Katayun Jaffari: Hello, everyone, and thank you so much for joining us today on Inside Scoop, a new series brought to you by Cozen O'Connor. Welcome to your next 30 minutes of getting the “Inside Scoop” from experts in corporate governance and securities matters and learning some tips of the trade to solve the most pressing problems faced by board members, executives, general counsel, and compliance officers.
Katayun Jaffari: I'm thrilled to introduce you to my first speaker of the series, Tanuja Dehne, who will be sharing with us her thoughts on boardroom diversity and inclusion in the boardroom. As chair of the Corporate Governance and Securities Practice Group here at Cozen O'Connor, I am thrilled to talk to you about this topic. I've been speaking and advising on this topic for many years, actually, because I've had an opportunity to chair the ABA Taskforce on Diversity in the Boardroom.
Katayun Jaffari: I believe it's over the last year that corporations are listening to the call of investors. I believe that the spotlight on racial and ethnic injustices that this country has seen over the last year has also shed light into the inequalities that exist in corporations and their leaderships. As a result, I believe the conversation regarding boardroom diversity has exploded. What I have found is that many conversations have been around the why as opposed to the what and the how. I believe we all know the why now, and we agree to the why. It's time to figure out the what and the how, and who better than Tanuja Dehne to help us with this?
Katayun Jaffari: Tanuja is a seasoned corporate executive. She is President & Chief Executive Officer of the Geraldine R. Dodge Foundation. She is also a public company director. She brings the perspective and experience from her cross-discipline roles from the C-suite to the boardroom. I, of course, would be remiss not to mention that Tanuja is also a lawyer, and that's how we came to work together. Currently and in the past, she has served on public company boards and has also maintained the role of chair of comp committees and nominating and governance committees. She also serves on countless non-profit boards.
Katayun Jaffari: So Tanuja, thank you so much for joining us today on Cozen O'Connor's Inside Scoop. It's really an honor to speak with you.
Tanuja Dehne: Thank you…
Katayun Jaffari: I'm going to jump right in, because I'm hoping that you can provide us with some practical thoughts and guidance on the topic of boardroom diversity and inclusion. I actually had the pleasure of speaking with you this fall on a panel, and what I learned from you is one of the key pieces to the puzzle, which was around inclusion. So let's start. I'd like you to give us your perspective of diversity in the boardroom. Once a company - its management and its board -really decide that they want to become more diverse, what's the first step they should take?
Tanuja Dehne: So you are right. The conversation around boardroom diversity has exploded this year, and you're even seeing some changes and a number of directors being recruited and joining public company boards. But we often just recruit for diversity, and then we onboard for assimilation. So once an organization decides, "We're going to recruit and bring on new directors, new diverse directors," before that even happens, I think a board really needs to have some hard conversations amongst itself about how the organization works, how the board works, the board's culture, how the board is going to hold itself accountable, and also, how intentional is this board going to be about inclusion and ensuring that these new directors are set up for success, that there is an intentional and deliberate onboarding program that is ongoing, and strengthening the team. A board is a team, just like any other team. So I think it's really important that even before new directors are brought on that the board is aligned on the onboarding and setting up these new directors up for success. Then...go ahead.
Katayun Jaffari: What does that look like? I love how you describe that, Tanuja. So when you say they have to do that, what form can they do that in? What does that actually look like? Because I want to give some concrete examples of how they can do that. How do they look hard at the topic and create that process?
Tanuja Dehne: So one of the things that I have kind of instituted with my public company boards and some of my not-for-profit boards and advise on is a culture retreat.
Katayun Jaffari: For the board?
Tanuja Dehne: For the board. Oh, absolutely. In fact, some of the boards, before I even started as part of my interview process, I had said that I would really appreciate having a culture retreat. It just has a couple of simple elements. It's how do we work together? What are our rules of engagement? Let's make sure that we name it and we are intentional and we're talking about it. How do we communicate? Do we communicate in the boardroom, or do we communicate on the golf course? How are decisions made, and where are decisions made? Once again, are decisions made around the boardroom, the Zoom Room table? Where are they made? I'm going to say it again, the golf course, and how are we going to hold ourselves accountable?
Tanuja Dehne: Let's just have a conversation about that and have this culture retreat on a clear day, on a day when people are feeling good. We're not addressing an issue. The accountability part is really critical, because it's about board succession and board performance. How are we going to hold ourselves accountable, meaning are we going to have board evaluations that have teeth? Are we going to have peer evaluations? Are we going to have 360s? If board members are not performing, are we in agreement that it's time for them to move on? Do that again on a day that there's not an issue.
Katayun Jaffari: Tanuja, the success of that leads to the success of the organization, just to say it out loud, because we know this. I think maybe what I would like to challenge is we're not criticizing where the board decisions are being made. We're simply acknowledging where some board decisions may be made, and therefore, we're shedding light to it so that when new people do join, they can be on the golf course, too, or we find ways to kind of change that decision-making process? What's your thoughts there?
Tanuja Dehne: I think it's an agreement and alignment on how we're going to work together-
Tanuja Dehne: ... so that if the decisions and the conversations that lead to these important decisions-
Katayun Jaffari: Right. That's a better way of saying it.
Tanuja Dehne: ... are made in the boardroom that everyone has the same information. These are fundamental cultural issues, and it's important that we establish a strong culture before we bring in new directors. Then, once we bring on new directors, continue the culture retreat. So we will have them on an annual basis. And we're not talking about two or three days on an offsite. We're talking about a couple hours, one morning where this is all we talk about. It's either facilitated by a third party or we facilitate it amongst ourselves, and just revisit what we said we were going to do a year ago and say, "How did we do, and what can we do better?"
Tanuja Dehne: But it's also important for new directors to get the lay of the land. It's part of the onboarding process. "These are the rules of engagement. This is what we've all agreed on. This is how we communicate. This is how we make decisions. This is how we get the information, and this is how we held ourselves accountable," so that the person coming in, or persons coming in, know that there are performance evaluations and they will be held accountable for their performance. So that's just one tool.
Katayun Jaffari: I just wanted to highlight, as you said, that performance evaluation has teeth, and the new person, the diverse candidate understands the rules of the room that the organization - the board has set, is what I'm hearing.
Tanuja Dehne: Right. Yes, and part of the culture retreat is how do we communicate? That includes an agreement that we're going to lift up the voices in the room, that we want to hear from everyone, that people have the space and the invitation, and that together, as a team, if one of our colleagues isn't speaking up, that we invite them to offer their opinions. If there's something that's not clear, that together, let's get clear on that. Because oftentimes if one person has a question and doesn't understand something or needs more information, nine times out of ten, the rest of the group needs that information too. So let's not let these important issues slide. Let's get the information we need.
Katayun Jaffari: Well, and I'm going to tease out a tip there, right? So to the extent that there is an agreement about communication and really strong leadership, right, on the board, then now we can move into the conversation of really giving the space for everybody around the board table to be able to question and share. That's where I want to bring up your comment regarding assimilation versus inclusion. So I understand that a good step is a form of a board culture retreat to really lay out all of the things that you described. Then how do you move to the next step? What is the next process? Is it a search firm? Is it looking at your own network? How can a board, once they do that, move to the next step?
Tanuja Dehne: So I think, again, it's another one of these really... honestly challenging conversations. I chair nom/gov committees, and I've conducted and facilitated these conversations, where we had come to agree and acknowledge we need diversity on this board.
Tanuja Dehne: Well, we need to unpack that. What does that mean?
Tanuja Dehne: Are we talking about gender diversity? Are we talking about ethnic and racial diversity? Are we talking about some other aspect, demographic diversity? Are we looking for digital directors? Are we looking for a skillset diversity? It's okay. Diversity is very broad. So let's name what it is that we're looking for and then prioritize it. I think it's so important to prioritize it. "We want gender diversity on this board. We want racial diversity," and whatever that may be, because what can quickly happen is that we dust off our skills matrix. We all have them, and on the first three lines, it says, "Former CEO, former CFO, and prior public company experience." That happens, and I've seen it happen; it’s those three attributes which are roadblocks; they're inherent structural impediments to diversity in the boardroom, to overshadow and become the priority.
Katayun Jaffari: Got it.
Tanuja Dehne: So we need to have that conversation, unpack the skills matrix or the attributes. Again, we have them in the proxy statement. Everybody knows what I'm talking about, and say, "What is it that we really need? Do we need another former CEO? Do we need another director that has public company experience? What are we giving up?" If we're trying to look for, for example, somebody who has the experience in social media marketing that has tapped into the Millennial or Gen Z generation
Katayun Jaffari: You're not going to find that in the CEO, right? Is that what you're saying?
Tanuja Dehne: There are many, many people who have that experience that we have just put a wall up.
Katayun Jaffari: Got it.
Tanuja Dehne: We have not even had the opportunity just to even bring those individuals into the fold to be potential board candidates.
Katayun Jaffari: So second tip is challenge, right? Challenge your matrix, and maybe challenge those top three, if they look like what they traditionally have always looked.
Tanuja Dehne: Yes. I would absolutely say that. I'm an author of those matrices in my early career and was a big proponent of it. I'm at the point now where I'm just saying, "Just throw it out and start over again and ask, 'What is it we need now, and what do we need to get us to the future as we continue to really push?' Why are we here in the boardroom?” Long-term value creation. So I would really challenge some of these tools.
Katayun Jaffari: I was about to say easier said than done, right? Throwing out that matrix, throwing out what you are used to. But I think I want to highlight the last comment that you just made, right? Ultimately, I would say it is easier said than done sometimes. You've been there. You've had that challenge. But you just hit, I think, the nail on the head. Long-term value creation. That is absolutely the conversation that has been and continues, right? We've had many years of, "How do we handle the short-term-ism?" conversation. But now we have investors, the shareholders, the stakeholders thinking about long-term creation. That's where this conversation of diversity in the boardroom—and I do want to say diversity and inclusion in the boardroom—comes to a head, because we now have, I would say, statistical...we have researched information demonstrating the benefits, the advantages of different types of diversity in the boardroom.
Katayun Jaffari: There's so much to unpack in what you have been sharing. So I'm going to try to unpack a couple of things to ask you about. Number one is—I do want to ask you that question. You started talking about the skillset, or excuse me, you started talking about the type of diversity. You share that your opinion is there's many different types of diversity, not just gender, maybe race, and ethnicity. What is your response, though, if any, to the shareholder... I don't want to call it ... the shareholder pressures for...actually, also the legislative pressures, the regulatory pressures. We saw the rule out of NASDAQ over the late fall, right? What is your response to—California and other states—coming up with the requirements around gender and now race. What's your response to that? Can it be, should it be just those things? How do you make sure you fit in the other types of skills from a diversity perspective? Do you have a response to that?
Tanuja Dehne: I do, I do. I mean, the movement has been glacially slow, and companies, corporations, human nature, we don't move until we have incentives or disincentives to move. One would hope that we would do the right thing just because it's the right thing to do, but we know that's not how the world operates.
Katayun Jaffari: Okay.
Tanuja Dehne: So, I say more power to the legislation and the NASDAQ rulings and the disclosure regimes and all of that. It's just, to me, it's a good starting point.
Katayun Jaffari: Okay.
Tanuja Dehne: It's not enough, but it's a starting point. We have to start somewhere.
Katayun Jaffari: Okay.
Tanuja Dehne: So there's been more movement on gender diversity over the years, I would say not enough, but if this is what is needed to bring more racial diversity, ethnic diversity into the boardroom and starts to really catalyze more conversations about why it's so critical that the conversations become more robust, then I say, "Let's go for it." I don't have a problem with it. So my response is: I support. I wish we didn't need it.
Katayun Jaffari: Right.
Tanuja Dehne: But clearly, we do.
Katayun Jaffari: Understood, understood. Let's pick up, again, to maybe share some more tips, how about how do you find the diverse candidates? Now, you did talk about the matrix, throwing out the top three, because if you include a requirement of former CEO or public company experience, you have potentially put a roadblock for potential diverse candidates. But let's say you've gone through that process. The culture retreat, you've really looked hard at the matrix, and you really challenge yourself on the matrix as a board. Now you are ready. You are ready to be open to that. How do you find the diverse candidates?
Tanuja Dehne: Well, the diverse candidates, let me be clear. They're there. There is a robust pipeline of candidates out there. So I'll never put up with the excuse that "I can't find people," because that's just nonsense. But there are a number of avenues that a corporation can take. The one that we hear about often is a search firm, and a lot of folks blanch at that, because it costs a lot of money.
Katayun Jaffari: Got it. Okay.
Tanuja Dehne: I've been on many sides of this debate about hire a search firm or not. But I will say the benefits of hiring a search firm is that a search firm is equipped to really poke and prod on those questions. They are going to really help an organization in their due diligence process, their fact-finding within the organization on what is it you really need?
Katayun Jaffari: Got it. Okay.
Tanuja Dehne: They're good at that. So those skills—if you're struggling with those conversations—a search firm, the right search firm, can be helpful in that.
Katayun Jaffari: Okay.
Tanuja Dehne: That said, it's really important those search firms will do what you ask them to do. So if you're not prioritizing diversity, even if you don't feel like you're well-equipped to talk about it, the search firm can be helpful in that regard. But if you're really kind of leaning back to your comfort zone, the search firm has a job to do, and that's to fill that search. They'll do what you ask them to do, and search firms do have their lists and their names of candidates that are out there. So it's really up to, ultimately, the client, pushing whoever's helping you to ensure that the pipeline is expanded. Then the organization also has to be willing to make the time and the space to define the candidates that they're prioritizing.
Tanuja Dehne: So a search firm is one avenue. There's several other avenues, but let me just be clear about something. Reverting back to the Rolodex—if that's a thing anymore—your contact list, that's not a winning strategy, because it's more of the same. You have to interrogate that. If you start to expand beyond the Rolodex and maybe go and start asking your Rolodex, "Who do you know? What do you know?" and go beyond that so your circle gets wider and wider, that's one way to do it organically and less expensively. But if you keep going to who you know, you're going to end up with that assimilation. It's just more of the same. Of course, there's affinity groups, too.
Katayun Jaffari: I was going to ask you next about that. Please keep giving these tips.
Tanuja Dehne: So as a chair of a nom/gov committee, I've kind of dealt with the issue of, "Search firms are really expensive.” What else? So one of the things that I had done with one of my boards is reached out to various affinity groups, women's executive groups. Again, you have to keep asking, "Who's out there?," and then putting your placements, like Women Corporate Directors, and putting your placements there. So there's many, many of these affinity groups, but the thing is that if you're in the one-on-one conversation that "I want diverse directors," you may not be plugged into those affinity groups.
Katayun Jaffari: Right.
Tanuja Dehne: So, again, the circle gets smaller. So I would challenge and say think expansively.
Katayun Jaffari: Any recommendations on how you get plugged in if you're not familiar with them? I am familiar with them. You're familiar with them. But what if there's folks out there who aren't being advised by me and don't know you? How do they get plugged into those affinity groups? Any thoughts?
Tanuja Dehne: It really goes back to being a director. Part of being a director is being a lifelong learner and staying on top of these issues and education. We are part of countless listservs, whether it's the National Association of Corporate Directors, Women Corporate Directors, the various universities—Drexel University, University of Delaware, Columbia University, Stanford University, and I'm sure I'm missing a zillion other ones. But if we're doing our job, I hate to say it, we should be plugged into at least the education programs. Then the education programs are good starts to reaching out to what are these other groups? Whether it's Ascend Pinnacle, which is the Asian corporate directors, or there's so many of these organizations. I think as a director, we're lifelong learners, and we have a job to do. So it's part of our job.
Katayun Jaffari: I'm going to throw in as an adviser to boards, it's part of our jobs to highlight those organizations as well. That's where I've seen the opportunity, is to be able to share with clients and with individuals there are organizations out there. If you cannot do a search firm right now at this stage or you're a smaller company and you really are committed to this issue and this topic and this desire, there's other ways to do it. But I'm really glad you touched on a variety of different ways. So we did. We talked about the process, right, and the challenge of that process, but the importance of the process. We talked about the stages. How do you actually do it?
Katayun Jaffari: I think with that said, while we all know the why, Tanuja, I kind of said that in the beginning, I really would like to end maybe with that topic. You go through this process. You find the candidates. How do you make sure that you've assimilated them, right? How does the candidate themselves feel assimilated, and how do we lead that into the why? What is the benefit? So it's a dual-prong question.
Tanuja Dehne: So I think so, and this is a lot of hard work. It continues. It's not easy. So these culture retreats and the space to have these conversations, this doesn't happen just-
Katayun Jaffari: Overnight.
Tanuja Dehne: The boards have to prioritize and make the space on each board agenda at the board level and at the committee level, that we're talking about these issues, that we're talking about the long-term. It's part of our regular cadence and part of our board culture so that it is not out of the norm to have conversations and for people to bring up issues that are impacting long-term value creation - the performance, the strategy, the risk management, but really pushing and interrogating and having those generative conversations that are perhaps questioning the underlying assumptions and the validity of what performance means over the long-term.
Tanuja Dehne: That's where the robust conversations with having different perspectives comes into play. I'll just make one point. This year with COVID-19 in and of itself has upended everything. So for example, just the issue around workforce, people, safety, not just at the C-suite—we're talking to the frontline on a regular basis. The conversation in the boardroom has shifted to just basic human nature. Are our people safe? That is not something that necessarily comes up on everyday board agendas, but it did this year. So we should leverage that momentum to keep those conversations on the top of our minds, and if we're not having those conversations, we have to ask ourselves, "Why?" Or maybe we don't have the right people in this boardroom that are going to ask and really push those questions to ensure that our workforce is not only safe, but we have a workforce that people want to stay and that we have a culture in our organization where people want to work. They want to come. They want to be recruited.
Katayun Jaffari: They want to be part of the team.
Tanuja Dehne: They want to be part of the team.
Katayun Jaffari: For long-term value creation.
Tanuja Dehne: Yes, yes.
Katayun Jaffari: I can't think of a better way to close out our short Inside Scoop conversation. I want to thank you, Tanuja, so much for your helpful guidance and real tips, a couple of things that people, board members or management and counselors, can actually share as a way through this process around boardroom diversity, and, again, I want to highlight inclusion.
Katayun Jaffari: If anyone listening has any questions, you can always contact me directly at firstname.lastname@example.org. I'm sure I can get you in touch with Tanuja if you need to be or would like to be. With that said, please stay tuned for our future programs. We intend to have programs regarding ESG disclosure and compliance, shareholder engagement with individuals just as engaging, I hope. I am sure, but I hope, too, just as engaging, insightful, and helpful as Tanuja Dehne. Thank you, Tanuja. Thank you, everyone, for listening today. Have a wonderful day.