Paul Ayoub has served as the chair of several boards, including two significant nonprofit organizations, and is currently Vice-Chair of the board of one of one of the largest nonprofit organizations in the country, St. Jude Children’s Research Hospital. In this episode he shares his views on board composition, the relationship between the board chair and CEO and the critical importance of diversity, equity and inclusion to the effectiveness of the organization.
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Boston Business Journal Power 50
On being chair of the Board
First, you have to remember you are not the CEO — you’re the chair. So what does that mean? It means that you’re really the coach; you’re the producer. It’s not your vision. It’s your job to bring forth the collective vision and the collective wisdom of the people who are on your board and to help the CEO be the best he/she can be. You also have to remember that you’re really just the temporary steward of that position. I’m sure you’ve both experienced this, but sometimes people will start to own their titles and own their positions and it becomes their identity.
When I have become a board chair, my first principal is that the CEO’s success is my success and so I have no desire to be out front from a management/organization point of view. The Chair represents the Board and there are speaking opportunities and public-facing events where the chair represents the organization on behalf of the board and the organization. The chair may sit at the head of the table, but there can be no ego of the chair. The meaningful reward the chair receives is knowing in his/her heart that the organization is successful and the CEO is successful.
How important is board composition and what’s the best way to approach it?
Board composition and culture are everything. I think of it much like a sports team. You can have a really talented team with a weak culture or you can have a great culture and a weak team and, in either case, you’re only going to get so far.
So, I think that the composition is critical. It’s actually not just a good thing, it’s an essential part of the fiduciary duty of a board to have the right mix of diversity of skill, talent, thought, background and, of course, critically, diversity in terms of women and people of color. It is not opinion, but proven fact, that diversity makes a board stronger and better . Also, it takes a dedicated investment in time to recruit, build, train and integrate a diverse board.
What have you found as effective strategies with respect to off-boarding board members?
Off-boarding begins with onboarding. So, when you are bringing people onto your board, it’s important to tell them what the expectations and responsibilities are in every respect such as meeting attendance, doing the reading, and serving on committees. One of those expectations also should be being prepared to leave the board when their term is up, regardless of whether you have limits. I think the culture of term limits is more powerful than a bylaw that sets term limits .
Serving on the board of a nonprofit organization
If you’re going to be involved in a nonprofit, you should understand why. In my view, it’s a combination of duty, privilege and responsibility. I think we all have a responsibility to give back to our community, whether it’s our immediate neighborhood or the larger community of the country of the world, and it’s a privilege to do so. But, upon beginning serving, understanding and fulfilling the fiduciary responsibility of being a board member is critical.
Progress toward diversity, equity and inclusion has been slow – shamefully slow. It’s been better of late, because world circumstances have dictated that it has to be better. There’s a heightened sensitivity and deeper understanding that diversity means strength. People understand that even if you don’t approach diversity from the moral point of view or that it’s the right thing to do, studies have shown that a diverse board is a stronger board and makes for a stronger organization. As Justice Louis Brandeis, the founder of my firm, Nutter, said: “In the frank expression of conflicting opinions that lies the greatest promise of wisdom.”
Also, keep in mind that you can’t be a board member and support diversity, equity and inclusion unless you are willing to rotate off a board to make room for someone who is diverse. So, in driving diversity on boards I’ve chaired, I use that approach and it’s rare to get a “no” when asking someone to rotate off of a board to make room for others.
Joe: Hello and welcome to On Boards, a deep look at driving business success. Hi, I’m Joe Ayoub and I’m here with my cohost Raza Shaikh. On Boards is about boards of directors and advisors and all aspects of board governance. Twice a month, this is the place to learn about one of the most critically important aspects of any company or organization: it’s board of directors or advisors.
Raza: [00:00:32] Joe and I speak with a wide range of guests and talk about what makes great boards great, or make a board unsuccessful, what it takes to be a valuable member and how to make your board one of the most valuable assets of your company.
Joe: [00:00:48] Our guest today is someone I’ve known for quite a long time. In fact, he moved into our family home when he was very young and didn’t move out until he went to college. [00:01:00] It’s my brother, Paul Ayoub. Paul is a partner of the law firm of Nutter McLennan and Fish, where he serves in the firm’s Executive Committee.
He has served as a member of a number of boards, including as board chair of two significant nonprofit boards: ALSAC, which is the fundraising and awareness organization for St. Jude Children’s Research Hospital, as well as the board of the Greater Boston Chamber of Commerce.
Raza: [00:01:30] Paul is also past president of the Real Estate Finance Association board, and the co-author along with his daughter, Lizzie,of a best-selling book entitled Inspire Me! A father-daughter book of quotations to motivate, teach and inspire. He was recently appointed to serve as a member of Mayor Walsh’s Reopening Advisory Board for the City of Boston and named to the Boston [00:02:00] Business Journal’s power 50 for 2020, in part for his leadership in increasing diversity of the Chamber board and in helping form a new nonprofit earlier this year called Small Business Strong,to help women and minority owned businesses during the pandemic.
Joe: [00:02:20] Paul, it’s terrific to have you as a guest on On Boards.
Paul: [00:02:24] Thank you. And thanks for having me be part of this program and the first part of this third series.
Joe: [00:02:30] So, as I mentioned in the introduction, you’ve chaired the boards of two extremely high-profile non-profit organizations, and you’re about to chair a third. You’re about to assume the chair of St. Jude Children’s Research Hospital’s board. It’d be great. If you could share a little bit about the journey that brought you to this point – what was your first board experience? How did it come about and what did you learn about the importance of joining the board of a nonprofit?
[00:03:00] Paul: [00:02:59] Thanks. Well, the first experience I had was with ALSAC and St. Jude, being a national committee member for a number of years before coming onto the board. So I had the real privilege, as I know did you, Joe, of sitting in a room with some brilliant, passionate visionaries, as they brought St. Jude from somewhat of a nascent stage to what is now the largest healthcare non-profit in the country. So, you know, you can go to school for an education or you can witness it and experience it with great minds and that’s what you and I were both able to do with ALSAC and St. Jude. So having been born into a family that was involved in it, it’s almost like coming into a family, learning a second language. It’s always been part of our lives and we’ve lived and breathed it.
Joe: [00:03:49] Maybe you could briefly tell the story of how our father actually got involved with St. Jude, because I think it really is a kind of an interesting background.
Paul: [00:03:59] Sure. [00:04:00] And it’s not only a great story about St. Jude and ALSAC, but also as people listen to it, it’s a story that plays out all over in terms of both for-profit and non-profit organizations and I think many of the principles of the same. In our case, our mom and dad had formed an organization in Boston to raise money for inner city kids in the early fifties and they arranged to have the late entertainer, Danny Thomas, do a benefit. They raised lots of money. So several years later, Danny Thomas was fulfilling a promise he had made to St. Jude, which in his religion, the Catholic religion is the Saint of hopeless causes. He wanted to build a shrine of life for St. Jude and that was to build a hospital for the sickest of kids and that point in time leukemia was essentially a death sentence for any child who was afflicted with it. And he had the idea that not only did he want to do that, but he as a first-generation Lebanese-American wanting to bring other [00:05:00] successful Syrian and Lebanese Americans together to give a gift to this country.
So combining those two passions and dreams, he invited our dad to come to a meeting in 1957 in Chicago with a number of other men and women to explain this idea and it was an artist’s rendering. And it was at that meeting that our dad wrote the bylaws of the organization that then became St. Jude with Danny Thomas and five years later, we’re standing in Memphis, Tennessee as the doors of St. Jude opened. So the dream had become a reality in that five-year period of time and again it was a dream to help the sickest of kids with catastrophic diseases. The principal is no child to die in the dawn of life and no child should ever be denied care because of an inability to pay and it’s those two principles that are alive and well under the pillars of the organization today almost 60 years later for St. Jude and [00:06:00] almost 65 years later for ALSAC, which as you said, is the fundraising and awareness organization for St. Jude.
Joe: [00:06:05] Yeah. You know, I obviously have heard this story many times, but just listening to it now, again, it’s really. It’s quite something. It’s a legacy that I am very proud of and every time I think about it, in fact, as I get older, maybe I appreciate it even more.
Raza: [00:06:22] Paul, what an inspiring story.
Paul: [00:06:24] Thank you. It inspires all of us who are involved with it every day.
Joe: [00:06:28] So tell us some of the things you’ve learned about the importance of being a board member on a nonprofit.
Paul: [00:06:35] I think there are several lessons. The first is that if you’re going to be involved in a nonprofit, you should understand why and it’s a combination of duty and privilege and responsibility. So I think we all have a responsibility to give back to our community, whether it’s our immediate neighborhood or the larger community of the country of the world and it’s a privilege to do so. But it’s also [00:07:00] very fulfilling if it’s something in which you believe. I think it’s important to be involved in something that one feels a passionate around. If you have a passion and a purpose, then the productivity and the effectiveness will follow and it needs to be authentic, especially in the non-profit world and I think that’s true even in the profit world. I think those who succeed most in either do it because they have a passionate and a vision and a real fervor for what they’re doing.
Joe: [00:07:29] Yeah, no, I agree with that. People would associate that with non-profit, but I think it cuts across all boards. You need to have a passion for the company, the mission, whatever it is you’re doing in order to really give it everything that it deserves.
Paul: [00:07:45] I think so. And also when you think about it and you think about when St. Jude started, for example, you need to have all that and I think, especially at the beginning stages of any enterprise, you have to have a healthy dose of naivete because if you [00:08:00] knew how many times have you interviewed successful business men and women who’ve said, if I knew now, when knew, then what I knew now I might not have done this and a little bit that I actually think has helped too much. It’s not healthy. And that’s where a good board comes in by the way. Is having a board that has that collaborative relationship with a CEO and a founder. So you don’t go too far astray, but you can dream, but not over dream to the point of not fulfilling your dream.
Joe: [00:08:26] Yeah. Agreed . So listen tell us a little about St. Jude Children’s Research Hospital and what you’ve learned in chairing the boards you’ve chaired that you hope to bring to your role as chairman of the board at St. Jude, starting with what makes a good board chair.
Paul: [00:08:43] St. Jude is the hospital board and ALSAC, as you mentioned, is the fundraising and awareness board and just for people who are listening it’s the same members of the board, but it’s two very different organizations. When I was chairing the [00:09:00] ALSAC board much, like when I was chairing the board for the real estate finance association, very different, one’s a trade group focused in Boston and real estate, one’s a healthcare organization that has an international focus. I think many of the principles are the same, which is as a chair first of all, you’re not the CEO, you’re the chair and so what does that mean? It means that you’re really the coach, you’re the producer. It’s not your vision. It’s your job to bring forth the collective vision and the collective wisdom of the people who are on your board.
You also have to remember that you’re really just the temporary steward of that position. I’m sure you’ve seen this, both of you, but sometimes people will start to own their titles and own their positions and it becomes their identity. It can’t be your identity. It can be your purpose, your love, your passion but it’s not yours. It’s in the case of a nonprofit, it’s the publics and it’s you’re [00:10:00] really just a fiduciary for those who are members of the public and are supporting the organization.
And the last thing is, I think there’s a lot to be learned from not being center stage and let others shine. One of the other lessons I learned, it’s not the output that you need to focus on it’s the input. If you have a good process, you’re most likely to have a good result. And we’ll probably talk a little bit in detail about what that means, but processes, good committees, good onboarding, good self-assessments, if you run your board well you will have a good result. And that’s why I think what you all do in terms of these podcasts and what you’re doing in terms of good governance is so important because you need to focus on it but it’s so much of it is process and letting the process dictate the result.
The last thing I learned is you’re at the epicenter , you know, everything going on and presumably not [00:11:00] everything going on. You start at “A” and you’ve probably got to Z by the time you’re speaking to some of your members of the board, but when you walk into a boardroom or you have a conversation, you have to understand, you can’t get to Z immediately. You have to bring people along. Sometimes they’re at, B or D or F and you need to have the time and the patience and the respect for every board member to understand that they’re there in good faith. They all, no matter who they are and whatever quirks or idiosyncrasies they may bring in their relationship with you and the board – they all have something to offer or they shouldn’t be there and wouldn’t want to be there, but you have to meet them where they are on their terms and not insist it’s your terms and that’s the difference between being a CEO, where you have hire and fire power presumably, and a chair where you’re there to coalesce the greater good for the greater good.
So those are some of the lessons that I learned doing it and would bring to St. Jude or any organization.
Joe: [00:11:56] Well, I was going to say, I think that cuts across all boards. It [00:12:00] doesn’t just apply to not-for-profit, it applies for all for-profit whether private or public. I think that’s really well said. One of the things that I think also cuts across all boards is trying to understand the line between governance and management and I’d like you to just talk about that. How do you recognize it? And is it always the same or different depending on the company?
Paul: [00:12:24] For those who have been involved in boards, this is the ultimate discussion that arises perhaps at every meeting or between meetings and you hear it all the time and anyone listening to this is probably smiling. So yes, we’ve had that conversation. And so we all know there’s no one bright line.
There are some things that are clearly governance: selecting a CEO, succession planning of the CEO, evaluation of the CEO for example, is one general oversight of the finances would be another, and there are some things that are clearly management hiring the team [00:13:00] below the CEO level, being an obvious example.
David Nadler wrote a great piece in the Harvard Business Review many years ago called Building Better Boards and he had this continuum and if you can envision it on the left-hand side, there was the passive board and then the certifying board, the engaged board the intervening board and then the operating board.
And if you imagine that in your mind, somewhere in the middle of being an engaged board is, is the right place you try to achieve, but you’re never, it’s not static because depending on circumstances and needs and boards and situations, sometimes you may be more of an intervening board. I think, in my judgment, you should try to avoid being a passive or a certifying board or rubber certified being like a rubber yeah whatever the CEO says, that’s fine. You’re not adding value. You’re adding optics. The challenge is being engaged, but not being intervening and not being an [00:14:00] operating board unless, and there are exceptions ,when it’s appropriate or necessary or in the best interests of all . And so it’s a wavering line , but the art form is to think about it, to examine it, to challenge yourself, make sure you’re at the right place at the right time.
Joe: [00:14:16] Yeah. So one of the important things of course is the relationship between the board chair and the CEO. Talk a little bit about what you think it should be, what it shouldn’t be and what makes that relationship strong and healthy.
Paul: [00:14:31] When I have been a chair of a board and there’ve been a few, my first principal is that the CEO success is my success and so I have no desire to be out front. I mean, obviously there are speaking opportunities, you’re at the head of the table, but there can be no ego of the chair. The pride, the trophy, the plaque you get is knowing in your heart that the organization is successful and the CEO is [00:15:00] successful.
If you start at that place, now you have a level of trust presumably with your CEO, because he or she knows all you want is for the success of the organization and his or her success. By the way, likewise, so if you have each other’s back and there are times when the CEO can help the chair too, right? You’re both eyes and ears for each other, presumably. I’ve heard the phrase that it’s a collaborative tension between the CEO and the chair. It’s not a friendship, it’s a collaboration and it’s not designed to always be smooth and easy, but if there’s a mutual respect and there’s a trust, and there’s a clear communication between the two, then I think it’s destined to be very healthy.
Trust is really key and communication is key and airing out issues when there are bumps in the road, inevitably there are. I think that’s when you build the strongest relationship, when there’s a little bump here or there, perhaps a misunderstanding. Those are some of the guiding [00:16:00] principles that I’ve seen emerge that are common.
Joe: [00:16:03] So have you served on a board where the circumstances were such that the board needed to intervene with management? And if you have just tell us a little bit about how that went, did it go well, did it not go well? And what were the lessons, if any, that you’ve learned from it?
Paul: [00:16:21] There are two examples I can think of. One is when St. Jude and ALSAC, were at their formative stages. So the chairman of the legal committee was essentially practicing law, but that’s because there was no budget, there was no lawyer and they were figuring things out. So I think often, profit or non-profit, in the early stages the board is, and I’m not saying it’s good practice in fact I’m saying it’s not good practice certainly not best practice, becomes an operating board because it’s the people you’ve brought onto the board have skillsets that for which there is a vacuum in management and that’s why it’s good to have a diverse board in many [00:17:00] ways, but also in terms of skill, but it’s also important to recognize if you’re doing that you need to fill those gaps in management. So it should be temporary and it should be by exception, not rule. That’s one example.
And the other example is when I’ve been board chair but on a board when it hasn’t been the right leadership and so you have a choice and one choice is to allow failure and the other choices to intervene and operate. And that, again, it’s the exception and not the rule, but you can’t stand by and watch failure or risk the organization. So it’s not the best thing, but it’s sometimes the necessary thing.
Personally, I believe that it’s okay if you recognize it for what it is and put boundaries on it yourselves and say, are we going to do this until we don’t, until we can not do it, not making it a habit.
Same with being an intervening board. For example, I think during COVID-19 no CEO had dealt with worldwide pandemic, no board had. I think that’s an example of when we were all in it [00:18:00] together and there wasn’t time for management to go do a study and come back to the board and say, well, this is what we’re going to do to close down our operation. We’ll meet next month. I mean, it was all real time. I actually think it’s a time when organizations showed their strength, because if there was a trust and a mutuality people came together and just said, we’ve got to figure this out together. It wasn’t ego. But that’s a time when you could argue it was intervening or cross the line, but it wasn’t really, it was, there was no line. So that’s another example of extenuating circumstances.
Joe: [00:18:30] Yeah. You know, I think the pandemic has really allowed a lot of people to understand how good their board is because a lot of boards have been really responsive to these changed circumstances. Not only as you said, in terms of how do we do this now, because we’re all in this together and we want to succeed, but also in terms of giving the right kind of support and advice to the leader of the company. Some companies have done well, some companies have not done well, but [00:19:00] in both situations, the CEO or the President has needed help and has needed advice. And it may be just as simple as “we’re here for you now,” we’re going to be your backstop or it may be something more than that, but I think it’s been a learning time for a lot of boards and a lot of organizations really do.
Raza: [00:19:20] Paul, we touched upon it a little bit earlier, but in what respects are functions of a board of a large non-profit similar to the boards of for-profit companies? What best practices apply to all organizations?
Paul: [00:19:36] So I think a few things that I’ve said, and I’m reiterating a few others. One is that the relationship of trust between the chair and the CEO and what the chair’s role is and isn’t in that, especially in a for-profit board, this chair is not the CEO and I think there’s more risk there than in a nonprofit for a whole bunch of reasons.
And it’s really [00:20:00] hard because probably the person who’s chairing the board is a CEO has run organizations. And so it’s hard to play a different role, but it’s essential. And I also think that, you know, understanding how to oversee strategic planning is critical. So it doesn’t matter what the organization is. That’s a fundamental role of the organization. So I think those are two key ones.
And then third is helping to develop, nurture and further the culture of the board. You are the steward of that as well. And you know, the phrase, culture eats strategy for lunch. It’s absolutely true, and you’ve seen that in great boards and I’ve seen, I can think of one board I once served on and over time it weakened and then the culture became somewhat dysfunctional and this board made horrific, I mean, unimaginable errors in judgment, but that’s because it lost its way. So I think, but that’s true. No matter what the organization is.
Raza: [00:20:59] We can also flip [00:21:00] it the other way where what do you think about how nonprofit boards and for-profit boards are different from one another?
Paul: [00:21:08] By the way, as you know, nonprofits is such a broad swath. Sometimes when you say non-profit, you’re thinking of like a local dance studio, but in fact, Harvard University is also a nonprofit, Mass General is a nonprofit. So it’s really hard to generalize because you think of those as businesses but they’re in a nonprofit structure.
The difference is what the governing rules are governing body of law , but fundamentally you get to the same point, but nonprofits, for example, are not governed by Sarbanes-Oxley but the best nonprofits adhere to many or most of the principles of Sarbanes-Oxley, right. Especially as you get larger, if you’re, if you’re a small local community, not an art center, you probably shouldn’t and wouldn’t, and don’t have the capacity. So it’s hard to generalize and it [00:22:00] depends on size. You know, of course the, you know, the tax code governs in sections of the tax code, really governing nonprofits and.
To whom you’re answering especially if it’s a private for profit versus nonprofit essentially is the same, which is the public, right? I mean if it’s a public organization essentially it’s the same, which is the throughput is the, the the owners of the organization. And if it’s a nonprofit, it’s essentially the public.
And if it’s a publicly traded corporation, it’s the shareholders. But. Arguably in these days, even beyond that’s where social impact comes in. So the lines have become blurred. I think that’s actually good, not bad.
Raza: [00:22:40] For sure, but perhaps one area where the notion of revenue for a for-profit typically comes from customers. Whereas the notion of revenue for non-profit comes from fundraising and typically boards are really big part of it for [00:23:00] non-profit organizations. Well, maybe at least one of the areas that maybe the worlds are different.
Paul, do you see that nonprofit boards are a good place for board members to start and learn how to be a good board member?
Paul: [00:23:14] Not to sound like an attorney, but the answer to that is yes and no. So let me tell you the yes. Sometimes that’s where you start because that’sjust where you have your first passion, your first point of entry. And so I think it’s great to be in a non-profit board or a smaller non-profit organization, as I mentioned before, they’re nonprofits broad swath.
So, but if we’re talking about any size, non-profit when you’re giving back to the community, inevitably, that’s what you’re doing or a, cause I think it’s terrific. The my “no” part is that it shouldn’t be, especially in smaller organizations, it shouldn’t be a place where you’re learning. So I think whatever board you’re on, you should be a [00:24:00] contributor.
I mean, there’s this phrase that the more you give, the more you get, of course. And that’s why one of the things that inspires and fulfills all of us, but that shouldn’t be your motivation. It should be that, you know, you’re giving a lot to the organization,
But yes, I do think so I think the more exposure to have to more people in more types of organizations, the better you are and the more exposure to different thought processes and products and I think all of that helps in the aggregate.
Raza: [00:24:28] How important is board composition and what’s the best way to approach it?
Paul: [00:24:33] Board composition, that and culture are everything and I think of it much like a sports team. So you can have a really talented team with a weak culture and they will not win, but you’re gonna have a great culture and a weak team and you know, you’re only gonna get so far. So I think that the composition is critical and it’s actually not just a good thing it’s an essential part of the fiduciary duty of a board [00:25:00] to have the right mix of skill of diversity, of talent, of diversity, of thought of diversity, of demographics, of women, people of color, all of that. Also depending upon the organization the right skills for the right organization. It’s not one size fits all, but I think it’s essential, you know, Oprah Winfrey said, surround yourself only with people who are going to lift you higher and I think that’s one of the quotes in Inspire Me! the book that Lizzie and I put together.
Think of that in the context of a board . Everyone who on that board should be lifting you higher and if they’re dragging you down, they shouldn’t be on the board. And the other quote I love is Einstein said everyone is a genius, but if you judge a fish by how it climbs a tree, you’ll think it’s lived its whole life thinking it’s stupid. So it’s the diversity, right? You have different people look at things very different ways and that’s what will make you stronger.
Raza: [00:25:54] One of the topics Paul that we, Joe and I often talk with our guests [00:26:00] is both recruiting in the board, onboarding and offboarding. What are your thoughts on, on this spectrum of the life cycle of a board member?
Paul: [00:26:14] It’s one of those tense issues that no one ever gets right, but people can write articles and books about it and lecture and sounded like they’re brilliant. First of all, offboarding is important. It can be difficult, but off-boarding begins with onboarding. So when you are bringing people onto your board, it’s important to tell them what the expectations are all around: meetings and doing the reading and whatever the responsibilities will be in serving on committees and being prepared to leave the board when the terms are up, if it’s a one or two term expectation. Regardless of whether you have limits. In fact, I think the culture of term limits is more powerful than a bylaws term limits, because that means people are understanding that they’re there. It’s not a [00:27:00] marathon, it’s a sprint, they’re going to give it their all, and then they’re going to pass it on to the next person. So I think it’s a real important piece , but it’s also difficult and we all know that because you’re not dealing with a number or a name you’re dealing with a human being with whom you sit in a room or now, you know, on a screen and you develop a relationship and inevitably their personal relationships in this, they can be hurt and it can be difficulties in it. That’s why you start at the beginning. So you can say, you know, we, when we invited you on, you may remember it was two terms they say, but how come so-and-so’s on a third term? And you have to explain why.
Joe: [00:27:37] Yeah, there’s no question, Paul. We, Raza and I have talked about this many times. It is difficult and in my view, it is the one thing that most boards find most challenging. I think even if you start at the beginning, which I think is a great idea, the fact still comes to, at some point you have to ask someone to leave and not everyone [00:28:00] really gets it.
And the people and the boards, I would say that have got better at it that has helped their culture. It has helped their effectiveness. They are there the high performing boards, because it doesn’t take a lot for board to become less effective. One or two members who maybe have been around too long or aren’t contributing or maybe are impacting the culture is enough to really have an impact , but I agree. It is a hard thing to do.
Raza: [00:28:29] Joe over our episodes, we’ve gathered a whole bunch of tips on this topic, I must say that starting from the end in mind and doing it at onboarding is probably a really effective tip from Paul.
Joe: [00:28:44] Yeah.
Paul: [00:28:45] You know, one other thing I know. So you both had talked about this on this podcast with others is the Meredith sport. So there are some people who serve for some period of time and probably would like to not have to come to all the meetings and do all the [00:29:00] reading and, but they don’t want to lose their connection.
It’s a social thing. It’s a spiritual thing. It’s the passion. And so the emeritus board really allows, again, it’s meeting the members of the board where they are. And so it it’s a, and I don’t even call it a soft landing. I call it a, just an evolution of the relationship. So it’s, worked very effectively in some of the organizations in which I’ve been involved, and that Joe and I have been involved in St. Jude ALSAC particularly .
Joe: [00:29:28] So Paul, over the years, you’ve really devoted a lot of time and energy to diversity, equity and inclusion, which I think is really wonderful. How do you see the progress in increasing diversity in the boards of for-profit and not-for-profit organizations. And talk about some of the situations in which you’ve been involved and have been able to see some progress.
Paul: [00:29:53] So progress has been slow. It’s been slow and it’s been shamefully slow. It’s been [00:30:00] better of late, because world circumstances have dictated that it’d be better. There’s a heightened sensitivity, there’s knowledge that diversity means strength. People understand that even if you don’t believe it from a moral point of view or it’s the right thing to do, it’s the right business thing to do.
For example, there was a study that McKinsey put out a few years ago that showed that companies who had more diversity in their executive suite were 20% more likely to outperform their competitors. So there are many other studies that have shown similar throughput. This is science, this is not art, and it’s not opinion. So it is good business and it’s your fiduciary duty again, even if you don’t believe in it for all the other, what I would call the right reasons. The founder of my law firm, Louis Brandeis, said that “It’s in the frank expression of differing opinions that lies the greatest chance of wisdom.” And that’s simply true. And for those of us who’ve been exposed to an open to different viewpoints, [00:31:00] you see it and you see it effectively.
I think clearly with a heightened sensitivity to racial equity and justice, it’s now: words are meaningless and action is the only item that’s measured. So in my experience, so if we take, for example, the real estate finance association, before I was the vice president of that board, we had a board of 30 and we had five women and one person of color.
And there were people who were sitting at that table who probably thought that was perfectly okay, because in the real estate, commercial real estate business it’s not known as a paragon of diversity, not known for it. Between the year I was vice president of the board and the year after I was president, that last year I was chair of the nominating committee we now have a board that is 40% women and 20% people of color. And the Chamber board [00:32:00] over the course of three years during the time I was in a leadership position, we went from almost the same lower numbers to 40% women and 20% people of color.
So how do you do that? Well, as I said, in both organizations, we’re not going to do it by looking inside the room. You have to do it by looking outside the room and recruiting people who may not come top of mind, but that you know, or there are organizations such as the Last Mile, I know you had Beth Boland on, she talked about the Last Mile, which is more you have other organizations that can help provide you with great resources for board members.
So the, the idea that it’s a matter of identifying board members and you can’t find them, it’s just, it’s archaic and frankly, it’s embarrassing when you hear that- and it’s, it’s factually wrong. So, you can do it. The first thing is commitment. And the second thing, is depending on size limits, someone coming on means someone coming off.
So you can’t be a board [00:33:00] member and support diversity equity inclusion, and not be willing to rotate off a board to make room for someone who is diverse. So it’s a holistic approach. And when you approach it that way it’s rare that you get a no from someone who may have to come off the board and it’s really good to know from someone you’re invited on a board, if they think it’s authentic and that you’re sincere about it.
Joe: [00:33:22] Yeah, two things. Absolutely the excuse there isn’t enough diverse talent that is a non-starter. There’s plenty of people of color, of women, whenever the diversity looks like, there’s plenty of talent out there. So , that has been debunked for a while now. And I’m so glad you said that. One thing you said to me though as far as the real estate board was that someone had said, well, “The business community doesn’t look like that.” The business community that we’re working in, isn’t half, you know gender diverse and people [00:34:00] color. And I think your comment was, we think the board should look like the business community should look not like it currently looks. And I thought that was really right on. I just thought it was perfect. I just wanted to say that because I really respect the work you’ve done on this. I think it’s just been fantastic.
So a couple of things that I know you’re involved in one is small business strong, and the other is the EOS foundation. Do you want to just talk a little bit about those two projects?
Paul: [00:34:28] Let’s talk about the EOS foundation. The CEO of the EOS foundation is Andrea Silbert. I’ve collaborated with her as a board chair, but she really has been the engine behind something called a women’s power gap. And what she has done is she’s put together very clinically. Presented surveys higher education, publicly traded companies, business trade groups as three examples.
And there’s a survey and is the CEO white male person of color is the chair, which of those categories? [00:35:00] What percentage of the board of women, what percentage of the board are people of color simply by putting out the facts in showing how. Much out of balance those organizations where over time it’s helped inspire people.
It’s not been shaming and blaming. It’s been inspiring and leading and more people have recognized that we need collectively and individually to do more work. So I think that’s been terrific and. There was a, there’ve been casual meetings and lunches where people get together and talk about best practices and making a commitment just to do better.
So I, I think the more people talk about it and recognize the need for it. I will also say this, that those of us who are white men of a certain age and certain positions in the community. W it’s on our shoulders. This is not women needing to advocate for women or people of color advocating for people of color.
It’s all of us [00:36:00] advocating for those issues. And I think what’s fueling the forward motion now is I think people get it and people w and we are clearly at a moment of time where I don’t think we’re going to turn back, but it’s all of us having to own this and feel an equal responsibility for it. And so that’s why helping to be part of the formation of small business.
Strong was great. And I think this is a terrific example of there are plenty of nonprofits in the community, but there’s always room for one more. That has a meaningful purpose. So Ron O’Hanley who’s the CEO of state street global had an idea at the beginning of COVID-19 to form an organization.
Initially for Massachusetts, but hopefully will expand and be replicated around the country to focus on businesses and our case of $250,000 in revenue or less, that tends to be highly high percentage of businesses owned by women and people of color [00:37:00] and the most desperate in terms of not having resources.
And so this. Group put together small business strong. It became an affiliate of the chamber of commerce. So it got his five Oh one C3 status and had a lot of infrastructure support from day one. It provides business advice and then specific specific advice like for legal or finance or marketing all without charge to help companies. You know, find their way in some cases, the way me being, not a way forward, but a way sideways or emerging with someone else. But in most cases, it’s to help them in a moment of need without bureaucracy, without judgment, without cost. And we’re working to the minute, multiple hundreds now of companies that we formed.
And, you know, it ties back to where we began with St. Jude children’s research hospital. It was a small idea. It was one person. He had this idea, he got others to buy onto it, and there was just an intense focus and [00:38:00] it’s now and stood up and it’s, it’s running. And it’s been a real con contributed to our community as have many others and many other organizations.
Raza: [00:38:09] Paul in addition to advising boards or being on boards how is your professional firm Nutter involved in helping and advising boards along with other things that that you do?
Paul: [00:38:25] We have a nonprofit and social impact practice group. I think it’s the second largest practice group of all the law firms in greater Boston, we represent a broad range of nonprofits. You know, we’ve referenced this before in terms of some of the largest in the city and some of the smallest. And we also do a lot of foundation work, so we represent a lot of donors to nonprofits as well. And we advise people in donor advise funds in addition to that. We see a broad swath and there are some [00:39:00] common themes though. And that is that the regulatory scheme the regulatory over lay for all of these nonprofits is becoming stricter. People have to be much more careful.
The it’s important not to be casual if you are. An employee or a board, especially a board member of a nonprofit and the heightened sensitivity to fiduciary duty is increasing. those are some of the issues we’re seeing from the legal point of view. But I will say this one of the great things of having such a large practice in this area. Especially in this community is seeing how many people are so given. And when they come to us, especially, you know, high-end donors who want to make a sizable contribution or board members who want to make sure they’re doing right by their organization, the authenticity and the giving and the passion and the purity [00:40:00] has really.
Been inspiring just to see it from a professional context as well. And we it’s one of the areas that I’m a member of that group, as well as the real estate finance group, which is my primary focus in the practice of law. But it’s an area that inspires us every day when we speak to our clients
Raza: [00:40:17] Well, that is great, Paul.
Joe: [00:40:20] Great. Thank you, Paul. It’s been great having you as a guest today. Thanks for joining us. I hope you, Jane and Lizzie will continue to be well and stay safe. I’m sorry, we won’t be together this year for the holidays, but hopefully, hopefully that will happen soon.
And thank you all for listening today to On Boards with our most special guest, Paul Ayoub. Please stay safe and take care of yourselves, your families and your communities as best you can.
And Raza you take care too. I hope you and your family continue to be well and are staying safe.
Raza: [00:40:55] Yes, Joe, we’re all staying safe. Thank you. And I hope you and your family are well.
[00:41:00] Joe: [00:41:01] Thank you.
And thank you for letting me be part of this series. Thanks very much.