Business Roundtable’s Statement — Comp + Coffee: Ep. 34

On the latest episode of Comp + Coffee, we’re diving into some current events: the Business Roundtable’s statement on corporate responsibility.

If you haven’t heard, the Business Roundtable (an association of America’s leading CEOs) recently released a statement that made some waves in the news last week. We’re going to dive into what this means for American shareholders and if this announcement should have been, well, ages ago.

Want to weigh in on the conversation? Email us your thoughts on the Business Roundtable’s statement at coffee@payfactors.com.

And if you like what to hear, subscribe to the Comp + Coffee podcast on Apple Podcasts, Google Music, Soundcloud, or wherever you get your podcasts!

 

For a full transcription of the episode, see below.

 

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Shawn: And we’re live.

Bill: Good morning, Shawn.

Shawn: I have to greet you, Bill, good morning.

Bill: Sorry, I jumped the gun.

Kaite: It’s that coffee.

Shawn: Good morning, Kaite.

Kaite: Good morning, Shawn.

Shawn: Wow.

Kaite: Sorry, I didn’t mean it like that.

Shawn: Good morning.

Kaite: I need more coffee.

Shawn: We have a really interesting topic today that I’ll go ahead and say I can get a little passionate about.

Kaite: Oh, yeah. I totally anticipate a lot of talk about passion in this topic.

Shawn: I’m not joking, I’m serious. I get passionate about this topic.

Kaite: I am being serious as well.

Shawn: It’s an obscure one but I get passionate about them. But before we dive into that, I want to give a shout-out to Drew from Australia.

Kaite: Hey, Drew.

Shawn: Who wrote in last night, complimented Bill’s improv. So, that he can tell that the lessons are working.

Bill: Poor Drew.

Kaite: Drew is like, “No, I didn’t.”

Shawn: I believe what you actually said… First of all, it freaks me out that this is…my voice is being heard in Australia. I never would have expected that.

Bill: It’s upside down though.

Shawn: It is upside down and probably at two speed. I believe what Drew actually said was we take what can be a dry, dull topic and make it interesting. And well, not everything applies to Australia, he still finds value in it. So, some of the stuff that we do every now and again maybe possibly has value. I’ll take that.

Bill: [Inaudible 00:01:29].

Kaite: And sometimes we’re like okay to listen to.

Shawn: Sometimes.

Kaite: Sometimes we get a little bit ridiculous.

Shawn: Sometimes.

Kaite: Usually.

Shawn: Bill’s the giggly one.

Kaite: Okay. You know what, the last episode, there was a lot of laughter that, listening back, you regret that.

Bill: We bring laughter to comp.

Kaite: You, you Bill. You bring laughter to comp.

Shawn: It’s true, I’m just here to…

Bill: Yeah, it’s my job.

Shawn: To harness the Coleman’s spirit. So, the topic today, and this is getting a lot of coverage in the last two days, basically since Monday, we’re recording this on a Thursday. It came out Monday morning, early Monday morning, and the topic is that the Business Roundtable which is a big lobbying group that has I think, Bill, correct me if I’m wrong, about 200 members, 200 of the biggest companies you’ve ever heard of basically are the members of it.

Bill: Right. Pretty much everyone sort of everything …

Kaite: It was like Amazon, Apple, Walmart.

Shawn: JPMorgan.

Kaite: Yeah, JPMorgan.

Shawn: Big companies are members of this. What they came out with this Monday was something that 182 of their members, CEOs of those companies, signed. What it’s doing is if you look from what they put out in 1997, but it was a trend from the ’70s until now, they changed their stance in 1997 to say that only shareholders matter. They have fiduciary responsibility to shareholders and that was what mattered above all else.

Bill: Correct.

Shawn: What they came out with this Monday to say is that shareholders are a part of the equation. They need to factor in, I’m gonna use this term, I’m not sure they did, stakeholders, right? Communities, vendors, employees, and shareholders. So, not everything needs to be driven by meeting your growth and profit expectations for this stream.

Bill: Correct.

Shawn: I’ll start this off and let’s jump in and have a conversation about this. Blows my…mind.

Kaite: Expletive.

Shawn: I’ll beep it out, beep. Blows my mind that this is getting as much attention as it does. But I’ll be fair in saying that it should have never been that way to begin with, right? If you play this out to its natural end where a corporation cares about nothing but profits, well then everything else collapses around it. You don’t have an infrastructure, you don’t have employees that will be taken care of in a community near you. You don’t have the ability to grow because you’re sapping resources from everything else if you play that out to its natural end. End rant.

Bill: Restarting, huh?

Shawn: Jump in whenever you like. I told you I get passionate about this.

Kaite: Bill has something to say.

Bill: True, although without profits, you know, or without the financial metrics.

Shawn: A business needs to be …

Bill: A business will go out of business faster. And so I think the old theory was if you keep your business running profitably and efficiently from a sort of financial market, Wall Street perspective, you can then afford to do everything else or dare I say sort of a trickle-down kind of mindset. This is like if you have lots of money, you can then do charitable things with it.

Shawn: But I think that’s what you… In theory.

Bill: Well, in theory.

Shawn: I’m not sure if you ever saw that playing out too frequently.

Bill: Well, right, because that, you know…

Shawn: The truth is it will never happen.

Bill: Because, well, once you write that check you don’t have that money anymore and therefore you’re, you know?

Shawn: Well, and a couple of trends have happened, right? You see the exponential growth in executive pay versus, you know, average employee pay. And so, a bunch of the money from profitability goes there. And I think you’ve also had a shift in beliefs. If you look back at where we got to between post-World War II and the ’70s where a lot of companies wanted people to stay around forever. It’s the classic. Like use IBM as the example, failure or not, use Verizon or what was Bell, all the Bells then as examples that wanted employees to stay around for life. That gave them pensions and gave them benefits, and gave them a lot of reasons to make sure that they stay because their belief was the more they stayed, the more that they would get out of them, not necessarily just productive but like the collective knowledge that they’ve had there.

Bill: Yeah. And actually that’s a good point is that, you know, the mindset was you come, you work for your career for me, for my company, you know, and everything was geared around that, you know, and that’s pension plans is a great example of that. On a number of levels, I think as pension plans only benefit those who are long-tenured employees when they retire. And it also, you know, sort of in the ’70s and ’80s had the same problem of if the stock market is doing well, pension plan is doing well, but the company benefits from that because they have to put less money into the pension plan. Whereas, 401Ks, if the stock market does well, the individual employee does well, you know, so all the employees wanted 401K plans and wanted mobility.

Shawn: Right. To be able to take it and go somewhere else.

Bill: Right. And invested as they see fit so that they could lose money more readily.

Shawn: I wanna be able to lose my own money. And on a scale, you know, we probably did reach a tipping point there because a couple of things happened. You had more globalization coming into play where it was in post-World War II it was all about America, right, in terms of an economy. And by the time we got to the ’70s and ’80s, ’80s for sure, globalization was starting to happen. And that trend has just accelerated even more, like it’s a smaller world for all intents and purposes now, right? So, you had to become less, to put it in the words of corporate writers, bloated, right? You had to become a little bit more nimble and agile. But I think what we’ve seen is probably an overcorrection now too where it’s profitability and shareholder value above all else. Not to say, and I agree fully, cannot exist as a business if you’re not profitable, it’s just not possible unless money is coming in from somewhere else, right?

Bill: Right.

Shawn: So, you wanna be profitable but we’ve stripped everything almost to bare bones, not quite but we’re heading in that path. Whereas, I think there needs to be a balance I think of somebody like Richard Branson. but I could say other CEOs, too, but he’s just the most notable out there saying this. But I would say the same for Tony Hsieh, for example, of Zappos, that belief that they take care of their employees so the employees can take care of the business. And in doing that, you have to incorporate stakeholders, the community, the vendors, right? All these has to work well together because if you beat the hell out of your vendors to where they’re not making money then you don’t have a vendor, right? You need to make sure that everybody in this loop is a virtuous loop. Everybody is making out well. Anyway, sorry.

Bill: That’s okay.

Shawn: This is my point in saying that it blows my mind that this is a big deal, but I guess it is. I guess it is a big deal if they’re signing their names to the paper and saying that they believe that there are more audiences they need to worry about than shareholders.

Bill: Well, it’s funny because the first thing I thought of when I heard about this was knowing who the, loosely who the category, who the group of signatory is, not any individuals but, you know, the big name companies, the ones that everyone knows. Those are also the companies that are really struggling in recruiting particularly the millennial generation. Because the millennials are not, as a group, you know, I don’t wanna broad brush like paint a picture of all millennials being equal but…

Shawn: Here’s what I’ll tell you about millennials, they’re terrible. They want everything right now and they job hop all the time.

Bill: Not true. Not true.

Kaite: I’m offended, I’m very offended right now.

Shawn: No, let’s not stereotype. That’s right.

Bill: But there is, there is a much bigger push now for doing good for the community, having other things besides money as being your driver and…

Kaite: And that’s like a top driver for millennials, too. It’s not just like, “Oh, this is nice to have.” It’s like research shows that it’s a huge factor in considering where to work, like right up there with salary.

Bill: Or above it. And they don’t wanna work for the evil empire. They just wanna work for, you know, it’s… Apologies if I get the company wrong but the Tom’s, the shoe place, you know, we make a shoe. You know, we make a pair of shoes and we donate a pair of shoes or Bombas socks, same thing.

Kaite: Oh, Warby Parker, they do it with the glasses.

Bill: So, you know, and that appeals a lot to these, you know, to the younger parts of the workforce in particular. And like I know for a fact that many of these big, huge, older companies are having a hard time recruiting younger talent and they’re losing lots of talent not just to the cool tech companies but also to companies that have a mission above and beyond the almighty dollar.

Shawn: I think you’re right, Bill, in what you’re saying that this is…clearly part of this is a PR play where you’re trying to make sure that you’re getting the right people in the door that would maybe be turned off otherwise. And I think it’s because you’re starting to see, again, if the ’70s or ’80s were in overcorrection one way or not an overcorrection. The ’70s and ’80s went too far one way and now we’re starting to head too far the other way. What we’re looking at is like this middle of the road here which is to say, “Sure, we believe in capitalism. We also believe that capitalism can do good. It doesn’t need to be pure profit above all else. I get that you need to be profitable but why don’t we help everything else while we’re doing that? Why don’t we try to do good in the world while we’re also making money?” I think that’s generally what you’re hearing from millennials.

Bill: Correct. And I think that part of this is to say, we, corporate America, can do both and that it is in part positioning a PR statement to help recruiting and help doing business with other companies.

Kaite: I wonder if this is like, you know, these massive organizations, if this is their answer maybe or their version of what we’ve seen some other companies do in terms of like the B Corps [inaudible 00:12:05]…

Shawn: Yeah, the B Corps which is… Are you familiar with B Corps?

Bill: I’m not. Is anyone out there familiar? Nobody said yes.

Shawn: Anybody in podcast world?

Kaite: No one said yes, wow. No, I’m sure it’s like a group of organizations that essentially signed on to their mission to do good essentially. I’m not butchering what it is.

Shawn: To be clear, it’s not just a sign on. They have to go through a process to become a B Corp.

Kaite: True, and they’re certified as B Corps.

Shawn: They have to prove that they are doing good in the world in what they’re doing as well to be also…

Kaite: I’m trying to think of…

Shawn: It’s like you would have an S Corp or an LLC and it’s not that you would…these things actually aren’t competing but like in, in other words, you…

Bill: It’s not an IRS thing.

Shawn: No.

Kaite: No, no, no, no.

Bill: But have to show upfront and I believe every year audit and show proof of that you are, that you are doing your part in the world, that’s it’s not just, right? So, B Corps balance purpose and profit. They’re legally required to consider the impact of their decisions on their workers, customers, suppliers, communities, and the environment. Ben and Jerry’s, Cabot, Stonyfield, Hootsuite, right? These are just some of the logos that they have on their site. It’s companies that are striving to do good in the world while also doing what they need to do as a big organization.

Kaite: And it’s on their products, too. Like my toothbrush, I know, is a B Corp. It’s made from plastic water bottles.

Bill: It’s funny you brought up toothbrush because I was gonna say that has more teeth than just Business Roundtable which is, this is a statement. But a lot of the criticism I’ve heard and read about this is that it’s just a statement and it’s sort of vague on the verge of motherhood and apple pie kind of, you know, we’re gonna treat our suppliers well. Does that mean that those procurement people that are just always beating people up to squeeze every nickel out of a contract are going to be a lot of softer about that? Or similarly, there are a lot of, this is a part of if I had access to these people and I could ask anonymously, you know, there are a lot of like financial institutions here like, you know, banks, investment banks, investment companies, hedge fund companies in here.

And it’s like are they going to hold companies to lower financial standards because of this? I mean they’re saying like we believe in this but their business also kind of relies on them being the arbiters of what is a good, strong business, you know? The analyst says we should buy, you know, will they say, “We should buy Cheeky Panda.” Even though they don’t make as much money as their competitors but they’re doing more good. Are we gonna start seeing that?

Shawn: I think there’s two things to look at here, right? And I’ll answer probably from my opinion in reverse to the way you asked it. I think one of the things you see with companies that try to also do good is they build a really solid brand. It’s an easier thing I’d argue to build a brand around which doesn’t, if you’re building a good brand and people are buying it more often then you’re more valuable, even if you still have this philanthropic parts of your business, this altruistic parts of your business. But the second part I think where you’re hitting on which is the interesting part of this, is to how it comes to life is fewer companies are publicly listed than they have been since the ’70s. And more companies are going private than they are going public now, like this year. And there’s a whole host of reasons that that’s happening. But I think at the core of it is effectively what you’re implying here which is it’s always a chase for what’s happening this quarter, what’s happening today? How did your stock do? Because of the way that Wall Street operates today.

So, it’s really difficult in that case and this is not just a philanthropic thing. It’s really difficult in that case to invest in R&D. It’s really difficult in that case to invest in employee benefits because you’re chasing the “Did you hit your profitability numbers this quarter?” And it’s not great long-term, and I think we see that that’s a problem now that we have, you know, more… We see it for sure in the numbers of publicly traded companies. If you need to retool your technology, take Avaya for example, not picking on them but it’s just the good case of it. Publicly traded company, well-known tech leader in the communication space, and they’re like, “We believe that we have to do different things with our business to be able to be more forward-thinking, to reinvent our technology a little bit, to take that next step. We’re gonna have to go private.” And they had a PE company buying them out and go private, right?

And that is the case more often than not now, and a lot of companies are delisting, is because they wanna be able to keep up, right? And so, if we’re on this constant pace for quarter, quarter, quarter numbers, it’s really difficult to invest long-term then.

Bill: Correct.

Shawn: It’s the first thing that gets cut if profitability is not where it should be. So, we have these two things at play, right? So, your point I think in what you’re asking is are they gonna be long-term investors? You see some of that stuff surfacing where Eric Ries who did the Lean Startup is now doing his own stock exchange, it’s the certified stock exchange that rewards long-term investors. Is that gonna be a trend, do we think?

Bill: I think that’s beyond the scope of this podcast.

Shawn: I mean that is the point though. You know, and did find it interesting that there are these people who are, you know, business analysts and variants of that who it’s just not their own company that they’re looking at but every other company. And you’re right, like the stock market has grown into this, you know, like everything else now. You know, EDD kind of like what’s the price today, what’s the price now? You know, did it move, you know, in the last minute? People have tickers on their desks and things and it’s, you know…

Shawn: Flash trading.

Bill: Day trading, right. Day trading became flash trading, you know. And it’s like all of that is just, you know, completely counter to the sort of spirit of this. And I think everyone’s known that the stock market has sort of turned against long-term R&D.

Shawn: Agreed.

Bill: And that there’s just too much pandering, I don’t think it’s the right word, but too much catering to that mindset in making your business decisions.

Shawn: You’re gonna think of something we’ve seen play out when you value that above all else, not including other aspects of it, you’re not a sustainable long-term business. It’s also why the stocks included in Fortune 500 companies or stocks included in DOW are turning over more than they ever did historically is there’s a lot more disruption happening and that’s one of the possible reasons.

Bill: Yeah. I mean, you know, and should there be a downturn which, you know, lots of people are predicting, a recession slow down, whatever you wanna call it, what happens to these 180 or so companies when the question is profits versus layoffs? You know, and our audience is listening and sitting there in the heart of HR going, “Oh, good point because it’s hard that…”

Shawn: “That’s a great point you make, Bill.”

Bill: Help us, I don’t know what to say. I mean there should be inside these companies some pretty heated discussions over should we have layoffs or should we warn in the street, or warn somebody that we’re taking care of our community, taking care of our employees. We don’t wanna ruin our vendors and stop paying people. We don’t wanna…

Shawn: To be blunt about what can drive that specific part of it I think is to say that a lot of executives, and we can target CEOs, a lot of executives in these companies are rewarded by stock value. And so…

Bill: By and with.

Shawn: Yes, correct.

Bill: I mean both components.

Shawn: Right. So, I think, and that’s the one of the reasons you see them also pushing this, that aligns them with the street if it’s not long-term stock value, right? If the options, for example, grant quickly, right, or if they can sell quickly. They need to be locked up for longer so that they’re thinking more long-term. But then in theory, in modern times, that does not align them with the street, right? But it does align them with the business and with vendors and with employees, and with community, right? So, it’s this interesting dichotomy that will, I think you raised a good point. The people who are signing this, a lot of them, are in a position to push on the companies that they are shareholders of and say, for example, I’ll give you an example because it depends in what degree you apply this to but in a company that I was at previously, they would push on you to make sure that, A, you’re taking care of your vendors and, B, you’re making smart decisions. So, as a software company, were you hosting? Do they have wind-powered server farms or solar-powered server farms, right? Those kinds of questions that you’re doing good by the world and not just saying, you know, making the quick decision, the cheap decision, that you’re thinking it through, right? These companies that sign this not only can do it themselves but they have the power to push on others to do it. So, will they do that?

Bill: The power, that’s funny.

Shawn: User. Will they do that or will they, the second something turns towards…recession is a good example. Will they just pull back and be like, “You know what, let’s profit build again.”

Bill: Right, yeah, exactly. Get rid of the green, you know, green server farm, we’re gonna go with the cheaper, you know, coal-powered one.

Shawn: Yeah.

Kaite: Yeah. But also, when we’re talking about the B Corps thing I was thinking of this is they didn’t, correct me if I’m wrong, they didn’t actually commit to like next steps, right? They’re literally just signing a statement. Whereas, at least in the B Corp example, you have to meet this criteria and year over year we’re checking to make sure you continue to it. This is just like, yeah, we’re gonna be better.

Shawn: Right. I mean what will be interesting and maybe getting too far into the weeds is next proxy season, next spring, are we gonna see executive incentive plans?

Kaite: Aligned to it?

Bill: Right. No longer just measuring financial metrics and measuring things like involuntary turnover or greenness of your vendor or carbon footprint of your supply chain, which is, by they way, this never ending thing. Because if you go to, in your case, Shawn’s case, if your hosting is done by a company that’s not green, like who are their vendors and so on and so on. Like, it goes pretty far.

Shawn: It can go pretty far.

Bill: It can go pretty far and it’s like very costly and [inaudible 00:23:03] thing to do.

Shawn: A hundred percent.

Bill: But, you know, are we gonna start seeing measures of things that align with not just what’s good for the shareholder directly but what’s good for the other stakeholders? So, you know, will the CFO have measures for, you know, supply chain relationship?

Shawn: So, do they better align with that period, right? And I’ll take that even in the board level. Does the board start to care about more than just profitability? Do they insist that these things are gonna be taken into account? Or do they even appoint somebody that is there to see that part of it, that’s there to advocate for that part of it?

Bill: And do they, you know, from a compensation perspective, do you rebalance the mix of pay so that there’s less executive pay tied to stock or delivered in stock, and more tied toward, you know, cash that’s based on other metrics?

Shawn: Things that are good for the business and good for all stakeholders.

Bill: All stakeholders.

Shawn: Yeah. You know, I think that will be fascinating. And just to play it out here, I think one of the things that you could see the natural response to this could be, right? Because one of the things that you’d wanna do in this, for example, is raise the minimum wage, right? Helps better take care of employees, better takes care of the community, right? Now, the natural thing that’s gonna, the natural argument that’s gonna comes into play there, that means, well, then you have to raise the cost of your goods or your services, right? So, this will be interesting to see how it plays out if everything raises or it’s an economic theory, argument until it actually plays out.

Bill: Right. Although you don’t, I mean that’s sort of the point to this is you don’t have to raise. You could raise salaries without raising cost of goods, take care of your employees, keep your customers neutral, and let the shareholders take a little hit.

Shawn: As long as the shareholders are okay with a lower return.

Bill: Right. But this statement is saying…

Kaite: We’re committing to that.

Bill: We’re putting shareholders that notice that there’s going to be a rebalancing of how we make decisions and who benefits from those decisions.

Shawn: And do we think this will play out to other non-publicly traded organizations? I mean I think there’s a lot out there, we’re talking about B Corps. There’s a lot of companies that try to have this model anyway but do we think this will influence that?

Bill: I don’t know. I think this is giving companies an out to be able to say, “Our decisions are not just about shareholder return and maximizing value to shareholders, it’s about other things.” And so, the big companies are looking for a way to justify making decisions that don’t directly help the shareholders. And ultimately, you know, I think as sort of led off this discussion, everything that they do will help the shareholders but in the long run, by building a better brand and a stronger company and…

Shawn: The company should be around for longer in theory if they’re making these kind of decisions. I mean I think that would be the hope is that by incorporating other things into the decision making, they are able to invest more in employees, and the R&D, and keeping employees that they wanna keep, right?

Bill: Well, right. In keeping, you know, I mean we sort of touched on this a fair amount when we’re sitting here talking but keeping employees is often a lot cheaper than replacing them, you know? And people just don’t test that a lot. And so, I think, you know, keeping employees, it has an immediate…it may have an immediate cost because you’re providing better benefits or higher pay. You know, you said John raising minimum wage.

Kaite: But long-term you’re saving.

Bill: But if you cut your turnover by 50%, 60%, 70%, that can save you a fortune especially with people that have roles where there’s a high ramp time or other thing to get familiar with the job, or worst, to replace a person. In an economy like where we have been recently at least, some of these high-skilled jobs are very hard to replace.

Shawn: In theory, this is a good thing and I get your point that companies that are not publicly listed, depending on their structure and their investors at that point, can make these decisions already. Which is why you see a lot that are trying to do good, the B Corps of the world for example. Just using them as example but there’s a lot of others out there. Salesforce has their 111 model which is commit 1% of your product, 1% of your employees’ time, and 1% of the resources available to philanthropy. And they encourage others to do something similar. And so, there’s a lot of companies that are trying out there to do this good in the world, and it’s nice to see we’re looking beyond the short-term interest of, it’s easy to point the finger at, the short-term interest of Wall Street.

But we’re just looking beyond short-term interest. We’re starting to factor in more what should be factored in in a corporate enterprise, right? You need to have good employees that are productive and happy. You need to have vendors that are the same, right? All the stuff needs to come together and, by the way, your community can’t be trashed then either because your employees probably aren’t gonna be happy, right? It’s not great to go home to that.

Bill: You want to be in a good, happy ecosystem that’s productive and, you know, mutually beneficial.

Shawn: And you are stakeholder in that and they’re stakeholdering you for that reason. It’s a virtuous loop, so it’s cool to see that.

Bill: Yes.

Shawn: It blows my mind that this is a thing but maybe I’m just idealistic or naive, I don’t know.

Bill: Great. I mean there are plenty of people out there, you know, yesterday and today saying like that this may or may not be a thing. I think we have to sit back and see, like is this real or is this…

Kaite: Like how does it come to life?

Bill: Right. Is it more than just a one-page…?

Kaite: More than just the PR stuff.

Bill: Statement on the purpose of a corporation.

Shawn: The fact that they’re acknowledging it is a big shift and it’s a good thing, right?

Bill: Correct. I agree with that.

Shawn: It’s been 20, a little over 20 years, 22 years since they went hard the other way. So, that’s a good thing. And it’s good that we as a country, it’s good that we as a business community are learning lessons and advancing because of it. I hope that this brings about change because I do appreciate that about businesses that try to create that part of the world.

Bill: Done.

Shawn: We talked about what ramifications this could have on comp a little bit. But I think one of the things you’ll start to see hopefully is, for example, longer term incentives maybe raising or at least assessment of what’s a good minimum wage, not just what might be federal for sure, or state or municipality, but what might be a livable, minimum wage for the areas you employ in.

Kaite: And this actually reminds me of, I was listening to the New York Times podcast on this topic, “The Daily,” and they have gotten to the history a little bit and they brought up Ford. And in the early 1990s, raising minimum wage for his employees from two and a half to five which is part of that motivation was not just to keep them because they couldn’t make that anywhere else but also so that they could afford the products that they are building. I thought that specifically was, you know, kinda go at hand in here but like super interesting.

Shawn: I can’t afford a [00:30:18]. Bail.

Kaite: Do you need that in your personal life? Or you got a market price like your kids’ allowance?

Shawn: What other considerations do we anticipate might have comp-specific ramifications if this comes to play like we were talking about?

Bill: Well, first of all, I think there should be discussions inside organizations about what this kind of thing means to their organization, what they’re adopting. And then, you know, as always, the compensation plan should align with and encourage and reinforce those messages. I think some of these are, you know, less specific and less…

Shawn: Tangible?

Bill: Yeah. Less tangible, but you can see how incentive plans can take some of these things into account with things like employee satisfaction to say is a simple thing. It’s like are our employees getting happier? Our employees like bigger proponents of our company and our mission, what we’re doing, you know, and starting to measure those things. And I think, you know, we hit on it fairly hard here. It’s all about longer term, like how is the company doing as opposed to the short-term kind of thing. So, will long-term incentive plans have less ability to pay out in the short-term?

Shawn: Right. You’re tied in for a longer period.

Bill: I mean I’m gonna get, I would get shot if I recommended this to a company but, you know, as a provocative statement to think about is like what if all executives, like equity plans, their stock or their options or their RSUs, what if none of them paid out until after they leave the company? You can’t take any money out, you’re getting paid plenty in base and bonus to live on. And this is your job is to build the business or, you know, it can’t get paid out for 10 years or it’s something like that which is truly long-term, whereas now long-term is like two to five years. And, by the way, you start investing early and you can sell your stock at any time.

Shawn: How is that not a pension?

Kaite: I was gonna say it sounds like it.

Bill: Well, I mean it is effectively a retirement plan.

Shawn: In terms of how you’re incentivizing, now it’s different because you’re not investing into it in theory.

Bill: Right, right. But I mean it is in a way but it’s, you know, it’s also… And, again, I’m saying this is very provocative and it’s, you know…

Shawn: Bill Coleman out on a ledge today.

Bill: I will host the podcast if some company actually does that.

Shawn: But wait, wait, Bill will fly to your location.

Kaite: I know what’s coming.

Shawn: With a zoom microphone.

Kaite: And a zebra suit.

Shawn: Maybe, it depends what he’s feeling that day, and interview you if you do this. You will get a visit from the man, the myth, the legend himself.

Bill: Yeah, all right.

Shawn: Right in the Coffee at payfactors.com.

Kaite: I like this.

Bill: But the point is, if you think about it in those terms and then cut back to something that makes sense and is reasonable. You know, clean slate, how would you… You know, if you were starting a Fortune 500 company today, what would you put in place.

Shawn: You know what, I wanna build, I wanna build Ford.

Bill: No. You just start there.

Kaite: So, you woke up think this morning, right, Shawn?

Bill: So, I think, I mean there are a lot of compensation impacts to this and I think it will be, you know, dipping toes in the water and testing things. And I think in reality, you’ll see a handful of these companies start injecting like one measure or two measures into an existing short-term incentive plan to address, you know, what this statement means to that company.

Shawn: That there are more stakeholders than just shareholders?

Bill: Exactly. Make people aware of it. I mean it would be sort of cool if, you know, companies communicated all the way down to the bottom of the organization who their stakeholders are. Just that, in and of itself, so that people are aware that somebody besides the shareholders or the owners, or whatever it is in your company, you know, there are other people that rely on our business and work with our business and need us or…

Shawn: Take these factors into consideration when you’re selecting a supplier, for example, or make sure that we’re doing these things when we do, right? Yeah. I mean those are great things. It would also be nice if they look to invest more in their local communities that they participate in, whatever that means to them.

Bill: Correct. And that’s the thing is it’s got to be personal and real, not, you know, we’re gonna do, you know, a community service project so we can put it on our recruiting website. That’s…

Kaite: Right. So, we can check the box.

Bill: Yeah, checking the boxes. This is not about checking the box.

Shawn: No.

Bill: This is about real change.

Shawn: Foughtful change.

Bill: Yes. Meaningful, and I think, at least to the extent that my earlier point, millennials are somewhere involved in this, the millennial mindset. It’s like they can also smell a fraud a mile away.

Kaite: It’s true, we can. We have fraud-sniffing technology in our…

Shawn: It’s an app in your phone, isn’t it?

Kaite: It is, it is. Right, Tessa? Yeah, yeah.

Bill: iFraud app.

Kaite: Yeah, exactly.

Bill: You have the iFraud app?

Kaite: Yeah. How do you know our secrets?

Shawn: I think anybody can do that. It’s pretty clear if you’re just using words and not following that up with actions.

Bill: Right.

Shawn: I think the difference is millennials are more likely to say, “You’re not being real about this. I thought when I started here, for example, that you were.” Yeah.

Kaite: Yeah. Like they’re gonna call you on your…

Shawn: I’m not gonna stay if that’s the case.

Kaite: And I think this is gonna be even more true with Gen Z which is now, I mean people think of millennials, I think that in their mind a lot of people think millennials are still 22 years old.

Bill: Correct, they’re not.

Kaite: But like millennials are now having children and are growing into being the business leaders and, you know?

Shawn: And they’re just entering the workforce I believe.

Kaite: Exactly, yeah.

Shawn: Yeah. Well, hey, I’m gonna argue this is all a good thing if it actually comes to life. We should take account more things than just pure profit. We should be profitable. We should keep everybody well paid and happy to the extent possible, but that means keeping everybody all paid and happy to the extent possible. Well, I hope this is an interesting topic. We try to jump on this one quickly today because it’s happening this week so we’re gonna get this pod out as soon as possible. Bill is an active podder, he’s in the pod community. He’s gonna edit this.

Kaite: You’re saying pod a lot.

Shawn: He’s gonna edit this and get it out. Thanks, Bill. We’ll be back next time with… We have a couple other pods coming up soon that I’m looking forward to. We also have the median versus outlier, and we have some other stuff coming up soon about reporting and visualizations.

Kaite: Shawn, what else is coming up pretty big?

Shawn: Bill’s birthday?

Bill: Shameless plug.

Kaite: Or, you know, CompCon.

Shawn: Isn’t it Bill’s birthday?

Kaite: Is it Bill’s birthday?

Shawn: It’s Bill’s birthday at CompCon.

Kaite: Wait, Bill’s.

Bill: Yeah. My birthday is coming up in about 10 months.

Kaite: When’s your birthday?

Shawn: I thought we’re celebrating at CompCon.

Bill: I know we celebrate every month.

Kaite: Every day.

Shawn: The other big thing coming up, we have only a handful of tickets left for CompCon San Francisco. I’m excited to hopefully round out our speakers this week. We’re in the final negotiations with the final speaker. It’s gonna be awesome. Get your tickets if you’re in the San Francisco area or if you wanna come out, see us, see Bill, get a hug from a zebra. It’s all gonna be there. It’s all gonna be happening.

Bill: When is it in October?

Shawn: October 21st and 22nd, Bill, that’s a great question.

Kaite: In San Francisco.

Shawn: In the Bay.

Bill: Got it, in the Bay.

Shawn: In the Bay.

Kaite: Literally, or at an island.

Shawn: One of the early considerations that I was pushing hard on was having a team-building exercise where you have to build a raft and row to Alcatraz. It got rejected for a bunch of different reasons but we’ll see what we can do.

Bill: I can think of some reasons.

Kaite: It’s still in his mind. He’s gonna make us do it with me, Jas, Shawn building a raft.

Bill: Just send Shawn.

Shawn: I’ll do it. I’ll do it.

Kaite: Give him a couple of like some old logs and like kinda awesome leaves.

Shawn: Listen, here’s the deal. We have another guest coming up on the podcast, I believe we’re recording it next week, David Goggins who is the keynote. If me and David Goggins can do that, and by me and David Goggins I mostly mean David Goggins. If we can do that…

Bill: David Goggins, the former Navy Seal.

Shawn: The former Navy Seal.

Kaite: Endurance athlete, yeah.

Shawn: If I can have him help me with that, again, by help I mean…

Kaite: He’ll just do it and you’ll cheer him on.

Shawn: I’ll keep him hydrated.

Bill: You know what his first thing to do is to get that done, I’m gonna throw you off the rail.

Shawn: Listen, Shawn, you’re too much weight. Get out.

Bill: Yeah, exactly. You’re a drag. That’s the Seal way.

Kaite: In the middle of CompCon Day 1, where’s Shawn? Where, you know?

Shawn: Are you a strong swimmer? I’ll see you at Alcatraz. All right. Well, we have a lot coming up. Look forward to it. Hope to catch you guys at CompCon, gonna be exciting, gonna be a cool event. And I guess that’s about a wrap for today.

Bill: Sounds good to me.

Kaite: Over and out.

Shawn: We’ll catch you next time. Thanks, everybody.