in place, even though they they're not, you know, screaming it from the rooftops. Yeah, I guess you got to do what you got to do. Everybody has a different calculus, right, but it's just an up and down, it is.

Brittany S. Hale: 29:26

It is, it is. But that's why we're here, because we're here to keep those of you who are riding the waves of uncertainty, as we all are, especially as it comes to DEI, we're keeping focus on most important questions. Yes, and we're always going to talk about it Exactly, and we're always going to talk about it Exactly.

Brittany S. Hale: 30:13

Well, kudos to Costco's board of directors for showing exemplary leadership and bravery and conviction, for standing by their policies and not being what I'm calling bullied by a political agenda. Yeah, absolutely. And I have to say you know we're not sponsored by Costco. But my answer every time, anytime someone says zombie apocalypse, where are you going? I'm going to Costco. They have everything that I need there. I feel even better about that.

Karen McFarlane: 30:34

Awesome, and I hear they make really good pot pie too.

Brittany S. Hale: 30:41

Listen, I have not yet had it. It's a perfect day for it. But yeah, trip to Costco. Trip to.

Karen McFarlane: 30:48

Costco on the way. Customers. All right, brittany, until next time. All right, see ya, see ya.