CEO Summit

Jeffrey A. Sonnenfeld is the Lester Crown Professor in the Practice of Management at the Yale School of Management. This post is based on Key Takeaways by the Yale School of Management CEO Summit. Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance by Lucian A. Bebchuk and Roberto Tallarita (discussed on the Forum here) and Socially Responsible Firms by Alan Ferrell, Hao Liang, and Luc Renneboog (discussed on the Forum here).


CEO Summit participants were in strong agreement: CEOs must speak up about racism and companies must take concrete actions to become more inclusive. Even companies that are already taking action must do more. The starting point, in the view of many CEOs, is to initiate conversations, which can be difficult. This involves communicating with employees, giving them a voice, and listening carefully and with empathy.

Then, companies need to go beyond listening by focusing on jobs and opportunities. The specifics may differ for each company based on its industry but may include focusing on K-12 education, increasing hiring for individuals with less than a four-year degree, and providing greater access to capital.

This is not a time for incremental change; it is a critical moment for fundamental change, with businesses and CEOs playing a major role.

Key Takeaways

Americans want CEOs and brands to speak up.

Kyle Dropp of Morning Consult shared survey findings that show how Americans are thinking and feeling. Among the findings:

  • No single person or group is viewed as doing a good job of addressing the protests. Governors and mayors fare best, but political leaders (Donald Trump, Joe Biden, and members of Congress), religious leaders, the police, media, and business leaders are all viewed unfavorably in addressing the protests.
  • Americans want to hear from CEOs and companies, with about 70% looking to business leaders to speak up about racial and social inequalities, along with specific measures their company is taking.
  • Most people believe brands should not stay silent. Brands supporting political and social issues is a divisive matter, especially along racial But inaction has consequences, as nearly 25% of adults said they would have a less favorable view of a brand if it didn’t make an official statement. Common actions that Americans want brands to take include:
    • Setting up a fund for small businesses impacted by looting
    • Donating to community cleanup
    • Conducting racial sensitivity training
    • Donating to social justice causes

Figure 1: Americans want companies to acknowledge the reason for these protests.

Question: How important is it for companies or executives to emphasize the following in their response to protests and demonstrations in dozens of US cities?

Many CEOs have spoken up and are speaking up.

At the forefront of speaking up is Ken Frazier, CEO of Merck. Frazier stepped down from President Trump’s Advisory Council in the aftermath of Charlottesville and spoke up again recently in an important CNBC interview. Frazier’s goal in speaking up was to explain to viewers what the source of the anger is for many African Americans. He said that when the African American community views the video of George Floyd, they see an African American being treated as less than human.

“This African American man could be me or any other African American man,” said Frazier. And the officials in Minneapolis didn’t take any action for four days until the community took to the streets.

Frazier said he has received tremendous support for speaking up, from people both within the business community and outside of the business world. He termed this “a defining moment for our country when it comes to the issues of race,” and said he worries that our democracy is “at a very fragile state.”

He sees the business community playing a key role in getting through this time and in providing opportunities to the African American community.

“The business community can take leadership when it comes to concrete actions around things like police reform and around things like access to capital…of all the issues the business community can unilaterally make an impact on, it’s the issue of joblessness; it’s the issues of opportunity in the African American community.”

—Kenneth C. Frazier, Chairman, President & CEO, Merck & Co.

Other CEOs commended Frazier for speaking up and agreed with his message. Paul Polman, former CEO of Unilever, stressed the importance of CEOs as advocates. During his time at the helm of Unilever he was vocal in making the case that businesses need to be more environmentally and socially conscious, and more responsible citizens.

“Business cannot be a bystander…We have some very courageous CEOs that speak up, but dare I say, I wish there would be more who would speak up.”

—Paul Polman, Retired CEO, Unilever PLC

Doug Parker, CEO of American Airlines, concurred. Parker said that white people are not good at having difficult conversations about racism and therefore often avoid having such conversations. But, because of their role, CEOs are always in the public spotlight and have an obligation to initiate important conversations on race, even if it is uncomfortable.

“We do have an obligation. Sometimes we can convince ourselves that it’s not really my responsibility as a CEO to opine on this or make a statement on this, because when it comes to diversity and inclusion, we might think, ‘Well, it’s not going to matter, because who am I to be making these statements?’ It does matter.”

—Doug Parker, Chairman & CEO, American Airlines

“I think it’s important to speak out,” agreed Stephen Schwarzman, CEO of Blackstone. However, he cautioned CEOs not to speak out on everything. “I think there are a limited number of things you can focus on,” he said. “When you feel strongly,” Schwarzman continued, “You should speak out, articulate why you say what you do…and you have to be consistent.”

Former PepsiCo CEO Indra Nooyi said, “I think it’s commendable that CEOs are taking positions.” But based on her own personal experiences, she encouraged CEOs to be aware that when they take controversial positions, they will be subject to criticism, both internally and externally.

After Nooyi made comments about the bathroom bill in North Carolina, one third of her employees supported her and one third strongly criticized her; the remaining one third were quiet. Her conclusion was, “As a consumer brand…as many people that laud you, an equal number will criticize you.”

Business leaders see the necessity of speaking with and listening to employees.

When asked what CEOs can and should do at this moment, a consensus emerged about the importance of speaking with and listening to employees. Multiple CEOs reiterated the idea of “start with your employees.”

In a recent letter to Johnson & Johnson’s employees, CEO Alex Gorsky stated, “The responsibility of the company to its employees is to create a safe and inclusive workplace.” Gorsky said the company has had conversations with employees and communities about diversity and inclusion for more than a decade but the tone and tenor of those conversations has changed as of late. IBM CEO Arvind Krishna said that companies must create a safe environment where people are comfortable having straightforward dialogue and talking about their fears.

Former IBM CEO and current executive chairman Ginni Rometty reiterated Ken Frazier’s words that focused on healing, reconciliation, and action. She was emphatic in stating that all organizations need to do more. Rometty encouraged CEOs to listen to successful black leaders, who often feel an immense burden on behalf of their community not to fail or let others down.

“I think for all of us, whatever we have done, it is not enough on the listening, the healing, the reconciliation.… It is not enough…we have much more to do on the listening piece and on learning.”

—Virginia M. Rometty, Executive Chairman, IBM

The comments of other CEOs resonate with Goldman Sachs CEO David Solomon. He agreed, “We have to speak to our people.” Just prior to the CEO Summit he participated in a town hall where three black partners spoke to 10,000 firm members about their personal experiences.

Similarly, Mary Barra, CEO of General Motors, has communicated with employees and in doing so has focused on listening, understanding, and giving employees a voice.

Likewise, Marriott CEO Arne Sorenson stressed listening, empathizing, and trying to understand the complexity of people’s feelings. Then, beyond listening, it is important to take concrete steps on things that the company can control.

“What we do at Marriott is make sure that we are recognizing the importance and dignity of everyone, no matter their race or background, and working to create opportunity for everyone.”

—Arne M. Sorenson, President & CEO, Marriott

Joanne Lipman, former editor-in-chief of USA TODAY and author of That’s What She Said, drew parallels to the Me Too movement. Initially, Me Too was viewed as a female issue. But, for real change to occur it was finally recognized that it was an issue for everyone. This is finally occurring as the concept of white allies takes hold where white people now join in by seeing racism as their issue to confront.

Speaking and listening is a start, but actions must follow focused on jobs and opportunities.

In addition to being in agreement on the need to listen, understand, and empathize, business leaders were in strong agreement that words are not enough; action is required. In particular, the actions that are required must focus on opportunities.

Several participants, including IBM’s Arvind Krishna and Blackstone’s Stephen Schwarzman, focused on education.

“Education gives rise to opportunities. That’s what the history has shown.

—Arvind Krishna, CEO, IBM Corporation

Schwarzman emphasized that education is the key to making sustained changes and providing people with a good quality of life. However, public education in the United States is not what it once was. But it is possible to dramatically improve the education system. Schools where Schwarzman has provided funding, where 90% of students are minorities and 70% are at or below the poverty line, have achieved a 98% graduation rate and 96% of students have gone on to college. These results could be replicated across the country.

Ginni Rometty agrees with the focus on opportunity, but sees many opportunities related to jobs that can be for individuals with less than a four-year college degree. GM’s Mary Barra agrees, seeing many possible opportunities for people without a college degree and pushing for greater focus on K-12 education and other types of education and experience.

Other ways that companies can provide opportunities is through greater access to capital. Goldman Sachs has been extremely focused on getting capital into underserved communities through a series of long-term programs, including the company’s 10,000 Small Businesses program and 10,000 Women program. Also, when PPP came out, Goldman Sachs worked with community development organizations and financial institutions to deploy just under $600 million in capital. This is going to businesses that have an average of four employees and take loans averaging $62,000; about 60% of these loans are in communities of color.

“We see an enormous imbalance in the way capital is allocated to people of color…I think these are things where we can make a difference through actions over a long period of time by consistent investment.”

—David M. Solomon, Chairman & CEO, The Goldman Sachs Group

Former defense leaders are extremely concerned about the military being used to quell civic unrest.

A legal expert (Richard Pildes) and a federal judge (Douglas Ginsburg) debated whether or not the President can legally use the armed forces domestically to calm unrest. (Mr. Pildes argued it is only allowable in the most extreme of cases and the current situation doesn’t rise to that level.)

But regardless of whether it is technically legal or not, three former high-ranking defense and military leaders expressed concern that the Trump administration is politicizing the military and is potentially eroding trust in the military, and they are extremely concerned with how the President and the administration are making decisions.

Richard Spencer, the former Secretary of the US Navy, argued, “The most important thing that our military has right now is its reputation. You are gambling that reputation … when you send active military troops into a civilian situation. It’s almost unfathomable to me that it could even be considered.”

“You’ve got to push back against attempts to politicize the Department of Defense,” said Ashton Carter, former Secretary of Defense. “One of your jobs as their boss and their top civilian is to protect them [the military] from politics, not to channel politics to them.”

Former Secretary of State and Chairman of the Joint Chiefs of Staff Colin Powell is deeply concerned about the decision making taking place by the President and within the administration. He said, “It’s not clear that the President fully understands how the military works…I’m not sure what the Chairman of the Joint Chiefs of Staff or the Secretary of Defense knew about what they were being told to do, which makes for a very unstable situation.”

What will happened after the pandemic and the headlines fade?

Indra Nooyi said the real test is how people and companies will behave when the collective crises we now face are over. Will we change?

Prior to the pandemic, Nooyi reflected, we referred to many individuals as “hourly workers.” Then, during the pandemic, many of these people became the backbone of our country and were termed “essential workers.” We admire them and clap for them.

But what happens when the pandemic has concluded? Will we give these individuals higher wages? Will we provide health insurance and more workers’ rights? Will we treat them differently? And, once the protests about police brutality and racism subside, what changes will truly be made?

“What happens when we come out of this pandemic; are we going to be a different humanity? Or, are we going to be like a rubber band and snap right back to the way we were?…I’m hoping and praying that as we come out of the pandemic, we imagine a very different society—that has a conscience and that makes money. I’m not against making money, but not money at all costs on the backs of workers…I want to reserve my judgment.”

—Indra K. Nooyi, Chairman & CEO (2006-2018), PepsiCo

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