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Next. A strategic milestone in your organization’s journey. Whether it’s a technical revolution, expansion into new markets, a merger or acquisition, or the launch of a game-changing new product, you will need the right people in the right roles to succeed. You also need the data-backed insight, IP and the tech that will ensure you identify, attract, assess and select the talent that will achieve your strategic goals.

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A BOLD MOVE INTO NEW FRONTIERS. WILL YOU BE TALENT READY?

Next. A strategic milestone in your organization’s journey. Whether it’s a technical revolution, expansion into new markets, a merger or acquisition, or the launch of a game-changing new product, you will need the right people in the right roles to succeed. You also need the data-backed insight, IP and the tech that will ensure you identify, attract, assess and select the talent that will achieve your strategic goals.

Be talent ready for next.

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Gary Burnison Chief Executive Officer

Jill Wiltfong Watch @ Korn Ferry Chief Marketing Officer Jonathan Dahl See how sexual harassment training Editor-in-Chief videos are updated in the #MeToo era at Russell Pearlman kornferryinstitute.com/times-up. Managing Editor Plus, watch our author take on a Nancy Wong Bryan corporate leader who uses pickup Copy Editor basketball games to de-stress, at Amy Roberts kornferryinstitute.com/basketball. Copy Editor

Creative Directors Robert Ross Job Hunt Help Roland K Madrid Art & Production Korn Ferry CEO Gary Burnison, author Daniel Botero Mary Franz of the new book “Lose the Resume, Land the Job,” offers his insights on Marketing & Circulation Manager Stacy Levyn Rozen career moves in a series of videos, podcasts and columns. Project Manager See kornferryinstitute.com/ Tiffany Sledzianowski losetheresume and KFadvance.com. Digital Marketing Manager Edward McLaurin

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Leadership News, Contributing Editors Every Week Lexie Barker David Berreby Korn Ferry’s experts review the leader- Simon Constable ship lessons from C-suite shuffles, major Martin Coyne mergers and other news, summarized Patricia Crisafulli William J. Holstein in our “This Week in Leadership” email Karen Kane on Thursdays. Sign up for the email Doron Levin at kornferryinstitute.com. Christopher O’Dea Glenn Rifkin P.J. O’Rourke Shannon Sims Meghan Walsh Peter Zheutlin

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2 Built 1731, Established 1851

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7-12 HALF MOON STREET | MAYFAIR | LONDON | W1J 7BH T. +44 (0) 20 7499 0000 W. www.flemings.co.uk E. [email protected] Ormer Mayfair Restaurant by Michelin starred chef Shaun Rankin Contents

Think About This: “There’s been a tipping point among investors. Businesses can be profitable and do good at the same time.”

—Virginia Harper Ho, Professor, University of Kansas

Cover Story Profit vs. Purpose: The Duel Begins In surprising fashion, Wall Street is telling companies to take the long view and support social causes. Will investors fight back if profits fall? 26

4 Voices on... Features Starts on page 9 Times Up: Can Sexual Taxes Harassment The new tax laws give CEOs Training Come globally a rare opportunity to deal with a nagging topic: of Age? 10 paying talent. Seven in ten compa­nies have it, Compensation but critics say this A pay-gap revolution is under key form of preven­ way, but is it missing the 12 tion hasn’t changed bigger picture? much in decades. 36 Healthcare Getting teams prepared for natural disasters poses a 14 special challenge. The Future CEO…for History Farming? Nothing may have saved Blockbuster, but facing a powerful 16 The industry has activist didn’t help. an array of high- tech options, but it needs leaders who can separate The Global the wheat from Economy the chaff. A decades-old 44 business tool is having a 18 digital-age revival.

Europe’s View Why retail keeps shopping 20 for new CEOs. Hershey: Beyond Chocolate Emotional Intelligence How does the Fixing your flaws without first female CEO

weakening your strengths. 22 of a 124-year-old company move the firm into more ‘snacking occasions’? Downtime: 52

InterestsStarts Outside on page 59 the Office

5 On Leadership But there is another reality—one that also can- Gary Burnison not be ignored. The hard fact remains that, in order to survive, companies must grow. At the end of the Chief Executive Officer, Korn Ferry day, CEOs are judged on whether they deliver prof- its. A purpose-driven company that grows by only single digits will lose to a competitor consistently delivering double-digit growth. What may look like dueling priorities—purpose vs. profitability—aren’t really mutually exclusive. If anything, this pair is actually a “dual.” Even as leaders are urged to become more outward focused and purpose driven, profitability cannot suffer. And, as leaders deliver bottom-line growth, they cannot Is It Duel ignore that a growing number of stakeholders— investors, employees and activists—are scrutinizing their social responsibility. or Dual? Yes, purposes and the terminology to describe them come and go, like bell-bottoms and tie-dye. It n an “either/or” world, the used to be ecology—I can remember that one back only real choice is “and.” in elementary school when Earth Day was launched. I This truth can get lost, Over the years, the vocabulary changed—people now speak of carbon footprints and sustainability. though, as scrutiny goes to Corporate social responsibility (CSR) became its one side or the other. Compa- own movement, an incentive to “do good”—and the means to trumpet the positive. Socially responsible nies today are in the spotlight investment is a wave within that movement, to put increasingly for the contribu- money behind what’s deemed “positive” instead of what’s considered “negative.” For companies today, tions they make. Business this may be the harshest spotlight of all. leaders are being called upon to I don’t want to be counted among the cynics, but I think back to a decade ago, in the depth of the stand up and speak out on a vari- worst financial economic crisis since the Depres- ety of issues affecting society— sion. In the Great Recession, sustainability as a pri- ority became a luxury few companies could afford to champion change beyond just when survival was on the table and people’s houses the business landscape. were being repossessed. That isn’t to say sustainability and CSR don’t In his latest “Annual Letter to CEOs,” BlackRock’s matter—on the contrary! But profitability can never Larry Fink wrote: “Without a sense of purpose, no stop being a priority. It isn’t “either/or,” it’s always company, either public or private, can achieve its “and.” CEOs who can balance and synchronize both full potential. It will ultimately lose the license to parts will be the winners. operate from key stakeholders.” That’s very true, and At the heart of that balance is an enduring companies that ignore purpose do so at their peril. fact: It’s always about people. They are the ones

6 Korn Ferry Briefings The Voice of Leadership

Illustration by Peter Horvath

for whom movements and causes should matter most. Purpose-driven talent—and not just millenni- als—will judge their employers by the good they do in the world. And that starts “at home,” with work environments that are inclusive and fair, that allow people to be who they are and bring all of themselves to work. “People want to work for companies But that still leaves People want to work for that engage and motivate them, 30 percent who companies that engage and are not engaged. motivate them, just as compa- just as companies need employees That’s a wasted nies need employees who are who are engaged and motivated.” resource as engaged and motivated. Here, incriminating as a too, is the balance of “and”—motivation and produc- belching smokestack or a polluted waterway. tivity. As Korn Ferry studies have found, firms that Corporate leaders can’t be so focused on external engage and enable their employees have 4.5 times perceptions of what they do in the world—their more revenue growth than companies that don’t. corporate giving and other CSR—that they neglect a Yet only a little more than half (59 percent) of global truth that’s as old as time. People want to be loved. employees feel extrinsically motivated to work hard Being loved means being seen and appreciated. It and do their best. The rest (more than 40 percent) means “you matter,” genuinely and sincerely. feel that their employers’ incentives are inadequate Leaders who pull this all together will rise above to keep them motivated. the rest. They will be far more likely to endure When it comes to intrinsic motivation, the through the ebbs and flows of trends and fads to numbers are somewhat more favorable: 70 percent achieve true sustainability—in their profitand in are intrinsically driven to work hard and do well. their purpose and in their people.

7 A NEW BOOK BY GARY BURNISON

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“The speed of the tax reform caught people a bit flat-footed.” Taxing Decisions page 10

Voices on... Taxes Compensation Healthcare page 10 page 12 page 14 Irv Becker Ben Frost Harry Greenspun, MD Vice Chairman, Korn Ferry’s Executive Korn Ferry’s Vice President Chief Medical Officer and Managing Pay and Governance Practice and General Manager Director, Korn Ferry Health Solutions Voices on... Taxes

Taxing Decisions

Under the new tax laws, CEOs globally have key moves to make. Will they get it right?

By Peter Lauria

he headlines have passed. The $40 million to $60 million a year now. By year end, shock is long over. But now, almost according to one estimate, half of the earnings per T a half year later, the impact from share that S&P 500 companies may enjoy could US Public Law 115-117—only come from the tax savings. slightly better known as the “Tax How organizations actually use the savings Cuts and Jobs Act”—is still sinking in at corporate won’t be known for years, partly because they suites and boardrooms. And so is the hand wring- aren’t yet sure themselves. Mark this as the rare ing on what steps to take. occasion when the government moved faster than Lowering the corporate tax rate from 35 to the private sector anticipated. In the process, one 21 percent has garnered the most attention by C-suite after another is now realizing the need far—and has sparked an on-again-off-again rally to do some fundamental rethinking of near-term on Wall Street. And for good reason: In total, the business plans. The speed of tax reform “caught a tens of billions saved this year alone is virtually lot of companies a bit flat-footed,” says Reuven S. unprecedented. Or put one way, an organization Avi-Yonah, director of the University of Michigan with revenue of $4 billion to $5 billion will save Law School’s international tax program and a

10 Korn Ferry Briefings The Voice of Leadership

The Takeaway Smartly led specialist in corporate taxation. And yet, are to do with cash—and a lot firms have a they acting? According to a Korn Ferry survey to do with that old mantra, chance to finally two months into the year, fewer than 40 percent “Location, location, location.” fix decades of of leadership teams had met to discuss any high- As millions discovered this talent woes. level plans for the savings. April, the new law heavily “Boards have been debating what to do for the penalized workers living in a last six months, and probably will be doing so handful of Northeast states for the next six months as well,” says Irv Becker, and California. The result: More than 70 percent vice chairman of Korn Ferry’s Executive Pay of C-suite executives polled by Korn Ferry said and Governance practice. In addition to share that tax reform would result in talent leaving buybacks, other actions being considered include: organizations in high-tax states. On a personal a one-time dividend, acquisitions, digital initia- level, 58 percent of those executives said they tives, employee training and development, and would consider looking for a job in a low-tax increased compensation/rewards for employees, state—with 44 percent saying they would ask for among others. A Morgan Stanley report earlier a transfer. this year projected that 43 percent of the tax All of which means that firms with more liberal savings will go toward share buybacks, versus work policies—or those not on the nation’s east 13 percent for workers. or west coasts—may be attractive. Outfits like But many experts say that’s a wrongheaded Amazon that are looking to build a second head- approach—that companies have a quarters or satellite office, or those truly rare opportunity to deal with in locations that would histori- the one topic that has nagged them A New World cally be deemed undesirable, have on and off for decades: talent. The % a whole new equation to consider. list here is endless… Not enough 21 “Companies have already been talent. Wrongly skilled talent. Per- new US corporate focusing on moving employees petually unhappy talent. Indeed, tax rate and facilities to low-cost geogra- is there a CEO over the years who phies,” says Becker. “Tax reform hasn’t brought up the critical value $40 million will accelerate the desirability of of hiring and retention? And these to some of these markets.” $ issues are only more challenging 60 million To be sure, conventional this year, with conditions (such wisdom says that organizations as low unemployment and glaring savings to large firm shouldn’t make business decisions attention on pay inequality) favor- % based on tax policy. But the reform ing talent. 13 passed is anything but conven- In response, some are grappling tional, and coming as it does in percentage of savings with how to raise base salary the midst of perhaps the greatest planned for workers rates to a higher level. Comerica, disruption to business and labor Walmart, Wells Fargo and others % ever, organizations may have have already announced plans 44 little choice but to leverage Law to raise minimum wages. But percentage of executives 115-97 to their, and their workers’, the biggest step may have little who will ask for transfer advantage.

11 Voices on... Compensation

What’s Lost in the Pay Gap A revolution for equal pay is under way, but are comp numbers alone telling the whole story?

By Lauren Covello

ith its sprawling glaciers and Recent analysis by Korn Ferry shows that red-hot volcanoes, Iceland is as the pay gap between men and women is surpris- W bold in its natural beauty as in its ingly small among men and women of the same determination to eradicate pay level, company and job function. In the UK, for inequality. Earlier this year, the example, that figure is 0.8 percent. But as the Nordic nation became the first country to force scope widens, so too does the gap: The pay gap in employers to prove they pay women and men the UK is 2.6 percent among men and women at equally for the same work. Under the new laws, the same level at the same company; 9.3 percent companies in both the public and private sectors among men and women of must procure government certification of their the same level; and 28.6 per- equal-pay policies or face fines. cent among men and women Iceland’s move is hardly the only recent effort overall. All 33 countries The Takeaway to narrow the gender pay gap around the world. surveyed in the report were Attention to the In Germany, employers are now required to reveal found to follow this trend. wrong data can the differences women and men are paid for simi- This points to a problem derail goals that corporate chiefs lar roles, while across the Atlantic, several states in female representation— may have in mind. and New York City have tried to hit the issue by women aren’t getting to banning employers from inquiring about salary the top-paying jobs and history during the recruitment process. Almost industries. Indeed, in the UK, assuredly, more laws are coming. men make up 67 percent of But as legislators focus on minimizing the all management jobs and 78 percent of all execu- pay gap, they may be missing the bigger picture. tive jobs, but just 43 percent of all clerical jobs, Experts say the issue has less to do with equal according to Korn Ferry. On top of that, top-paying pay for equal work and more to do with the lack of industries such as engineering and tech remain women in senior leadership positions. “All of these male dominated. laws go in the right direction; none of them on While the new laws targeting the pay gap their own will fix the issue,” says Ben Frost, vice itself are unlikely to resolve this core issue, they president and general manager at Korn Ferry. may be useful in eliminating some conscious and

12 Korn Ferry Briefings The Voice of Leadership

WHERE THE GAP SHRINKS While pay gaps vary by country, they narrow almost everywhere when men and women are doing the same job at the same company.

SOUTH KOREA GERMANY SPAIN BRAZIL

VIETNAM NEW ZEALAND SOUTH AFRICA MEXICO 12.1% 2.0%

30.7% 2.9%

13.3% -1.4%

PAY GAP BY SAME LEVEL, 29.8% COUNTRY 15.1% 1.6% COMPANY 3.0% average AND FUNCTION average 17.7% 1.6%

22.8% 0.9%

24.9% 3.3% 5.0% 24.5%

Source: Korn Ferry research

unconscious biases. For example, companies that Namely, with 450 employees, decided to implement are prohibited from asking a job candidate’s salary its own ban on salary history six months before history will no longer be tempted to perpetuate the official ban went into effect in New York and an existing pay inequity or rely on someone’s extended the same policy to other offices. That gave salary history to determine what a job should the company’s hiring managers and recruiters time pay. Women, who as a group have historically to familiarize themselves with the new laws (infrac- struggled with salary negotiation, may also ben- tions come with penalties of $125,000 to $250,000), efit in this situation. but also reaffirmed what the company already “Anywhere you can take out subjectivity or knew: that pay equity and job role evaluation is individual negotiation and replace that with critically important in hiring the best talent. The something objective and assessment based has to company had already been doing regular pay equity be a good thing,” says Frost. analysis two years prior to the new legislation. Of course, the best answer may be for companies “A lot of companies were like, [the ban] is such a to stay ahead of any legislation—and about 60 per- bad thing, we don’t know how to approach it,” says cent surveyed by Korn Ferry have in fact assessed Ashley Pelliccione, Namely’s senior director of tal- gender pay equity in the past two years. For its part, ent acquisition. “We looked at it and said this is a Infographic by: Column Five Media the New York City-based HR software company really good thing, we just have to work through it.”

13 Voices on... Healthcare

For Healthcare Chiefs, Preparing for the Storm

A spate of natural disasters has put healthcare officials on readiness alert. Now the right teams are needed.

By Adam Penenberg

s Hurricane Harvey heaped more The results were impressive. Although Harvey than 50 inches of rain on Houston, still caused extensive damage and took lives, only A the most from a single storm ever 20 of Houston’s 110 hospitals were forced to evacu- recorded in the continental USA, ate any patients—a far cry from previous disasters. streets turned into rivers, cars This kind of leadership is needed now more floated away and much of the city lost power. The than ever. Though politi- tropical storm, with winds up to 134 miles per hour, cians can debate the causes, rendered tens of thousands homeless, ultimately the number of natural The Takeaway causing some $200 million in flood and wind dam- disasters worldwide contin- Getting teams age. It was a disaster of near-epic proportions—and ues to climb—to now more prepared for no more so than for Houston’s hospitals. than 400 a year, according rare events But by and large, the city’s healthcare leaders to several government poses a special were ready. Some 16 years earlier, Tropical Storm sources. Hardest hit by challenge. Allison belted the region, flooding hospitals, these events—defined as drowning pharmacies, destroying medical earthquakes, storms, floods records, shorting out medical equipment and and heat waves with death snuffing out backup generators. Afterward, lead- tolls of 10 or more and government emergencies ers representing a coalition of local-area hospitals, declared—have been the US, China and India. emergency medical services and fire departments But wherever they happen, they put the medical came up with plans to bolster the city’s medical field on crisis alert, and there is little question services in times of crisis. Hospitals installed that health organizations that had planned ahead floodgates and submarine doors that could be respond the best. The first issue, though, is how to closed to wall off critical sections of a hospital. get teams focused on what may never happen. Emergency generators were moved to upper floors “Weather-related disasters are increasing, but and key supplies were stashed throughout build- they are still rare events,” says Mahshid Abir, MD, ings. Communications systems such as cellular assistant professor of emergency medicine at the networks were beefed up. University of Michigan and director of the acute

14 Korn Ferry Briefings The Voice of Leadership

care research unit at the university’s Institute for That changes by creating a shared sense of Healthcare Policy and Innovation. “You are asking purpose and ensuring that communication net- hospitals to prepare for rare events, and it is dif- works are robust enough to handle major weather ficult to get them to do that.” events. Other preparations are more complicated Even in times of relative tranquility, many and involve structural changes to the physical hospitals are functioning near or at maximum hospital—again, requiring a heavy dose of vision- capacity. There is little bandwidth for adding the setting from the top. kinds of drills needed for coping with a disaster Fortunately, some hospitals have been adapt- or improving communication or coordination ing. After floods unleashed by Hurricane Katrina among rescue workers and destroyed paper medical hospital staff. Experts say records, the state made such advance planning can Number of global a push for digital patient be almost as disruptive to natural disasters records. When a tornado the systems as some of the last year destroyed a hospital in Joplin, storms. It all begins, they say, Missouri, a new medical with leadership at the top. facility rose in its stead four “In essence, preparedness years later, with an exterior is another form of agility, to composed of reinforced deal with the unexpected in concrete panels. Windows in an organized and successful the intensive care unit can way,” says Harry Greenspun, handle gusts of wind up to MD, chief medical officer and 250 miles an hour. Each floor managing director, Korn Ferry boasts a fortified safe zone Health Solutions. with reinforced ceilings, Some changes can be stairwells and walls, while small, such as ensuring critical life-support systems that staffs have the proper are equipped with backup tools and resources at their batteries. Crucial supplies— disposal. Healthcare concerns crowbars, flashlights and also need managers and CEOs shovels—are stored on every who can motivate people to floor, and the new hospital come to work in tough times. receives signals from four “One of the issues that cell-phone carriers as well has come up in different as a HAM radio operating disasters is people’s willing- center. ness and ability to come Was it expensive? Actu- to work,” says Jennifer A. ally, the fortifications only Horney, associate professor, raised construction costs a department of epidemiology few percentage points. In and biostatistics, Texas the end, consultants say, A&M School of Public nothing can control Mother Health. “Sometimes 50 Nature, of course—but a dose percent of people don’t report of the right leadership moves to work out of concern for can weather at least some of their families.” the storm.

15 Voices on... History

How Blockbuster Became ‘House of Cards’

Nothing may have saved the video-rental chain’s antiquated business model, but facing a powerful activist didn’t help.

By Chana R. Schoenberger

ne was a well-known Wall DVD-by-mail service Netflix. He also saw how Street “raider” whose massive technology could soon let a viewer order and O investments and corporate watch movies without leaving the couch. To meet maneuvering in airlines, casinos, the challenge, Antioco moved to make existing software and other industries customers happier—by eliminating late fees on made him a billionaire. The other was a corporate- videos—while also pouring money into a stream- turnaround artist who invigorated convenience ing service to attract new customers. stores and the nation’s top taco chain. The share- holder activist and headstrong CEO had a blockbuster clash at, fit- tingly, Blockbuster—a fight that, ultimately, both lost. Everyone is familiar with the once-ubiquitous video- store chain, which at its peak in the early 2000s had more than 9,000 stores and 84,000 employees. John Antioco was one of the reasons for the chain’s success. After successful stints at 7-Eleven and Taco Bell, he took over Blockbuster in 1997 and helped it nearly double its sales in seven years. But Antioco didn’t think that was enough. By his account, he saw the potential threat from

16 Korn Ferry Briefings The Voice of Leadership

GETTING ALONG

Nearly half of boards ACT FAST. STEP INTO THE STAY CONNECTED. surveyed by the ACTIVIST’S SHOES. National Association of Start doing homework Listening to shareholders Corporate Directors don’t about the activist’s prior The activist may have should be an ongoing have an official plan to history and tactics. A some valid points, so responsibility, not only when respond to an activist- CEO should also try to have answers on whether an activist appears. If there investor challenge. meet with the activ- the company’s costs are is a proxy fight, smart CEOs Here are some moves ist to learn his or her too high or structure too and boards will be clear about that have helped. intentions. complex. the company’s strategy.

The moves were designed to pay off for the long closed three years later. “Blockbuster turned out term, but in the short term they clobbered Block- to be the worst investment I ever made,” Icahn buster’s finances and stock price. That’s where Carl said after the bankruptcy. Icahn, the noted and never-shy shareholder activ- Whether Antioco’s vision would have suc- ist stepped in, boasting an enormous war chest. ceeded had the fight with activist Icahn In 2004, Icahn started buying up the company’s never happened is up for debate. Even before shares and complaining to other investors and the Icahn came along, the firm was losing customers. public that the company had a bad strategy (and Blockbuster’s unit costs also were higher than that Antioco was overpaid). In early 2005, Icahn its rivals, and the chain needed lots of employees initiated a proxy fight, getting himself and two to stock multiple copies of each movie at all of its others elected to the firm’s board. After losing stores; Netflix could store its movies in far fewer the proxy fight, Antioco finally met Icahn face- distribution warehouses, says Daniel McCarthy, to-face. Over the next two years, Antioco never an assistant professor of marketing at Emory won over Icahn to his strategy, while Icahn kept University’s Goizueta Business School. (In one accumulating more influence on the board. touch of irony that still shakes heads, Blockbuster Antioco stepped down in 2007, unable to execute passed on a chance to buy Netflix in 2000.) the strategy that he felt the firm needed, and In some ways, the struggle between Antio- frustrated by a pay dispute. “I firmly believe that if co’s long-term vision versus Icahn’s short-term our online strategy had not been essentially aban- push for profitability reverberates today, as activ- doned, Blockbuster Online would have 10 million ist investors are increasingly launching efforts subscribers today, and we’d be rivaling Netflix for against companies big and small. That effort has the leadership position in the internet download- started to hit resistance from an unusual source: ing business,” Antioco told the Harvard Business Wall Street, where today big investing firms are Review in 2011. (He didn’t respond to interview now telling companies and CEOs they are obli- requests.) Says Barry Nalebuff, an entrepreneur gated to push not for quarterly gains but set and who founded, among other companies, Honest Tea pursue long-term strategies. and who teaches at the Yale School of Management, But in the heyday of Blockbuster, farsighted “Blockbuster should have won.” investors of such size were rare indeed. The last But, as most people know, it didn’t win. Block- company-owned store closed in the fall of 2013, buster ended its online service and hemorrhaged albeit with some fanfare: According to numerous business to Netflix and other digital rivals. The press reports, the final rental was for the Seth firm filed for bankruptcy in 2010 and its final store Rogan movie “This Is the End.”

17 The Global Economy

Simon Constable When a Tornado Can Save the Day

few years ago, a major Connecticut-based manufacturer was desperately trying to fix the profitability of one of its business Aunits. Executives’ initial thoughts were that the business needed some good old-fashioned cost cutting, a bit of slash and burn if you like. But to be sure, they asked for some expert help in the form of Yael Grushka-Cockayne, professor of quantitative analysis at Univer- sity of Virginia’s Darden School of Business. She got to work by ana- lyzing the key variables—and came to a different conclusion. It wasn’t cost cutting. “The focus needed to be on sales growth,” she says.

But how do you convince a management by algorithms and artificial intelligence, the tor- stuck on one idea? Enter the tornado chart. This nado diagram goes in the opposite direction. This remarkably simple diagram—easy to produce— time-tested method takes us back to basics and is would be the game changer here, with bar lines so easy to follow. “When you show a tornado dia- proving the impact of boosting profits with more gram to a client, their reactions are ‘holy cow, now production. The wider the bar at the top, the big- I get it,’” says Joe Walsh, managing director at ger the impact—and, yes, it resembles the shape business strategy firm Incode Consulting. “They of a tornado. love ’em.” And they also want to start using them The tornado diagram isn’t a new technique. I in their own companies, he says. learned about it in business school two decades Such analyses can apply to a wide range ago and then didn’t see one again until recently. of businesses—and answer a wide range of While analytical work gets ever more dominated issues. Some companies need to anticipate data

18 consumption, for example, or a telecom executive similar cognitive systems alone is expected to might want to know what to bid in auction against grow to $46 billion a year. And training staffs competitors. “I’ve used tornado diagrams to assess on the charts is not hard; many treasury and bankruptcy risk,” says Bob Bruner, dean emeritus accounting staff will have already studied such at Darden School of Business. He’d focus on items methods at business school and should be able to such as profits, cash flow, valuation and external put such an analysis together for the C-suite with financing requirements. relative ease. But, however it’s used, the great irony here is Of course, AI has enormous uses that a chart the cost. Indeed, comparing the costs of sketch- that’s decades old doesn’t. And creating and ing out these things to the bill behind the latest using a tornado diagram to make key decisions craze of so-called “thinking robots” is a joke. isn’t without its pitfalls. Like anything requiring Global spending on artificial intelligence and numbers, it’s a question of garbage in, garbage out, says Joan Adams, founder of New York-based Pierian Consulting. But the speed of tornado- Simple, But Helpful chart analysis does give CEOs the chance to make Sensitivities much faster strategic decisions, all in an age Printed Wiring Board when shrinking C-suite tenure and impatience Polyvinylchloride Polystyrene from activists are pressing them to act. It has Electricity (coal) Glass fiber the advantage, too, of being so easy to follow; Adhesive ABS the audience doesn’t need to be mathematical Truck Transport Melamine because the width of the bars tells the story of the Polypropylene Electricity (bio) importance of each variable. Train Transport All of which makes you wonder if other, Polyethylene Steel simpler-calculating methods will work their Ocean Transport Copper way back into favor. Not that retro change is Paper

9.95 10 10.05 10.1 10.15 10.2 10.25 10.3 10.35 10.4 ever very easy, but as the adage goes, “If you do CO (kg/dry) 2 what you’ve always done, you’ll get what you’ve always gotten.”

Constable is a former Wall Street Journal TV anchor and current fellow at Johns Hopkins Institute for Applied Economics.

19 Europe’s View

Sarah Lim Why Retail Keeps Shopping for New CEOs

ne company switched leaders after its profits fell by 25 percent in a year. Another firm switched out its CEO who Oalso was a member of the family that founded the company in 1882. Finally, there’s the firm that hired a CEO who lasted just two months! Let’s hope the board kept the receipt. Businesses swap out leaders all the time, of course, but all of this happened in the same sector—retail—in the same country— the United Kingdom—in one year. Indeed, UK retailers swapped out

50 CEOs in 2017, the most in the sector in one turnover; after all, the industry is trying to year since 2012. It isn’t like the intervening years figure out how to succeed where consumers are didn’t have any turnover, either. There were 41 cost-conscious and can shop for anything online changes in 2016 and 45 in 2015. I bet you didn’t from anywhere in the world. But what’s amazing even think there were that many big retailing is that the enduring leaders—at least the savvy companies based in the United Kingdom. All told, ones—have carved a successful path for their half of all UK retailers have changed CEOs at least organizations and, more often than not, they’ve once in the last four years. done it using familiar techniques. These changes at the top have impacted some Of course, anyone familiar with shopping and of the most well-known brands in the world, let the Amazon effect knows about the industry’s alone the UK. The Body Shop, Topshop, Alfred turmoil, but UK retailers have a couple of unique Dunhill and others got new leaders in the last challenges. The British have embraced online year. It isn’t surprising that there’s so much shopping even more than other shoppers around

20

the world, with shares of UK web sales doubling to build out and continuously innovate. He’s made in five years to more than 20 percent, compared it easy to buy Superdry clothes online and has to 10 percent in the United States. Retailers also expanded the brand across the world. Annual have the Brexit headache and all its uncertainty sales are up 75 percent since he joined. to deal with, not to mention a weakening British And then there’s culture—and how retail’s pound that has raised the cost of imports. new or surviving CEOs are overhauling their Yet with all that, some UK retail- organizations. Tesco, the UK’s ers are doing just fine, and it’s due biggest retailer, was reeling from in part to following some basic, but Half of all UK both lower-priced competition and not always followed, principles of a financial overstatement. In came sound leadership. First, there’s a retailers have Dave Lewis, an executive from focus on talent. The current boss of changed CEOs at Unilever, who emailed all 500,000 the supermarket Sainsbury’s, Mike least once in the employees, asking them to focus Coupe, has only led the firm since on what customers wanted while 2014, but he’s been with the firm last four years. assuring them that Tesco would since 2004, working up its ranks. As be an open and honest business. CEO, he has filled out his executive Plus, he energized employees team with many former CEOs of other retailers. by promising bonuses to those who hit key With that talent horsepower, the grocer, which targets. Sales and profits have risen ever since, started in 1869, now agilely uses excess store which has allowed Tesco to buy UK’s leading capacity to sell other merchandise, has its own food wholesaler. bank and made two smart acquisitions. Perhaps all the retailers that have swapped The best leaders also keep their firms centered out CEOs recently will turn around, but it’s the around a singular vision. In 2014, Euan Suther- stand-out leaders who are making their firms land took over Superdry, best known for selling thrive. It goes to show that even in the toughest shirts and jackets with Japanese characters on of environments, if you make the right leadership them. Sutherland didn’t see the company as a purchase then you don’t often have to go shop- bunch of stores to manage, but as a global brand ping again.

Lim is Korn Ferry’s managing director and Retail sector lead in Europe, Middle East and Africa, and also head of the UK Consumer practice. 21 Emotional Intelligence

Daniel Goleman A Goldilocks Approach to Talents and Traits

ou run a team, and small problems seem to keep blowing up into showstoppers. A frank talk with your executive coach Ysurfaces your role in this scenario: You are afraid to give peo- ple bad news, particularly feedback about their failure to perform. This insight, and a bit of coaching practice, suddenly make you better at delivering bad news. So guess what you end up spending too much time on? Delivering bad news and negative feedback really well—and bumming everyone out in the process.

All leaders need to give performance feed- (perhaps understandably) shuts them down to back—but in the right way, at the right time and learning. Mixing in a goodly amount of feedback for the right reason. Like any other part of a lead- about what they are doing right, on the other er’s emotional-intelligence tool kit, doing this well hand, energizes, motivates and aids learning— requires a mix of competencies such as empathy, while still letting you deliver the bad news about which lets you sense how the other person reacts what needs to change. emotionally to what you are saying. A leadership paradox of our time can be seen Focusing only on the negative, even if you’re in the widespread approval of high-level execu- comfortable having such difficult conversations, tives who get high performance from direct does no one any good. In fact, research by my reports, but at a cost in morale and motivation. colleague Richard Boyatzis, a professor at Case By focusing relentlessly on hitting goals like Western Reserve University’s Weatherhead revenue targets, executives may look good in School of Management, finds that negative per- the short term, but damage performance as formance feedback makes people defensive and time goes on.

22 For one thing, an overachieving executive team members may be ready to abandon ship. will tend to fall back on tactics like coercion Sustainable achievement requires, at the rather than focusing on the larger spectrum of very least, a dose of empathy, so you sense the emotional-intelligence abilities that strengthen whole picture of an employee’s pressures and relationships. Focusing exclusively on hitting a stresses. In addition, this lets you show you care target at all costs erodes trust and loyalty. The about the person, not just his or her performance. risk: Eventually the team will miss those crucial Indeed, if you add some coaching and mentoring goals, and as the executive’s relationships with to that mix, you can help your direct report find workers fray, they will lose a better balance between steam. Key players will be full-steam ahead and some tempted to move on. energy-restoring times. Consider the full spectrum We all have a That’s a recipe for resil- of emotional-intelligence­ natural tendency to put ience, not burnout. abilities. It begins with four too much effort into Whether it’s pointers on separate talents: self-aware- emotional intelligence or ness, self-management, the particular ability mastering some other skill social awareness and we’re developing. set, like your golf stroke, we relationship management. all have a natural tendency Within these four domains to put too much effort into follow a dozen emotional-intelligence competen- the particular ability we’re developing at the cies, ranging from emotional self-awareness to moment without maintaining our other strengths. emotional self-control. Research at Korn Ferry In the athletic or yoga world, this of course is quite finds that outstanding leaders demonstrate common. How many times are people injured tak- strengths in six or more, and those who don’t ing too many classes or training too hard, and so are capable in three or less. Then there are those have to give it all up in the end? leaders who show no strengths at all in emotional A too-determined mind doesn’t know when to intelligence; they are likely to be in the bottom 10 check itself. A fully rounded skill set demands a percent of leadership ability, and a number of their delicate balance.

Goleman is author of the international best-seller “Emotional Intelligence.” See keystepmedia.com for his new series of primers, “Building Blocks of Emotional Intelligence.” 23 THE PERFECT SWING

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BY RUSSELL PEARLMAN The problem Taking a long view may be what CEOs want, but can they set strategy if the purpose movement doesn’t last? Why it matters Many experts believe short-term focused firms are rarely successful in the long run. The solution CEOs should use this rare opportunity to prove that profits and purpose can coexist.

urt Graves had just heard from multiple inves- tors in Intarcia Therapeutics, the pharmaceu- tical firm he runs, asking him a single question: Why wasn’t he putting Intarcia up for sale?

Intarcia is one of those “unicorns,” a firm with a multi- billion-dollar valuation. Its big product is a pushpin- sized pump that, when placed under a patient’s skin, will deliver medicine without trouble for a year. It’s a potential life changer for diabetes patients, many of whom have trouble keeping up with all the injections and pills to keep their disease at bay.

28 PHOTO ILLUSTRATIONS BY RICHARD MONTOYA But the treatment, while succeeding in many clinical trials, was still facing months of regulatory review. Selling now, or taking the company public, the investors argued, would let the owners earn some quick short-term profits. Graves was having none of it. Intarcia, he says, has a higher priority—and purpose—than just making money. “We’re out to create disrup- tive medicines, new ways of treating chronic diseases that will dramatically improve peo- ple’s lives,” he says. Taking the short-term route would be doing a disservice to all the potential patients who could benefit from the treatment and other Intarcia therapies. Only by coincidence soon after that episode, he read a letter from BlackRock, one of Wall Street’s biggest investors, addressed to the CEOs of all the companies in which the asset manager holds stakes. “Companies must benefit all of their stakeholders, including shareholders, employees, customers and the communities in which they operate,” the letter stated. “Without a sense of purpose, no company, either public or private, can achieve its full potential.” Graves could only smile and agree at one other sentence: “Purpose, profits and social impact can coexist.”

rom the power days of corporate

raiding to today’s hedge-fund activism, there has been immense pressure on cor- Fporate leaders to make delivering profits the only priority. “Maximizing shareholder value” is the mantra drilled into MBA candi- dates worldwide; everything else is secondary. There’s no question that the attitude has helped investors—just look at what stocks have done since the 1980s. But critics contend that it has

29 29 put CEOs under incredible pressure to deliver that says these purpose-driven firms wind up consistently improving financial results at being more profitable for their investors than nearly all other cost. Sometimes that has meant those whose primary focus is profits. laying people off or forgoing long-term projects. But theories and causes have a tendency to In the worst cases, it has led leaders to condone get tossed when stock prices or profits aren’t less-than-exemplary behavior by their employ- quite as rosy as they have been lately. Indeed, ees just to make money in the short term. many say the profits vs. purpose duel hasn’t But the dynamics appear to be changing. really been tested, but almost assuredly will be An increasing number of leaders, particularly when markets tip the wrong way. Cynics say younger ones, are saying that their organiza- it is a simply a fad, a marketing gimmick. But tions are in the business of saving the environ- adherents are continuing to push the long view, ment, improving people’s lives, serving their arguing purpose can boost profits. “Purpose community or some other higher-minded isn’t just a nice thing, it’s the source of value purpose. Making their shareholders money is creation,” says Kevin Cashman, a Korn Ferry still critical, but shareholders are just one of senior partner. many constituencies to serve, and not the most important one. Even more surprisingly, some of Wall his isn’t the first-time corporations Street’s biggest are going along with that idea. BlackRock may be the biggest asset manager to have taken a flier on purpose. Back in the say purpose matters, but it is by no means the 1970s, many firms started trumpeting first. Investment groups controlling $114 bil- Tsocial causes. But it was an odd fit. Beverage lion, according to one study, already are telling makers encouraged drinkers to recycle bottles. leaders they should let purpose, not profits, be Cereal firms embraced nature by selling granola. the driving force in their businesses. And if that Even coal-consuming electric companies said means trading some profitability for happier they were helping the environment by installing employees, more satisfied customers or cleaner new cooling towers. In the 1980s and 1990s, com- communities, so be it. “There’s been a tipping panies began addressing issues that its customers point among investors,” says Virginia Harper cared about. Many clothing manufacturers Ho, a professor at the University of Kansas who committed to better labor practices after the researches the issue. “Businesses can be profit- public saw that much of the clothing they were able and do good at the same time.” buying was made in Asian sweatshops. Some Taking the foot off the profit pedal is a theory countries even codified the idea that firms need to that has many names: enlightened shareholder look out for other stakeholders. The UK changed value; conscious business; purpose-driven firms. its security laws in 2006. Now directors of any It’s an idea that has been mandated in the United publicly listed company have to explain how their Kingdom for more than a decade. Whatever it’s company’s actions will impact its employees, called, the premise is simple: running an organi- customers, suppliers and the environment. zation where generating profits is not the No. 1 But while many companies embraced a cause, priority. And there’s a growing body of research very few let a purpose other than profits drive

30 Causes have a tendency to get tossed when stock prices or profits aren’t quite as rosy as they have been.

31 A DIFFICULT PUZZLE They sound great in theory, but in practice, purpose-driven firms face a variety of tough challenges.

PROFITS ARE EASIER TO MEASURE INVESTORS PUT PRESSURE ON THE BOTTOM LINE RIVALS THAT IGNORE PURPOSE IDEOLOGY ISN’T IN LINE (GOOD CAUSES ARE FOR NONPROFITS) INTERNAL PRIORITIES MAY COMPETE their business. Many leaders subscribed to the philosophy expressed best by famed economist Investor groups Milton Friedman: The social responsibility of businesses is to increase their profits. controlling $114 billion Even when leaders may have felt a higher pur- pose than profits, many investors didn’t. Leaders are telling firms to let were—and many still are—under tremendous pressure to keep costs to a bare minimum, and if a competitor has better profits, many investors are purpose, not profit, going to demand that they catch up. Choosing profits over purpose is also easy drive their business. because it’s very easy to measure profits. There are dozens of easy-to-track concepts, including cash flow from operations, gross income and return on invested capital. And those are the needed it or not. We felt it was right to have it.” metrics that tend to determine leaders’ rewards. Behar served on the board of the company for 12 There aren’t many cash bonuses for improv- years; the decision to provide healthcare never ing employee satisfaction or lowering a firm’s came up. “It wasn’t that we didn’t talk about carbon footprint. “If you say your firm’s purpose costs, but that issue never came up because it was is to improve people’s environment but have no non-negotiable,” Behar says. rewards for actually improving the environment, There will always be a conflict between then improving the environment isn’t your shareholders and companies whose purpose puts company’s purpose,” says Andrew Hoffman, a other groups first, Behar says. That, however, professor at the University of Michigan who stud- appears to be shifting in many circles. Indeed, ies sustainable companies. many big investing firms (but not all) are not That’s why real purpose-driven firms that only saying they want companies to have a made a lot of money over the past 40 years stand higher purpose, they’re demanding it. There’s out. Starbucks wasn’t in the business of serving an increasing demand for more products—and coffee, it was in the business of serving people, companies—that support sectors such as clean and coffee was just the means, says Howard energy, education and healthcare, according to Behar, who ran Starbucks’ global operations for the investment bank UBS. The number of so- a decade. Behar and other company executives called “impact” investing products has grown believed that if they treated their own people from 31 in 2004 to 420 in 2016. nicely, they in turn would treat customers nicely. Even investors that are not known for social “Shareholders were always asking, ‘Why are you activism are saying companies need to have a giving healthcare to part-time workers? They purpose beyond making money. In its letter to the don’t need it,’ ” Behar tells us. Indeed, during companies it invests in, BlackRock, which man- Behar’s tenure, Starbucks’ annual employee ages more than $5 trillion in assets worldwide, healthcare expenses often cost nearly as much said it expects company directors to be able to as the coffee. “It wasn’t the point whether they express how their firm intends to grow profits and

33 Piecing Purpose Together Successful purpose-driven companies often share these traits:

LONG-TERM VALUE STRATEGY CLEARLY LAID OUT

CLEAR, TRANSPARENT MESSAGING TO EMPLOYEES AND CUSTOMERS

TOP MANAGEMENT/BOARD ALIGNED

LEADERS PRACTICE WHAT THEY PREACH

VALUE-DRIVEN EVEN IN TOUGH TIMES

34 benefit the community over the long term. “To fellow Mark Kramer—purpose-driven firms that prosper over time, every company must not only prioritize a long-term approach over short-term deliver financial performance, but also show how profitability have been shown to have higher it makes a positive contribution to society,” the brand loyalty, employee retention rates, better letter stated. resource allocation and an overall competitive Demographics also may be giving purpose- advantage. “Shared value is not social responsibil- driven firms a boost. Many millennials are ity, philanthropy or even sustainability, but a new demanding that companies be more socially way to achieve economic success,” the co-authors responsible, an area where purpose-driven firms reported in the study, “Creating Shared Value.” may have a leg up, says Professor Harper Ho. Experts say purpose-driven firms also might be able to attract and retain talent more effectively than their profit-driven peers. According to a 2017 rofits are still at the forefront for the Korn Ferry survey of more than 1,000 recruiters, job candidates are making final job decisions majority of leaders. They’re easy to find based on a company’s culture and purpose rather and report, and they’re still what many than the actual benefits package. Another study P shareholders will measure a manage- found that 90 percent of employees at purpose- ment team’s performance by. But there’s more driven firms say they’re engaged—or willing to of an acceptance of firms like Kind, which go the extra mile for the company—compared to makes nutrition bars. It was started by Daniel just 32 percent of employees at ordinary firms. Lubetzky in 2004 with the idea that everyone But the biggest boost for purpose-driven should be, well, kind. The nutrition bars, made firms may be growing evidence of the power of with nuts, fruit and honey, were a way to be the almighty dollar. What started as a series of kind to one’s body. That purpose imbues every- working papers in academia in the early 2000s thing else the firm does, including giving away has turned into a body of research showing that $10,000 each month to causes that promote purpose and profit not only peacefully coex- well-being, and letting employees reward a ist, but that purpose can drive profit. A Korn colleague when they see that person perform an Ferry study found that while purpose-driven act of kindness. Kind sold $1 million worth of consumer-products firms grew their sales at a bars in the first year. Its annual sales are more 9.9 percent annual clip from 2011 to 2015, their than $700 million now. peers averaged only a 2.4 percent growth rate. As for Graves at Intarcia, he’s convinced his The stocks of purpose-driven firms that also antsy shareholders to stick around. It isn’t that have management teams that have a clear view he doesn’t care about profits. “They’re abso- of where they want to go and how to get there lutely vital,” he says. But he believes that his routinely outperform rival firms, says Claudine organization has a higher priority. “The leader Gartenberg, a professor at the University of of an entity absolutely has to create shareholder Pennsylvania’s Wharton School. value, but I believe the best leaders are those In another study—this one by Harvard who are driven by a core passion and purpose to University professor Michael Porter and senior do something really good in the world.” •

35 Can Sexual Harassment Training Come of Age?

Seven in ten companies have it, but critics say this key form of prevention hasn’t changed much in decades.

By Meghan Walsh The problem → Most companies’ sexual harassment training has become a check-the-box exercise aimed only at limiting liability.

Why worry? → The high-profile abuses of recent times prove how ineffective it has been.

The solution → The training needs a whole lot of updating, and must be part of a whole culture shift at organizations.

organ Mercer tightens the Mstraps on my virtual real- ity headset, and moments later I’m transported from the base- ment of a Silicon Valley startup incubator to a modern, nondescript industrial office with high concrete ceilings and glass walls. My invisible avatar, like the Ghost of Yet-to-Come, stands in the middle of the room, among four white-collar employees— three men and a lone woman seated on a couch rifling through paperwork. It’s clear the man posted behind the desk, vaguely older than the rest, is at the top of the hierarchal totem. He casually migrates from his mahogany throne to sit on the coffee table across from his female subordinate, leaning over as he praises her recent contri- butions to the team. The two other coworkers exchange glances only to return their gazes downward to the task at hand. Back in San Mateo, I’m suddenly warm and unwrap my scarf. 37 Mention the topic of sexual harassment to New York. “My sister lives in the training and professionals of every age may city,” says the woman. No, he says. It’s well grimace, recalling their own experiences of going to be long hours and require her watching grainy, overly coiffed video lectures full dedication. The other two male col- and clicking through stale PowerPoint presen- leagues wrap up and make plans to grab tations. A survey by the Association for Talent an after-work drink. The boss asks the Development, with members from 120 coun- woman to stay behind. tries, found more than 70 percent of companies Moments later, a text bubble appears offer some form of sexual harassment training. on the horizon presenting what should But unlike the clients they serve, the cottage be a simple question: What’s the best compliance industry has lacked innovation. By response from the observers? the industry’s own admission, not to mention many in HR offices, much of it has remained Corporate conduct policies date virtually—and remarkably—unchanged since it started decades ago, becoming little more than back to the ’60s, when the Supreme a box-checking function to protect companies Court first recognized sexual harass- from liability. Even the Equal Employment ment as a form of discrimination Opportunity Commission has taken notice, say- under the Civil Rights Act. Then came ing in a 2016 report that workplace harassment Clarence Thomas. While some com- training “has not been a productive tool” and panies began educating employees in can do more harm than good. the ’80s, sexual harassment training While there may be many reasons, both became more widespread in the ’90s, legitimate and not, behind the collective after Anita Hill captured America’s inertia, one thing has become clear in 2018: attention and rattled its leaders when Complacency is no longer an option. Companies she accused the Supreme Court nominee have more to dread than lawsuits. In social during his confirmation hearings of media, advocates have perhaps an even more lewd behavior while she worked for him. powerful platform to voice their grievances. In early iterations, sexual harass- But the #MeToo movement has had another ment trainings included written effect—it’s broken off the shackles of fear. study guides, real-life testimonials “There was a lot of trepidation to try some- and broader discussions about power thing new, because everyone thought it would dynamics and gender discrimination. get them in trouble,” says Elizabeth Tippet, an The industry officially calcified in 1998, associate law professor at University of Oregon. though, when the high court ruled “#MeToo has freed business to move beyond the in two separate cases that providing status quo.” In the wake of Harvey Weinstein anti-harassment training and grievance and widespread revelations of workplace reporting systems, even if they aren’t misconduct, space has been created for those effective, shields companies from liabil- like Mercer (who is currently piloting Vantage ity. “There was an element of willful Point, a fully immersive virtual reality sexual ignorance; a we-just-want-everyone-to- harassment training program) to develop cur- pass attitude,” says Andrew Rawson, riculums that might actually succeed in making co-founder of Traliant, which makes the office a more fair, empathetic and safe place. compliance-training materials that Meanwhile, in the virtual world, el jefe hope for Netflix cachet and, as he says, struts back to his leather cathedra and turns “don’t suck.” Traliant launched in 2016 the conversation to an upcoming business trip and has quickly grown to more than “There was a lot of trepidation to try something new [but] #MeToo has freed business to move beyond the status quo.”

—Elizabeth Tippet, Associate Law Professor, University of Oregon

39 39 400 clients, including Hilton Hotels and the US About 25 Congress Office of Compliance. Over time, offerings, developed mostly by percent of lawyers, began to homogenize: an on-screen talking head outlines company policy and the women report business costs of harassment, interspersed with cautionary examples that are often either having been a) blatant or b) so convoluted that it’s hard to distinguish between permissible and impermis- sexually sible behavior. The latter risks sending the mes- sage that white men—who tend also to be the harassed at gatekeepers—should simply avoid interacting with marginalized groups, a phenomenon some work. One-third are calling modern-day discrimination. Victims are then advised to report offenses through the of those who company’s institutionalized system, the same one that critics say failed to protect them in the file complaints first place. Unsurprisingly, the problem is just as ubiqui- say they end tous today as it was 30 years ago, according to the EEOC and other sources. “You don’t change up much behavior by teaching people the law or policy,” says Ingrid Fredeen, vice president of Navex worse off. Global, one of the largest compliance-training

A New Breed of Videos

Actors performing in a sexual harassment training video being prepared by Traliant, a Los Angeles-based HR compliance training firm. To create a more active experience, many of these videos now allow users to assume a bystander role and pick from alternative endings.

WATCH BEHIND-THE-SCENES FILMING, AT KORNFERRYINSTITUTE.COM providers. The company was born out though: It isn’t just the victims who suffer. of a law firm in the ’90s but grew into Bystanders also absorb the psychological rever- an independent business that now berations of sexual harassment, magnifying takes a holistic approach by offering productivity loss far beyond isolated incidents. compliance management systems, risk rates for assessing contractors, a hotline and case management. “You have to The correct answer to how observers learn to have empathy,” Fredeen says. According to the EEOC, about 25 percent should respond? It’s complicated. of women report having been sexually The type of training described earlier harassed at work. One-third of those is known as bystander intervention and who file complaints say they in turn empowers witnesses to step in, ideally before were demoted, fired, harassed further something egregious occurs. The approach is or raped. From 2010 to 2016, employers increasingly used on school campuses and in paid $699 million to workers alleging the military to combat sexual violence. In this harassment through the agency. That instance, the boss is “grooming” his female figure doesn’t include settlements facili- subordinate. “It’s not just the harassment but tated without federal intervention. what leads up to it,” Mercer says. And direct payments to victims are Based on their response, users are then of course only a sliver of the overall toll. branched to another scenario. I chose cor- Studies show tainted workplace rela- rectly, so it’s on to empathy training. But wait. tionships vastly diminish productivity. I’m not ready. Employees spend less time at the office If I were to put myself in the position of the and are more distracted when they are onlooking coworkers, what would I have done? there. What most people don’t recognize, He was close, but was he too close?

41 “There’s been a lot of pressure put on training to solve an ailing culture. Training is just one piece of the puzzle.”

—Ingrid Fredeen, Vice President, Navex Global

I want to see the right response in action. I to learn to be respectful—and be willing want practice. Like athletes who visualize their to apologize. And willing to receive an every move, I want to know what to say and apology.” how to say it. Because I don’t know. And I’ve In other words, it’s going to get messy, been thinking and writing about this stuff for requiring companies to create a safe years. Not to mention having been the target space for dialogue both before, during of unwelcome advances. “Mental preparation and after any mistreatment—an area makes responding to sexual harassment more where many startups are jumping in, automatic and, like anything, practice increases from tEQuitable, STOPit Solutions and confidence,” Mercer says. AllVoices, which provide platforms While there are still many unknowns, for employees to report workplace dis- experts in this field seem to agree that the most crimination, to Bravely and BetterBrave, effective prevention practices emphasize empa- which offer unbiased, independent HR thy and instill global accountability. As Rawson coaching. Even David Schwimmer, says, “Disrupt, confront, comfort.” Eden King, better known as Ross from the ’90s a psychology professor at Rice University, has sitcom “Friends,” released a series of found some evidence that training programs public service announcements called have better outcomes when they are longer than #ThatsHarassment. “Look, men have a four hours, incorporate interactive learning lot to learn, but you’re not going to learn and face-to-face interaction, are conducted by anything without dialogue,” Schwimmer outside experts, and actively involve leaders told the New York Times earlier this year. in the workplace. The interactive component is Most experts also say that by itself, important because it not only allows the curric- sexual harassment training can be ulum to be tailored to an individual but has the meaningless, especially when it is only added benefit of collecting data, so companies about rules. “The ‘dos and don’ts’ still know developmentally where employees are at. objectify people,” says Andrés Tapia, Meanwhile, trainers can then use the outcomes one of Korn Ferry’s global diversity and to measure comprehension. inclusion leaders, “as opposed to trying “This is a journey,” says Fredeen. “People to be inclusive and showing the whole don’t always say things that are appropriate value of people for who they are.” Social and people have different tolerances. We have science suggests employees are more likely to respond to a morale framework. This sort of “civility training” puts the focus on promoting respect rather than policing behavior. In its report, the EEOC found that the companies that succeeded in creating positive cultures “owned” their well-handled complaints, rather than burying them. That of course starts at the top, with leaders who invest resources, take honest inventories and promote more women. “There’s been a lot of pressure put on training to solve an ailing culture,” Fredeen says. “Training is just one piece of the puzzle.”

Back at the Silicon Valley startup The Five Stages of Maturity hub, I’m once again transported to the virtual office, but this time we’re in a Companies tend to be in one of five common space. The two male colleagues stages of diversity and inclusiveness (D&I), says Andrés Tapia, a senior from the night before are working on Korn Ferry D&I strategist. parallel couches, when their visibly Compliance-Driven shaken female coworker approaches. D&I is narrowly defined and focused, She explains that after they left, the overseen by the compliance boss propositioned her. When she department solely to avoid rebuffed his advances, he blamed her for litigation. sending mixed signals. What was this Values-Driven going to mean for her career? Based on moral imperative—“the right thing to do”—with HR One man remained silent, though overseeing it and top leadership clearly concerned. The other tried to accepting some responsibility. console her, but in his attempts only Talent Performance-Driven justified the boss’s behavior—maybe it D&I is recognized for generating really was a misunderstanding, I’m sure high-performing work teams; the he didn’t mean anything by it, he won’t business case is clearly spelled out, and D&I principles are programmed retaliate against you. into talent-management processes. I remove the headset but the feeling Internal Operations-Driven of discomfort in my gut lingers. Mercer D&I is seen as a key enabler of and I share our own experiences of operational strategies; responsibility sexual harassment and assault and broadens past HR and is considered a key leadership competency. talk about not what it would be like to never have experienced them but what Market Strategy-Driven it would mean to be met with empathy. Seen as growing the firm’s competitive advantage in When we leave the conference room, I increasingly diverse marketplaces; glance around the floor. Mercer and I are executives and senior leaders take the only women in a sea of men. full responsibility, and line leaders • are key change agents. 43 The Future CEO… for Farming? BY SHANNON SIMS

A critical industry has an array of high-tech options, but needs leaders to see the field of dreams. 45 a farm in northern Vermont, O 40-something Mateo Kehler was stressedN about bacteria. At Jasper Hill Farm, one of the country’s top cheese-making operations, Kehler and his brother, Andy, were trying to run an all-natural business. Their cows were grass-fed, their water was recycled, and their employees were largely THE PROBLEM: The agri- local. And yet, when it culture business still has a came to their cheese “Chinese wall” between old- and new-school farmers. cultures—the starter WHY WORRY: kit of bacteria required With the to catalyze any cheese- shrinking number of farms, only technology can keep making process—they production growing as fast had to order samples as it needs to. THE SOLUTION: over the internet from an Farm industrial supplier across firms of the future must bring in teams more skilled the country. Kehler saw in science and engineering. a challenge: What if they used new technology and developing genome science to isolate local microbiomes in the DNA of northern Vermont’s land, and make their own hyper-local cultures? It was a high-tech solution to an age-old practice—farming, hacked. The Future CEO… for Farming?

he innovative experiment at Jasper Hill Tcould well open up a brand new horizon for cheese making in the US. But it is not just cheese makers who are taking agriculture to new, innovative dimensions. Thanks to the introduction of digitization and advanced math- ematical tools, this once old-school industry is going through of a host of little-noticed but critical changes, with plaid-shirted tractor- bound farmers teaming up in a very real sense with nerdy Silicon Valley alums, yielding excit- ing results. Indeed, from flower farmers in Viet- nam to salt farmers in Chile to rice farmers in Louisiana, a young, tech-savvy generation has arrived, in search of CEOs for next-gen farming. Kehler and his Jasper Hill Farm are, in fact, just a minuscule slice of what American farming looks like now. The US Department of Agricul- ture estimates that today there are about 2.1 million farms in operation, a third fewer than in the post-Depression era, but each of those farms is nearly three times larger. More importantly, they’re more productive: Farming output has more than doubled since the mid-20th century. And without a doubt, technology is driving a lot of this. In Kehler’s case, he’s used it to solve his own problem, eliminating the cost of buying from an outside supplier, and investing that cost in his business’ longevity instead. It’s a strategy being employed across the industry, as leaders of agribusinesses see that to survive and grow during difficult economic and environmental times, they’ll need a hand from new technology. This shift is welcomed by none other than the man who coined the term “agribusiness” so many years ago. Ray Goldberg is a professor emeritus at Harvard University, but he is best known for being one of the fathers of agribusi- ness. Decades ago, he predicted many of today’s high-tech farming changes, and in an interview tells us, “I have never been more excited about the future of agribusiness.” But there is a chal- lenge: With food, nutrition and world health in 47 the balance, he says agriculture now relies on a unique collaboration between engineers, social scientists, agronomists, economists and envi- ronmental scientists—and that future leaders of the sector will need multidisciplinary back- grounds, such as engineers with a specialization in food science, or business graduates with a focus on environmental systems. To which some observers must ask—are they out there?

the past, being an agriculture pro INmeant building experience on the land over years, and even generations. It meant getting your hands dirty, knowing the ins and outs of seed production, and being able to sense in your joints when it was about to rain before any clouds had gathered. To develop the perfect crop demanded hyper-attention to detail, in order to create a masterful product. “It was kind of a secret sauce,” says Pablo Golfari, the Korn Ferry Futurestep sector leader for Agribusiness, about farming of the past. “You’re the chef in the kitchen, putting a little this, a little that, and all of a sudden you have a wonderful recipe that you can replicate.” But in agriculture, there are always unexpected, force majeure challenges. Weather, pests or some other unforeseeable circumstance could make that secret sauce dry up overnight. So, historically, farmers learned to adjust, and usually that learning came from within the family. “Experience was passed from generation to generation,” says Golfari. Today, of course, the game has changed—and keeps changing. Now you can draw data from everything from lab samples to satellite pictures to help you dodge those oncoming obstacles. That influx of data and tech could be a boon to both large and small farms in a variety of ways. Big agribusinesses can further maximize crop yields across huge swaths of land. At the same time, small farms can afford many of the new techniques and tools, giving them ways to improve their own profits. But the key to the modern farm of the future, Golfari believes, is linking those two worlds: generational farming knowledge and high tech. He says new farms need people to make The Future CEO… for Farming?

TWO WORLDS COLLIDING ON THE FARM: THE TECH GUYS SEEING FARMERS AS BACKWARD; FARMERS SEEING THE TECH GUYS AS ARROGANT.

49 The Future CEO… for Farming?

sense of and manage all the data: ex-Googlers, would be “a hacker plus an agronomist.” climate-change technology startup founders, Though changing quickly in many ways, the IBMers. But they’ll need to partner with that technology surrounding agriculture is still a boots-in-the-dirt person who knows farming long-term play, as inventors rush to find new better than anyone: the agronomists, solutions to the shifting sands of climate the fifth-generation landowner, the change and new nutritional demands. tractor driver. And as farmers embrace the shifts, Getting those two sides to experts believe the full adoption partner together is no small task. 15 Years curve is one that will take 15 In a paper by Golfari and Silvia TIME IT MAY TAKE years, because of the cost and the Sigaud, global leader for Korn FOR FARMING ongoing dilemma of integrating Ferry’s Agribusiness practice, TO FULLY ADOPT modern technology into an old- MANY NEW the two went so far as to call this fashioned farm. For the millennial TECHNOLOGIES gap between tech knowledge and executive accustomed to waking up farm knowledge a “Chinese wall”: The with an app idea on Monday and seeing two worlds don’t speak to each other. And it roll out on Friday, a 15-year wait might even more problematically, they sometimes as well be forever. don’t even particularly like each other. The tech Still, demographics suggest a true opportu- guys see the farmers as backward; the farmers nity for future CEOs who move into farming. see the tech guys as arrogant. On the modern The average age of farmers these days is 55, and farm of the future, that’s why you need a third many of those in charge aren’t tech-savvy, but group: the businesspeople, the leaders. “The retirement-focused. That 15-year adoption cycle model we felt was most efficient,” says Golfari, means that the technology of today will be lock- “was that of the large farm featuring more pro- ing in right around the time that 55-year-old fessionalization and being run more like a busi- farm leader is ready to step aside and hand over ness, with folks with a finance background.” the keys to the tractor to the next generation. Moreover, the Korn Ferry study found that the sweet spot of a future leader in agriculture is someone with that business background, who ateo Kehler is part of that next also can handle the IT issues that come with Mgeneration. Though he grew up near running a major, complex, ever-changing opera- Jasper Hill Farm, he never imagined returning tion. “You need someone who is open to tech and to Vermont to work in agriculture. “I wasn’t agile, but someone who is also good at bringing raised breeding livestock or working the land groups of people together,” says Sigaud. And, or anything like that,” he says. Instead, Kehler optimally, that person won’t cringe at the idea and his brother, Andy, saw how their tiny little of throwing on a pair of overalls and getting town was going broke as small-scale farms were his or her shoes muddy. The best leaders for the forced to close shop due to diminishing margins. future of agriculture will need to have some Even though he isn’t the younger generation long-term involvement with the industry in of a farming family—his dad was a consultant order to lend an air of authenticity and convince in Colombia, South America, where Mateo was the farmers that they’re at least a little bit like born—he still had a soft spot for his town’s them. That doesn’t mean the next-gen ag leader farming community and its traditions. Fresh out can’t come from Silicon Valley, says Golfari, of his 20s, and aided by all the tech savvy that “but it does mean they’ll have to pay their dues” comes with being that young, Kehler decided to by spending time on the farm, or at least in the head back to Vermont and start a little cheese industry. It’s why one industry executive told business, which meant buying a little land and Sigaud that the ideal modern farming leader feeding a few cows. Farming’s “Chinese Wall” Korn Ferry experts found a disconnect between two elements that make for a successful executive in the agriculture sector today: farming knowledge and technical knowledge.

FARMING TECH

knows the land knows computers and systems knowledge passed down knowledge gained in schooling through generations and office experience gets hands dirty works from the computer adjusts depending on land conditions adjusts depending on innovation experience as important as boasts an advanced degree formal education

But Kehler was thinking bigger: He brought love of technology. As he talks about the latest in hyper-digitalized processes, and built out developments in DNA sequencing, he gestures cheese-aging caves, calibrated for humidity broadly with his hands. Because he is so often and temperature to microaccuracy. He hired a digging his hands into soil, he doesn’t wear his combination of local farmers and outside techni- wedding ring, and he’s got dirt beneath his nails. cal specialists. Many of his cheese experts come It won’t be just new leaders that will trans- from around the country, and his microbiologist form agriculture—a cultural shift is critical, is Greek. Today, Jasper Hill Farm is considered a too. But a new generation won’t hurt. “The model cheese-making operation for both its sani- challenges with working with living products tary standards—a major challenge for cheese ­ and living species will never end,” Kehler says. makers—and its holistic, community-driven “The real challenge will be being open-minded approach to agriculture and farming. While he’s enough to be willing to harness all that science already proven himself as an authentic, boots- and technology to make the best product pos- on-the-ground insider, Kehler doesn’t hide his sible for consumers.” • 51 52 THE HERSHEY C O M PA N Y: Beyond Chocolate How does the first female CEO of Hershey, a 124-year-old company, move the firm into more ‘snacking occasions’?

BY PATRICIA CRISAFULLI Q&A

We’re listening to Michele Buck recount brand stories, and her voice grows “snacking occasions,” which will require more enthused. There was the family both innovation and new strategies that that celebrated their grandfather’s 100th complement its core sweets business. birthday with a cake made entirely out Buck, the first female CEO of the of Hershey’s Milk Chocolate Bars (the 124-year-old company, is also among 24 grandfather’s favorite, of course). female CEOs in the Fortune 500, a Then there was the man who lined position she says wasn’t her up seven Hershey’s Kisses every goal early in her career. night and ate them one by Like many other female one. When he died, his wife CEOs interviewed as lined up seven of those part of Korn Ferry’s foil-wrapped confections study of women leaders, in his casket. “We get sponsored by the stories like this every Rockefeller Foundation, day,” she tells us. “By Buck said her focus was the dozens.” more on “a strong desire But since taking over one to work with others, to see of the most iconic companies enterprise results ... and to in the world in March 2017, see the team succeed.” Buck has come to realize that But we want to know more. So even companies with such a devoted Buck sat down recently with Briefings following need to branch out in today’s to discuss her leadership and what it’s like hyper-demanding consumer world. And to guide an iconic company that’s in the so begins The Hershey Company’s move midst of unprecedented consumer change. to capture more of what Buck likes to call (Questions and answers have been edited.)

AS HERSHEY’S FIRST had our first female board director Hershey’s 13-member board FEMALE CEO, HOW DO YOU in 1978. I can’t imagine that includes five women.] VIEW THE IMPORTANCE there were too many female OF HAVING DIVERSE WHAT ARE SOME OF directors then. PERSPECTIVES WITHIN HERSHEY’S MILESTONES THE COMPANY AND ITS IN DIVERSITY I’m really proud that we have LEADERSHIP RANKS? ACHIEVEMENT? women well represented across ● our employee base. And you can ● I hold tremendous regard for certainly see the progress that We’ve been recognized the many female Hershey we’ve made, especially on our consistently for our work in trailblazers who came before me. executive committee and also diversity. We joined the Paradigm As we did some work on diversity, I on our board, particularly in the for Parity, a coalition that helps was delighted to see that we past couple years. [Currently, companies close the gender gap,

54 Michele Buck Joined Hershey: 2005 Named COO: 2016 President, CEO: 2017 to present

ASSIGNMENTS. CAN YOU and for the fourth consecutive disability inclusion. And, in 2016, DESCRIBE THIS FOR US? year, were recognized with a 100 we supported three White House percent rating from the Human initiatives: the White House Equal ● Rights Campaign Foundation. Pay Pledge, the First Job Compact I grew up with marketing One of our board members, former Pledge and the Fair Chance Pledge. as my functional backbone. Pennsylvania Governor Tom About 10 years into my career, UPON LOOKING BACK Ridge, has been very active with I had an opportunity to take on AT YOUR CAREER, individuals with disabilities, and my first general-management YOU’VE MENTIONED so has the company. We have assignment. The interesting THE IMPORTANCE OF earned back-to-back National thing was it was also a TAKING ON DIFFERENT Organization on Disability seals for turnaround assignment. The

55 As a leader, I love to listen, and I value the courage to speak out—for people to bring forth their different ideas.

—MICHELE BUCK

with diverse backgrounds and experiences. I really think about [diversity] very broadly as diversity of thought—and some of that comes from what we might consider the more traditional ways that diversity is viewed. But some of it comes from diverse experience overall. Diversity is particularly impactful in driving innovation and new ways of doing things. SPEAKING OF plant itself was failing, and the presentation or with … pretty INNOVATION, CAN YOU company was planning to shut hard-core investment bankers TALK ABOUT HERSHEY’S it down. I sought out coaching, who weren’t exactly easy to deal RECENT ACQUISITION leaned into my leadership skills with, and then presented to a OF AMPLIFY SNACK and learned to manage different number of significant Fortune BRANDS, WHICH IS technical functions. This was 500 CEOs, all by myself. My PROBABLY BEST KNOWN a very different role for me, and boss told me, “This is your job, FOR SKINNY POP? we were able to turn the facility here are the parameters. You’re around. The company decided to going to earn a bonus based on ● keep the plant open, and when the sales price you get, so this is When I took over as CEO, I left the job, the Teamsters your scorecard.” It was a great I set the goal for Hershey to Union plant employees gave me development exercise and a be an innovative snacking a handmade plaque that read, confidence booster. I maxed out powerhouse. We are actually “Our Loss Is Their Gain.” It is on the price I got for the business. the No. 2 snacking company the most meaningful reward by virtue of being No. 1 AS A FEMALE CEO, CAN I’ve ever gotten. within confections. We love YOU DESCRIBE HOW our confections business. We A GOOD EXAMPLE OF DIVERSITY INFLUENCES have a strong leadership share PULLING TOGETHER YOUR LEADERSHIP position. We’ve had strong A TEAM FOR A THINKING? single-digit growth on our core TURNAROUND. ● brands year after year over the ● One of my fundamental past several years. The second example was at leadership philosophies is a deep a fairly junior level. I was given belief in diverse perspectives. Building off that tremendous the responsibility to lead the As a leader, I love to listen, and strength, with our presence divestiture of a pretty sizeable I value the courage to speak in confections, a lot of the business with total autonomy out—for people to bring forth capabilities we have are very to do it on my own. And I had their different ideas. One of the transferable across snacking. never done this before—never best ways to get those ideas Our taste science in R&D. Our worked on a management is to [bring together] people ubiquitous distribution because

56 From snacks are found everywhere. appealing to consumers in that Sweet Our manufacturing capabilities. market. But we really do start Our consumer insights, because with Hershey’s as the core, and to we look broadly to understand then we look at where there are consumer snacking. So it local opportunities that make really starts with winning sense to build around that. Salty in confection, and then how HOW ARE YOU REACHING we capture more consumer CONSUMERS TODAY snacking occasions. Strategic Changes USING TRADITIONAL HOW DO YOU LEVERAGE AND DIGITAL MEDIA? at Hershey HERSHEY’S STRENGTH IN CONFECTIONS TO ● Consumers are evolving, as Building its core US confec- OTHER SNACKS? they have over time. It’s our tion business, including with job to keep pace and to meet more variety and innovation. ● Recent examples include sweet We really study what consumers’ needs—how they treat rollouts such as Hershey’s consumers are looking for: are consuming media, how Gold, a bar made from caramel- They’re snacking more overall. they are shopping—and to ized cream, pretzels and peanuts, Indulgent snacking is growing. make sure that we’re set up to and Hershey’s Cookie Layer Better-for-you snacking is deliver. While we continue Crunch, a multitextured candy growing. Sweet snacking is to see growth in bricks-and- available in a variety of flavors. growing. Salty and savory mortar consumption, we also snacking is growing. So how see growth in e-commerce. Expanding into salty do we capture as many of those We have a focused cross- and savory snacks in opportunities as possible, functional team that is the US. Its $1.6 billion leveraging the capabilities we building a digital commerce acquisition of Amplify have? And that is what Amplify business for us. Snack Brands Inc. last will let us do. Amplify also December marked has the benefit of being a scale In marketing and media, we the company’s largest brand on top of that—Skinny Pop absolutely have evolved from step beyond confec- is now our sixth largest brand, being television-focused years tions. Amplify, with such products as Skinny which is pretty incredible. ago to today really having Pop popcorn and Paqui tortilla Strong margins, industry- an approach to reach the chips, widens Hershey’s move leading velocity. We have a lot consumers where they are. into “snacking occasions.” of confidence that it can be a key That includes social media pillar of growth for us. and PR that generates a lot of Scaling into emerging earned impressions. In fact, HOW IS HERSHEY markets through its core we’ve gotten quite good at EXPANDING GLOBALLY? confectionery portfolio. After doing that in advance of a lot of resetting the profitability of its ● our innovation launches, where existing international business, Globally, we start first with consumers know it’s coming Hershey is now looking for expanding some of our core before it’s even on the shelf. global growth by focusing on its business into international core Hershey’s brand, including SO, WE HAVE TO ASK, markets. Greater than 50 the use of special packaging WHAT ARE YOUR percent of our sales in our for greater consumer appeal in FAVORITE SNACKS? international markets markets such as Asia. leverage the Hershey’s brand. ● We stay consistent with the I really like Almond Joy and Creating breakthrough brand, but we do alter our Take Five. Take Five is a newer marketing by way of digital product formulas and some brand that we developed in the content, using social media and of our packaging according early 2000s. And it’s just this earned PR to create consumer demand ahead of product to what’s important in the great combination of pretzel, launches. In addition to align- local environment. Packaging caramel and chocolate. When ing with creative agencies, Her- is obviously much more I’m hungry, it just hits the spot. shey is also developing more important in Asia, so we have And I actually like Almond digital media content in-house. some unique packaging that is Joy—it’s from my childhood. a little more special and that’s I remember eating it as a kid.

Human rights activist DR. DENIS MUKWEGE, 57 photographed by PLATON

Downtime

The Unyielding Love of Pickup By Glenn Rifkin

y teammate Kevin, an executive at Welch’s, sets a sturdy pick on my Mdefender Chuck, a financial advisor. I dribble to the right, find an opening, square my shoulders, and launch a perfect jump shot. The ball leaves my hand in a spinning arc and ripples through the net. With a slight grin, I turn and trot back up the court as the crowd goes wild. The basket gives us the lead, which we won’t relinquish; another victory secured.

59 Downtime

That scenario is entirely accurate—well, except for the crowd going wild. There is no crowd. It is just us, a group of guys in a small rustic gym in Concord, Massachusetts, playing our regular lunchtime pickup basketball game. Though the faces have changed over the past 25 years, the rit- Not surprisingly, ual remains the same. Pickup hoop is my addiction, and this year, as I turned 65, I marveled at how pickup has a long I have kept at this, well beyond my expiration particular appeal to date, in a game I started playing when I was 12. Back then, I would have dropped to the ground business leaders. laughing if someone had suggested I’d still be playing when I was enrolling in Medicare. This is a young man’s game, after all, and running full-court for an hour or two would just be too much. I’d be injured, I’d keel over from a heart attack, I’d simply be embarrassing myself trying to dribble, leap and score on arthritic knees and bum shoulders. Against the odds, I’ve kept at it along with a bunch of guys in their 50s and 60s, who, like me, can’t give it up. Pickup basketball has long been a staple of Amer- ica’s, now the world’s, workout diet. President Barack you dripping with sweat and fatigue but joyous Obama got major props for playing regularly at the in its intricacy and challenge. Most of all, it is White House. How cool was it that the commander- hypercompetitive and without ambiguity. Every in-chief could go to his left and hit the three? game has a winner and a loser, and if you’re good According to Statista, a statistics portal, enough, like in business, you control the outcome. more than 30 million Americans play basketball, Take Tom Tremblay, a tall, athletic, deadly up from 25 million in 2008. While some play on perimeter shooter, with whom I’ve played for more formal high school and college teams, the vast than 20 years. Tremblay is an entrepreneur, the majority are pickup players who show up at gyms, founder and CEO of Guardair Corporation in Chi- choose sides and run. Since the famed US Olympic copee, Massachusetts. Also 65, he has played all his “Dream Team,” featuring Magic Johnson, Larry life. Longevity in business, he says, tends to yield Bird and Michael Jordan, wowed the world in 1992, long-term success. “That’s one reason I keep run- pickup basketball has exploded around the globe. ning my company and I keep playing basketball.” Go to an outdoor court in Hamburg or Nairobi or Besides the sheer competitive passion, Trem- Beijing and you will undoubtedly catch a pickup blay sees many analogies between running his game in action. Don’t forget your Nikes. company and shooting hoops. It’s about striving In reality, basketball is far more than a fit- to improve and striving for perfection, Tremblay ness regimen. It is an obsession that keeps men explains. “Avoiding mistakes in business is the and women out on the court for years past their same as avoiding turnovers and making shots in athletic prime. Not surprisingly, pickup basketball hoops,” he says. “As is especially true in business, has a particular appeal to business leaders. It is winning is a lot more fun than losing.” simple to learn but exceedingly difficult to master. Perhaps most appealing, basketball is the It is an intense physical workout that leaves perfect escape from the wearying obsession with

60 Korn Ferry Briefings The Voice of Leadership

work. “I think about my business constantly outside the office and it gets tiresome,” Tremblay says. “When I’m playing basketball, I’m concen- trating 100 percent on the game. I leave my wor- ries and frustrations on that court.” THE RULES OF THE SPORT Even after back surgery, a ruptured Achilles Pickup game rules are governed by the players. tendon, and assorted other aches and pains over But there are always the unspoken ones: the decades, my passion for this game goes deep, beyond logic and a doctor’s advice to try golf. TONE DOWN THE TRASH TALK. What keeps me out there three times a week, Leave the insults to pros who have the skills to back them up. chugging up and down the court, trying to guard guys half my age with twice my skill, is primal, a DON’T CALL A BUNCH OF FOULS. hunt for that perfect pass, a blocked shot, a chance Players don’t want to stop the game for every to score the winning basket. Executives know this bump or push. feeling, operating in a place with an unspoken STICK WITH LOOSE GYM ATTIRE. code of honor, an agreed-upon set of rules, no Wearing NBA jerseys can border on dorkiness. referees and a level playing field where victory is A full uniform is especially embarrassing. sweet. It is tough to give up. I walk into the gym, see the basketballs, the hardwood and the back- boards, and, like Jack Twist said to Ennis Del Mar See our reporter and a pickup executive in “Brokeback Mountain,” I mutter, “I wish I knew in action at kornferryinstitute.com how to quit you.” I shrug, and then I lace up my sneakers for yet another game.

61 Downtime

The World Cup’s Other Stars Forget the players. We rate all the rest that matters.

By Peter Lauria

or those who know and love soccer, all been the same teams for years. Indeed, those three eyes at next month’s World Cup in Russia have together won 10 World Cup titles, or 50 per- will be on No. 10, Lionel Messi, consid- cent of the tournaments played heading into this Fered one of the sport’s greatest players year’s. In fact, though the World Cup tournament of all time, whose three-goal “hat trick” last fall field is the largest of any major sporting event, singlehandedly kept his team, Argentina, out of only eight teams have been crowned champion in elimination. Or if not him, there’s Cristiano Ron- its entire history. aldo, the Portugal star with a $12 million annual Clearly, these nations don’t have a monopoly salary, not counting endorsements, or the player on soccer-playing talent, but they apparently have simply known as Neymar, whose 50-plus goals key elements working into the mix. To find out for Brazil has risen him to celebrity global soccer what keeps the same teams at the top of the world status, too. soccer heap—and what all organization might But what about these names: Joachim Low, Tite learn from that—we turned to Jed Hughes, vice or Didier Deschamps? Will most fans pay much chairman and global sector leader for sports at attention to them? Korn Ferry, and his colleague Andrew Montag to Probably not—these are the coaches of Ger- handicap the World Cup staffs. What emerges in many, Brazil and France, respectively. But these varying degrees is a combination of culture, tal- teams are favorites to win the World Cup, and it’s ent, leadership and alignment.

62 Korn Ferry Briefings The Voice of Leadership

GERMANY SPAIN

The last decade has arguably In Spain, La Liga is everything. been the best era in German No other sport comes close to soccer history for two reasons: it in terms of popularity or stable leadership and alignment participation, which means across the whole organization. Joachim that there is less competition from other Low is in his 14th year as the team’s sports for the most talented athletes. coach, an unusually long tenure for a More importantly, “Spanish players tend coach in any sport. In terms of alignment, to stay in Spain, which makes them more “Germany has developed a philosophy familiar with each other’s playing style and identity for its national style of play when World Cup time rolls around,” says that emphasizes the system and not Montag. That, in turn, makes the national necessarily individual talent,” Hughes team’s scheme of short passing, patience says. That makes it a lot easier for and ball possession, known as tika-taka, players who don’t normally play together easier to translate. to adapt to the system and gel quicker. ARGENTINA BRAZIL

The success of Argentina’s With five titles to its name, national team is remarkable given Brazil is the World Cup’s most the team’s leadership instability. successful nation. It is referred Since 2004, the team has had eight to as the “country of football,” different coaches—this year’s coach, Jorge and the sport is woven into its cultural Sampaoli, has been in the position for less fabric, with a strong grassroots youth than a year. But, according to Hughes, program. Plus, the country is one of the “what the team lacks in leadership it most populous nations in South America, makes up for in culture and alignment.” which coupled with the sport’s immense Like its neighbor Brazil, Argentina has popularity gives it a huge talent pool a sophisticated youth program, which relative to its competition. According spreads talent over eight leagues and 450 to Montag, data supports the theory of a teams. Its national team’s success is owed high correlation between population size less to a system or identity and more to and success in soccer in South America. soccer’s role in the culture and heritage of the country and its investment in training FRANCE and talent development.

ENGLAND France is unique in that even though it is one of eight World Cup winners, it should arguably The Premiere League is the have more than one title to its most popular soccer league in credit. The country has one of the world’s the world, yet England boasts biggest and best soccer talent pools, only one World Cup title, and its with solid youth academies and a strong national team will be considered a dark national league. But France’s national horse. A key issue is the Premiere League team has been plagued by inconsistent imports players from other countries, so leadership. Didier Deschamps is the “the best talent leaves to play for its home team’s fourth coach since 2002. As countries come tournament time,” says a result, France’s national team has Hughes. What’s more, instead of having struggled to establish a vision and one UK national team, Wales, Scotland, purpose. “The country’s talent pool takes Ireland and England all have their own them deep into every World Cup,” says teams. Couple that with the country’s Hughes. “Inconsistent leadership is what other popular sports, and England has a has stopped them from winning it more.” smaller talent pool.

63 Downtime

By Renee Morad

Leadership Training… on the Beach At last, a summer reading list that’s not homework.

sk self-made millionaire Steve Siebold about one thing that the 1,200 high-net-worth Aindividuals that he recently interviewed had in common, and he’ll mention one particular trait: reading. Taking that cue, here are some of the books that C-suite executives and academics told us have made a sizable impact on their success.

questions to ask is far more PowerAndrew SobelQuestions and Jerold Panas important. TheElena CEO L. Botelho Next and DoorKim R. Powell, John Wiley & Sons, Inc., 2012 “In some cases, certain ques- with Tahl Raz tions can help the person you Currency, 2018 This book overturns the com- are engaging with navigate a mon assumption that engaging scenario that they never con- Botelho and Powell set out to a prospective client with witty templated,” says Matt Tierney, a redefine the path to leadership, banter will carve out a fast path fan of the book and global insur- uncovering four common CEO for success. Instead, the authors ance practice leader for Grant behaviors from 17,000 assess- argue that knowing the right Thornton LLP. ments’ worth of data. “It offers a corderostudios.com

64 New Books from Korn Ferry Authors rare view behind the scenes on developed, more than 10 game how leaders get picked for cov- theorists have gone on to win eted roles and how they really the economics Nobel Prize. succeed or fail,” says Jacqueline “‘Prisoner’s Dilemma’ may Reses, capital lead and people help businesspeople rationalize lead of Square, Inc. other people’s motivations and Lose the Resume, negotiation positions in order LandGary Burnison the Job to outthink their opponents,” John Wiley & Sons, Inc., 2018 says Taylor Lukof, founder and OnJeff Intelligence Hawkins with Sandra Blakeslee CEO of the asset management Korn Ferry’s CEO writes that job Times Books/Henry Holt & Co., 2004 firm ABR Dynamic Funds. seekers of all levels spend too much time thinking about how The technology behind artifi- they look on paper and not enough cial intelligence has changed time figuring out the type of dramatically since 2004, but TheJeff Haden Motivation Myth job they actually want. Burnison the book on creating smart Portfolio/Penguin, 2018 explains how to discover that last machines remains highly influ- part, along with how to network ential. Hawkins, who invented High achievers stay motivated and target opportunities. the PalmPilot, and Blakeslee, by enjoying small, seemingly a well-known science writer, minor successes—but on a regu- provide a fascinating discussion lar basis, writes Haden. Learn- on how the brain is architected, ing a new language, playing a TalentRam Charan, Wins Dominic Barton and says Roger Dickey, founder musical instrument, or other Dennis Carey and CEO of the software firm small successes allow these Harvard Business Review Press, 2018 Gigster. achievers to sustain momentum throughout their lives. Carey, a vice chairman at Korn Adam Grant, best-selling Ferry, and his co-authors make author and professor at the the case for why companies need Prisoner’sWilliam Poundstone Dilemma Wharton School of the Univer- to overhaul how they acquire, Anchor Books, 1993 sity of Pennsylvania, says Haden manage and deploy talent. The may give people a new way to book uses real-world examples Poundstone explores the view success. “Success is less of firms (such as Apple, Johnson science of game theory: the about searching for motiva- & Johnson and PepsiCo) that logical decision-making in tion and more about muddling have reinvented their approaches humans, animals and computer through until you achieve some- to talent to better compete in a models. Since the concept was thing motivating,” he says. technology-driven environment. corderostudios.com

65 Briefings

Endgame copies:Additional / 1900 Avenue of the Stars, Suite 2600 Suite AvenueStars, 1900 the / of By Jonathan Dahl VP, Chief Content Officer, Korn Ferry

[email protected] Los Angeles, CA 90067 CA Angeles, Los

Circulation Customer Service: +1 (310) 556-8502 (310) +1 Service:CustomerCirculation Reprints: Advertising:

In Search of Impact 226-6336 Tiffany (310) Sledzianowski +1

and in a “job that is useful to society.” Years ago, 556-8502 (310) LevynStacy+1 was looking for a job and of course, money would have mattered the most. Now comes the surprising push and pull then I found a job/ between activists and many stockholders And heaven knows I’m insisting on short-term, bottom-line results, I and some heavy-hitting investment firms

—THE SMITHS miserable now… on Wall Street demanding that companies consider longer-term and social causes. It’s In all candor, you didn’t hear the word “pur- great to see the big guns stepping up, but you

pose” much back in my prior life as an editor at could argue that Wall Street firms have simply

The Wall Street Journal. You definitely heard the caught up with where employees have been for word “profit” a lot more. And the skeptic in me a while—and realized that profit and purpose still struggles with the concept that companies can work hand in hand. will put good causes and diversity ahead of the next quarterly statement. But while I sincerely doubt the Smiths

had any of this in mind, their ’80s pop inks, in a sustainable and environmentally responsible manner. Produced utilizing solar power, recycled paper and soy-based PRINTED IN THE U.S.A classic “Heaven Knows I’m Miserable Now” has a few lines that any purpose- driven leader might relate to. There’s a great irony, for example, in how we devote such efforts into finding and keeping work but ignore whether it . drives and fulfills us. And who among us hasn’t asked, as this song does, Why do I give time valuable time/To people who don’t care if I live or die? Quite accidentally, it strikes, well, a chord on what purpose is about. Will this sentiment continue if the market Clearly, the research keeps piling up to takes a huge tumble? Here, I turn to a different show how much corporate culture and values source, with words a little less lyrical but defi- matter to people at work. Our own study found nitely on point: A recent Korn Ferry Institute that 145,000 workers in 50 countries rank report says employees “have a genuine need for KornFerry Copyright2018, © ISSN 1 “interesting job” as the most important job char- having impact, and approach their work as a 949 - acteristic—defined as the ability to work inde- means to express that value.” At long last, 8365 pendently in a “job that can help other people,” I believe they are being heard.

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