January 6, 2025 • 31 mins
Costco has made headlines by affirming its commitment to Diversity, Equity, and Inclusion (DEI), resisting external political pressures that many corporations face regarding these essential policies. This episode explores the implications of Costco's stance for the retail sector while discussing the challenges other corporations encounter in balancing internal ethics with external demands.
• Costco’s board’s unanimous decision supports DEI initiatives
• The impact of political pressure on corporate DEI policies
• Contrast between Costco’s commitment and Walmart’s rollback
• Importance of DEI in building consumer trust and loyalty
• Leadership responsibility in fostering an inclusive corporate culture
• The necessity for internal DEI teams to counteract external pressures
• Future implications for corporate governance concerning DEI
Kudos to Costco's board of directors for showing exemplary leadership and bravery in standing by their policies.
CONTINUED LEARNING
- Did Costco just reset the narrative around DEI? (Retail Dive)
- What brands can learn from Costco's no-nonsense defense of DEI (Fast Company)
- In Costco’s Defense Of DEI Efforts, Lessons For (Forbes)
- Costco People & Communities (Costco)
Stay With Us
- Watch and Subscribe to The E Word on YouTube.
- Follow Karen on LinkedIn and learn more at Colossal Work.
- Follow Brittany on LinkedIn and learn more at BND Consulting Group.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Brittany S. Hale (00:01):
Happy New Year Brittany.
Happy New Year Karen.
How are you?
Karen McFarlane (00:05):
I'm good.
I'm good, I'm having a greatstart to the new year.
Love it Okay, positive, okay,positive.
But I think you know it's goingto be a good year.
How about you?
Brittany S. Hale (00:20):
I agree it is going to be a good year.
I actually started the NewYear's off sick, so New Year's
Eve I was on my couch gross,congested all sorts of things,
but it's only up from here.
Karen McFarlane (00:37):
You know what?
That's a great way to look atit.
Brittany S. Hale (00:43):
Well, we also started off the year with some
good news Did now yeah mina alsostarted the year off well oh
hey, mina, it's your first newyear.
Karen McFarlane (00:54):
It is mommy she's ready.
Brittany S. Hale (00:56):
I know she's ready for a nap, so she's me too
.
So she will not be deterred,right, exactly.
Karen McFarlane (01:06):
I could use a nap right now too.
As a matter of fact, we need tobring back naps, you know we
need to do a day, you know,respite to just recharge and get
us going.
As a matter of fact, I think ifcorporations adopted this,
they'd get workers to worklonger hours.
So it has benefits.
Brittany S. Hale (01:31):
I agree, yeah, a nap room incredibly helpful.
Karen McFarlane (01:37):
Exactly exactly .
So you know, let's bring backnaps this year.
Brittany S. Hale (01:42):
Block them into your calendar.
Karen McFarlane (01:44):
You don't have to name it nap, you can just
have a one-on-one meeting withyourself and your eyelids there
you go with what it was, the theblock they put, like work time
or like the focus time, focustime can have a nice little
restorative section there.
Yeah I've seen those, uh, thosethings on.
I think you can buy them onamazon.
(02:05):
You put them under your desk.
It's like a little habit fornap time.
I like it feels excessive, likeyou should be able to just go
to your bed or a couch, thecouch.
Invest in the couch is notgreat for a nap, yeah.
Anyway, you know, last year wesaw a lot of changes happening,
(02:30):
particularly with DEI, and wetalked a lot about that and how
it relates to leadership andmarketing and things of that
nature, and so, particularlytowards the end of the year, we
saw a lot of these hugecompanies roll back their DEI
programs, which, you know, weobviously feel is the wrong move
.
But we started out the yearwith one major company, one of
(02:56):
the largest in the world, thefifth largest in the world
saying no, we're not rollinganything back, we're keeping it.
Brittany S. Hale (03:14):
Yeah, and outside of you know,
ideologically speaking, a lot ofthese companies believe that
rolling back these policies aregoing to somehow ins proponents
and shield them from any sort oflitigation, which is not
actually the case and may haveit may backfire.
Karen McFarlane (03:35):
We don't know, we don't know, we don't know,
but the Costco board ofdirectors said hey, we will
evaluate what you're saying,which you should do, right.
And they did evaluate it andthey came back and were like no,
actually we believe in our DEIprogram, we don't believe that
(03:57):
it's violating any legal rulesand regulations and we believe
it's good for our business.
And so, in fact, they wentfurther and said and we believe
that you don't really care aboutour people and our business,
but you more so care about yourpolitical agenda, and so we're
(04:19):
not going to bend the knee tothat.
Thanks, but no thanks.
Brittany S. Hale (04:23):
So two things that I want to point out,
because this is what you juststated is so incredibly
important First, that it was aunanimous vote by the board,
right, there was no dissension.
One band, one sound, band, onesound.
(04:49):
And then the next point thatyou fleshed out around kind of
intention, and it seems that alot of investors have used a
tactic, you know, to kind of tousher in their political agenda,
which is to say that DEI raisesstockholder risk.
Now, stockholder risk is thiskind of amorphous catch-all
(05:10):
phrase to highlight a number ofthings and, like I said before,
the stockholder risk in thisparticular be litigation coming
from anti-DEI proponents whobelieve that DEI is creating
(05:31):
unfairness or inequitythroughout the workforce,
despite all of the evidence tothe contrary.
But it's, I think it's reallyimportant that the board called
this out, because they didn'tjust say no, thank you, we're
(05:53):
not interested in rolling thisback.
We've got it boards who mayfeel similarly and they're
giving legitimate businessreasons why this isn't
appropriate for them and fortheir business right.
Karen McFarlane (06:14):
Absolutely.
And it's so important that itcame from the board, right,
because the board sets the tonefor the organization.
That is the CEO of the boss,and so they're basically saying
this is CEO's boss.
And so they're basically saying, look, we have a vote of
(06:36):
confidence in the CEO andeveryone that works for the
organization.
We have a vote of confidence inour policies.
We've vetted those.
We understand the legalitiesand more so, we understand the
risk right, understand thelegalities and more so we
understand the risk right.
So every business assumes somelevel of risk and they have to
figure out their risk appetite.
(06:58):
And that risk appetite, as youknow right, is across various
different categories.
You know, I don't know whereDEI sits in Costco's specific
risk scorecard, right, butthey've made that assessment and
they've decided that whateverlevel of risk was associated
with it specifically, even if itwas a specific category it
(07:19):
might, they have it under.
It is acceptable, and ifsomething arises, they will deal
with it and they have boardsupport around dealing with it.
And that is so incrediblyimportant for a CEO and the
(07:43):
entire organization to basicallylive their principles right.
And if your DEI principles arean integral part of your culture
, authentically, so ripping itout would have catastrophic
(08:05):
effects.
Correct.
Out would have catastrophiceffects, correct.
You know, if it's, if it'sintegrated, if it was just this
add on, then some of thesecompanies can just take it out
and it feels like potentially,feels like it's, it's nothing, I
don't know.
So, yeah, I am so incrediblyproud of the board for taking
that stance and that, and thefact that it was the board, is
(08:27):
so incredibly important to theorganization as a whole I also
want to to highlight or kind ofpeek behind the veil at how this
was brought up.
Brittany S. Hale (08:38):
Right, because this proposal came to the board
through a costco shareholder,which is the National Center for
Public Policy Research.
Yeah, and they're aconservative think tank, right.
Like you said, this isproprietary research where the
(09:03):
ends or the means really kind ofjustify the end.
The conclusion is always goingto be the DEI is bad and, and
you know, harmful to business,and so they're working from
there.
Then they supplement with theiralleged research.
(09:23):
And so, looking at some of theof the information coming from
the proposal, because the DEIroles the policy, it's not just
a CDO, right, it's not just achief diversity officer right,
it's embedded, they have peoplein communities.
(09:46):
That sounds pretty inclusive.
That sounds like something youwould, to your point, would want
to keep and not yank out andrip out of the organization's
identity.
They're policies.
They have goals, right, this isnot fluff, this is not about,
you know, it's just simplymaking everyone feel good.
(10:08):
Right, there's, there's amission here to to expand, grow
and deepen trust in Costco as abrand, as a go-to brand, both
for people who currently workfor Costco, people who are
interested in working for Costcoand people who are interested
(10:29):
in buying from Costco.
Karen McFarlane (10:33):
And their community is quite broad, right,
it's about being representativeof the entire community through
various different facets oftheir people, culture and
operations.
So you know how do you do thatwithout being intentional about
that representation across theboard?
You know, one of the thingsthat I'm particularly a huge
(10:56):
proponent of, when I even talkabout marketing, is that there's
multiple domains of influencethat just marketing has across
the organization to impact DEI,right they?
just don't always realize thatthey have this impact.
You know around it.
So everything from yes, thetalent to supplier diversity, to
(11:18):
the advertising, to even boardrelations, right, and so you
know if a company is reallythinking about those core
principles throughout theirorganization, it's not something
that you can just say isdestructive when it is in fact
(11:39):
been intentionally additive totheir growth and prosperity as
an organization absolutely,absolutely.
Brittany S. Hale (11:47):
And I was just thinking, uh, as you were
mentioning, you know, reallykind of reflecting the entirety
of the, the community, that'sright, here recording.
We're a community, right, andwe live in two separate states,
close, but separate states,right.
So I live in a state wherethere's no, we don't have
(12:10):
self-service, right, they say,uh, we don't pump gas, we pump
this in new jersey, but sojealous, okay, right, but you
live in a state that you knowhas self, has self-service,
right.
So if we were to solely go frommy perspective, you would be
(12:33):
left out of that conversation,right?
If I were to say, well, at theE-word, we here, we don't pump
our gas, we pump our fists.
The next time you're at the gasstation, you'll be waiting a
while, right?
So when we think about DEI, whenwe're deconstructing DEI, for
(12:59):
those who are listening, firstof all, you're probably
listening because you're notscared of DEI.
But if you're curious, right,if you're unfamiliar, it is not
this scary, obscure,guilt-ridden premise about the
way that organizations shouldrun their businesses.
You just detailed all of theways that it impacts business
(13:24):
and how we see shifts inbusiness operations, how it
increases revenue, expandsmarket share, increases business
growth, simply because you'vereconciled yourself with the
(13:46):
fact that everyone who buys fromhere, everyone who works here,
may have more than one interest.
Karen McFarlane (13:57):
Absolutely Right, and it boggles me,
boggles my mind thatparticularly because I think
it's like a clear line of sightfor retailers, right, who
broadly right it boggles my mindthat a retailer doesn't see
(14:19):
value in the various crosssections of individuals, right,
or communities that can engagewith their products over the
short and long term, right, orcommunities that can engage with
their products over the shortand long term, right.
(14:52):
And I just want to understand, Ireally do want to understand
that thinking that is the riskassociated with with potential
litigation around potentiallitigation around inclusive
(15:14):
policies, right, so great thatyou would basically eliminate,
potentially eliminate, certaincommunities from the equation.
Or is your calculus that thosecommunities will still buy from
us anyway because we're theironly option or best option, and
so it'll be a storm for a littlewhile and then it will taper
off, which could actually be alegitimate calculus as well?
(15:38):
Sure, but that just means theypotentially don't see value in
cultivating that audience andgrowing that audience in a much
more deeper way to have thatlongevity over time.
So I just think it's a reallyinteresting conversation to
(16:03):
understand how they think thatconsumer behaviors work, right,
yeah.
Brittany S. Hale (16:11):
Question for you.
Karen McFarlane (16:12):
Yeah.
Brittany S. Hale (16:13):
May require you to dust off your crystal
ball, but we have Costco and wehave Walmart, which we've
recently spoken about.
But Walmart, in shutting downtheir DEI initiatives, are
(16:33):
refusing to commit to about $13billion in business that they
previously committed to.
Both are huge brands.
Both are huge brands.
Both are likely to give rise toother similar brands in the
(17:00):
industry doing somethingcomparable.
Okay, do you think that Costcoor Walmart, the way that either
of them are acting, do you thinkit sets the tone, because we're
at the start of 2025.
I'm sure we will be surprisedby the time we come in next week
(17:24):
.
There will be more news, butwhich do you think really has
impact, the kind of impact, andwhat do you think's next?
Karen McFarlane (17:40):
Okay.
So this is a really toughconversation because we have
this change of administration,right, so I can't even predict
around the response to theadministration.
Let me just take that out ofthe equation.
For a second Playing field isthat I believe that that Costco
(18:19):
is setting a tone, and I'mhoping that other organizations
and their boards see that,because what we have seen around
, this push to remove DEI, insome ways, is a bullying tactic.
Right, it is just like theboard of directors at Costco
said it's a political agenda.
It's not really a people agenda, right, and so we need more
(18:40):
boards to think about theirorganizations and their people
and their longevity and to notbe bullied into pulling
something that's genuinely partof their culture and their
profitability.
Right, but sometimes you needsomeone to lead the way to see
that this is the way to go andthat we're going to stand up and
(19:02):
we're going to fight for it.
And, yes, there might be somelitigation around it, but we are
the titans and that we can makea difference going forward.
Right, because know that ourconsumer is, is diverse in, not
(19:23):
just race and ethnicity, whichis what this, this push, is
about Like.
For whatever reason, dei hasbecome synonymous with primarily
Black people and some Latinopeople, right, and that's not
even what it's about.
Right?
When you succumb to those typesof pressures, you are actually
(19:43):
taking away opportunity frommore than just Black and Latinos
, right, it's a hugecross-section of individuals,
right, and so we need more boardmembers to stand up, to be
brave, and I'm hoping thatCostco, doing this, is leading
the way you are not supposed tobe worried about.
You need to be cognizant of howthe political landscape is
(20:04):
going to affect yourorganization and the long-term
effects of that.
So I'm not trying to discountthat, but how can you be brave
in the face of what you clearlysee is not an agenda for the
people right Now?
I also want to be somewhat fairin the concerns around why some
(20:34):
of these cases are being won.
Right, it's basically sayingthat when you have these
programs, it is racialdiscrimination reverse
discrimination which I was justgoing to say I know that's your
favorite term.
I'm sorry to have a response to,but let's just let that sit
(20:59):
there and simmer for a second asif it's real.
And so I can see where there'san argument for saying, hey,
there should not be anyrace-based decisions.
This is part of our laws.
But we also have to address thesystemic inequality that has
(21:19):
been caused by our historicalpast, and so some of these
programs are there to rightthose wrongs.
And so what are we going to do?
Yeah, what are we going to doto fix it, because we can't
ignore it.
And so, if you're going to makeshifts in your policies, still
(21:43):
act with the intention youoriginally had and what does?
that look like for yourorganization intention you
originally had, and what doesthat look like for your
organization?
I don't know if that was a truecrystal ball but that's my
question.
Brittany S. Hale (21:55):
No, that's helpful because when I think
about what's to come, thequestion that comes up for me as
you were speaking was well, howdo we know who to believe?
Which is another group right Aboard at Walmart might like to
(22:33):
hear, because it supports theirpremise, which is that we don't
need DEI, we don't need thetrouble, right?
And then you have other thinktanks that will come out with
research saying the opposite.
So DEI is itself, in and ofitself, a vehicle for fostering
(23:03):
trust, but so is the informationaround it, right?
So are the the, the researchthat we have coming out about it
, and it's going to continue tobe this space of wondering you
know who's right and its impacton business and what do we do
(23:29):
about it.
So, I guess, for peoplewondering, you know which
reports do I read?
You know which conclusions do Icome to?
I would think it comes back tothe organization's vision and
mission.
But, um, sorry, she's coughing,I will, but yeah, but then that
(23:51):
just makes me.
Karen McFarlane (23:54):
Yeah, I'm, I'm wrestling with that you know,
Well you know from my experience, right, this is, this is the
job of the board.
They are there to gather,research, collect and interpret
information and come up with thebest answer for their
(24:15):
organization, which is tied backto their mission, vision and
values.
Right, and so you know.
However, they tackle thissituation, whether it's a task
force or committee, likewhatever they need to gather all
the information, both sides,middle sides, read it, interpret
it, discuss it and vet itagainst what it means for Costco
(24:39):
, walmart, whatever right andwhat they come up with should be
right for the org, it shouldnot be too filtered People are
individuals but too filteredthrough their own personal lens
of what they want?
right, because they're not thereas a board member personally,
(25:04):
right, they're there for growingthe organization.
So, no matter what theirpolitical or personal views are
I'm not saying it's not going tofilter in, because you have
board members there for theirintellect and their experience
and their critical thinkingskills, right.
But you want people that areopen to gathering and
(25:29):
researching information andmaking meaningful decisions,
right, and then you come to aconclusion together.
And so that's where I think youknow boards got to put on their
you know board PhD hats, okay,and be able to defend their
position when asked as well,because you have to.
You not only have to defend itto your shareholders, you have
(25:50):
to defend it to yourorganization, because you need
all of those people working intandem and believing.
And so if you create systemsand policies and structures that
are against the people that areactually working for you, right
(26:12):
, what kind of experience areyou delivering?
Now, you may be a company thatdoesn't need to provide the best
customer experience, thatdoesn't thrive on customer
loyalty.
That you know.
Just, it has a differentcalculus and therefore DEI is
not as important to you versusanother company where that
customer experience is ofgreater value.
(26:32):
And so you're going to putdeeper meaning onto it, and so I
don't think there's everthere's like one.
Unfortunately, there isn't aright or wrong across, say, the
United States of America, forexample, but there is a right or
wrong for the individualorganization, which makes it
very difficult because we oftendon't hear the backstory around
(26:54):
why these decisions were madeand we often don't know the
inner operations of any oneorganization to understand what
makes it tick and how theyactually truly extract value
from their customers.
Brittany S. Hale (27:06):
So it sounds like this is also an argument
and petition for eachorganization to have their
internal DEI team.
Karen McFarlane (27:19):
I would agree.
Dei team I would agree, okay,but you know, I think the ones
that again value it and they do,and the ones that don't,
obviously they've been likecutting those teams, or.
What's kind of interesting,though, is like some companies,
they're they're, they're goingstealth in a way.
Right, they still believe in it, but they don't want to say it
(27:42):
out loud because they don't wantto risk anything, and so what I
find pretty hilarious is thatyou'll have companies that are
changing their DEI officertitles to say inclusion and
belonging, so it's taking theword diversity out and equity
out.
Brittany S. Hale (28:00):
Apparently, inclusion is fine right which,
although you know, inclusionmeans that you would have to
perceive and appreciate on somelevel the differences yeah, and
that's the stuff we're doing.
Karen McFarlane (28:19):
Yeah, it's like , yeah, we don't have dei
anymore, we have inclusion, sowe're not just not saying dei,
those people will go away, whichI don't.
I don't, I don't have the wordsfor that, but I guess I'm happy
that some companies, at thevery least, are keeping them in
(28:40):
place, even though they they'renot, you know, screaming it from
the rooftops.
Yeah, I guess you got to dowhat you got to do.
Everybody has a differentcalculus, right, but it's just
an up and down, it is.
Brittany S. Hale (28:55):
It is, it is.
But that's why we're here,because we're here to keep those
of you who are riding the wavesof uncertainty, as we all are,
especially as it comes to DEI,we're keeping focus on most
important questions.
Yes, and we're always going totalk about it Exactly, and we're
(29:17):
always going to talk about itExactly.
(29:42):
Well, kudos to Costco's board ofdirectors for showing exemplary
leadership and bravery andconviction, for standing by
their policies and not beingwhat I'm calling bullied by a
political agenda.
Yeah, absolutely.
And I have to say you knowwe're not sponsored by Costco.
But my answer every time,anytime someone says zombie
apocalypse, where are you going?
I'm going to Costco.
They have everything that Ineed there.
I feel even better about that.
Karen McFarlane (30:03):
Awesome, and I hear they make really good pot
pie too.
Brittany S. Hale (30:10):
Listen, I have not yet had it.
It's a perfect day for it.
But yeah, trip to Costco.
Trip to.
Karen McFarlane (30:17):
Costco on the way.
Customers.
All right, brittany, until nexttime.
All right, see ya, see ya.
Happy New Year Brittany.
Happy New Year Karen.
How are you?
Karen McFarlane (00:05):
I'm good.
I'm good, I'm having a greatstart to the new year.
Love it Okay, positive, okay,positive.
But I think you know it's goingto be a good year.
How about you?
Brittany S. Hale (00:20):
I agree it is going to be a good year.
I actually started the NewYear's off sick, so New Year's
Eve I was on my couch gross,congested all sorts of things,
but it's only up from here.
Karen McFarlane (00:37):
You know what?
That's a great way to look atit.
Brittany S. Hale (00:43):
Well, we also started off the year with some
good news Did now yeah mina alsostarted the year off well oh
hey, mina, it's your first newyear.
Karen McFarlane (00:54):
It is mommy she's ready.
Brittany S. Hale (00:56):
I know she's ready for a nap, so she's me too
.
So she will not be deterred,right, exactly.
Karen McFarlane (01:06):
I could use a nap right now too.
As a matter of fact, we need tobring back naps, you know we
need to do a day, you know,respite to just recharge and get
us going.
As a matter of fact, I think ifcorporations adopted this,
they'd get workers to worklonger hours.
So it has benefits.
Brittany S. Hale (01:31):
I agree, yeah, a nap room incredibly helpful.
Karen McFarlane (01:37):
Exactly exactly .
So you know, let's bring backnaps this year.
Brittany S. Hale (01:42):
Block them into your calendar.
Karen McFarlane (01:44):
You don't have to name it nap, you can just
have a one-on-one meeting withyourself and your eyelids there
you go with what it was, the theblock they put, like work time
or like the focus time, focustime can have a nice little
restorative section there.
Yeah I've seen those, uh, thosethings on.
I think you can buy them onamazon.
(02:05):
You put them under your desk.
It's like a little habit fornap time.
I like it feels excessive, likeyou should be able to just go
to your bed or a couch, thecouch.
Invest in the couch is notgreat for a nap, yeah.
Anyway, you know, last year wesaw a lot of changes happening,
(02:30):
particularly with DEI, and wetalked a lot about that and how
it relates to leadership andmarketing and things of that
nature, and so, particularlytowards the end of the year, we
saw a lot of these hugecompanies roll back their DEI
programs, which, you know, weobviously feel is the wrong move
.
But we started out the yearwith one major company, one of
(02:56):
the largest in the world, thefifth largest in the world
saying no, we're not rollinganything back, we're keeping it.
Brittany S. Hale (03:14):
Yeah, and outside of you know,
ideologically speaking, a lot ofthese companies believe that
rolling back these policies aregoing to somehow ins proponents
and shield them from any sort oflitigation, which is not
actually the case and may haveit may backfire.
Karen McFarlane (03:35):
We don't know, we don't know, we don't know,
but the Costco board ofdirectors said hey, we will
evaluate what you're saying,which you should do, right.
And they did evaluate it andthey came back and were like no,
actually we believe in our DEIprogram, we don't believe that
(03:57):
it's violating any legal rulesand regulations and we believe
it's good for our business.
And so, in fact, they wentfurther and said and we believe
that you don't really care aboutour people and our business,
but you more so care about yourpolitical agenda, and so we're
(04:19):
not going to bend the knee tothat.
Thanks, but no thanks.
Brittany S. Hale (04:23):
So two things that I want to point out,
because this is what you juststated is so incredibly
important First, that it was aunanimous vote by the board,
right, there was no dissension.
One band, one sound, band, onesound.
(04:49):
And then the next point thatyou fleshed out around kind of
intention, and it seems that alot of investors have used a
tactic, you know, to kind of tousher in their political agenda,
which is to say that DEI raisesstockholder risk.
Now, stockholder risk is thiskind of amorphous catch-all
(05:10):
phrase to highlight a number ofthings and, like I said before,
the stockholder risk in thisparticular be litigation coming
from anti-DEI proponents whobelieve that DEI is creating
(05:31):
unfairness or inequitythroughout the workforce,
despite all of the evidence tothe contrary.
But it's, I think it's reallyimportant that the board called
this out, because they didn'tjust say no, thank you, we're
(05:53):
not interested in rolling thisback.
We've got it boards who mayfeel similarly and they're
giving legitimate businessreasons why this isn't
appropriate for them and fortheir business right.
Karen McFarlane (06:14):
Absolutely.
And it's so important that itcame from the board, right,
because the board sets the tonefor the organization.
That is the CEO of the boss,and so they're basically saying
this is CEO's boss.
And so they're basically saying, look, we have a vote of
(06:36):
confidence in the CEO andeveryone that works for the
organization.
We have a vote of confidence inour policies.
We've vetted those.
We understand the legalitiesand more so, we understand the
risk right, understand thelegalities and more so we
understand the risk right.
So every business assumes somelevel of risk and they have to
figure out their risk appetite.
(06:58):
And that risk appetite, as youknow right, is across various
different categories.
You know, I don't know whereDEI sits in Costco's specific
risk scorecard, right, butthey've made that assessment and
they've decided that whateverlevel of risk was associated
with it specifically, even if itwas a specific category it
(07:19):
might, they have it under.
It is acceptable, and ifsomething arises, they will deal
with it and they have boardsupport around dealing with it.
And that is so incrediblyimportant for a CEO and the
(07:43):
entire organization to basicallylive their principles right.
And if your DEI principles arean integral part of your culture
, authentically, so ripping itout would have catastrophic
(08:05):
effects.
Correct.
Out would have catastrophiceffects, correct.
You know, if it's, if it'sintegrated, if it was just this
add on, then some of thesecompanies can just take it out
and it feels like potentially,feels like it's, it's nothing, I
don't know.
So, yeah, I am so incrediblyproud of the board for taking
that stance and that, and thefact that it was the board, is
(08:27):
so incredibly important to theorganization as a whole I also
want to to highlight or kind ofpeek behind the veil at how this
was brought up.
Brittany S. Hale (08:38):
Right, because this proposal came to the board
through a costco shareholder,which is the National Center for
Public Policy Research.
Yeah, and they're aconservative think tank, right.
Like you said, this isproprietary research where the
(09:03):
ends or the means really kind ofjustify the end.
The conclusion is always goingto be the DEI is bad and, and
you know, harmful to business,and so they're working from
there.
Then they supplement with theiralleged research.
(09:23):
And so, looking at some of theof the information coming from
the proposal, because the DEIroles the policy, it's not just
a CDO, right, it's not just achief diversity officer right,
it's embedded, they have peoplein communities.
(09:46):
That sounds pretty inclusive.
That sounds like something youwould, to your point, would want
to keep and not yank out andrip out of the organization's
identity.
They're policies.
They have goals, right, this isnot fluff, this is not about,
you know, it's just simplymaking everyone feel good.
(10:08):
Right, there's, there's amission here to to expand, grow
and deepen trust in Costco as abrand, as a go-to brand, both
for people who currently workfor Costco, people who are
interested in working for Costcoand people who are interested
(10:29):
in buying from Costco.
Karen McFarlane (10:33):
And their community is quite broad, right,
it's about being representativeof the entire community through
various different facets oftheir people, culture and
operations.
So you know how do you do thatwithout being intentional about
that representation across theboard?
You know, one of the thingsthat I'm particularly a huge
(10:56):
proponent of, when I even talkabout marketing, is that there's
multiple domains of influencethat just marketing has across
the organization to impact DEI,right they?
just don't always realize thatthey have this impact.
You know around it.
So everything from yes, thetalent to supplier diversity, to
(11:18):
the advertising, to even boardrelations, right, and so you
know if a company is reallythinking about those core
principles throughout theirorganization, it's not something
that you can just say isdestructive when it is in fact
(11:39):
been intentionally additive totheir growth and prosperity as
an organization absolutely,absolutely.
Brittany S. Hale (11:47):
And I was just thinking, uh, as you were
mentioning, you know, reallykind of reflecting the entirety
of the, the community, that'sright, here recording.
We're a community, right, andwe live in two separate states,
close, but separate states,right.
So I live in a state wherethere's no, we don't have
(12:10):
self-service, right, they say,uh, we don't pump gas, we pump
this in new jersey, but sojealous, okay, right, but you
live in a state that you knowhas self, has self-service,
right.
So if we were to solely go frommy perspective, you would be
(12:33):
left out of that conversation,right?
If I were to say, well, at theE-word, we here, we don't pump
our gas, we pump our fists.
The next time you're at the gasstation, you'll be waiting a
while, right?
So when we think about DEI, whenwe're deconstructing DEI, for
(12:59):
those who are listening, firstof all, you're probably
listening because you're notscared of DEI.
But if you're curious, right,if you're unfamiliar, it is not
this scary, obscure,guilt-ridden premise about the
way that organizations shouldrun their businesses.
You just detailed all of theways that it impacts business
(13:24):
and how we see shifts inbusiness operations, how it
increases revenue, expandsmarket share, increases business
growth, simply because you'vereconciled yourself with the
(13:46):
fact that everyone who buys fromhere, everyone who works here,
may have more than one interest.
Karen McFarlane (13:57):
Absolutely Right, and it boggles me,
boggles my mind thatparticularly because I think
it's like a clear line of sightfor retailers, right, who
broadly right it boggles my mindthat a retailer doesn't see
(14:19):
value in the various crosssections of individuals, right,
or communities that can engagewith their products over the
short and long term, right, orcommunities that can engage with
their products over the shortand long term, right.
(14:52):
And I just want to understand, Ireally do want to understand
that thinking that is the riskassociated with with potential
litigation around potentiallitigation around inclusive
(15:14):
policies, right, so great thatyou would basically eliminate,
potentially eliminate, certaincommunities from the equation.
Or is your calculus that thosecommunities will still buy from
us anyway because we're theironly option or best option, and
so it'll be a storm for a littlewhile and then it will taper
off, which could actually be alegitimate calculus as well?
(15:38):
Sure, but that just means theypotentially don't see value in
cultivating that audience andgrowing that audience in a much
more deeper way to have thatlongevity over time.
So I just think it's a reallyinteresting conversation to
(16:03):
understand how they think thatconsumer behaviors work, right,
yeah.
Brittany S. Hale (16:11):
Question for you.
Karen McFarlane (16:12):
Yeah.
Brittany S. Hale (16:13):
May require you to dust off your crystal
ball, but we have Costco and wehave Walmart, which we've
recently spoken about.
But Walmart, in shutting downtheir DEI initiatives, are
(16:33):
refusing to commit to about $13billion in business that they
previously committed to.
Both are huge brands.
Both are huge brands.
Both are likely to give rise toother similar brands in the
(17:00):
industry doing somethingcomparable.
Okay, do you think that Costcoor Walmart, the way that either
of them are acting, do you thinkit sets the tone, because we're
at the start of 2025.
I'm sure we will be surprisedby the time we come in next week
(17:24):
.
There will be more news, butwhich do you think really has
impact, the kind of impact, andwhat do you think's next?
Karen McFarlane (17:40):
Okay.
So this is a really toughconversation because we have
this change of administration,right, so I can't even predict
around the response to theadministration.
Let me just take that out ofthe equation.
For a second Playing field isthat I believe that that Costco
(18:19):
is setting a tone, and I'mhoping that other organizations
and their boards see that,because what we have seen around
, this push to remove DEI, insome ways, is a bullying tactic.
Right, it is just like theboard of directors at Costco
said it's a political agenda.
It's not really a people agenda, right, and so we need more
(18:40):
boards to think about theirorganizations and their people
and their longevity and to notbe bullied into pulling
something that's genuinely partof their culture and their
profitability.
Right, but sometimes you needsomeone to lead the way to see
that this is the way to go andthat we're going to stand up and
(19:02):
we're going to fight for it.
And, yes, there might be somelitigation around it, but we are
the titans and that we can makea difference going forward.
Right, because know that ourconsumer is, is diverse in, not
(19:23):
just race and ethnicity, whichis what this, this push, is
about Like.
For whatever reason, dei hasbecome synonymous with primarily
Black people and some Latinopeople, right, and that's not
even what it's about.
Right?
When you succumb to those typesof pressures, you are actually
(19:43):
taking away opportunity frommore than just Black and Latinos
, right, it's a hugecross-section of individuals,
right, and so we need more boardmembers to stand up, to be
brave, and I'm hoping thatCostco, doing this, is leading
the way you are not supposed tobe worried about.
You need to be cognizant of howthe political landscape is
(20:04):
going to affect yourorganization and the long-term
effects of that.
So I'm not trying to discountthat, but how can you be brave
in the face of what you clearlysee is not an agenda for the
people right Now?
I also want to be somewhat fairin the concerns around why some
(20:34):
of these cases are being won.
Right, it's basically sayingthat when you have these
programs, it is racialdiscrimination reverse
discrimination which I was justgoing to say I know that's your
favorite term.
I'm sorry to have a response to,but let's just let that sit
(20:59):
there and simmer for a second asif it's real.
And so I can see where there'san argument for saying, hey,
there should not be anyrace-based decisions.
This is part of our laws.
But we also have to address thesystemic inequality that has
(21:19):
been caused by our historicalpast, and so some of these
programs are there to rightthose wrongs.
And so what are we going to do?
Yeah, what are we going to doto fix it, because we can't
ignore it.
And so, if you're going to makeshifts in your policies, still
(21:43):
act with the intention youoriginally had and what does?
that look like for yourorganization intention you
originally had, and what doesthat look like for your
organization?
I don't know if that was a truecrystal ball but that's my
question.
Brittany S. Hale (21:55):
No, that's helpful because when I think
about what's to come, thequestion that comes up for me as
you were speaking was well, howdo we know who to believe?
Which is another group right Aboard at Walmart might like to
(22:33):
hear, because it supports theirpremise, which is that we don't
need DEI, we don't need thetrouble, right?
And then you have other thinktanks that will come out with
research saying the opposite.
So DEI is itself, in and ofitself, a vehicle for fostering
(23:03):
trust, but so is the informationaround it, right?
So are the the, the researchthat we have coming out about it
, and it's going to continue tobe this space of wondering you
know who's right and its impacton business and what do we do
(23:29):
about it.
So, I guess, for peoplewondering, you know which
reports do I read?
You know which conclusions do Icome to?
I would think it comes back tothe organization's vision and
mission.
But, um, sorry, she's coughing,I will, but yeah, but then that
(23:51):
just makes me.
Karen McFarlane (23:54):
Yeah, I'm, I'm wrestling with that you know,
Well you know from my experience, right, this is, this is the
job of the board.
They are there to gather,research, collect and interpret
information and come up with thebest answer for their
(24:15):
organization, which is tied backto their mission, vision and
values.
Right, and so you know.
However, they tackle thissituation, whether it's a task
force or committee, likewhatever they need to gather all
the information, both sides,middle sides, read it, interpret
it, discuss it and vet itagainst what it means for Costco
(24:39):
, walmart, whatever right andwhat they come up with should be
right for the org, it shouldnot be too filtered People are
individuals but too filteredthrough their own personal lens
of what they want?
right, because they're not thereas a board member personally,
(25:04):
right, they're there for growingthe organization.
So, no matter what theirpolitical or personal views are
I'm not saying it's not going tofilter in, because you have
board members there for theirintellect and their experience
and their critical thinkingskills, right.
But you want people that areopen to gathering and
(25:29):
researching information andmaking meaningful decisions,
right, and then you come to aconclusion together.
And so that's where I think youknow boards got to put on their
you know board PhD hats, okay,and be able to defend their
position when asked as well,because you have to.
You not only have to defend itto your shareholders, you have
(25:50):
to defend it to yourorganization, because you need
all of those people working intandem and believing.
And so if you create systemsand policies and structures that
are against the people that areactually working for you, right
(26:12):
, what kind of experience areyou delivering?
Now, you may be a company thatdoesn't need to provide the best
customer experience, thatdoesn't thrive on customer
loyalty.
That you know.
Just, it has a differentcalculus and therefore DEI is
not as important to you versusanother company where that
customer experience is ofgreater value.
(26:32):
And so you're going to putdeeper meaning onto it, and so I
don't think there's everthere's like one.
Unfortunately, there isn't aright or wrong across, say, the
United States of America, forexample, but there is a right or
wrong for the individualorganization, which makes it
very difficult because we oftendon't hear the backstory around
(26:54):
why these decisions were madeand we often don't know the
inner operations of any oneorganization to understand what
makes it tick and how theyactually truly extract value
from their customers.
Brittany S. Hale (27:06):
So it sounds like this is also an argument
and petition for eachorganization to have their
internal DEI team.
Karen McFarlane (27:19):
I would agree.
Dei team I would agree, okay,but you know, I think the ones
that again value it and they do,and the ones that don't,
obviously they've been likecutting those teams, or.
What's kind of interesting,though, is like some companies,
they're they're, they're goingstealth in a way.
Right, they still believe in it, but they don't want to say it
(27:42):
out loud because they don't wantto risk anything, and so what I
find pretty hilarious is thatyou'll have companies that are
changing their DEI officertitles to say inclusion and
belonging, so it's taking theword diversity out and equity
out.
Brittany S. Hale (28:00):
Apparently, inclusion is fine right which,
although you know, inclusionmeans that you would have to
perceive and appreciate on somelevel the differences yeah, and
that's the stuff we're doing.
Karen McFarlane (28:19):
Yeah, it's like , yeah, we don't have dei
anymore, we have inclusion, sowe're not just not saying dei,
those people will go away, whichI don't.
I don't, I don't have the wordsfor that, but I guess I'm happy
that some companies, at thevery least, are keeping them in
(28:40):
place, even though they they'renot, you know, screaming it from
the rooftops.
Yeah, I guess you got to dowhat you got to do.
Everybody has a differentcalculus, right, but it's just
an up and down, it is.
Brittany S. Hale (28:55):
It is, it is.
But that's why we're here,because we're here to keep those
of you who are riding the wavesof uncertainty, as we all are,
especially as it comes to DEI,we're keeping focus on most
important questions.
Yes, and we're always going totalk about it Exactly, and we're
(29:17):
always going to talk about itExactly.
(29:42):
Well, kudos to Costco's board ofdirectors for showing exemplary
leadership and bravery andconviction, for standing by
their policies and not beingwhat I'm calling bullied by a
political agenda.
Yeah, absolutely.
And I have to say you knowwe're not sponsored by Costco.
But my answer every time,anytime someone says zombie
apocalypse, where are you going?
I'm going to Costco.
They have everything that Ineed there.
I feel even better about that.
Karen McFarlane (30:03):
Awesome, and I hear they make really good pot
pie too.
Brittany S. Hale (30:10):
Listen, I have not yet had it.
It's a perfect day for it.
But yeah, trip to Costco.
Trip to.
Karen McFarlane (30:17):
Costco on the way.
Customers.
All right, brittany, until nexttime.
All right, see ya, see ya.
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