February 17th, 2021
EPISODE 3: Is U.S. Capitalism Creating a Just Economy for All?
This week we tap the mind of Martin Whitaker, CEO of JUST Capital. In a meeting of CEOs Dr. David Rock and Martin explore how JUST lifts the voice of the American public to identify the issues that matter most when it comes to just business behavior. They identify the specific qualities of leading companies that supported their workers, customers, and communities through the pandemic and ongoing racial injustices. Martin also shares how JUST Capital is addressing systemic challenges at scale to create an economy that serves all Americans.
[00:00:06] GB: Get big companies to do good things because it’s better for everyone. That’s the simple concept behind Just Capital, a non-profit that tracks, analyses and engages with large corporations on how they can build a more just economy. And this desire for a just economy isn’t confined to a few forward-thinking people at a few progressive organizations. It’s a popular sentiment. Surveys show that half of Americans think that large companies aren’t doing a good enough job at promoting an economy that serves the needs of everyone, and a vast majority of Americans think it’s important that they do. But Just Capital isn’t asking organizations to act out of the kindness of their corporate hearts. They use data to show that companies actually stand to do better when they do good by doing better on DE&I, by paying their employees better, by treating the environment better. They do better financially. So how does it happen? Where does it start? Keep listening.
I’m Gabriel Berezin, and you’re listening to Your Brain at Work from the NeuroLeadership Institute. We continue to draw our episodes from a weekly webinar series that NLI has been hosting every Friday. This week our panel consists of NLI’s co-founder and CEO, Dr. David Rock and Martin Whittaker, CEO of Just Capital. Enjoy.
[00:01:29] GB: This is a really important conversation. It always has been an important conversation, but it seems like, companies really care now about this more than they ever have. I’m delighted to get the time. We’ve been watching you guys, watching Just Capital for the last few years and really loving the research you’re doing and quoting you in a few places.
I actually at one point, was thinking about building a ranking for how human organizations are being, sort of how much they’re kind of working within the way humans really work. Then I saw you guys had already done it. So here we are. I’m very happy that –
[00:01:58] MW: If we’re together, we could probably do a better job together. But no, I really appreciate the chance to just come and talk about what we’re doing. I think it’s a crucial conversation, quite honestly, for the country. I think it’s happening all over the country right now. I think the topics we’re about to discuss are universal and really important at this moment in time.
[00:02:21] DR: Yeah. And really come through – Speaking of countries, those of you trying to work it out, I’m Australian, he’s English, and we both live in the U.S. So that’s what’s going on here, some external commentators on the world of what’s happening here.
Let’s dig in. Martin, the big question, it’s sort of a big question, it’s like we need a bottle of wine in a week, or a case of wine in a week to debate this one. Do we need a better capitalism? I mean, probably the gut instinct is yes, but what does the data say?
[00:02:48] MW: Well, yeah. I don’t think we need a week, or whine to know the answer is yes, emphatic yes. I think there are lots of reasons for that, but just for the benefit of those who don’t know just that well, I will say very quickly, our mission, we are a non-profit 501(c)(3) despite the name Just Capital. We’re not a money manager. We’re a non-profit. And our mission is to build a more just and inclusive economy that works for all Americans, and we do that by changing the behavior of big companies. And we’ll talk about what that looks like in a few minutes. But the belief is if you can get big corporations to do things in a more just humane way, as you say, good things happen. You can really address systemic, societal, environmental and economic challenges. And if you don’t get the private sector pulling in that direction, you’re fighting an uphill battle.
So we were founded seven years ago by philanthropists, market people capitalists, believers in capitalism who felt that actually we’ve got to do more. The private sector markets and big business in particular has just got to do more. And you know what? It’s in companies’ enlightened self-interest, as I say a lot, to actually do more because it’s better business. And I’ll show you some data that supports that. But what you see here is one of the things we do at Just is throughout the year and every year, we go out and we talk to ordinary Americans all around the country to ask them what they think Just company looks like. So it doesn’t matter what Martin Whittaker thinks or our board members or our team. This is all about really meeting people where they are. And we ask all sorts of questions about capitalism and the economy and then we bring it to a head when we’re talking to people about what makes a just company today. And I’ll describe that later.
But just to kick off on this bigger theme, you can see we are really probing on how people feel about the economy right now. The truth is the vast majority of Americans think the economy is not currently serving all Americans. And you know what? They’re absolutely right. They also want large companies to do more, to promote an economy that serves all Americans, and yet only 50% of Americans think that that’s actually going on, the company’s doing a good job with that.
And before we leave this, I would say we must get this economy working for more people. If you don’t feel like you have a stake in something, bad things happen. And I think this is all about trust and faith in the system and trying to do what so many of us have in common, which is build a better future for ourselves and our families and our communities and our loved ones. So that’s really what at the root of what Just Capital does.
[00:05:38] DR: No, that’s great. Thanks. And it reminds me a bit of some work I saw a few years ago. There’re a couple of researchers also from the U.K. who wrote a book called The Spirit Level. I don’t know if you’ve seen that work. But they essentially tackled the question; what happens when societies are more unfair, more unequitable? And they actually created an equity kind of scale for states within the U.S. and for countries everywhere and they basically correlated the equity quotient against health outcomes from birth to death and for everyone, not just for different levels. It’s called The Spirit Level and they’ve got a new book as well. And what they found is that actually everyone is less healthy when there’s more inequality. Everyone is actually suffering. But they also found a very strong correlation between health outcomes all the way from birth to death for people. So it has really big implications that people feel like there’s some degree of equity in there for sure.
[00:06:32] MW: So that’s 100% right. So right at the beginning of Just Capital, and it’s still on our website, our founder and chair, Paul Tudor Jones, gave a TED Talk and he talked about exactly what you’ve just said, David. That this is – The U.S.A. in particular is off the charts when it comes to inequality, and that’s in nobody’s long-term best interest. In fact, it doesn’t end well. And that was kind of prescient when we think about what’s happened recently where the grave divisions we have in the country right now. And at the root of that I think is we need a system that works for more people as you just said. Again, all of this is on our website at justcapital.com. We publish all of our polling and our survey work. But how many people think the current form of capitalism is working and whether or not we need a more evolved form of capitalism to build a better future? Create the society that I want for the next generation? And we found the majority of people actually believe that this more evolved form of capitalism, its time has come.
And so I think what we’re seeing in the country right now is sort of that transition process happening and it’s like any major transition. It’s messy. It’s got its components and its opponents. So it’s sort of like we feel like we’re in the middle of that right now societally, and I think that’s going to continue for a while longer, but we really believe fervently that especially in our world, corporate America, has a lot that it can do and a lot that it is doing quite honestly in order to bring that transition about.
[00:08:07] DR: Right. Right. And not to get too off the rails here. I might go off the rails. Australians are known to do that here and there, but I sometimes think about capitalism in North America in particular or the U.S. is driven a lot by the sort of non-conscious priming that the constitution provides us so that the culture is kind of in many ways driven by sort of the – Capitalism frameworks are driven a lot by the culture, which is driven a lot by kind of how we believe we should be as Americans and some of that constitution. Then I think about when was the constitution written again? How many hundreds of years ago? Before medicine kind of really existed? Before we knew anything about the brain? Before we knew almost anything about psychology? A bunch of guys got in a room, made some stuff up. We sort of hold it like we bow down to it, but we know unbelievably more now about how humans function and how societies function than we did 300 years ago, but that’s kind of sacrosanct, and that’s kind of driving a lot of what we do. So it’s almost like we need new capitalism and kind of almost a new set of values to underpin that capitalism as well. But as I said, we could go off the rails pretty fast there.
[00:09:10] MW: Yeah. Just quickly on that. I’ve written and blogged a lot about the American dream. We’re both immigrants, and I can just speak personally. I chose to come here and raise my kids here and raise a family and put down roots here because I believe in that. I felt like this was an amazing country which could do incredible things and provide great opportunity. And I think that is something that you want everybody here to believe and to have a stake in and to realize many people are excluded from that economy. We’ve had a reckoning with racial equity last year, which is bringing racial divisions to the surface.
[00:09:50] DR: It’s not over. That feels like a warm-up. Yeah.
[00:09:52] MW: That playing out. And I think this ideal, this sort of centralizing idea that I can build a better future here and it’s down to me and my endeavor and my hard work and all of that. I think this is about growing the pie for everybody and giving everybody access to that. Create sort of much greater equity when it comes to that access to that dream. And so that’s what we’re trying to create. And if you do that, you can create an economic engine that grows the pie for everybody. So this is not about wealth redistribution. I don’t think anyway. I think this is about growing the pie for more people and for more people believing in that system.
[00:10:34] DR: Yeah. Yeah. Obviously, you get a strong reaction and that you get some political responses. Sometimes you get a strong reaction when you’re talking about more for everyone, people feel like they might lose something, and particularly people in power react very strongly when they feel like they’re under threat. There’s a whole lot of research on that and often reacts irrationally because it sort of feels really dangerous to come from sort of a high pedestal down and feels like you have a lot to lose. So some interesting reactions we could dig into. But let’s talk a little bit more about your work and from your perspective what makes a company actually more just. Like how do you define it? And I know we’ve got some examples here, but how do you define a just company and what do they do differently?
[00:11:15] MW: So to be crystal clear, the American people define what a just company is through survey and polling work and our quantitative weighting. So essentially what it boils down to, David, it’s pretty simple in the end. You get five stakeholders. How a company treats its workers, its customers, the communities where it operates including supply chains globally, the environment and then its investors. Is it well-governed? Is it led by people with integrity? Those are the five major buckets. Underneath each one of those are a set of specific issues that we measure companies on, and all of those issues come also from our polling.
So under workers, for example, one of the most, if not the most for many years now has been does a company pay a fair and livable wage? So, great. We hear that wherever we go. That’s whoever we talk to. You tend to see that is one of the most heavily weighted in terms of its importance. So we then go and analyse the universe of companies that we’re currently focused on, which is the 1,000 largest publicly traded companies in America. We analyze them as objectively and in as data-driven away as we can on each of those issues.
And we then, from that analysis, we produce various outputs, rankings. We produce the just 100. We rank companies by sector. On our website you can track companies against a customized subset. We track them by theme so you can see who’s the best at paying a living wage. And so the definition of just overall is sort of the totality of all of those things, right? So that’s sort of like what we do as an organization. And of course we take that data and we support investment products with it. We have seven or eight investment funds now and we’re pushing well over a quarter billion dollars in assets under influence in those funds. We work directly with the companies themselves, because many companies that we track are seeking to be better on some or all of those things or just overall on stakeholder capitalism.
But you bring it back down to like when does the rubber hit the road? What we’ve found is that compared to their peers, the most just companies, whether by sector or overall, they do better on diversity, equity and inclusion. They pay their people better. They are more generous philanthropically. They are better environmentally. They have much greater engagement with their employees and with their customers. So they do well on all of those things and they also do better financially.
[00:14:00] DR: We’ll get to that in a minute. We’ll get to that in a minute. I have a question about how do you think it happens? Is it like one CEO has a dream and make it happen? Or is it an accident of nature? Is it geography? How do you think these companies can sort of end up in this place? I’m guessing you’ve thought about that a lot.
[00:14:17] MW: I have, and we talk to companies all the time about that very question. I used to think it was kind of a complex messiness on where different sets of circumstances drove behaviour. There’s an element of that. You get companies go through major events, negative events. Something bad happens and there’s a turnaround. But typically, honestly, David, it comes down to leadership. Either the CEO or the C-suite, there’s leadership within a company that says, “This is what we stand for. This is how we’re going to do business. This is our recipe for success. This is our north star and we build from there.” None of this is easy, but that’s what you build. It’s not the case, because people talk about causation correlation all the time. I have yet to meet a CEO who treated all their stakeholders really badly was financially successful and then all of a sudden said, “Now we’re successful. We’re going to be nice guys. We’re going to start to like do well by our stakeholders.” Never seen that happen. It’s typically, “Okay. This is what we stand for. This is how we’re going to do it,” and that then sort of drives success in lots of different ways over time.
[00:15:30] DR: I’m thinking about the values of an organization. So we do a lot of work to help companies rationalize or re-launch kind of all the artifacts by which they describe their culture. So we did a lot of work in that space. We helped Microsoft rethink their whole definition of leadership and then scale that. We’ve helped about 25 companies, so far big companies like Microsoft, rethink how they define their culture in language. So values, vision-mission, leadership model, framework, all this stuff. And when we look at values, for example, if you looked at like a hundred company sets of values, from a distance you would just look at those values and say, “Oh, this is a just company. They’re doing all these things.” So it’s clearly not in the value statements that this stuff is. And I think probably it’s got to be in the CEO and the C-suite’s vision. It’s got to be something that they’re willing to fight for, not just believe in, and I think because it does take some fighting against pressures to do this stuff.
[00:16:23] MW: Well, being a just company is a journey, not a destination. You’re never done. Competitive dynamics today, for any company, are incredibly complex and the whole relationship between business and society is shifting and those who are better at creating value for all their stakeholders will do better competitively and in the market. Period. End the story.
You mentioned Microsoft. As luck would have it, they’re actually right at the top of our list. One of the things we do is produce a sort of a head-to-head comparison of all companies in any sector, and Microsoft is the number one. And Satya Nadella spoke at our flagship event last year on what happened. Now, why did they – To your question. Why do they do what they do? How do they do it? How are they changing? This is not meant to imply that Microsoft can’t get any better. On the contrary, they know where they need to focus. But on a relative basis, they are really, really good.
And what we measure is sort of, I guess, the much more practical elements of how that vision is manifested. Show us the data on your performance on fair pay. Show us what’s actually happening around your policies and your disclosure and your work internally on diversity. Show us what you’re doing, et cetera, et cetera. So it’s sort of takes the high-level stuff and boils it down to like very specific measurable things which, as I said, when you go out into the world and talk to people on main street, that’s what they think about. That’s what they want to know.
[00:18:02] DR: Yeah. Certainly the CEO’s vision is going to play a lot, but it doesn’t always also have to be the CEO. It could be the C-suite and a bunch of really passionate people and then the CEO gets on board. But I think it’s going to be easier if the CEO certainly has that vision.
A couple things coming up, I’m thinking about the mindset actually of leaders in organizations that sort of are interested in this. And there’s a number of different sort of distinctions that are out there around mindset. And I there’s theory X and theory Y. Theory X is people need to be controlled and theory Y is people need to be unleashed. And leaders you know have this mindset of either of we have to micromanage people now because they’re working home. We have to like put technology in to watch every keystroke and see when they have keystroke gaps and call them. Some companies are doing that, which is I think crazy because people on the whole are more productive a day a week if they are left alone. So the sort of theory X, theory Y.
There’s also growth and fixed mindset. If you have a fixed mindset you believe that talent is to be assessed and put into buckets. And a growth mindset, you think talent is to be grown and nurtured and evolved. There’s also the sort of – And just going on a comment. Someone made this. There’s a belief that there are finite resources and we have to compete. But if you kind of pull back a bit, the resources that we all have to deal with are probably infinite. We just haven’t got necessarily the technology there. I mean, the energy hitting the earth is infinite just about certainly for the next billion years may as well be.
So there are sort of different schools of thought, an abundance mentality versus highly, highly competitive. And this is the last thing I’ll say. The last couple of events, annual events or flagship events we’ve run, we’ve talked a lot about the different mindset that leaders have, and essentially there’s exploitative, depletive, sustainable or regenerative. And most leaders have never thought about this. And exploitative is mostly illegal now. Exploitative is you take everything out of the system, like a farm. You just exploit the land, but it’s poisoned the next year. Depletive is where most farms and energy production and even human capital practices are, which is you’re not killing people or things, but you’re still leaving things depleted. Sustainable is sort of neutral. But the best idea is regenerative. And regenerative practices are if you have a farm, every year the land is actually more rich, the wildlife is more healthy and more abundant, the nutrients even richer. And you can apply that to talent practices and people practices. Every year actually your people get healthier, wealthier, smarter, more connected, more successful as your organization does. And so that’s an idea we’ve been playing with and starting to really dig into, and I think there’s some important parallels with just kind of just. And some organizations have been able to sort of get their head around that a little bit. Any comments on depletive through regenerative there?
[00:20:44] MW: No. I love the framing. I am an environmental scientist in my early career. So it resonates with me. I think if I were to tell you that there are millions of full-time employees at large publicly traded companies who still rely on food stamps and government support to make ends meet. Is that depletive? Is that exploitative actually? Like now you have sort of like a system which has created a low-wage culture that essentially drives down wages to the point where full-time workers need a couple of jobs to get by and in fact can’t get by the government support. So the taxpayers subsidizing shareholders at those companies, you drive that quarterly earning cycle.
So there’s got to be a regenerative agricultural analogy there because that’s a race to the bottom. For society, it doesn’t – Like we said before. It doesn’t end well. You have to shift thinking around to address that and there are probably many, many other examples. And it reinforces division because most of those people who are at that sort of end of the wage spectrum are front line workers, black and brown workers, people who don’t have access to the same kind of – In many cases, banking, financial resources. So it becomes a very, very downward spiral. So I think when you talk about breaking the cycle through a more regenerative thinking, apply that to the economic system, and I couldn’t agree more.
[00:22:21] DR: Yeah. I think I’m dreaming maybe of a time where we do a survey of what percentage of American companies are exploitative, depletive, sustainable and regenerative. I think we’ll find regenerative, but well less than 1% and even sustainable if you’re looking at their talent practices more deeply even than you do, because we would like to look at – As we think about what makes an organization more human, they’re working with how the brain works. Like in terms of how they onboard people. How they do performance management? How they teach them stuff? How they learn? How they develop people that they’re actually following the biological principles of how people work. And the obvious way to think about that is they’re not – If you think about food, they’re not giving people a canteen to eat on Monday and then expecting they eat on Monday for the week. They’re not following biological principles means letting people eat three meals a day. And when it comes to performance management and learning and these other things, there are actually clear biological principles that organizations if they respect humans would follow. So there’s a sort of deeper dive that we may have to talk to you about and see if we can put together even more just 100 together or something, yeah.
[00:23:24] MW: Yeah, absolutely. And you know what? That’s the point. It’s good for business. It’s better business to do that. We’ve been working closely with PayPal recently because the work they’ve done to address sort of their employees financial hardship. And Dan Schulman, the CEO, talks about this survey that they did, which he thought would be a great news event. Employee engagement survey turns out they had a whole bunch of employees that were experiencing real distress and they created a whole program around it of lifting wages and lowering benefit costs and providing ownership of the company and financial education. And guess what? It was a great business return on that. So we’ve seen that financial out performance. We have some charts I know in there somewhere where we unpack that a lot. So I totally agree with you and I think it’s actually a major sort of undiscovered frontier, if you will, of corporate competitiveness.
[00:24:20] DR: Yeah, it’s an interesting one. Let’s just go back to the data for a minute. I mean, this for me is just so poignant. It tells the story really clearly. And there’s a bunch of questions about diversity, equity and inclusion. Let’s dig into that next.
[00:24:30] MW: This is the market performance of our top 20% companies on workers. How they performed on a whole set of worker categories, versus the laggards, and it’s really interesting. This is over the last 12 months or so. So starts in September, October 2019, goes through the pandemic. What’s interesting is you get to January 2020. Bang! Look at that. Guess what? Companies that really invested in their workers and did well on those criteria outperformed those that did not by an absolute mile, and that’s through the teeth of a global pandemic.
So there’s something there, David, that is a really interesting signal. And I think that companies that are on that red line, that top line there, have a lot to teach. Other companies about, “Okay, what’s working? Why are we more resilient? How is this translating into market performance and financial performance?”
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[00:26:09] DR: Yeah, I know. That’s really interesting. I want to spend some time unpacking this with you. The inflection points are so interesting, and obviously as the pandemic really hit in March, April, the stronger companies did better and the other companies did a lot worse. And then they come together. It’d be really interesting to unpack this.
So a bunch of questions. Let’s dig into diversity, equity and inclusion. And you’ve got some charts. Maybe let’s move through those relatively quickly. Get to some questions. But I think some of your charts tell the story. Tell us a little bit about this to start with.
[00:26:36] MW: Yeah. So real quick. This is a hugely important issue obviously nationally. After George Floyd, we began polling Americans on what companies should do. We also got a lot of calls from companies saying what should we do? We saw companies make a lot of sort of public statements in support of black lives matter and action on racial equity. And so we began to really track this more closely. And that’s ongoing work for us.
What you see here is a percent of respondents in a survey we did who say workplace policy to promote racial diversity, equity and inclusion is important. And maybe not as a surprise, but the vast majority of people felt it was either very important or somewhat important to do these major actions. Commit to paying off employees a living wage. Provide accessible grievance mechanisms. Fund local education and create apprenticeships and scholarships and analyze wages by ethnicity and gender and address pay gaps.
And so you begin to see how companies now can like tangibly move on from just a great statement and a major donation to the NAACP. We drill down here on disclosure. So what percentage of companies that made a statement on black lives matter were actually disclosing what they’re doing in terms of their workforce composition on racial and ethnic breakdown? You find that 47% of companies that made those statements provided no disclosure and another quarter, 24%, disclose sort of general minority. And I think this is a big area. Disclosure on workforce demographics is a step on the journey to understanding where you are as a company and what you can do better and you’ll see even more just sort of breaking that down.
We’ve been working with big investors, the New York City Controller’s Office, the Illinois Treasurer, Illinois State Treasurer, CalSTRS, around really a corporate engagement exercise where we ask companies to provide disclosure. And as of a few weeks ago, 59 companies, we broke them down by sector on the left side there, have made the information. They publicly disclosed to the equal employment opportunities. There’s a certain type of report that companies provide which provides a more detailed disclosure breakdown. And so you see there even, we see, again, preponderance. No disclosure. In fact, if anybody listening or watching us wants to go to the best practice, we always lift up Intel as being a really strong performer on that.
[00:29:23] DR: Just to just throw this in there. We actually worked with them on that. We did three or four years of work with Intel on, their whole DE&I strategy, and we were there when they made the commitment to getting rid of the gender pay gap, and they did it within one year. We were working with their CEO. We worked right across the whole organization. In fact, probably one of the most fun projects we did, we took about 20 different diverse DEI initiatives from across the company and turned them into – They were sort of very sporadic and not scalable and not speaking to each other and created three really profound powerful habit activation strategies that impacted all 110,000 people. And over about two years, worked with them to really not just rationalize, but really transform their DEI strategy around a few key habits starting with growth mindset and then very much focused on inclusion. So just we’re proud of the work we did there as a major global initiative and happy to hear that they’re continuing to do great things.
[00:30:19] MW: Yeah, and we love that, because where Just’s MO is always to try and lift up leadership. Showcase what companies are doing so that others can emulate it. And when we interview CEOs at companies all the time on that and we have a great relationship with Intel and really trying to find places to showcase their leadership on that issue and other issues too. So it’s really important. And I think sharing the best practice honestly, Dave, is probably one of the biggest things companies can do to really shift that sort of – create that systemic momentum [Crosstalk 00:30:54].
[00:30:55] DR: I think about a moment with the CEO of Intel some years back. BK at the time was the CEO then. And it’s similar to a moment I’ve had with a number of CEOs where we’ve been sort of brought in by maybe the HR team to kind of brief the folks on DEI. And one of the first things that we want to do is get the leadership to see that bias is insidious. And if you don’t actively do something about it, it takes over and for no fault of anyone’s own, nothing to do with racism. It’s just how the brain works. There are certainly racist people. But the bigger issue we think is that everyone has a ton of bias. And it’s not that you need to generally raise awareness of it because that does almost nothing. You’ve got to actually put in place systems and processes to take it out of everyday practices.
But one of the moments with CEOs I always find really powerful is I’ll kind of walk them through the actual science of how bias works in the brain and show them that even though they see something really clearly one way, other people see it completely differently. And there’re a number of exercises we do with them just showing them different tasks. And I always remember BK to this day just sitting there quietly staring at it going, “Wow! I had no idea that I could actually be completely wrong sometimes and feel completely right.” And it’s that sort of humility of that’s really important to get into particularly the C-suite and CEO. Like the way bias works is you don’t know you’re having it. You feel absolutely certain. You feel absolutely right. And you can be absolutely wrong. And when we sort of get them to that place, it’s sort of like is this mind-opening moment where they start to kind of think more broadly. Yeah, a lot to point.
[00:32:24] MW: I can definitely relate to that myself. I think so many leaders in organizations – I don’t just mean CEOs, but there are leaders throughout organizations are – It’s really changing how you think, your own awareness, self-awareness, the level of empathy you have to have as a leader these days. I mean, it’s really shifting and I think you’re sort of beginning to see that sort of move through organizations. Ultimately, as I said, it drives performance. We talk about that a lot. We talk about disclosure being it’s not the end. It’s not the destination, right? The destination is like are you better at whatever the issue is? But disclosure and transparency is a really important step on that journey and it’s probably important because the market needs that information. Like markets can’t function if they don’t have good information.
And if you look at the trajectory of financial disclosure from the 1920s over the last 100 years and now you think about we’ve really only been focused on sort of ESG disclosure and more recently disclosure on important human issues. But for several years, we’re very, very early in that game. And yet already you begin to see such a wide discrepancy in performance between companies that are really ahead of the game and those that are behind. And I firmly believe the arc of history on disclosure and transparency is only going one way. 5 to 10 years from now we’re going to know exactly what companies are doing on all of these issues. Not what they say they’re doing or what policies are, but what’s actually happening and is it working. We’re going to know that. And there’ll be some other set of issues that we’re just learning at that time. But I see this as a transition.
[00:34:20] DR: Big issue, yeah. I’m thinking I might want to do a session with you down the track with our CEOs in our network just on the impact of disclosure and sort of thinking about what’s coming and how that’s going to impact. Not to put you on the spot whatsoever. But someone suggests you and I should go to Capitol Hill and share all this. So are you in?
[00:34:36] MW: I’m up. I’m up for it. I’m in.
[00:34:38] DR: Right. You heard him. So let’s do that. I think –
[00:34:41] MW: Let all of them go. There’re 128 participants. Whoever wants to come.
[00:34:45] DR: There you go. Take a bus. So I think there’re some important things to share there about societal data. So I don’t think it’s four years too late. I think four years ago a bus would have been turned away, but now we might –
[00:34:58] MW: Oh! Well, I could tell you. I mean, the Biden Administration, they’re all in on this stuff. I think that’s not to say they’re going to get it all right, but I do think there’s an openness. I know you’re being facetious.
[00:35:11] DR: No, I’m looking at my calendar.
[00:35:13] MW: But there is a willingness now to begin to think a little differently about the system and I think it created an opportunity.
[00:35:20] DR: There’s a big opportunity, right.
[00:35:21] MW: Yeah, it’s really important that we don’t sort of go back to the old relationship between government and business around just about taxes and policies and regulations. Like we try and think, “Okay. How is the private sector and government going to work together to actually solve problems?” And when you look at it that way, you might do things a little differently.
[00:35:42] DR: Yeah. No. I did a briefing in the White House about five years ago to lots of different agencies in the White House and the OPM and a bunch of folks. It was a fantastic day actually. So it must be time to go back. We’ll get to work on that.
Let’s change gears a little bit. Let’s talk about COVID for a moment. I put for a moment because everyone’s kind of done talking about COVID a little bit, although just going to put it back there. The Stockdale paradox is still really necessary right now, which is – Except this is going to be tough for quite a while probably. Don’t get all hopeful. It’s going to be in now. You should still be accepting this is going to be pretty tough for probably a while and get on with making it better. Be careful of assuming it’s going to just all be fine, back to normal in a minute. I’m not so sure. But let’s talk about COVID. How did companies measure up? What’s your data on that realm?
[00:36:25] MW: Well, we all want COVID to be over. And so maybe I don’t know the Stockdale paradox, but –
[00:36:31] DR: Actually, introverts don’t, by the way. The introverts are like, “Please wait. Let’s go another five years.” I would say we all want it to be over. Yeah.
[00:36:38] MW: Well, business definitely wants it. I certainly do. But we want it to be over, but it’s not over. It’s not over. And so, what businesses are doing right now and what they have been doing is super important because it affects the lives of tens of millions of people in communities all around the country and around the world. So what we did was began to track companies right from day one, March 12th, when we moved out of our office in Manhattan and we began to track what companies are doing and poll the public on what people think companies should be doing. And what we’ve seen, we got a ton of data on this. And by the way, if you want to go to our website, you’ll see a tracker. So we’re tracking, logging what companies are doing on COVID, which is super interesting. But this is sort of in blue, you’ll see what Americans wanted companies to do. And in orange you see how companies actually measured up.
[00:37:35] DR: Great. Is it?
[00:37:36] MW: Companies did pretty well on work from home, modified schedules. That’s the second two bars down there. They did not do well on providing worker health and safety equipment, PPE, and they did not do well in dependent care. They started out – What’s interesting is companies did actually begin in the first few months of the pandemic. Many of them did the right thing. Extended dependent care coverage, provided worker with health and safety equipment, hazard pay, all of that. But what we saw, David, was it just dropped off over time. And we were asking ourselves back in late summer last year. I wonder how much of these actions are going to stick around. And some companies did that, but many did not. But you see this difference here between, again, expectation and performance.
[00:38:26] DR: Yeah. I’d love to dig more into that data with you sort of what companies did well. I mean, our experience is probably skewed more towards companies who are doing well because a lot of our key clients are, by nature, just working really hard on their people and their people practices and we’ve been really moved by some of the things companies have done. But on the whole, on average, I guess it’s not great. And it’s a shame. I think there was some data somewhere I saw from you like 89% of people wanted companies to use the crisis to really transform their practices. People really wanted COVID to be a spur for organizations to radically change their practices. And it’s sort of like they moved a little, but there’s a lot more to do.
[00:39:02] MW: The companies in those orange bars are the companies at the top of that chart doing really well financially. So I think we’re going to look back on this moment and say, “Okay, how does a company best get through a major crisis like this, right? You’re not going to have a bigger credit. You’re locking down the economy for months on end and then trying to reopen. And when survival is at stake, people have to think differently. And I think one of the legacies of the – Well, a good legacy of this pandemic will be a willingness to think differently about how business is done.
[00:39:39] DR: Yeah, I think so. I think there’re definitely some silver linings for the folks who come out the other side of this, but the companies who do as well. I mean, it’s been a time of tremendous stress. So many companies, other organizations, it’s been a time of tremendous growth. I mean, you’d like to be an investor in Zoom in January and other organizations. We’ve never been busier at NLI. So I think as you come out the other side, I think it’s going to be really interesting to see what really sticks. In five years, what kind of practices really stick.
But I also agree this is not necessarily the biggest crisis that we’ll all hit in our work lifetimes. There could actually be bigger ones. There could be a pandemic that’s far more lethal that impacts children, touch wood, but there could be other issues that come up, environmental issues that suddenly hit us. And there’re all sorts of stuff that could happen. So I think it’s an interesting wake-up call for American companies and global companies to be more prepared for the black swan event for that crazy thing that just changes everything.
[00:40:31] MW: Crises move at different speeds and different sort of levels. You look at climate crisis. You look at the crisis that many Americans who live in poverty face every day. That’s a crisis. It’s just we know it’s happening all the time. So I think we are more aware of that. I hope we are more aware of that, certainly Just Capital. If we have a say in it, people will be more aware of that, and how business can address that.
[00:41:00] DR: It’s interesting. The slower moving crises sometimes need more attention and focus, because we don’t focus on them just because they’re slower moving. We don’t notice them. They’re more invisible. Yeah, that’s an interesting one. We should write something about that one day. Why slow-moving crises need more attention.
Just in closing, just a couple of minutes, what’s your hope for the future? You see a lot of scary data? Maybe some inspiring data? What’s your hope for the future?
[00:41:22] MW: Well, I am an optimist and I do believe in trying to fix things. And I think that transitioning to this more inclusive just stakeholder-based form of capitalism, if you want to call it that. I just think that’s an absolute necessity. What makes me hopeful is I see business leaders ready for that. Not all business leaders. But there are many leaders who are ready for that. I see many, many investors. If you look at the flow of capital into sustainable ESG funds, that money is going – At some point that money is going to want to know it’s making a difference. It’s going to ask awkward questions, “Okay, are we moving the needle here or no?” This is not just an ESG label. I want to know what’s at what’s going on.
So you’ve got Wall Street shifting, corporate shifting, consumers as well, the public expecting business to be better and do better. And now the fourth element is you have an administration that’s opened up a new policy frontier where there seems to be a willingness to see this as something legitimate and not socialism or some form of politics, which I don’t believe it is. So it feels to me like you’ve got these tectonic plates are now kind of coming together and you could get something done. And I think we have a moment now – You might sense the urgency in my voice, because I do feel as though the next few weeks, months, years are absolutely pivotal. We can’t go back to an economy where only fewer and fewer people are benefiting. It’s just going to deepen the divisions, radicalize the agenda. We need just to bring it back. Calm it down and bring it back. Let’s focus on building this you know economic future, because that’s what we all have in common. No matter where I’ve been in the world, who people are, what their backgrounds are. They kind of want the same thing, not that different. Most people just want the same thing.
[00:43:32] DR: Yeah. I have teenage kids. The older one, her friends and stuff, they sit around and talk about when they’re going to start tearing down the walls, because they’re not in a good way. They’re angry. Older teenagers, young 20s, all this, they’re angry and they’re going to rise up and do all sorts of things. And it won’t just look like starting their own businesses instead of going to companies, and it won’t all just look like nice disruptions. There’s some really, really angry people particularly in the last few years. And I think organizations have a role to play in being fair and being just in every way they can. I know, just speaking of politics, before we close off. Do you want to speak to this one?
[00:44:05] MW: Yeah. So I just want to go back to what you just said. We’re all passionate about this, and we might not all agree. Well, that’s another point by the way. We have to find a way to disagree. It’s fine to disagree. We just have to disagree properly, right? Like that’s actually a healthy start. Let’s just figure out how to disagree well and then we can maybe find areas we can agree on.
But anyway, here, we look at politics. Obviously, that’s on everybody’s minds these days. We polled on American’s belief on the role of business in protecting democracy, because let’s face it. You don’t have a healthy democracy. You don’t have any of the above, right. And we found differences between republican and democrat sentiment, but we also found areas of agreement. And where you see at the top there, companies should do whatever is necessary to stop the spread of disinformation by identifying and debunking falsehoods and propaganda. Actual surprising agreement, 68% republicans, 86% of democrats. We did see some disagreements, whether social media platforms were right to bar accounts from people propagating conspiracies. We’ve seen disagreements around holding companies accountable. But again, I draw your attention to the last one. I trust CEOs more than politicians when it comes to taking action to protect and uphold democracy, 52% republicans, 63% democrats. That’s pretty close. So that’s one of the reasons I’m hopeful. There are areas where we can agree to disagree, but there are areas where we can actually are in probably more alignment than we believe.
[00:45:54] DR: Right. Right. We’re going to avoid those areas that are deeply political because they bring up kind of strong emotional responses on things. But overall, if you avoid those kind of pitfalls, there’s strong agreement that things could be better I think. That’s really interesting. You gave me some things to think about for when we get down to D.C. virtually or in-person. You heard it here first.
Look, man, it’s been so great to get some time with you and think about this. I’ve made a ton of notes myself about stuff to dig in on and you’ve given people a lot of great insights as well. So I really appreciate. Just a closing announcement about our flagship event, but I really appreciate your collaboration here. Speaking of common goals, we share a lot of common objectives. You’re looking at it from a data point. We’re looking at it from a biological perspective and how do we activate the right habits to actually do this. So hopefully we’ll get to collaborate in some creative ways down the track. But thanks for all the work that you and everyone at Just is doing. Really important work, provocative, very data-driven, which we love, and telling some really, really important stories. So thanks for all that you’re doing and take care of yourself, your family, your loved ones, and everyone there, and look forward to connecting again soon. Thanks, Martin.
[00:47:01] MW: Thanks, David. My pleasure. Thanks everybody.
[00:47:05] GB: Your Brain at Work is produced by the NeuroLeadership Institute. You can help us in making organizations more human by rating, reviewing and subscribing wherever you get your podcasts. Our producers are Cliff David, Matt Holodak and Danielle Kirschenblatt. Our executive producer is me, Gabriel Berezin. Original music is by Grant Zubritsky, and logo design is by Ketch Wehr. We’ll see you next time.