January 5, 2025 • 34 mins
What happens when corporate boardrooms fail to reflect the diversity of the society they serve? Today, we tackle this pressing question as we discuss the controversial rejection of NASDAQ's diversity rules by a US Appeals Court in New Orleans. We explore the crucial role of appointing judges capable of understanding diverse perspectives and the broader societal implications of their decisions. Let's go beyond the courtroom to uncover how demographic shifts, like the undeniable influence of minority populations on US growth since 2010, are reshaping the corporate landscape. We promise you'll gain insights into why these changes matter and the nuanced challenges they present to DEI initiatives in corporate America.
CONTINUED LEARNING
- Nasdaq Board Diversity Rule (Nasdaq Listing Center)
- Navigating the Nuances of Board Diversity in NASDAQ-Listed Companies (Harvard Law)
- US appeals court rejects Nasdaq’s diversity rules for company boards (AP News)
- Appeals Court Strikes Down Nasdaq’s Board-Diversity Rules (WSJ)
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.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Brittany S. Hale (00:01):
Hey Brittany, Hi Karen, how are you?
I'm good.
How are you?
I am doing well.
I've got some peppermint hotcocoa here with my Santa.
Karen McFarlane (00:12):
With your black Santa Claus.
Brittany S. Hale (00:15):
I love it.
You know, there are some spacesthat still value diversity, and
my home happens to be one ofthem.
There you go.
Karen McFarlane (00:28):
Which is reminding me of that recent
controversy with the Bootscommercial with the actress from
Bridgerton.
I can't remember her name rightnow, but she's playing Mrs
Claus and I thought it was agreat commercial.
It was you know commercial forthe boots she had on right Like
a shoe commercial Right andpeople were up in arms that
there was a commercial for theboots she had on like a shoe
commercial and people were up inarms that there was a Black Mrs
Claus, never mind the fact thatSanta Claus was still white in
(00:51):
the commercial.
Brittany S. Hale (00:53):
Interesting.
Yeah, santa doesn't have thefreedom to choose whom he loves?
I guess not.
Karen McFarlane (01:02):
And you know what?
Here's the thing.
I think there can be whiteSanta, black Santa, green Santa,
purple.
Santa yeah, I agree, becausechildren are not listening to
this.
Santa isn't real, correct?
Brittany S. Hale (01:18):
wait what he's not.
Children aren't listening, butMina is, you know I'll cover her
ears.
Karen McFarlane (01:23):
Sorry, mina, but you know Children aren't
listening, but Mina is.
Oh sorry, Mina, I'll cover herears.
Brittany S. Hale (01:26):
Sorry, Mina.
Karen McFarlane (01:28):
But you know, our imagination is free to run
wild, that's true, you know.
Brittany S. Hale (01:36):
So it doesn't have to be wild.
That's the best part abouthaving an imagination is there
are no rules.
Exactly, exactly.
Santa can be whoever, and Iagree with you Exactly, exactly.
Santa can be whoever.
(01:57):
And.
Karen McFarlane (01:59):
I agree with you.
I love the idea of having Santareflect your own ethnic to come
to town, right, and be like,hey, this is my address for real
, for real, right, you can findme here.
This is my family.
Then you know, I've been doingthis for I don't know, hundreds
of years.
I think people will be morefocused on how he's lived so
(02:20):
long.
Brittany S. Hale (02:21):
All right, we might want to follow his
skincare regimen Exactly, ratherthan the color of his skin
Right.
Karen McFarlane (02:34):
So anyway, super interesting.
Brittany S. Hale (02:38):
It's also a weird movie.
Karen McFarlane (02:40):
But I'll talk to you about the weird movie
later.
But so this week week a newruling came down.
So we have been seeing, youknow, week after week after week
.
You know this, I guess it's,you know we can definitely call
it a backlash against diversity,equity, inclusion, and just it
(03:02):
keeps spiraling in a negativedirection.
Brittany S. Hale (03:07):
So we need like a sound for every time
there's like some sort of DEIpolicy that gets you know I'm
going to find a sound.
Karen McFarlane (03:18):
We have sounds on here.
Okay, yes, you know, but maybenext time.
Yes, you know, but maybe nexttime.
But the US Appeals Court in NewOrleans.
They rejected NASDAQ'sdiversity rules for company
boards.
Brittany S. Hale (03:57):
I saw that.
I want to reiterate why it isso critically important for
executive leaders, specificallythe president, to appoint
federal judges in differentcircuits around the country,
Because if you are, you know alot of these federal judges.
They're tenured right.
These can be lifetimeappointments, and so you want to
ensure that your specificpolicy and, by extension, your
perception of America, what itshould be, what we're working
toward is protected.
Karen McFarlane (04:46):
That's absolutely right and that's
actually, you know, one oftheoring up the judicial system
with judges that might have aparticular point of view, and so
, just as you said, they havethese long tenures and they may
or may not be amicable to be,you know, amicable to, you know,
dei, right, in its originalform, right.
(05:10):
And so then we see decisionslike this, you know, trickle and
we trickling down, especiallysince the Supreme Court set
aside affirmative action rules,right, we've seen that reaction
to what happens next, right?
So you know, this is to me likea big deal, right?
(05:31):
Just for a little background, Ithink it was in 2020, but
NASDAQ put together a proposalthat was approved by the SEC,
proposal that was approved bythe SEC, which basically asked
huge corporations I think theywere in the Russell 3000, I
(05:54):
think to ensure that theirboards included at least one
woman and at least one personwho represents an
underrepresented group or LGBTQ,right?
So, basically, in their words,like two diverse board members,
and if they didn't, they neededto explain why not, otherwise
(06:21):
they could be kicked off theexchange.
Brittany S. Hale (06:24):
Interesting.
Karen McFarlane (06:28):
Yeah right, they'd be kicked off, they could
be kicked off the exchange.
So, yeah Right, it's like theultimate accountability.
So, okay, you can, you don't,you don't do it.
But why?
And it has to be a reasonableexplanation, and I'm sure there
you know, from a boardperspective, in terms of their
documentation they have to.
They would have to show youknow what steps they went
through to secure these boardseats, who they interviewed, all
the details to show that itjust wasn't possible to obtain
(06:53):
the necessary skill sets to fillwhatever gaps or needs were
required for the board.
And I'm sure that's a difficultthing to do, For sure.
Brittany S. Hale (07:05):
For sure, and I guess I'm also just thinking
really kind of about therationale behind this, which is
when left to their own devices.
We understand that thesebusiness leaders are not going
to do this on their own Right,as much as we may want them to.
(07:28):
As good as it can be forbusiness, we recognize that it's
not something that people aredoing on their own, and so
there's an effort to createrequirements to incentivize
people to move forward, and thisisn't unique in American
(07:51):
history because, I mean, we hadintegration right.
We've seen time and time againthat, unfortunately, we need a
little bit of a legislative push.
Karen McFarlane (08:07):
Yeah, on all subjects, right, because you
know, at the end of the day, allbusinesses want to be
profitable, right, and so it'sabout their vision of what, of
how profitability will beobtained, and that vision, you
know, historically has been, youknow, white males, right,
(08:29):
that's how the system has beenset up.
So I think it's a little.
It's hard for organizationsthat have these, you know, these
margins that they have to makeevery single year and
responsibilities to theirstakeholders and their investors
, to focus on things that theymay not feel are a direct line
(08:52):
to profitability, although youknow that has been proven in
many different ways.
So, for example, in theoriginal proposal, nasdaq cited
a report from the Carlyle Group,which is an investment company,
that having at least twodiverse board members have
(09:15):
nearly 12% companies that havethat have nearly 12% more
earnings growth per year thanthe average company that lack
diversity.
12% growth is significant,significant gains.
Yes.
Brittany S. Hale (09:33):
Yes, I would never say no to a 12% increase
in my business.
Karen McFarlane (09:38):
Right, exactly, that was back in 2020.
So it's a little shocking,right, and outside of the
earnings, which I know that'sthe most important thing, right,
but outside of that, it justkind of shocks me that people
(09:58):
today, people in any business,don't think that it's important
to be reflective of the broadercommunity.
Right, women are half thepopulation, right, at the very
least.
Why aren't there more women onboards?
Brittany S. Hale (10:15):
right.
Karen McFarlane (10:16):
At the very least.
And then, of course, we add inthe different.
You know, I don't want to callus minorities, because we're
becoming a majority.
Brittany S. Hale (10:28):
We'll come back to that in a moment.
I have a very interesting statfor you.
Karen McFarlane (10:33):
Okay, good, all right, but why non-white groups
are not part of the?
Shouldn't be part of theequation?
And so, just in general, fromjust an intellectual perspective
, it just still boggles my mind.
I know we've talked about this,but I just can't wrap my head
around it.
Brittany S. Hale (10:50):
Yeah, and I have to say so.
When I started in law school asyou know, your law school
summers are really important myfirst summer I started at a
financial services firm and oneof the things that I had to do
was scour the SecuritiesExchange Act of 1934 and draft
an insider trading primer for mysupervisors.
(11:13):
Oh, interesting.
So this is very interesting tocome at it from this perspective
.
And so at least the judges aresaying that these rules don't
further the Exchange Act,because the Exchange Act exists
as a quote, primarily to protectinvestors and the macro economy
(11:38):
from speculative, manipulativeand fraudulent practices and to
promote competition in themarket for securities
transactions.
Mm-hmm, it is fascinating thatthey, knowing the data that you
just shared, see this as anobstructionist take, when we
(12:00):
know that this is going topromote competition in the
market.
Right, if we see thatbusinesses are more successful.
Um, I am trying to reason withthat.
And again, for people who I amassuming that these judges at
(12:24):
least have a conservative slant,but again, conservatives are
about limited government,ostensibly right, right, small
government.
And so this, uh, at least the,the judges who dissented and
this is a nine eight opinionright, this was, it was not.
It was very close, um, butthey're saying that the court is
(12:48):
overstepping its authoritybecause nasdaq it's a limited
liability, it's private, rightRight, it is one thing if there
is a public not appropriate forprivate organizations to how
they choose to run theirbusinesses and what they choose
to require of the companies thatinteract with them.
Karen McFarlane (13:57):
I agree.
That's totally another reasonwhy it's shocking.
And how will this have aneffect on other things that
companies require in going to beappealed and appealed and all
that good stuff?
But it's, it's.
I feel like it's veryshort-sighted from that
perspective because of thedomino implications that this
could have.
Right, and again, just unpackingthat, that definition, that
definition around competitionand fraud.
(14:20):
Of course it depends on everyorganization what those words
mean.
Banking, right, there could befraudulent practices against the
consumers that maydisproportionately affect
(14:41):
underrepresented groups.
Right, and so, assuming none ofthat is intentional, right,
when you have a diverse board,they can surface some of these
things based on theirexperiences.
And when you surface some ofthese things, sometimes it's not
like this big aha.
(15:03):
Right, it is a small action thatleads to another action that
leads to another action.
So it can go unnoticed for avery long time.
But it's that one person that'slike hey, you know what.
This thing happens right inthis community, or it happens to
(15:25):
me, right, and it can have anegative effect that has larger
implications for families, haslarger implications for families
.
Maybe we should explore thatfrom this business angle and see
if there's something that wecould change in our practices.
(15:47):
That either doesn't cost us anymoney, or it's a minimal cost
because investment in thecommunity or the greater good,
or it actually makes us moreprofitable by changing a couple
steps in our process.
Brittany S. Hale (16:01):
Right.
Karen McFarlane (16:02):
And it's that thoughtful analysis that comes
from people and people'sexperiences that can make your
organization more consumerfriendly in some cases, more
consumer-friendly in some cases,and so obviously we weren't in
the courthouse to hear thesearguments, but from my
(16:25):
layperson's perspective, I don'tunderstand how something like
this detracts from thedefinition of what NASAC and the
SEC rules combine, what they'resupposed to mean for
organizations.
Brittany S. Hale (16:47):
Absolutely.
Can I ask you some marketingquestions?
Yeah, how important ismarketing and business growth?
Karen McFarlane (17:01):
I think it's the cornerstone of all business
growth.
That's you know, you know I youknow from my perspective.
You know, honestly, it's, atthe end of the day, it's about
the brand right and marketing isthe is the steward of the brand
right, and that brandincorporates messaging and how
(17:22):
we go out to the world and howwe relate to our customers or
buyers, depending on B2B, b2c orwhatever and it's your persona,
it's how people perceive you.
So, at the end of the day, Ithink that it is the primary
function, although sometimesit's not seen that way.
Brittany S. Hale (17:44):
Okay, and is it beneficial to try to keep up
to date with your target marketin terms of demographics,
consumer behavior, that type ofstuff?
Karen McFarlane (18:00):
Absolutely your current and your target, the
ones you have and the ones youwant.
So right, extremely imperative.
Brittany S. Hale (18:09):
So I know it seems like I'm cross-examining
you a little bit.
I'm coming with the leadingquestion.
Can you explain to those whomay be listening and aren't
aware?
Can you explain what Nielsen's?
Karen McFarlane (18:24):
is oh, basically it's a measurement
organization that really testsconsumer interactions with you,
right?
So I think the most traditionalform of that is with, say,
television, right, who'swatching, how long are they
watching?
And those data points are usedto basically secure advertising,
(18:46):
more advertising dollars,because if I can prove that 52
million people are watching thisshow, right, that has value to
advertisers who want that reach.
But it also is used acrossdigital media as well.
Brittany S. Hale (18:57):
OK, are they?
And I understand this may bekind of a biased question, but
are they relatively relied upon,do they do?
They have a pretty goodreputation throughout the market
.
Karen McFarlane (19:14):
I think they have an excellent reputation
throughout the market.
I think they have an excellentreputation throughout the market
.
I think it has changed overtime, right Because of the
nature of media, right?
So, whereas in my view and alsojust as a caveat, I'm more B2B
(19:35):
than B2C, which is where I seeNielsen mostly playing, but
people can measure forthemselves using different
technologies and stuff and get amore accurate point of view I
think Nielsen does now providemore in-depth and detailed data
than they did, say, back in theday when you had to have top
boxes and things like that.
(19:56):
It's a different way toleverage them now.
Brittany S. Hale (20:00):
I ask because I attended a presentation led by
an executive at Nielsen, whichis unrelated, but what I saw was
that minorities, or at leastthe global majority, account for
100% of US population growthsince 2010.
(20:24):
Damn, that shocked me.
54% of US population growthsince 2010.
Asians about 23%, BlackAmericans at 17% and
non-Hispanic white populationdeclined slightly from 2010 to
(20:48):
about 2022.
And then, of course, when itcomes to people who identify as
biracial or multiracial, about42% of the you know part of the
population growth that shockedme.
Karen McFarlane (21:11):
Wait, this is since when?
Since 2020?
Brittany S. Hale (21:15):
Minorities account for 100% of US
population growth since 2010.
Karen McFarlane (21:21):
2010.
Okay, 2010.
That is, those numbers areincredible.
They're not necessarilyshocking, and I'll just tell you
this little story.
Okay, how long ago was this?
My son is 21.
So, maybe 10 years.
(21:42):
Yeah, maybe 10 years ago,something like that.
Right, he was going to schooland DEI, in a way I don't think
it was really called that wasstarting to emerge right as a
topic for the school, and theybrought in some consultants to
talk about this and how we could, you know, be more inclusive
(22:05):
and things of that nature.
And I remember I was part of theParents Association.
I didn't see this, I didn't seethe slides prior to the small
group presentation.
There's going to be a smallgroup and then a larger group
presentation, but I didn't seethe slides.
But one of the slides talkedabout the US population and the
(22:26):
data showed something similar,not said exactly that way, but
basically said you know, theworld is browning, okay, and it
will be brown all the way, brownby 2030.
It was either 2030 or 2040, butI think it was something like
that, okay, okay.
And again, there's like 10, 12years, something like that, and
(22:50):
the school was majority white,you know, parents.
And I remember saying to myselfprobably shouldn't have put
that slide in, because theparents, the small group, that
was in there lost their minds.
There was too shocking of astatistic for them to hear,
cause it would be the first timethat they were hearing it.
(23:12):
Right, they weren't eased intothe fact that their group okay
was, you know becoming aminority essentially, and so
it's not shocking to me, but Imean the shocking.
It's not shocking because Iknew it was coming for a very
long time.
To hear the numbers is likewhoa okay.
Brittany S. Hale (23:36):
Exactly, exactly, and so I bring all of
that up.
I laid the foundation to sharethat stat, to reinforce that for
these organizations you knowthat choose to be listed on
NASDAQ and choose to interactwith NASDAQ, nasdaq is seeking
to reflect the changing of thetie, right, they're seeking to
(24:02):
continue to be relevant and sodoing, incentivizing businesses
that also want to seek tocontinue to be relevant.
Karen McFarlane (24:13):
Agreed, it was a good and bold move for the
times, yeah, but it's sufferingat this point and so I think,
kind of like we talked about,companies will have to reinvent
how they approach this subjectRight, because, like you said in
(24:36):
the beginning, we wouldn't needthis if people were just going
to do it on their own withoutneeding to be incentivized.
I don't know if this is reallyan incentive.
Brittany S. Hale (24:50):
Yeah, it's more A mandate Exactly
Implementing punitive right.
Karen McFarlane (24:59):
Right, and it's interesting why they even took
that tact.
I'm sure that there wereconversations about this prior
to, and it was determined thatthey had to mandate it in order
to get people to comply.
And it's interesting, they'reonly asking for two people.
(25:21):
They didn't say 50% of yourboards, right, they said two
people, and one of which, again,is a woman, which should just
be a given Correct.
I don't know who the others cando for me, but I'm just saying
like, well, damn, right, right.
And so, really, at the end ofthe day, you're asking your
(25:45):
bigger shift around race, whichis a harder thing for people to
do.
Right is one person, right,because I don't understand why
women are a problem.
And look, you know, I don'tknow how the math works for this
right, like if you had a Blackwoman, could you check your box?
(26:05):
I don't know.
Brittany S. Hale (26:05):
Right, I was thinking you know a Black gay
woman or a Black lesbian woman,right?
Could she then Check, check,check?
Karen McFarlane (26:15):
I don't know how that works, but, hey, I'm
sure they would have found someways to work it out right In the
explanation, the notes, butit's scary though it actually is
scary to see something likethis, and I'm really interested
(26:39):
in how companies are going toapproach it.
Now, that's not saying thatsome companies weren't going to
do this anyway.
This is the mandate.
They weren't even worried aboutit.
This is part of our cultureregardless, right from the top
down.
So I'm sure there's a goodportion of companies where that
(26:59):
is already part of theircalculus and this is a
non-factor.
It's probably meant for theones that are egregious
historically and now there'll beno accountability towards it.
You know, and we as consumersjust have to, I guess, just be
(27:23):
aware it's really hard.
You know, I get how it's reallyhard to follow these things
because that's really on a macrolevel.
Like you, consumers deal withstuff their day to day.
Like you know, walmart, youknow throwing out their DEI
policies.
You know there's large swathsof people that rely on Walmart's
(27:46):
affordability for food andgoods.
Right, that can't just easilymake the switch to Tarjay.
So I get it and I think theyknow that right, there may be
like a dip for a minute, buteventually people will swing
(28:10):
back up right.
I'm outraged right now from thefact that there's no ginger in
ginger ale and there's somelawsuit with Canada Dry or
something.
Brittany S. Hale (28:21):
I don't know if it's real, it's very
upsetting to me as someone wholoves ginger ale.
Karen McFarlane (28:28):
I love ginger ale right, this is my thing and
I'm like it's only soda I drink,and so I was at the supermarket
yesterday and I'm like, well,maybe I should just try ginger
beer.
There's a brand that my friendhas.
I need to find it.
But I ended up buying gingerale because I didn't see the
brand that I was looking for.
Brittany S. Hale (28:50):
Now I'm very curious to know the brand.
We can discuss offline, but Iwould love to know the brand,
because there's one brand thatis a cultural staple in the
black American community, soanyway, um.
Karen McFarlane (29:12):
So anyway, just to say it's kind of hard to
execute in terms of boycotts andthings of that nature.
It's hard to sustain that on along-term basis, and I think the
companies know that.
And so we're in weird times,brittany.
We're in weird times I mean I.
Brittany S. Hale (29:33):
I am more so concerned about our ability to
compete and perform on a worldstage because we're in a global
market.
Now I would even have we, youknow our podcast, the.
The country outside of theunited states that listens most
(29:55):
to us is Germany, so hello topeople in Germany who are
listening, followed by Canadaand the UK and Sweden.
So that for me is fascinating,it's exciting and at the same
time, knowing that if ourpodcast is, you know, on a world
(30:18):
stage, all of these othercompanies you know listed have
to compete and perform globally.
How are we, from a legislativeand a judicial level, how are we
hindering american progress,american success and american
(30:42):
business performance on a globalscale?
And by american, of course, Imean the united states.
Karen McFarlane (30:47):
But I agree with you.
I mean, look, just start insideyour organization.
If you're a global organization, you have employees everywhere
and they're more than likelyoutside of the US, more diverse
depending on where you are rightand depending on your
(31:07):
definition of diversity.
But culturally, you have to besavvy to you know create a work
environment where people arehappy and are innovative and you
know engaging with yourcustomers in a meaningful way
that's going to create loyaltyand sustainability for your
company.
And so, again, it's just kindof shocking to think that there
(31:33):
are organizations out there thatdon't think in that way.
Like I need a board that'sreflective of my global
footprint, right, right, so Idon't know, but what do I know?
Brittany S. Hale (31:51):
A whole lot, Karen A whole lot.
Karen McFarlane (31:54):
To me all right .
And, by the way, I know stuffisn't easy, right, it's easy to
talk about, it's very difficultto execute and there's so many
different layers.
On an organizational level.
On a board level right, so manydifferent layers, but it's not
insurmountable.
Board level, right, so manydifferent layers, but it's not
(32:16):
insurmountable.
It just takes, you know,diligence and a strong desire to
make it happen, right, and CEOsand boards are very smart
people.
They can get it done.
They can get it done.
And if boards mandate it totheir CEOs, if boards model the
(32:39):
behavior in how they selecttheir members, their board
members, and they mandate it totheir CEOs and they hold them
accountable, then you have areally strong trickle-down
effect, right?
But if you don't, then you wona really strong trickle-down
effect, right, but if you don't,then you won't Exactly.
Well, I think we're going to betalking about this more,
(33:04):
unfortunately, yes, and we'llcontinue to try to give you
insights on how to navigate, onwhat you should and should not
be doing, and I don't know.
We'll just ride.
We'll just ride this wavetogether, all we can do.
I didn't see Mina today.
Brittany S. Hale (33:27):
She's here, she's napping, but she's got a
little bit of bedhead lap head.
I don't know Her eyes are wideopen.
Karen McFarlane (33:37):
Yes, but her eyes are wide open.
Yes, her eyes are wide open.
So she says hello, you know,talk about the good stuff with
mina yes, exactly all right.
Well, we'll see you next time,britney, bye.
Hey Brittany, Hi Karen, how are you?
I'm good.
How are you?
I am doing well.
I've got some peppermint hotcocoa here with my Santa.
Karen McFarlane (00:12):
With your black Santa Claus.
Brittany S. Hale (00:15):
I love it.
You know, there are some spacesthat still value diversity, and
my home happens to be one ofthem.
There you go.
Karen McFarlane (00:28):
Which is reminding me of that recent
controversy with the Bootscommercial with the actress from
Bridgerton.
I can't remember her name rightnow, but she's playing Mrs
Claus and I thought it was agreat commercial.
It was you know commercial forthe boots she had on right Like
a shoe commercial Right andpeople were up in arms that
there was a commercial for theboots she had on like a shoe
commercial and people were up inarms that there was a Black Mrs
Claus, never mind the fact thatSanta Claus was still white in
(00:51):
the commercial.
Brittany S. Hale (00:53):
Interesting.
Yeah, santa doesn't have thefreedom to choose whom he loves?
I guess not.
Karen McFarlane (01:02):
And you know what?
Here's the thing.
I think there can be whiteSanta, black Santa, green Santa,
purple.
Santa yeah, I agree, becausechildren are not listening to
this.
Santa isn't real, correct?
Brittany S. Hale (01:18):
wait what he's not.
Children aren't listening, butMina is, you know I'll cover her
ears.
Karen McFarlane (01:23):
Sorry, mina, but you know Children aren't
listening, but Mina is.
Oh sorry, Mina, I'll cover herears.
Brittany S. Hale (01:26):
Sorry, Mina.
Karen McFarlane (01:28):
But you know, our imagination is free to run
wild, that's true, you know.
Brittany S. Hale (01:36):
So it doesn't have to be wild.
That's the best part abouthaving an imagination is there
are no rules.
Exactly, exactly.
Santa can be whoever, and Iagree with you Exactly, exactly.
Santa can be whoever.
(01:57):
And.
Karen McFarlane (01:59):
I agree with you.
I love the idea of having Santareflect your own ethnic to come
to town, right, and be like,hey, this is my address for real
, for real, right, you can findme here.
This is my family.
Then you know, I've been doingthis for I don't know, hundreds
of years.
I think people will be morefocused on how he's lived so
(02:20):
long.
Brittany S. Hale (02:21):
All right, we might want to follow his
skincare regimen Exactly, ratherthan the color of his skin
Right.
Karen McFarlane (02:34):
So anyway, super interesting.
Brittany S. Hale (02:38):
It's also a weird movie.
Karen McFarlane (02:40):
But I'll talk to you about the weird movie
later.
But so this week week a newruling came down.
So we have been seeing, youknow, week after week after week
.
You know this, I guess it's,you know we can definitely call
it a backlash against diversity,equity, inclusion, and just it
(03:02):
keeps spiraling in a negativedirection.
Brittany S. Hale (03:07):
So we need like a sound for every time
there's like some sort of DEIpolicy that gets you know I'm
going to find a sound.
Karen McFarlane (03:18):
We have sounds on here.
Okay, yes, you know, but maybenext time.
Yes, you know, but maybe nexttime.
But the US Appeals Court in NewOrleans.
They rejected NASDAQ'sdiversity rules for company
boards.
Brittany S. Hale (03:57):
I saw that.
I want to reiterate why it isso critically important for
executive leaders, specificallythe president, to appoint
federal judges in differentcircuits around the country,
Because if you are, you know alot of these federal judges.
They're tenured right.
These can be lifetimeappointments, and so you want to
ensure that your specificpolicy and, by extension, your
perception of America, what itshould be, what we're working
toward is protected.
Karen McFarlane (04:46):
That's absolutely right and that's
actually, you know, one oftheoring up the judicial system
with judges that might have aparticular point of view, and so
, just as you said, they havethese long tenures and they may
or may not be amicable to be,you know, amicable to, you know,
dei, right, in its originalform, right.
(05:10):
And so then we see decisionslike this, you know, trickle and
we trickling down, especiallysince the Supreme Court set
aside affirmative action rules,right, we've seen that reaction
to what happens next, right?
So you know, this is to me likea big deal, right?
(05:31):
Just for a little background, Ithink it was in 2020, but
NASDAQ put together a proposalthat was approved by the SEC,
proposal that was approved bythe SEC, which basically asked
huge corporations I think theywere in the Russell 3000, I
(05:54):
think to ensure that theirboards included at least one
woman and at least one personwho represents an
underrepresented group or LGBTQ,right?
So, basically, in their words,like two diverse board members,
and if they didn't, they neededto explain why not, otherwise
(06:21):
they could be kicked off theexchange.
Brittany S. Hale (06:24):
Interesting.
Karen McFarlane (06:28):
Yeah right, they'd be kicked off, they could
be kicked off the exchange.
So, yeah Right, it's like theultimate accountability.
So, okay, you can, you don't,you don't do it.
But why?
And it has to be a reasonableexplanation, and I'm sure there
you know, from a boardperspective, in terms of their
documentation they have to.
They would have to show youknow what steps they went
through to secure these boardseats, who they interviewed, all
the details to show that itjust wasn't possible to obtain
(06:53):
the necessary skill sets to fillwhatever gaps or needs were
required for the board.
And I'm sure that's a difficultthing to do, For sure.
Brittany S. Hale (07:05):
For sure, and I guess I'm also just thinking
really kind of about therationale behind this, which is
when left to their own devices.
We understand that thesebusiness leaders are not going
to do this on their own Right,as much as we may want them to.
(07:28):
As good as it can be forbusiness, we recognize that it's
not something that people aredoing on their own, and so
there's an effort to createrequirements to incentivize
people to move forward, and thisisn't unique in American
(07:51):
history because, I mean, we hadintegration right.
We've seen time and time againthat, unfortunately, we need a
little bit of a legislative push.
Karen McFarlane (08:07):
Yeah, on all subjects, right, because you
know, at the end of the day, allbusinesses want to be
profitable, right, and so it'sabout their vision of what, of
how profitability will beobtained, and that vision, you
know, historically has been, youknow, white males, right,
(08:29):
that's how the system has beenset up.
So I think it's a little.
It's hard for organizationsthat have these, you know, these
margins that they have to makeevery single year and
responsibilities to theirstakeholders and their investors
, to focus on things that theymay not feel are a direct line
(08:52):
to profitability, although youknow that has been proven in
many different ways.
So, for example, in theoriginal proposal, nasdaq cited
a report from the Carlyle Group,which is an investment company,
that having at least twodiverse board members have
(09:15):
nearly 12% companies that havethat have nearly 12% more
earnings growth per year thanthe average company that lack
diversity.
12% growth is significant,significant gains.
Yes.
Brittany S. Hale (09:33):
Yes, I would never say no to a 12% increase
in my business.
Karen McFarlane (09:38):
Right, exactly, that was back in 2020.
So it's a little shocking,right, and outside of the
earnings, which I know that'sthe most important thing, right,
but outside of that, it justkind of shocks me that people
(09:58):
today, people in any business,don't think that it's important
to be reflective of the broadercommunity.
Right, women are half thepopulation, right, at the very
least.
Why aren't there more women onboards?
Brittany S. Hale (10:15):
right.
Karen McFarlane (10:16):
At the very least.
And then, of course, we add inthe different.
You know, I don't want to callus minorities, because we're
becoming a majority.
Brittany S. Hale (10:28):
We'll come back to that in a moment.
I have a very interesting statfor you.
Karen McFarlane (10:33):
Okay, good, all right, but why non-white groups
are not part of the?
Shouldn't be part of theequation?
And so, just in general, fromjust an intellectual perspective
, it just still boggles my mind.
I know we've talked about this,but I just can't wrap my head
around it.
Brittany S. Hale (10:50):
Yeah, and I have to say so.
When I started in law school asyou know, your law school
summers are really important myfirst summer I started at a
financial services firm and oneof the things that I had to do
was scour the SecuritiesExchange Act of 1934 and draft
an insider trading primer for mysupervisors.
(11:13):
Oh, interesting.
So this is very interesting tocome at it from this perspective
.
And so at least the judges aresaying that these rules don't
further the Exchange Act,because the Exchange Act exists
as a quote, primarily to protectinvestors and the macro economy
(11:38):
from speculative, manipulativeand fraudulent practices and to
promote competition in themarket for securities
transactions.
Mm-hmm, it is fascinating thatthey, knowing the data that you
just shared, see this as anobstructionist take, when we
(12:00):
know that this is going topromote competition in the
market.
Right, if we see thatbusinesses are more successful.
Um, I am trying to reason withthat.
And again, for people who I amassuming that these judges at
(12:24):
least have a conservative slant,but again, conservatives are
about limited government,ostensibly right, right, small
government.
And so this, uh, at least the,the judges who dissented and
this is a nine eight opinionright, this was, it was not.
It was very close, um, butthey're saying that the court is
(12:48):
overstepping its authoritybecause nasdaq it's a limited
liability, it's private, rightRight, it is one thing if there
is a public not appropriate forprivate organizations to how
they choose to run theirbusinesses and what they choose
to require of the companies thatinteract with them.
Karen McFarlane (13:57):
I agree.
That's totally another reasonwhy it's shocking.
And how will this have aneffect on other things that
companies require in going to beappealed and appealed and all
that good stuff?
But it's, it's.
I feel like it's veryshort-sighted from that
perspective because of thedomino implications that this
could have.
Right, and again, just unpackingthat, that definition, that
definition around competitionand fraud.
(14:20):
Of course it depends on everyorganization what those words
mean.
Banking, right, there could befraudulent practices against the
consumers that maydisproportionately affect
(14:41):
underrepresented groups.
Right, and so, assuming none ofthat is intentional, right,
when you have a diverse board,they can surface some of these
things based on theirexperiences.
And when you surface some ofthese things, sometimes it's not
like this big aha.
(15:03):
Right, it is a small action thatleads to another action that
leads to another action.
So it can go unnoticed for avery long time.
But it's that one person that'slike hey, you know what.
This thing happens right inthis community, or it happens to
(15:25):
me, right, and it can have anegative effect that has larger
implications for families, haslarger implications for families
.
Maybe we should explore thatfrom this business angle and see
if there's something that wecould change in our practices.
(15:47):
That either doesn't cost us anymoney, or it's a minimal cost
because investment in thecommunity or the greater good,
or it actually makes us moreprofitable by changing a couple
steps in our process.
Brittany S. Hale (16:01):
Right.
Karen McFarlane (16:02):
And it's that thoughtful analysis that comes
from people and people'sexperiences that can make your
organization more consumerfriendly in some cases, more
consumer-friendly in some cases,and so obviously we weren't in
the courthouse to hear thesearguments, but from my
(16:25):
layperson's perspective, I don'tunderstand how something like
this detracts from thedefinition of what NASAC and the
SEC rules combine, what they'resupposed to mean for
organizations.
Brittany S. Hale (16:47):
Absolutely.
Can I ask you some marketingquestions?
Yeah, how important ismarketing and business growth?
Karen McFarlane (17:01):
I think it's the cornerstone of all business
growth.
That's you know, you know I youknow from my perspective.
You know, honestly, it's, atthe end of the day, it's about
the brand right and marketing isthe is the steward of the brand
right, and that brandincorporates messaging and how
(17:22):
we go out to the world and howwe relate to our customers or
buyers, depending on B2B, b2c orwhatever and it's your persona,
it's how people perceive you.
So, at the end of the day, Ithink that it is the primary
function, although sometimesit's not seen that way.
Brittany S. Hale (17:44):
Okay, and is it beneficial to try to keep up
to date with your target marketin terms of demographics,
consumer behavior, that type ofstuff?
Karen McFarlane (18:00):
Absolutely your current and your target, the
ones you have and the ones youwant.
So right, extremely imperative.
Brittany S. Hale (18:09):
So I know it seems like I'm cross-examining
you a little bit.
I'm coming with the leadingquestion.
Can you explain to those whomay be listening and aren't
aware?
Can you explain what Nielsen's?
Karen McFarlane (18:24):
is oh, basically it's a measurement
organization that really testsconsumer interactions with you,
right?
So I think the most traditionalform of that is with, say,
television, right, who'swatching, how long are they
watching?
And those data points are usedto basically secure advertising,
(18:46):
more advertising dollars,because if I can prove that 52
million people are watching thisshow, right, that has value to
advertisers who want that reach.
But it also is used acrossdigital media as well.
Brittany S. Hale (18:57):
OK, are they?
And I understand this may bekind of a biased question, but
are they relatively relied upon,do they do?
They have a pretty goodreputation throughout the market
.
Karen McFarlane (19:14):
I think they have an excellent reputation
throughout the market.
I think they have an excellentreputation throughout the market
.
I think it has changed overtime, right Because of the
nature of media, right?
So, whereas in my view and alsojust as a caveat, I'm more B2B
(19:35):
than B2C, which is where I seeNielsen mostly playing, but
people can measure forthemselves using different
technologies and stuff and get amore accurate point of view I
think Nielsen does now providemore in-depth and detailed data
than they did, say, back in theday when you had to have top
boxes and things like that.
(19:56):
It's a different way toleverage them now.
Brittany S. Hale (20:00):
I ask because I attended a presentation led by
an executive at Nielsen, whichis unrelated, but what I saw was
that minorities, or at leastthe global majority, account for
100% of US population growthsince 2010.
(20:24):
Damn, that shocked me.
54% of US population growthsince 2010.
Asians about 23%, BlackAmericans at 17% and
non-Hispanic white populationdeclined slightly from 2010 to
(20:48):
about 2022.
And then, of course, when itcomes to people who identify as
biracial or multiracial, about42% of the you know part of the
population growth that shockedme.
Karen McFarlane (21:11):
Wait, this is since when?
Since 2020?
Brittany S. Hale (21:15):
Minorities account for 100% of US
population growth since 2010.
Karen McFarlane (21:21):
2010.
Okay, 2010.
That is, those numbers areincredible.
They're not necessarilyshocking, and I'll just tell you
this little story.
Okay, how long ago was this?
My son is 21.
So, maybe 10 years.
(21:42):
Yeah, maybe 10 years ago,something like that.
Right, he was going to schooland DEI, in a way I don't think
it was really called that wasstarting to emerge right as a
topic for the school, and theybrought in some consultants to
talk about this and how we could, you know, be more inclusive
(22:05):
and things of that nature.
And I remember I was part of theParents Association.
I didn't see this, I didn't seethe slides prior to the small
group presentation.
There's going to be a smallgroup and then a larger group
presentation, but I didn't seethe slides.
But one of the slides talkedabout the US population and the
(22:26):
data showed something similar,not said exactly that way, but
basically said you know, theworld is browning, okay, and it
will be brown all the way, brownby 2030.
It was either 2030 or 2040, butI think it was something like
that, okay, okay.
And again, there's like 10, 12years, something like that, and
(22:50):
the school was majority white,you know, parents.
And I remember saying to myselfprobably shouldn't have put
that slide in, because theparents, the small group, that
was in there lost their minds.
There was too shocking of astatistic for them to hear,
cause it would be the first timethat they were hearing it.
(23:12):
Right, they weren't eased intothe fact that their group okay
was, you know becoming aminority essentially, and so
it's not shocking to me, but Imean the shocking.
It's not shocking because Iknew it was coming for a very
long time.
To hear the numbers is likewhoa okay.
Brittany S. Hale (23:36):
Exactly, exactly, and so I bring all of
that up.
I laid the foundation to sharethat stat, to reinforce that for
these organizations you knowthat choose to be listed on
NASDAQ and choose to interactwith NASDAQ, nasdaq is seeking
to reflect the changing of thetie, right, they're seeking to
(24:02):
continue to be relevant and sodoing, incentivizing businesses
that also want to seek tocontinue to be relevant.
Karen McFarlane (24:13):
Agreed, it was a good and bold move for the
times, yeah, but it's sufferingat this point and so I think,
kind of like we talked about,companies will have to reinvent
how they approach this subjectRight, because, like you said in
(24:36):
the beginning, we wouldn't needthis if people were just going
to do it on their own withoutneeding to be incentivized.
I don't know if this is reallyan incentive.
Brittany S. Hale (24:50):
Yeah, it's more A mandate Exactly
Implementing punitive right.
Karen McFarlane (24:59):
Right, and it's interesting why they even took
that tact.
I'm sure that there wereconversations about this prior
to, and it was determined thatthey had to mandate it in order
to get people to comply.
And it's interesting, they'reonly asking for two people.
(25:21):
They didn't say 50% of yourboards, right, they said two
people, and one of which, again,is a woman, which should just
be a given Correct.
I don't know who the others cando for me, but I'm just saying
like, well, damn, right, right.
And so, really, at the end ofthe day, you're asking your
(25:45):
bigger shift around race, whichis a harder thing for people to
do.
Right is one person, right,because I don't understand why
women are a problem.
And look, you know, I don'tknow how the math works for this
right, like if you had a Blackwoman, could you check your box?
(26:05):
I don't know.
Brittany S. Hale (26:05):
Right, I was thinking you know a Black gay
woman or a Black lesbian woman,right?
Could she then Check, check,check?
Karen McFarlane (26:15):
I don't know how that works, but, hey, I'm
sure they would have found someways to work it out right In the
explanation, the notes, butit's scary though it actually is
scary to see something likethis, and I'm really interested
(26:39):
in how companies are going toapproach it.
Now, that's not saying thatsome companies weren't going to
do this anyway.
This is the mandate.
They weren't even worried aboutit.
This is part of our cultureregardless, right from the top
down.
So I'm sure there's a goodportion of companies where that
(26:59):
is already part of theircalculus and this is a
non-factor.
It's probably meant for theones that are egregious
historically and now there'll beno accountability towards it.
You know, and we as consumersjust have to, I guess, just be
(27:23):
aware it's really hard.
You know, I get how it's reallyhard to follow these things
because that's really on a macrolevel.
Like you, consumers deal withstuff their day to day.
Like you know, walmart, youknow throwing out their DEI
policies.
You know there's large swathsof people that rely on Walmart's
(27:46):
affordability for food andgoods.
Right, that can't just easilymake the switch to Tarjay.
So I get it and I think theyknow that right, there may be
like a dip for a minute, buteventually people will swing
(28:10):
back up right.
I'm outraged right now from thefact that there's no ginger in
ginger ale and there's somelawsuit with Canada Dry or
something.
Brittany S. Hale (28:21):
I don't know if it's real, it's very
upsetting to me as someone wholoves ginger ale.
Karen McFarlane (28:28):
I love ginger ale right, this is my thing and
I'm like it's only soda I drink,and so I was at the supermarket
yesterday and I'm like, well,maybe I should just try ginger
beer.
There's a brand that my friendhas.
I need to find it.
But I ended up buying gingerale because I didn't see the
brand that I was looking for.
Brittany S. Hale (28:50):
Now I'm very curious to know the brand.
We can discuss offline, but Iwould love to know the brand,
because there's one brand thatis a cultural staple in the
black American community, soanyway, um.
Karen McFarlane (29:12):
So anyway, just to say it's kind of hard to
execute in terms of boycotts andthings of that nature.
It's hard to sustain that on along-term basis, and I think the
companies know that.
And so we're in weird times,brittany.
We're in weird times I mean I.
Brittany S. Hale (29:33):
I am more so concerned about our ability to
compete and perform on a worldstage because we're in a global
market.
Now I would even have we, youknow our podcast, the.
The country outside of theunited states that listens most
(29:55):
to us is Germany, so hello topeople in Germany who are
listening, followed by Canadaand the UK and Sweden.
So that for me is fascinating,it's exciting and at the same
time, knowing that if ourpodcast is, you know, on a world
(30:18):
stage, all of these othercompanies you know listed have
to compete and perform globally.
How are we, from a legislativeand a judicial level, how are we
hindering american progress,american success and american
(30:42):
business performance on a globalscale?
And by american, of course, Imean the united states.
Karen McFarlane (30:47):
But I agree with you.
I mean, look, just start insideyour organization.
If you're a global organization, you have employees everywhere
and they're more than likelyoutside of the US, more diverse
depending on where you are rightand depending on your
(31:07):
definition of diversity.
But culturally, you have to besavvy to you know create a work
environment where people arehappy and are innovative and you
know engaging with yourcustomers in a meaningful way
that's going to create loyaltyand sustainability for your
company.
And so, again, it's just kindof shocking to think that there
(31:33):
are organizations out there thatdon't think in that way.
Like I need a board that'sreflective of my global
footprint, right, right, so Idon't know, but what do I know?
Brittany S. Hale (31:51):
A whole lot, Karen A whole lot.
Karen McFarlane (31:54):
To me all right .
And, by the way, I know stuffisn't easy, right, it's easy to
talk about, it's very difficultto execute and there's so many
different layers.
On an organizational level.
On a board level right, so manydifferent layers, but it's not
insurmountable.
Board level, right, so manydifferent layers, but it's not
(32:16):
insurmountable.
It just takes, you know,diligence and a strong desire to
make it happen, right, and CEOsand boards are very smart
people.
They can get it done.
They can get it done.
And if boards mandate it totheir CEOs, if boards model the
(32:39):
behavior in how they selecttheir members, their board
members, and they mandate it totheir CEOs and they hold them
accountable, then you have areally strong trickle-down
effect, right?
But if you don't, then you wona really strong trickle-down
effect, right, but if you don't,then you won't Exactly.
Well, I think we're going to betalking about this more,
(33:04):
unfortunately, yes, and we'llcontinue to try to give you
insights on how to navigate, onwhat you should and should not
be doing, and I don't know.
We'll just ride.
We'll just ride this wavetogether, all we can do.
I didn't see Mina today.
Brittany S. Hale (33:27):
She's here, she's napping, but she's got a
little bit of bedhead lap head.
I don't know Her eyes are wideopen.
Karen McFarlane (33:37):
Yes, but her eyes are wide open.
Yes, her eyes are wide open.
So she says hello, you know,talk about the good stuff with
mina yes, exactly all right.
Well, we'll see you next time,britney, bye.
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