As companies continue adjusting to increased scrutiny around ESG issues including diversity, equity and inclusion (DEI), James D. White, the former CEO of Jamba Juice, is offering advice on how boards can improve their ability to meet diversity and inclusion goals in a new book, Anti-Racist Leadership: How to Transform Corporate Culture in a Race-Conscious World, written with his daughter Krista White, co-founder of the DEI startup Culture Design Lab.
A board member of Chief Executives for Corporate Purpose (CECP), White led a successful corporate turnaround of Jamba Juice by building diversity into the company’s corporate culture which helped increase its market cap by 500 percent. He recently sat down with Corporate Board Member to share his views on how boards can begin the process of transforming their corporate culture to be more inclusive.
MATTHEW SCOTT: How can a board embrace “anti-racist leadership” and take the first steps toward making cultural change?
JAMES D. WHITE: For the board, it’s all about governance, oversight, and policies. When dealing with this movement around environmental, social and governance, I focus board members on the social part of ESG. The work around anti-racist leadership is really about tackling that part of ESG in a very thoughtful, systematic fashion.
MS: So, how do you get directors interested in dealing with some of the social and controversial issues associated with cultural change without scaring them off?
JW: I don’t know. We’ve attempted not to scare people off. I’ve taken 30 years of operating experience – 20 years in the boardroom – and provided real examples of what people are doing. Making cultural change is about good processes and good practices that leaders can apply to eliminate bias from all the systems inside a company – from hiring practices, to how people are promoted, to how people are paid equitably, to how companies can eliminate bias in their supply chains and have the most diverse set of suppliers available, and to how they show up in the communities where they do business. Anti-racist leadership takes a clear-eyed, thoughtful view, and asks, how do we create a company culture that is driven by equal opportunity for all that brings out the full potential of the company? From our perspective, that shouldn’t be controversial. That should never be political.
MS: What are some keys to getting the process of creating an anti-racist culture off to the right start?
JW: In the boardroom, the first thing is to view diversity, equity and inclusion as part of ESG. So, it has to be on the board’s agenda. Second, it needs to be measured in some way. And third, there needs to be oversight. Let me give some examples. There’s one board that I sit on where we’ve created an ESG standing committee that meets on a quarterly basis and will deliver an annual report. Obviously ESG cuts across all the committees, but this board has made it a formal committee where the board members review the relevant topics related to ESG on a quarterly basis.
The combination of the pandemic and the racial reckoning has really focused this issue globally. I’ve gotten many CEOs to update the board on ESG on a quarterly basis, especially the “S” component, with metrics that are visible. And there are a couple of companies where I meet with the CEO, the CHRO, chief diversity officer, and the key operating executives on a monthly basis to talk about their D&I scorecard. We talk about progress being made regarding best practices that I’m seeing at other places that I work. This is really all systems and process focused. I’ve been doing it on an ongoing basis, and we’re focusing on this topic like we do every other critical issue for the company.
MS: What type of changes have you seen boards implement and how have they done it?
JW: The most critical thing is that board members have to agree that this is an important topic for the organization. So, having a process that raises this issue to the board level, is a positive first step. Assessing where the company is and having the CEO and management team report on the data is also a fantastic place to start.
Then there must be alignment between the CEO and the board on what the path toward better DE&I is, how frequently measurement should happen, and what should be measured. Those decisions will be different from company to company. Some people start with diversity in the boardroom or the lack thereof. Some companies focus on supplier diversity. In the book, we cite a company that focused on diversifying its supply chain and supply base as an example. We also talk about another CEO that held his executives responsible for moving the representation of Black employees in the company’s North American operations from 1% to 13% over a four-year time frame. And the update on that company is its Black employee population grew to above 6% in less than two years. So, what gets measured and what you focus on actually gets done.
MS: What else is important to making “anti-racist” cultural change?
JW: There’s an education process that should happen with the board members. In many companies, CEOs are taking themselves and management teams through an education process to really be more thoughtful around this work. We want to be a catalyst for some of those discussions with rich examples in enough different industries that we can get the conversation started with practical, actionable points of view. And some of the stories and anecdotes in the book will be helpful to educate and enlighten people and really start to change the conversation.
MS: When you start deciding what to measure, are there any measurements that you find make the cultural change process work better?
JW: If you look at numbers in general and you don’t look at the levels of diversity in a company, you could look at the boardroom at first glance and say, “We’re fine – we’ve got a good representation of all races, and we’re pretty gender balanced.” But if you look at most companies in America, from the boardroom to the C suite, you’ll see a precipitous drop-off of diversity in the organization. So, I always make management teams go through the distribution and demographics at each level of the company.
Applying equity analysis to the organization in the same way that you look at the demographics and other kinds of simple software measurements is just auditing the culture and getting feedback. Companies should look at different groups inside of the organization. Do different people experience your company differently? The answer almost always is, yes.
The way Black employees experience a company could be different than their white colleagues. Folks that view themselves as a part of the LGBTQ plus community might experience the company differently – and the same for the Latinx community. The best companies are taking really disciplined cuts and how to really look at the most important assets encountered and how they’re experiencing the company. And there are lots of good tools to do that – tools that people can slice and dice and measure how different communities inside an organization are experiencing their environment.
MS: You’ve discussed the idea of DE&I being viewed as a business unit at corporations. How can boards begin that process, and why is it important that they do?
JW: DE&I work is part and parcel with the culture of the company. So, if you think about the values, the practices, and the policies of a company, you want to hardwire that into the operations of the company – and also into company strategy. For example, in the case of the company board that created a separate standalone committee on ESG, they’ve hardwired their ESG working commitments into the company from a strategy perspective.
Another way to approach it is to engage resource groups. If a company has a Latinx resource group, or an Asian Pacific Islander resource group, or a Black group, or LGBTQ plus group or organization, focus those resource groups on the business of the company and challenge them to find ways to help the company become better. Have them think about unique marketplaces that they might have a different perspective on. In the book, we talk about how Clorox did one of the better jobs of leveraging its various resource groups to accelerate the business at the company, whether it was looking at new markets, or M&A, or challenges facing the CEO and leadership team. So, when I talk about making DE&I a business unit, it’s about not making this a separate thing – it’s about fully integrating it into the company and leveraging it in a way to drive the business. And that will be different at every company.
MS: So, what are the long-term benefits for companies that change their business model to incorporate more of an anti-racist culture that is more inclusive?
JW: The benefits are going to be different for different stakeholders. There’s a new generation of employees that are going to demand that companies are more diverse, more inclusive. So, for the associate or employee stakeholder, you’re going to drive higher retention and you’re going to be a more attractive and advantaged employer. For suppliers, you’re going to be a more attractive partner if you’ve got a more inclusive view and deep respect for the folks that you partner with. And any actions that boards take from an overall governance perspective to codify anti-racist policies and practices will certainly be viewed positively by both regulators and investors.
You’re also going to see investors increasingly flow dollars towards companies that are more thoughtful from an ESG perspective. That’s a long-term benefit that only increases going forward. And I think there are many facts that demonstrate that companies that are more thoughtful, from a social and environmental perspective, deliver better results. That separates those companies from others and gives them an advantage, and I think we’ll see more of that moving forward.