You mentioned the importance of values in a family business, have you been able to bring that to your role on public company boards?
I certainly hope so. I’ve tried every day. It goes back to my father, who was a remarkable, remarkable person. He left home at 17, joined the US Army, served in Korea for four years, then joined the police department in Los Angeles.
He was very proud of that. And he never stopped talking to me about the importance of acting with integrity.
What has been your most rewarding leadership experience?
I’ll go back to my father. He joined the LAPD in 1953 I think it was. Back then it was a pretty proud organization of 5,000 policemen responsible for a huge geographic area—a professional police department in an era where the term “professional police” really hadn’t evolved. He retired 20 years later in 1973, when I was going into college. Fast forward again to 1992, and the Rodney King incident happens, where King was brutalized by police officers.
A year later, 1993, Los Angeles had a new mayor, Richard Riordan. And Mayor Riordan asked me to serve as president of the Los Angeles Police Commission, the civilian body organized to oversee and help reform the police department.
My dad passed away about 15 years ago. Of all the things I’ve done, I’m most proud of leading that commission. Not just because I’m proud of the job we did, but because it was the achievement of which my dad was most proud: His own son had been put in that position and was responsible for something as significant as that.
Boards are often faced with circumstances for which there is no playbook. How do you determine what's in the best interest of the company and its stakeholders when the path forward may not be clear?
We faced a situation like that at McDonald’s not too long ago, in the aftermath of a CEO behaving in a way that had clearly violated McDonald’s values. We terminated the CEO. But then, months after the termination, I received a complaint about additional conduct. We conducted a further investigation and found that the former CEO had behaved in ways wholly inconsistent with our values that he concealed from us when we terminated him. And so, we brought litigation against him to get the company’s money back.
If you look at how other companies have historically handled situations like that, it has been essentially to move on once a separation agreement is in place. There was no extensive track record of companies pursuing legal action against an executive who had been already separated from the company, to get back pay that they believed was improperly paid.
It was kind of uncharted territory. In our case, we asked ourselves, “What’s the right thing to do?” And in answering that, you look at your values, your responsibilities to your colleagues, to shareholders, and to society.
I’m proud of that decision that we made; I think we made it for the right reasons, trying to do the right thing.
And we’ve been transparent about it. Within McDonald's, I think that whether you’re the newest or among the more tenured people, you have a right to understand the organization’s values and how they’re being applied. For an organization to be at its best, people need to know that they're getting the true story, that they’re respected enough to be informed properly.
You’re chair of McDonald’s and a director at Chevron. How did these respective boards react and adjust to COVID-19?
For all their differences, both businesses are global enterprises. Both saw their markets incredibly affected. Both focused on employee health and safety as they found ways to continue operating. So I participated in, and was able to witness, the true mettle of these companies.
It’s one thing to help manage a company and maybe make a basis point difference here or there. Without being overly dramatic, this was a decisive moment for the future of these businesses. And I can say both were extremely well managed during the crisis and continue to be. It brought out the best and it made me very proud to be part of both. I don’t know that every director can say that about how their companies responded. But I can.
Diversity on boards has been an ongoing challenge. Only 2.7 percent of board members at Fortune 1000 companies were Hispanic in 2019. The lack of diversity on boards has come under the spotlight again in recent months. Why do you think it’s an ongoing challenge?
I think the challenge is around opportunity. We need to give more people the opportunity to be considered for board positions, and we need to encourage candidates to demonstrate their full contribution across the board’s agenda, not just in one area. Only then will we have truly diverse boards.
To give you a sense of how I approached it and was thinking about it earlier in my career: I believe that you have to devote some part of your life to charitable activities. So I joined the board of the Children’s Hospital Los Angeles. And on the hospital’s board was the nominating committee chair of Great Western Financial, a large savings and loan business in California.
I was a young guy. And at one point he came over after a board meeting for the hospital and said, “Would you ever consider going on the board of Great Western Financial?”
That many years ago, breaking into a company listed on the New York Stock Exchange was big. And what happened after that, at least in my case, was that once you’re “in the big leagues,” then you have opportunities to meet other people—it’s an opportunity though, it’s not guaranteed. Your work, your ideas, your performance, whether you’re collaborative and well prepared—all those things are noticed. But that opportunity is what is critical to getting a foot in the door.
I later went onto the Nordstrom board, the McDonald’s board, I’ve been on the Tribune board over time. And it started by doing volunteer work. My brother has had similar experiences on the boards he’s served on.
Today, one of the ideas that Nasdaq has put forward is having specific targets for diversity in boardrooms. That resonates with me. But I also believe that I’ve seen something else in boardrooms over the years: board tables aren’t created level. You have to earn your voice. And if you can’t contribute on a variety of subjects or participate in a collegial sort of way, you tend not to earn that voice.
You know the old commercial, “When E.F. Hutton talks, people listen”? Generally, there are some E.F. Huttons around a board table. There’s also the opposite, people who tend to have a weaker voice because they talk about only one thing—one-trick ponies. Every business has some specialty component, and if you pick a director for a specialty—a regulator, for example—you risk them becoming so focused on one thing that they don’t speak until that subject comes up, or they try and work that subject into something that’s not necessarily connected closely with that.
What issues have risen up the board agenda? And which issues will rise or continue rising over the next decade?
Two come to mind. One is climate. Working climate issues into a strategy, and making everybody within a company a partner in the effort, is so important.
There’s also an expectation that companies perform a different and greater role in society. How McDonald’s views the world and our business is much more expansive than just making sure that the French fries are hot for the consumer—that’s a caricature of the old model. Today, we’re still going to make sure the French fries are hot, but we’re going to also make sure we do it in a way that we’re participating as a citizen of the world, and contributing toward the many, many communities where we work.
Kevin Helliker is the Pulitzer Prize-winning journalist and Editor of the Brunswick Review.