CEO Forum Building a More Civil and Just Society with George Barrett and Rebecca Ray

🎥 Aug 11, 2020 📺 The Conference Board ⏱ 24m 👁 139 views

Ensuring Equality in the Workplace. The CEO Forum series features CEOs from across American industry who will focus on actionable insights to address underlying challenges of economic opportunity, childhood education, health care, workforce skills development, workplace equality and corporate governance.

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About George Barrett

In May 2020, George Barrett participated in a musical performance for the Offstage LIVE series, playing bass alongside musicians Byron Stripling, Bobby Floyd, and Andy Woodson. During the event, he stated that he had been doing board work and policy work focused on patient safety, and that he was trying to stay involved in healthcare while wishing everyone health and safety. In a 2015 interview with the Financial Times, Barrett discussed the healthcare sector's merger and acquisition activity, describing it as a byproduct of companies repositioning for industry changes. He noted that Cardinal Health had expanded its position in generics and the specialty pharmaceutical area, and acquired Cordis to address changes in the medical device world. Barrett stated that spending 18-20% of GDP on healthcare is "probably an unsustainable model" and that there would be pressures to manage costs more effectively. He expressed the view that the Affordable Care Act was likely to remain in its basic form, saying repeal would be difficult politically and that many Americans were benefiting from reduced uninsured rates. In a 2016 acceptance speech for the Peter G. Peterson Business Statesmanship Award, Barrett said he thought of statesmanship as having two definitions: one related to government operations and the other to thinking about the public good. He remarked that while healthcare undergoes changes, it is important to keep in mind that behind the scenes is a "father, a mother, or brother or sister, a cousin, a friend."

Source: AI-verified profile updated from George Barrett's recent appearances. Browse all interviews →

Transcript (24 segments)

✨ AI-enhanced transcript with speaker attribution

Rebecca0:12

No one could have predicted this confluence of events just a few months ago. Beginning with the COVID-19 crisis, the ensuing economic crisis, then the death of George Floyd, and now the seismic street protests driving a sea change in public consciousness. CEOs across the corporate landscape have added their voices to the discussion and are determined to use their influence to make lasting change. Corporations are in a unique position and indeed are often expected to address issues of racial injustice and social unrest and other social issues that we face. For over 100 years, the Conference Board has helped the world's leading companies and society at large navigate crises and develop reasoned solutions for our country. We have, from our very earliest days, advocated for decent working conditions, for the rights of women entering the workplace, for the rights of people with disabilities in the workplace, and other challenges in creating a fair and respectful workplace for all. So, given recent events, we're launching a series of CEO forums to foster action called 'Building a More Civil and Just Society,' featuring CEOs and business leaders from across American industry who will focus on actionable insights to address our societal challenges. Today, we're fortunate to have George Barrett with us. George is the former Chairman and Chief Executive Officer of Cardinal Health, a role he held from 2009 through 2017, when he became Executive Chairman of the Board, serving until November of 2018. Previously, George spent a decade at global pharmaceutical manufacturer Teva Pharmaceutical Industries, most recently as President and CEO. Over the years, he held various senior positions with other top pharmaceutical companies. Currently, he serves on the boards of Target Corporation, Olive, a healthcare-focused technology company, InStride, a public benefit corporation that provides workplace education, Nationwide Children's Hospital, and Children's Hospital Solutions for Patient Safety. He's also the Vice Chairman of our Board of Trustees here at the Conference Board. During his tenure at Cardinal Health, the company was recognized by Fortune as one of the world's most admired companies, by Forbes as one of America's best employers, by the Wall Street Journal as part of Drucker Institute's top companies for corporate social responsibility, by the National Association for Female Executives in their top companies for executive women award, and Chief Executive Magazine's top companies for talent development. We could not have a better guest to join us for this particular topic. He earned his Bachelor of Arts degree from Brown University and his Master of Business Administration from New York University. George, thank you for joining today.

George Barrett2:54

Thanks for having me, Rebecca. This is an important discussion, so I'm glad to be part of it.

Rebecca2:58

Well, thank you. I'd love your views as a CEO and also someone now who is so involved in different organizations at different levels. I know this topic comes up a great deal in many different contexts. I wondered if you could begin by sharing where you think we've come and where we still need to go in the world of diversity and equity and equality in the workplace.

George Barrett3:24

So, I guess I would have to say we've made a lot of progress over the last decade, but I think the data is also fairly clear at this point that we have not made the progress that we need to make. And there are lots of different ways of measuring this. If we just take the corporate world and let's say we look at the Fortune 500 as a measurement, there are, I think today, fewer than 40 female CEOs among Fortune 500 companies and fewer than 10, and it might be fewer than five, Black CEOs in that group. And so, with all the attention that we've devoted to this, and it has been considerable for all of us, I would say that we haven't really made the progress that we still need to make.

Rebecca4:08

And as you look at the years where there has been a great deal of focus on it, certainly, what do you think are some of the perennial challenges that keep us from making the kind of progress that I think most everyone wants to see happen?

George Barrett4:22

Yeah, so it's a complicated story, as you all know. Some of this is broadly institutional. You know, this question comes up: why aren't we making more progress? And I think we can probably acknowledge that we've made more progress with women than we have with Black executives. And I think if you look at management teams, you probably see this in the C-suite as well. But I think there's been a lot of discussion about this, questions about whether or not it's in the pipeline. I don't really think that's the issue. I think it's really a combination of a number of factors that relate to opportunity and they relate to access. And I think if you look at the events of the past few months, which have highlighted some of the asymmetries in the way people are treated, I think we can say that we all bring baggage. Even if we assume positive intent, we can still acknowledge that human beings probably have a tendency to see in people like them certain positive qualities, familiar qualities, and to assign to people who are unlike them less favorable qualities. And I think there's a lot of data to support this. Ken Frazier from Merck has talked about this issue a lot. He talks about the algorithm that we go through in our heads without even knowing it. And I think there's some real validity to that. In fact, he talks about the fact that when they blinded the applicants for their intern pool, taking away name and pictures, that they saw very different results—a much higher percentage of Black interns selected. And again, this just highlights some of these dynamics. So that's one piece, which is sort of this implicit bias that we all probably have as humans. I think the other, which has again been studied, is this issue of access. And again, I'll cite another company: LinkedIn has studied this, and Jeff Weiner, who's led this, has spoken about this issue that we have a tendency to have certain groups of us that have benefited from the network effect, meaning we've grown up in the right place, we've been to the right schools, we've been employed in the right companies, and that in and of itself creates sort of this virtuous cycle for those in the favored group, the group with access, and actually a blocker for those that don't have access. And so I think we have to think about all these things in terms of the work that we do to address this. There are lots of other things, which I think we'll touch on, related to practices and policies, but I think those are things that we probably have to acknowledge are with us and that we need to address.

Rebecca7:23

Well, I think there's something to that, and there's something to be said for casting a wide net and removing some of the things that, if you select on a blind basis, of course, it gets more tricky once you're starting to look at succession planning or opportunities when people are already your employees and you know them. And so part of what you know about them is sort of their background, and so it's difficult to do it then. But I wondered if, before I start to ask some maybe questions about some of the things that you may have led the initiatives on at Cardinal Health, because I think as I mentioned before, Cardinal Health has such a track record of having done some really terrific things and having emerged as a company doing many of the right things in terms of advancing people's careers. How do you frame, as a CEO, how did you frame or think about the issue of diversity and inclusion? I mean, what was the lens through which you looked at what needed to be done?

George Barrett8:20

This is a great question, Rebecca, because I think the subject itself elicits strong responses and emotions from people. So I tried to frame this in the organization really in the context of our business. And what I said was I use multiple lenses in thinking about this, and I think people often do. You can think of this from a moral and a fairness aspect. You can think of this in terms of the legal obligations that we have to have diversity in our organizations, certainly with government contracts. You can think of this as a market phenomenon, which is, as an organization, wouldn't we want to, in a sense, represent the markets that we serve and to look like the markets we serve? I think there is another aspect, which was the power of human capital, which is I want the most talent we could possibly get. And I know that if everyone looks alike, sounds alike, thinks alike, the likelihood that we're going to get that kind of positive tension that's necessary for innovation is less likely. And so I wanted an organization that actually had people that came from different backgrounds and different points of view and different worldviews, and that I thought that would make us stronger as an organization and actually be a competitive advantage. So I wanted to frame it using all of those lenses, all of which I believe in.

Rebecca9:44

George, we've done some work here at the Conference Board on the relationship between diversity and inclusion and higher levels of innovation. And I wondered if you had an example, perhaps from Cardinal Health, where this focus on D&I work resulted in something that was an innovative opportunity to kind of push the envelope.

George Barrett10:07

Yeah, it's actually a great question, and I'm reminded of an innovation that we saw in our pharmacy division. So this was led, this idea, by our women's employee resource group, which is really a wonderful and powerful group at Cardinal. And this group identified that the overwhelming majority of graduates from pharmacy schools are women—I think it's over 60 percent now, somewhere between 60 and 70 percent of pharmacy graduates are women—and yet the number of pharmacy owners was actually very low, I think less than 15, might have even been less than 10, it was quite low. So their idea was, why don't we help these emerging pharmacists find opportunities to either acquire or build their own businesses, independent pharmacies, that could run for us a great customer base. And this idea, literally coming from this resource group, that might not have come from a group of guys sitting around and looking at strategies. And so again, this is just an example of having another lens, another point of view, and it turned out to be a wonderful idea, and Cardinal moved on it right away.

Rebecca11:27

George, you alluded to the network effect and how not being part of that keeps folks really at a disadvantage. I wonder if there was a way at Cardinal Health that perhaps you began to address that successfully.

George Barrett11:40

Yeah, this is a hard nut to crack, but you know, there are a couple things that we did. I think the most effective thing that we did was to move from sort of the classic notion of mentoring, which is sort of counseling, to sponsorship. So the mentoring idea is more of a resource, I am a resource to you as your career unfolds. The sponsorship idea was to say, I have identified you, we have identified you as an organization, I am going to take ownership of trying to advocate and promote you in this organization to see your advancement. And I think that's an important distinction, and I think that is something that I think we felt had some success, and I suspect that that's continuing today at Cardinal Health.

Rebecca12:27

So I'd be curious to know maybe some of your thoughts. You know, some of the literature will show that quite often men, white men in particular, are given opportunities that sort of position them for success in a way that those opportunities don't always come to others, whether those are women or underrepresented populations. And so therefore, when you're looking at a candidate fairly well into a career, you see a variety of experiences and you just think, well, this one's ready. And some of the data will show that women or minorities, for example, have to wait longer, usually are older at the time that they are given certain opportunities, particularly at the CEO level, and that they are held to a standard of having achieved as opposed to potential. So I'd be curious to know some of the things that you might have done at Cardinal Health that began to address some of those things so that the issues of fairness and opportunity really rose to the top.

George Barrett13:29

So let me describe a little bit about what we did, and let me also acknowledge that we didn't accomplish everything I wanted to accomplish, and like most organizations, have a way to go. I would say that we started by making the notion of diversity and inclusion a business imperative, a strategic imperative. And so, like any other critical strategy, that requires planning, that requires action items, that requires metrics, that requires reward systems that reinforce the things that you want to promote. And so I do think that this idea of integrating diversity and inclusion into your business, as opposed to thinking of it as a department, was important for us. We did, as another thing, we formed a diversity council. Now, I chaired that diversity council, not the head of human resources, not our Chief Diversity and Inclusion Officer. They were advisors to that group. And so again, signaling that this was a strategic imperative, I would be regularly with our employee resource groups. We had some very terrific and influential employee resource groups, and I would sit with them and really get a chance to ask them what it was like to work at Cardinal Health. So again, we tried to treat this like any other strategy. But again, this framing is very important, which is why is it important to us and what are we going to do to reinforce it. We made tremendous progress along many metrics, and particularly with women, where half of my direct reports were women, four of our board members were women. You could look through our organization and see that progress. We actually had other areas where we were less successful, and it's probably some of these implicit issues that you referred to earlier that make it so challenging. We were underrepresented in our senior team with Black employees, and I had that conversation many times with people in the organization. Good news, I know that my successor, Mike Kaufmann, has continued the seriousness around this, and I can see those signs of progress there. So, you know, it is one thing to say you're going to care about it and work on it; making it happen requires discipline and constant reinforcement. And going back to where I started, acknowledging some of these challenging things that are very tough for organizations, which is that we have some human characteristics that we have to fight and create mechanisms to overcome.

Rebecca16:06

Well, George, I don't think any company achieves all that they want to do in this space, but the question is how much progress is being made. And to your point, it sounded like it was all about accountability. It's one thing to say it, it's another to measure progress against it and also to hold people accountable when they fail to deliver against certain standards. And I think that's more about what progress are you making. It's like many issues, you may have a difficult line of business or a turnaround situation for your division, and it's not that you're expected to close the gap immediately, it's how much tangible progress are you making and what strides are you continuing to hit.

George Barrett16:50

So, you know, what you're highlighting is again this notion of thinking of this as you would think of another business strategy. Like, what market are we going to enter? You would design a strategy and operational tactics for doing that. You would have measurement systems, you would have course corrections if the measurements weren't operating effectively. You, as I said, make sure your reward systems align. So we tried to do that, and again, I think this is part of a process that companies need to go through, and where you're not making the inroads you need to, you evaluate it just the way you would with any other strategy.

Rebecca17:27

Yeah, hope is not a strategy, or at least not a successful one, although many people still reach for it. But apparently, George, I'd be curious to know what advice you might have for other CEOs who might be watching this segment and thinking about, you know, I don't know where to start, I don't know how to connect my people as strongly to this goal as I am. Where do they start? How do they get this rolling?

George Barrett17:58

At the risk of being repetitive, again, I would start by framing this for the organization. You have to be able to articulate this in some way that resonates with folks that know that they have responsibilities to hit certain numbers or to produce a certain amount, and so you have to be able to give context. And so I think framing it for the organization is extremely important. I think this idea of integrating the activities into the company so it becomes embedded, as opposed to this idea that it's going to stand alone as a department or an initiative, right? This has to be built in so that it can be seen as a source of competitive advantage, that it's a business imperative. I think the other thing is to recognize that as senior leaders, we are modeling behaviors all the time. And so when we have representation in our senior team, it signals to the organization our seriousness, and when we don't, it sometimes signals the opposite. We don't intend necessarily for that to be the signal, but it can inadvertently be that, and I probably am guilty of that at times in my career. I think this idea of setting goals and measuring them is important, and then I also think it is valuable to look outside your own organization and to look at what's happening elsewhere and to see where progress is being made and to start to ask the questions like we would in other parts of our evolution as leaders. There are lots of places where we can see things happening. It's not necessarily even in the private sector. You look at the military, and the military has been sort of an early mover on some growth and improvement in racial diversity. So I think it is important for us to think of those best practices and look at those, and then design, if possible, tools to get around some of the challenges. Those can be hard, and you mentioned earlier challenging, but things like a diverse slates as a requirement is a very good practice. Blinding applicants is sort of something that's been emerging in recent years as another tool. You know, I think back in other worlds, there's a reason that if you audition for a symphony, your name may not be clear and you're behind a curtain. And so in a sense, that's a blinding. It takes away one of the biases that we can bring to the system.

Rebecca20:37

I think that's right. I think you have to be willing to look at things and you have to be willing to say this is important enough and we're going to hold each other accountable and whatever that might look like in a particular organization. But that's a great place to start. A question about, you know, I know you serve on several boards and in many different organizations, what's the board's role in helping an organization crack the code on this? What advice would you have for board members and what should be their role?

George Barrett21:04

Yeah, it's a great question. I do think it's, you know, boards have a responsibility for helping define good governance and ensuring that it happens, but also in helping to set strategy, with of course the leadership of the CEO and their team. I think making sure that this becomes part of the strategic conversation is a good place to start. Again, don't allow it to sink too low as a tactical issue or as a departmental issue or as an initiative, as I mentioned earlier. So I think keeping that elevated. I think the second thing is to challenge yourself and to ask the hard questions, including examining your own composition as a board. Again, even when we attribute positive intent, which I think is true for most people, we can still fall into old patterns, and sometimes you just have to crack the brick a little bit. And I think asking those hard questions, it's a hard one for many of us because it raises this question of sort of racism and are we acting in a certain way. And I would argue that it doesn't have to be that; it just means that we as an organization have fallen into patterns that reinforce certain dynamics that have been embedded in the system for a long time, and we have to try to break that cycle. So I think the board can do that. And again, I think this issue of metrics is always viable for a board, without question. I think whenever you can get a board to signal that this is truly important and there'll be accountability, when you get a CEO that leads a team of people who are galvanized around this, and then you have people who begin to see that change is possible and that great things will come from the many lenses you've talked about, then I think you start to see an organization with sustainable change.

Rebecca23:01

Yeah, I think what you're describing is exactly right. This is sort of this unique moment, I think, in time. We've had these throughout our history, but I think in these moments, it is important for us to sort of take advantage of the energy, recognize that while it may make us uncomfortable, a very important issue has been illuminated, and it's the opportunity for leadership, both the CEO and his or her team and the board, to demonstrate leadership. And I think the private sector has this interesting opportunity now to demonstrate that we can lead and in a way that set the path. So, yeah, I think it's a great opportunity, and I think it's one we need to take advantage of now.

George Barrett23:43

No question. And I think as business leaders, in partnership with human capital leaders, have the ability to make significant progress toward equality and equity, fairness, opportunity, just simply by the choices they make across the spectrum of human resource programs and policies, and to your point, by holding folks accountable for hitting those goals.

Rebecca24:02

So thank you, George. Thank you for sharing your experiences and insights, and thank you for joining me today on this session. It's been a real pleasure.

George Barrett24:10

It's my pleasure, Rebecca.