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for a very long time boards were not asked to be representative of the people who they served the the communities in
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which they operate or their larger stakeholder base so kind of like the government when the government doesn't
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represent the people the government starts making all sorts of decisions that don't always reflect the needs of
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all the people welcome to a special edition of the ripple effect I'm Dia Loney in honor of
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Juneteenth this month senior advisor to the dean for the Coalition of equity and
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opportunity Kenneth Shropshire will be your special guest host in each episode this month Ken and Wharton faculty are
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focusing on the critical themes of diversity equity and inclusion we'll be covering a diverse range of topics
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bringing you the latest insights and knowledge that you could apply to your life and work so get ready to dive into
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this special edition of the ripple effect with guest host Ken Shropshire while the topic of diversity Equity
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inclusion has so many different facets to it one though is how Corporate boards are thinking about these topics as we
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move forward pleasure to be joined by Stephanie Curry who's an assistant professor of management at Thorne school
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and as well our friend Ken Shropshire of the Wharton School and Ken let me start
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with you because the larger scale the role that the board has in really kind of getting this process set and roll
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becomes a very important one doesn't it really does so the board can apply pressure
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can move forward regulations or or whatever new standards a company might want but we see a lot of this in a lot
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of different areas we might see it in cyber security or whatever else and boards can be silent on this or they can
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go full speed ahead and make it their major issue so so I'm anxious to speak
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with Stephanie about her extensive work in the space and to see if we can help leaders out there and board members out
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there on doing better well and as I said Stephanie has uh just a wealth of of knowledge in this area so I will let you
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two have your conversation a pleasure to be joined Stephanie having you back on the show thanks for your time today
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Stephanie my good friend yes this is so this is the uh the old and and the relatively new
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um I have become uh great friends and colleagues in our short time of knowing each other
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and Stephanie before we talk about boards as a primary focus I I was thinking about you know kind of the old
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school new school like kind of thinking about this and you know before me there's you know
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emancipation reconstruction equal protection um even before me too or the kind of the
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World War II kind of activities that took place and then you got Brown versus Board
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you've got the the Civil Rights kind of laws that cut happened in the in the
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early 60s then we've got the affirmative action kind of moment and then we have
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the uh retrenchment from affirmative action we have kind of negative period and then
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George Floyd was kind of this moment forward where are we now this whole Dei spaces where it's we're
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characterizing everything which could be a whole nother show about what we should
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characterize this whole Space is but but where where are we now and and then we'll talk about board so yeah so Ken
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we're in a we're in a really interesting time I think if you were to ask me this
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question in 2017 when I arrived at the Wharton School I would tell you that the students who I teach who you know you
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had taught and believe that we didn't have a race problem in America still and
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certainly that wasn't a problem race wasn't an issue that we need to discuss
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outside of the U.S borders and so that was six years ago and so I would say that there had been previously a lot of
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indifference amongst uh citizens in the U.S around the world is certainly amongst companies in taking up topics of
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race so I would say if you were to dry a graph based on the things that you talked about there's sort of an uptick
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at key key points in time key moments around civil rights legislation Etc and then I would say 70s 80s 90 keep
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I think we would start to see like a down swing in the numbers of activities that corporations were engaging around
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this topic schools Etc and and so you know the interesting part is uh the the first movement if you will was
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around 2014 and 2016. um I always talk about that as the first black lives matter movement when we actually thought
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that the black lives matter movement was sort of some extremist group right we didn't have a lot of clear unders and I
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say we uh meaning you think that on average citizen didn't have an understanding of what these issues were
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they didn't understand why people were talking about police brutality Etc so we
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started to see some interest in in 2014 and 2016 in the general population obviously Colin Kaepernick started
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kneeling we didn't think that was a great thing back then um and then 2020 happens and then it's
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the sort of this explosion of interest in talking about racism systemic racism which was something that was I would say
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new in our vocabulary as everyday citizens um and then we saw an explosion of interest in this topic outside of the
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U.S and not necessarily talking about America can black lives they were talking about Japanese lives and
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Nigerian lives and people who were from historically marginalized ethnic groups in their country so you know sum it up
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where we are is um in a place where there's a heightened attention to this topic we still don't
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all agree on whether or not racism is an issue or how to address it but I would say that for people like yourself and
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myself who study these topics it's a good time to be studying and talking about it because there is significant
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interest in knowing more and learning what we can do now that's that's a great
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catch up and it is I mean it's it's horrible horrible phrasing on your part
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though it's a great time to be studying this I guess it's it's not great that
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we're studying it I guess so it is a fantastic time for people that are interested in trying to trying to solve
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these these issues and leaders really play a role in this and and this gets us to to boards and thinking about what
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boards do with companies why do we care to get to it directly why do we care about and I want to be specific about
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the diversity that we're talking about why do we care about more blacks and Latinos on boards as well as other
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diverse groups what what difference does it make in the context of what we're
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talking about what is it what can companies do and then what can boards do to make companies do that
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so I'm going to tell you what the ideal is and then I'm going to tell you what I
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actually study because these are two different things right so the ideal is is that boards act as
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strategic advisors to their firms but also as people who monitor the firm's activities and help the firm to make
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sure that it's complying with all that's expected of them from a variety of
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stakeholder groups so that's compliance monitoring on the one side and the other
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side it's a strategic uh position strategic advisory position so so on a good day what we want a board to be able
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to do is to help the firm understand its customer base the communities it operates in and to really understand how
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its products and services can help to solve the needs met and unmet needs of people in who who are
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part of the stakeholder Network right on the one hand on the other hand as as corporations they do have
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responsibilities to the societies that allow them to exist so here here in the U.S publicly traded companies have you
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know relationships with with the government right and the government especially in heavily regulated areas
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like or Industries like Finance expect for the firm to be following um whatever regulations it has set forth
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so this gets back to representation when the board is not representative of stakeholders doesn't understand the
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needs of stakeholder groups we have a problem and so for a very long time boards were
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not asked to be representative of the people who they serve the the communities in which they operate or
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their larger stakeholder base so kind of like the government when the government
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doesn't represent the people the government starts making all sorts of decisions that don't always reflect the
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needs of all the people so the ideal is that we have a diverse board in this case a racially diverse board that also
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represents the interests and perspectives of people from a variety of racial groups so that's the ideal is
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that these boards will raise issues that are pertinent to the livelihoods of various stakeholder groups and they will
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make sure that the CEO the management team understands in the activities that they engage in how how to address these
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stated groups needs but that's not what I study what I study is uh why and how
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why boards do not do that right why uh diversity or diversifying a board has been so problematic
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um why is it that even if you have a diverse board they may not necessarily uh engage in activities that meet your
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needs or my needs um and so yeah I think it's a it's a conversation that you know I hope to
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continue to build through my own research I think the conversation about board diversity has spent a lot of time
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focusing on getting a more diverse board will help us to perform better without fully understanding what the mechanism
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is that would explain that um but it is an important question but it also requires us to not just focus on
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uh diversity for diversity's sake but to understand uh that the people who are on
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the boards are still people we want them to make decisions that are helpful for us all okay so let me probe a little bit
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more than as someone who sits on a public board and thinks about this issue a little bit of financial board yes
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correct Financial work and whatever whatever I am uh trying to be anybody wants to be on a
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board the smart question is always well what's in the best interest of the shareholders I mean that becomes the
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ultimate kind of stakeholder question and and a lawyer said all the legal cases you go to Delaware courts in the
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end was that board member acting in the best interest of the shareholders and often and you
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may tell me too often that goes to share price Share value that that's how you
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translate what's what's in the best interest how does that conflict or how
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does that meld with this idea of issues that are important with regard to Dei our investors of the company yeah so
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so in the last few years a big institutional investors like BlackRock and State Street and Vanguard have made
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the topic of board diversity one of their greatest priorities and when you read their position papers they they
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speak a lot about you know the potential for enhanced financial performance from
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in from increased board diversity they cite all the academic research on this topic they cite consulting firms
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research on this topic but beyond that what they talk about is risk which you can appreciate as a lawyer the language
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of risk and the language of risk comes uh is one such that if we don't know um our neighbors and understand what
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their needs are if we are missing um targeting our products and services to certain communities if we are not
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following and complying with the regulations that are um you know know given to us to abide by
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as it relates to particular racial groups then we might have a problem that might hurt our financial performance and
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so while there's a lot of the conversation around how do we increase you know our Market size and and
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generate Revenue by being able to gain entry into diverse markets there's that
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whole conversation lately the conversation has been about risk mitigation and that's something that
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shareholders care about is losing money because we haven't uh effectively monitored all of the costs
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so even if you don't have the bottom line information about this will help you be more profitable
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as a board member be aware that there may be other externalities that will come at you and cost the company money
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which will impact the bottom line yeah you don't act positively in these ways
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and this and this gets captured not only in this Dei kind of conversation but also in the ESG conversation the the S
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the S of the ESG conversation how you mentioned some big name companies Enterprises that are
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aware of this and highlighting this how Universal is that understanding now in in your work in your conversations
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uh are you enlightening companies yeah to the broader concern or is it something that that seems to be in the
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atmosphere yeah so so before coming to Wharton I was a professor at Cornell and one of my
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students who ended up uh you know working with me in a variety of research projects uh moved on to State Street
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um as state tree Global advisors and he works in the unit that has put out all this guidance to firms on uh what they
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should be doing initially it was around gender diversity several years back and then more recently was around racial
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diversity so Ryan and his team and I have had a number of conversations they've interviewed me in a number of
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other uh people who you probably know who are on boards um to talk about like what does this
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conversation look like what's an Institutional Investor's role in it and
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because Ryan was my former student he has come to Wharton and he has actually come in and sat in on my diversity
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classes and actually taught our students and the interesting thing is we have another student at the Wharton School in
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a in a in our MBA program who used to work in Ryan saying role at Vanguard and so this past fall it was interesting to
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hear them talk about uh their shared responsibilities around meeting with board chairs and helping them to
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understand why this topic was important and why they should continue to keep topics around diversity racial Equity
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gender equities at the top of their conversation so I would say from the perspective of big institutional
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investors yes there's certainly a lot of attention now they're not the only
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investors but they do tend to hold I mean think about as Ryan explained to me think about your you know we don't have
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a 401k we have a 4013b but you think about your retirement plans and who's managing that money those are the folks
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those are the entities that are going and meeting with board chairs to say hey what are you doing with people's
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retirement monies and are you paying attention to ESG and Dei and racial Equity um how is the company doing and is the
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board actually doing its job to hold the company accountable so from our perspective or from my my perspective
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when I see the big institutional players doing so much of this work I think that
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it's um you know it's an indicator that of its prominence but you know in my own
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daily activities working with my former student who's obviously a professional
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doing you know amazing work around this and then meeting people in our own MBA class who have also taken up the role
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the last thing I want to say about this is um you know when you were talking about
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history and and I started thinking about Generations I'm a generation xer right
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so I'm kind of in between I would say a generation of of one type of activism
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and another type of activism and Ryan he is oh he he will Define himself as a white American male which I find super
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fascinating um given I think about who traditionally tends to take up these issues Ryan is
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also in his late 20s as our is the average age of our MBA students and the NBA student who was also taking up this
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issue around racial Equity at Vanguard was a white female and so for me as a generation excerpt watching who's
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actually doing this work and who's trying to hold the boards accountable it's not people who look like you and me
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can there's absolutely people who are in their late 20s and white Americans who
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have strong um sentiments around this Topic's important and that's that's the question
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I want to ask you before we start to close out because I was in the New York Times recently there was a discussion
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about a new dictionary that skip Gates you know in real estate test coming out on the African-American language some
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stuff and it's got all these terms that I kind of chuckled to myself as I heard
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heard some of them that are not broadly known to the rest of the world but but the one that may or may not be in there
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is as you were saying this I was thinking about good white folks and he kind of has framing like this yeah and
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when I think about that and this is you know within the culture white folks that are doing good stuff
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that are down kind of as you're describing so so knowing that knowing that that can
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happen going back to the beginning of this conversation how important or what kind of signaler
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is the diversity of the board that this work will actually be done and we can't
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can't the board be people by good white folks or Ryan and as we're describing
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this and how important is it just as a as a proxy to have a diverse board yeah it's
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certainly a question that I'm asked a lot especially now that we have this new
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generation that has done a lot to begin to understand the lived experiences of other people so that is so important and
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I will talk about these folks as allies right a whole lot of my work including my work on board diversity the academic
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side of it is looking at allyship and how that happens and and how that works and why that's important on board so it
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is so important that allies like Ryan and and this this student who's award an
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NBA student exists and that they are talking about these issues but that's not a replacement or that's not a
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substitute for people who actually come from these communities have these backgrounds have these experiences who
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are reflective of these subsets um you know there is I don't want to call it a Nuance because that sounds
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like marginalizing the experience but there's a difference there's a difference experience that you have when
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you walk around um in that body in a black body in an African-American body in the U.S and you
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navigate the professional Workforce and heck when you navigate what it's like to
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be a board member often one of you know 13 right one person who is underrepresented and the other 12 for
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example might be all white there's a lot more that comes with that than can be
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just I think subsumed by somebody who just learned about it from talking to other people but Ally is important but
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people who have the lived experience the shared experiences of navigating these companies are important as well that
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said I want to say that just because you're black doesn't mean that you have
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the same lived experience as another black person and so in my research what I try to talk about is
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um you know understanding that um when we're thinking about board diversity um we are trying to actually capture not
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just the brown person or the black person on the board and we're talking about racial diversity we're trying to
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capture the perspective and so let's say for example um I probably get in trouble when I say
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this it is great if everyone on our board got their MBA from the Wharton School right lots of us would be really
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really really happy um and so sometimes what happens is people say well we need another woman
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and we need another black person let's look and see who else graduated come to
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Wharton MBA program so while that's nice it actually hasn't truly created uh in in many cases the
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diversity that the board is seeking because that network is small they are they've probably been taught very
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similar ways of thinking about businesses um and so I think one of the next stages
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for companies today is when they're thinking about recruiting a diverse board to step outside their alma mater
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Network right to step outside their client network and to really try to find people for the board who are not only on
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the surface difference because they have different color skin or they have a different gender identity or whatnot
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um it's also to think about you know when we're recruiting a diverse board we
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want everyone to bring different things to the table and that's where I think
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the the set of opportunities are for boards today so Stephanie it's so exciting to speak with you it's so
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reminiscent of your professor David Thomas who started the ward in school with me so many years
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years ago so I am glad to have his presence here in in your form in your unique way it's uh it's also just just
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the big takeaway for me is this idea of thinking about the task of a board member demographics being important I
00:23:07
also also think about this is not shouldn't leave this is the last thought but if you just just reverberated with
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me as you said it I think about uh excuse the politics of this but I think about what Thurgood Marshall was
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stepping off the court and he was asked whether or not his replacement needed to
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be black and he said essentially you know if it's a black snake or a white snake it still bites I mean he wanted
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somebody that had the presence to make the decisions in the court that we're looking out for the interest
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of civil rights matters in a way that he did no matter who that who that person was and colorful The Guiding Light so I
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appreciate every everything I've learned from you today thank you so much thank you for listening to the ripple
00:23:56
effect we hope you found this episode informative and engaging don't forget to
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