S7E14 | How can boards advance ESG priorities through a values-based culture?

What you'll learn in this podcast episode

With increasing demands from institutional investors, employees, consumers, and shareholders around ESG priorities, how are company boards assuring that they are shaping business strategy to be responsive to these expectations? In this episode of the Principled Podcast, Dr. Marsha Ershaghi Hames, partner at Tapestry Networks, explores the role of boards in bringing a strategic mindset to advancing ESG issues with Virginia Addicott, former president and CEO of FedEx Custom Critical and board member of both CDW Corporation and Element Fleet Management. Listen in as the two discuss how the board’s own diversity can humanize the elements of creating sustainable corporate cultures and creating meaningful organizational change.

 

Featured Guest: Virginia Addicott

Virginia Addicott recently retired as president and CEO of FedEx Custom Critical®, a leading North American expedited freight carrier located in Green, Ohio. Virginia joined FedEx Custom Critical in 1986 and quickly worked her way up the ranks, holding director positions in various departments where she placed a strong focus on organizational culture, customer satisfaction and developing people. In each role, Virginia used technology to improve productivity. By streamlining processes she has improved efficiency and enhanced communication capabilities to move the company forward. 

Virginia has been recognized for her leadership both at work and in the community. In recent years she has been inducted into the Northeastern Ohio Business Hall of Fame (2013), received the Women of Power Award from the Akron Urban League (2013), and also received the Leadership Excellence Award from the National Diversity Council (2014). She has also been named to the Inside Business Power 100 list for the past six years (2011-2016) and the Crain’s Cleveland Business Power 150 (2014). She was also named honorary chair for the 2015 Bridgestone Invitational Tournament, the first-ever woman to be named honorary chairperson for the tournament. 

Virginia earned a Bachelor of Science degree (‘85) and an EMBA (‘95) from Kent State University. In 2013 she was appointed by Ohio Governor John Kasich to the Kent State Board of Trustees. She is past chair of The Boys and Girls Club of the Western Reserve and past chair of the Greater Akron Chamber of Commerce. She also serves on a number of other boards, including Akron Children’s Hospital, the Akron Community Foundation and FIRST (For Inspiration and Recognition of Science and Technology).

 

Featured Host: Marsha Ershaghi Hames

Marsha is a partner with Tapestry Networks and a leader of our corporate governance practice. She advises non-executive directors, C-suite executives, and in-house counsel on issues related to governance, culture transformation, board leadership, and stakeholder engagement.

Prior to joining Tapestry, Marsha was a managing director of strategy and development at LRN, Inc. a global governance, risk and compliance firm. She specialized in the alignment of leaders and organizations for effective corporate governance and organizational culture transformation. Her view is that compliance is no longer merely a legal matter but a strategic and reputational priority. 

Marsha has been interviewed and cited by the media including CNBC, CNN, Ethisphere, HR Magazine, Compliance Week, The FCPA Report, Entrepreneur.com, Chief Learning Officer, ATD Talent & Development, Corporate Counsel Magazine, the Society of Corporate Compliance and Ethics and more. She hosted the “PRINCIPLED” Podcast, profiling the stories of some of the top transformational leaders in business.

Marsha serves as an expert fellow on USC’s Neely Center for Ethical Leadership and Decision Making and on the advisory boards of LMH Strategies, Inc. an integrative supply chain advisory firm and Compliance.ai, a regulatory change management firm.

Marsha holds an Ed.D. and MA from Pepperdine University. Her research was on the role of ethical leadership as an enabler of organizational culture change. Her BA is from the University of Southern California. She is a certified compliance and ethics professional.

 

Principled Podcast Transcription

Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace changemakers.

Dr. Marsha Ershaghi Hames: With increasing demands from institutional investors, employees, consumers, shareholders around ESG priorities, how are corporate boards ensuring that their companies are assessing, measuring, and shaping business strategy to be responsive to these expectations?

Hello, and welcome to another episode of LRN's Principled Podcast. I'm your guest host, Dr. Marsha Ershaghi Hames, a partner at Tapestry Networks. Today, I'm joined by Virginia Addicott, the former president and CEO of FedEx Custom Critical. Virginia serves on the board of CDW Corporation and Element Fleet Management. We're going to be talking about the critical role of boards in shaping ethical corporate culture and why board diversity is essential to creating meaningful organizational change.

Virginia is a real expert in the space, having carved out an impressive career in operations and innovation in logistics at a time when relatively few women were in the industry. Virginia joined FedEx Custom Critical in 1986 and quickly worked her way up the ranks holding director positions in various departments where she placed a strong focus on organizational culture, customer satisfaction, and developing people.

Virginia has been inducted into the Northeastern Ohio Business Hall of Fame. She's received the Women of Power Award from the Akron Urban League and received the Leadership Excellence Award from the National Diversity Council. Virginia, thank you for coming on the Principled Podcast.

Virginia Addicott: Well, thank you very much for having me. It's a pleasure to be here. Thank you.

Dr. Marsha Ershaghi Hames: So let's get started from the top. You had such an accomplished career. You retired as president and CEO at FedEx Custom Critical before turning to a distinguished career of service on both corporate and nonprofit boards. Maybe to start, just share a little bit more about your journey and how these experiences have helped shape and prepare you for the lens of oversight and board service.

Virginia Addicott: Yes, Absolutely. As you have mentioned, I had a really terrific career at the FedEx corporation leading the FedEx Custom Critical organization. I was with the organization for a little over 33 years. Unbelievable in this day and age I think. But I really did have a terrific career because I started out in the ranks and moved my way up quite quickly. I think really starting out really... I'll say doing the doing, having your hands dirty, and really in the operations really did shape and prepare me for ascending to the role of president and CEO because I really understood how the organization worked, how the people worked together.

And through that 33 years, one of the biggest things that I did see was that culture is everything to an organization and how you treat your employees with fairness and dignity and making sure they know that they're valued in their work really makes the difference in how you can execute a strategy. And I love strategy, but without having a really engaged workforce, it's very difficult to take any strategy and put it into play.

Dr. Marsha Ershaghi Hames: As you came through this, I would say, observation of the importance of the intersection of not just the execution, but the how we get there, there were relatively few examples of female leaders in your industry. A lot of how we look at the lens of decisions can be informed by our own personal and professional experiences. Tell us a little bit more about how your experience of perhaps being the first woman or the only woman in a room shaped how you took your next steps in your career and maybe some of the lessons that you're carrying forward into the boardroom.

Virginia Addicott: Well, definitely when I began my career back in the '80s, the later '80s and 90s, you're right, there weren't that many women in the leadership levels of our industry and the transportation industry. And of course today, much different story to that. But one of the things that it was absolutely apparent to me is the whole need for diversity around a table, because one of the things that I witnessed was that when you have the same types of people all sitting around a table and they've had maybe similar backgrounds, similar experiences, et cetera, they come to the table with similar viewpoints.

When you start bringing people to the table who have had diverse background, experience, you really do start to get a whole new possibility of how you'll take something forward, how you'll shape your strategy, how you'll handle and work with those people who are working with you and for you. So I really do think that the opportunity to be that person who was maybe the only or one of very few gave me the context as to how that feels and how important it is to have the diversity, but also how to embrace and engage and work with people who come from many different types of backgrounds.

Dr. Marsha Ershaghi Hames: So I think embrace is a great characterization here because it starts with the willingness to be open and inclusive of ideas or points of view that may differ from your own. I've certainly been in dozens of conversations now with corporate directors that continue to reveal this pressing need for boards to really improve their understanding of diversity, equity, inclusion.

And there's a lot of dialogue around the board's role in the governance of DEI, especially as investors and employees are demanding more progress from institutions. I'd like to get your reflections a little bit more on this. I mean, to what extent, both within your own industry, and I think more holistically, are you seeing progress around inclusivity, diversity, even gender parity, and what is really the responsibility that you feel is of the corporation in being more intentional about driving us forward?

Virginia Addicott: Well, I have the luxury up sitting of course on a couple of boards. And I can tell you, on both of our boards, we have a really firm look at the entire ESG and we talk about it. But the number one thing we understand before you even get to ESG is how important diversity is.

So it's not doing it because somebody just said, "Hey, we have this thing called ESG and this is what you need to do," it's really understanding, and again, embracing the idea that when you have people from different backgrounds, whether it's gender, whether it's ethnic, whether it's background of an experience, when you get those people around a table, you get a better answer.

I can't quote them off the top of my head, but there's studies out there that show that when you do have this diversity, a company is much more likely to thrive, grow, and be profitable. So it's a no-brainer to know that that's important. Now, I'll tell you that the boards I sit on, we do talk about this at the board meeting and we do have metrics around it and have the human resources or the chief operating officer. But we include all of the C-level players at these companies in talking about, how are we doing?

How can we do better? And really working around the ideas of acceptance of other ideas, embracing other people's thoughts and experiences. So it's an ongoing conversation and a dialogue. And again, it's not one done just because of ESG, it's done because we all understand that diversity will help our company be even better.

Dr. Marsha Ershaghi Hames: Well, I mean, it's really a testament to the cultures of the boards you sit on too in terms of some of the progressive design and openness to keep this as a priority on agendas, to be more inclusive of some of the C-level executives. Not every board today is taking those approaches, so that's fantastic example.

Virginia Addicott: At least my experience has been when you see a board that has good communication amongst themselves, good dialogue, and good dialogue, of course, with the C-level and even those below that level, when you've got good communication, and I'll say respectfulness of thoughts and opinions, that maybe I'll bring something up and maybe the chief operating officer, the CEO or somebody maybe they agree, maybe they disagree with my thought, but they're open to hearing the thought.

I think that's where it all begins, is you've got to be respectful of each other and communicating with each other and open to each other's ideas first. Then when you start talking about diversity, certainly that then spills over into it. But I think you have to start with this notion that we are all here for the good of the whole, for the good of the company, for the good of the shareholder, and that we need to be open to ideas so that we don't go down the wrong path or make unnecessary twists and turns. But by listening to each other, we can come up with the best ideas.

Dr. Marsha Ershaghi Hames: It's so important to point out just the simplicity, but the power of respect and respectful communication and good listening skills.

Virginia Addicott: Yeah, absolutely. And it's great when you're sitting in a boardroom and people come up with ideas and we can banter them around. The board is not trying to certainly tell the executives how to run their company, but we're all in it together to advise and to talk about it and to have that good dialogue so that we can come up with the right answers to situations or strategy, et cetera.

I think one of the things that I've really witnessed, I can say personally, what I've witnessed is this move from... with ESG coming out, is move from having a plan to become more diverse in an organization and maybe even over a couple of years where you see the plan and it gets presented again and we're not really making that great of a headway or... et cetera. For me, what I'm seeing is we are seeing the plan and we're seeing headway because we, the board, are saying, "Okay, so you didn't get to move the needle as much here, tell me what you're going to do next time."

And then again, we banter it around, we talk about best practices we've seen other places, maybe some creative ideas defining diversity to come in or raising people up within the organization. But I think that this ESG certainly has prompted the notion that you can't just keep putting numbers up and them not moving. You need to see movement, and then let's get creative on how we're going to do that.

Dr. Marsha Ershaghi Hames: Well, building a little bit on ESG issues. So you and I initially we met... You're part of our audit committee network and you have been fantastic contributor to our ethics, culture, and compliance network. However, every committee, I think, that you're on and you're a part of seems to be morphing into some sort of ESG committee. There's just so much focus now on climate risk, people, talent, cyber, tech transformation, and all these issues.

And these are great examples around, how do we go from the plan to making headway on the plan? What would be your guidance for our listeners? How can boards start to really approach thinking or planning differently around oversight of these issues? What are some strategies you picked up where boards could be doing better?

Virginia Addicott: I think one of the things that we've got to... at least we bring this one up, is that post... and I don't want to say post-COVID because obviously COVID is still alive and well, but I'll say post-vaccine, one of the things that we're seeing is a big stretch on people because of people exiting the workforce or moving companies. So I think one of the things is there is a heightened focus on climate and people and cyber, et cetera, as you've mentioned, and then we have this exit of people.

So one of the things we have to do is really understand who is in charge of each of these things? What is the team, the committee? And make sure that they are staffed correctly to get the work done. Because what I'm seeing is quite a bit of stress in workforces just in general. So I think it's really making sure that when you look at each of these areas that are very important to us, that who is on point for it and what resources do they have to do this? The other piece for me that I'm seeing a lot of, which I really love, is the collaborative effort across the companies to address these issues.

For instance, cyber is not an IT or technology issue, yes, probably the leadership and ownership sits there from the standpoint of the CIO or whoever it is in that organization, but it's the operations, it's the human resources, it's the marketing, it's the legal, and they all have to collaborate to make sure that we're in compliance, that we are on track with the cyber possibilities and the cyber threats. So one of the things I've seen through all of this is really a nice collaboration. We were just talking the other day, I was at a board meeting, and one of the things we were talking about, and this is around the diversity piece especially, was how everybody has to own diversity.

And it's got to be a part of the fabric of each organization within the company. And it's not something we're checking off so that we can have an ESG score, it has to be woven into the fabric of everyday things that we do to make sure that people are, one, from the very beginning that we've got a diverse slate of candidates when we have jobs available, that we're working with let's say universities or colleges, or depending upon what the job is other people, to how do we develop a new slate of candidates?

Then within our companies, making sure we're working from within the company to make sure people are getting the right development to move up. But it has to be, each and everything we have to do, are we doing things each day to make sure people feel included, that we're listening, and that we are valuing the opinions and inputs of people who may not look like us, may not come from the same country we do, may not worship the same way, may not like the same people that we do, et cetera? So for me, I'm seeing much more collaboration. And again, let's weave it into the fabric of the organization. This is not a number to check off.

Dr. Marsha Ershaghi Hames: Yeah, no, this is an excellent example. And what I'm really hearing from you here is the ownership and the threading into the DNA as you're saying [inaudible 00:16:39] it in. How can boards activate this expectation? Because there's a lot of conversation around, who in management owns it? How much time do they have to be visible at the board level in terms of what's being measured and what's changing? But I've also heard, if the board is not demanding or asking of, are we able to affect change? So I'm just wondering, it's this tension between who's driving what? Who's taking those first steps?

Virginia Addicott: Right. Definitely, the human resources type function or the chief diversity officer is going to present information. And of course, we want to see that and we want to see those metrics move. But I think one of the places that boards can really... let's say when a new position is coming available, a high-level position is coming available, are we asking, what does that slate of candidate look like? And I'll use the word demanding, but are we really pushing the idea that we need to see a diverse slate?

But I think the other place where it's really a bit of a no-brainer and it's super easy to do is let's say the operations is reporting out on something, that we are asking that operational leader, the chief operating officer, or somebody, a director, et cetera, we're going to be asking them questions of their organization and what does their organization look like and how have they been taking other people's opinions and new ideas into putting them into play?

I think it's asking the questions to many people, not just in that one section where we talk about diversity, equity, and inclusion. But really asking questions as we go through the entire board meeting and putting an emphasis on that. I think that really helps people get the idea that this isn't a check the box, it's a I need to live my life like this.

Dr. Marsha Ershaghi Hames: Yeah. Yeah. Yeah. So much of this is a purpose, values orientation, but then it goes a little bit back to the culture of the board. Maybe that helps us shift to this topic of, you've been an active contributor to the ethics, culture, and compliance network. We formed a culture measurement working group earlier this year and you contributed to helping create a framework that boards can leverage as a guiding tool to assess culture. Tell me a little bit about how do you see frameworks like this helping directors really move the needle. How are you thinking or leveraging this even within your own boards?

Virginia Addicott: I can tell you, when I was talking to one of my boards about being involved in this ethics, culture, and compliance network, they said, "Oh good. I really look forward to seeing what your outcomes are and maybe see how we can use it." So I think number one, from my standpoint, is certainly talking about it and talking about the work that we have been doing. And it was a great group that you all put together. I think there's a lot of boards that really want to do more around this, but maybe don't know how to get started or exactly what does this mean?

So I think these frameworks help to frame the question, and what is culture? And what is diversity? What is inclusion? And then giving some good ideas on how the board can... as we just talked about, how can the board in their role as advisor, how can we help to either direct, redirect, or just ask those probing questions to make sure our organization is really embracing diversity, equity, and inclusion all the way through the organization?

Dr. Marsha Ershaghi Hames: Well, Virginia, I want to ask one last question before we wrap up, and this is going to be a little more personal. I want to go back to your life, your professional journey, building your career. As you mentioned, 33 years is an exceptional tenure, one that we just don't see in today's professional landscape. But I want to peel back the concept of mentorship. In all my interactions with you, you're incredibly confident, you draw from a strong notion of, "I've tried this." I'm confident asking even the questions that I don't know the answers to.

And that's not always easy, especially for us as women, as we're building our careers. I've certainly had a number of mentors that have opened doors for me and that I've drawn upon and have guided me. I want to turn to you and see, were there any significant mentors, or shall I even call them professional sponsors, that maybe had an impact on examples or opening up the trajectory of your career path and how do you, looking back, look at their guidance and how do you in turn give back in terms of your mentorship?

Virginia Addicott: Well, this is definitely a topic that I enjoy talking about it because I think it's really important. And absolutely I have had mentors and I have had champions. For me, just to clarify, I say a mentor is somebody that you can sit down and really talk about things with and, "Hey, this is the dilemma going on. Maybe how should I handle it?" Or, "Hey, I'm thinking about this career, I'm thinking about this job. Help me to develop myself for that role." That's to me a mentor.

A champion or a sponsor for me is somebody who when I'm not in the room, they're the person saying, "Hey, Virginia would be great at that. Let's put Virginia in charge of that." Or new possibility coming up is speaking out and saying, "Oh, let's put her in that role." And I'm very much a person who wants to mentor men and women because I think everybody needs this. So I think sponsoring somebody, so speaking up for them on their behalf when they're not even there, and really being their champion and mentoring, helping to guide, are very important things.

Yes, I've had plenty of them myself. And I still have them, so don't mishear me. I still have people who I go to and talk to. But I also am very keen always to help people who are in this upward climb of the corporate ladder, if you will. So I do spend quite a bit of time. I love doing it because it gives me the opportunity to share some of my experiences. And I will tell you, I'm very quick. In fact, I'm mentoring a young woman out of Chicago who has great upward mobility.

And I was telling her something the other day, she was going to give a presentation, and I said, "Listen, I would love to work with you on the presentation if you want me to because I was given tremendous feedback that was so helpful to me." And I explained to her what I had done wrong and how it impacted me and how through some coaching that I got from an outside firm my presentations got so much better. So to me, it's not about, this is what you should do, but also giving experiences where it didn't work out so great for me and these were some of the things, the lessons I learned, and maybe I can impart that to you.

But I really think it's very helpful for men and women to help those who are in these lower levels and have this upward trajectory and the desire to really take the time to stop, turn around, and as people say, lend a hand to pull somebody up along with you. As a woman, I think it's important to have mentors who are men and mentors who are women, because when we talk about diversity, people come at things from different angles, and people who have diverse backgrounds and experiences, not just somebody in your business line or your organization. So you get the idea.

But I'm really big on mentoring. I love to do it, I love to spend the time with people, and it's so... I always say it, all through my career, the most rewarding piece of my career was not my upward mobility and climbing, but it was to see people that you were working with or that you had maybe hooked up with, another coach or mentor, to see them move ahead. That development to me was worth everything from the standpoint of making me feel like, okay, we are really accomplishing something here. So I certainly suggest to everybody that they get to be mentors and hopefully they're champions for people as well.

Dr. Marsha Ershaghi Hames: No, you couldn't have said it any better. It can be so rewarding. And it's a very positive, if not infectious behavior. So I hope we can spread more of that. Virginia, I could speak to you for hours. I've learned so much through your reflections. But we're going to be respectful for our listeners' time. So I want to thank you for opening up and sharing a lot of your thoughts on all of these matters from ESG to the trajectory of your career, mentorship, being a good champion, the importance of diversity and culture. There's so much that we covered. But thank you Virginia for your time.

Virginia Addicott: Thank you, Marsha. I really appreciate being asked to participate on your podcast. I hope that our discussion here today triggers something in somebody's mind to think differently about maybe whether it's ESG or culture or mentoring. It would be great.

Dr. Marsha Ershaghi Hames: Thank you. Thank you. And to you all, I'm going to close up. This is Dr. Marsha Ershaghi Hames. I want to thank you all for listening to the Principled Podcast by LRN.

Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustained values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.