Director Nightmares, Pitfalls, and Lessons Learned from the Boardrooms of Pepsi Bottling, Reebok, and easyJet
NACD Chapter Advancement Officer Susan Paley led a fireside chat with Dean John Quelch at NACD Florida’s final program for the season. With more than 40 in attendance, Dean Quelch began by sharing his first board experience. He explained to the group that after two of his Harvard colleagues turned down a board opportunity to serve a little-known company that made sneakers, he said “yes” to what eventually became the mega-brand Reebok. And so, began his impressive boardroom career.
Dean Quelch discussed the belief that maintaining a consumer-centric approach was the key to Reebok’s explosive growth in the 1980s and beyond. Knowing, interacting with, and staying engaged with one’s customer, Dean Quelch said, are critical to success and represent key challenges facing many industries today.
Ms. Paley mentioned the importance of diversity in the boardroom. Dean Quelch explained that he has been a director for owner-influenced companies where he was stymied in his efforts to create a culture where diversity of thought is encouraged. These companies have significant challenges with both retaining talent and attracting top talent, which hurts long-term value because diversity of thought, gender, ethnicity, and skills are critical success factors and even more impactful when there is a critical mass of diversity.
The discussion continued, touching on the importance of culture to a successful merger. Bringing cultures together successfully requires deep understanding of the workforce, what motivates them, and what matters most to them. Culture becomes even more important when dealing with international acquisitions.
Identifying the “mood in the middle” and “buzz at the bottom,” Ms. Paley posed the question of how board members should interact directly with management below the C-level—if at all. Dean Quelch said that while some management has been trained to interact with the board, those in the more junior ranks have not, and he believes the board should not attempt interaction, outside of a site or informal office visit. The risk could be unintended misinformation. Best practice is to engage with the management team by inviting them to board dinners or asking them to present during board meetings.
Evelyn D’An, chair of NACD Florida’s Advisory Board, closed the program with a story and a lesson of her own: a recent board encounter with a significant activist shareholder. The marching orders that the board set for itself were to listen and not comment, because even if it had initiated strategies to deal with some of the issues the activist shareholder raised, the activist may still have believed that the board was not doing enough, not moving fast enough, and not going deep enough.
The NACD Florida Chapter would like to thank the University of Miami for supporting this event with the spectacular venue and networking event.