Auren Hoffman  0:01  

Welcome to World of DaaS, a show for data enthusiasts. I'm your host, Auren Hoffman CEO of SafeGraph. For more conversations, videos, and transcripts, visit safegraph.com/podcasts.

Hello fellow data nerds. My guest today is Ann Fudge. Ann is the former chairman and CEO of Young and Rubicam brands. Ann is also a very active board member, and that's what we're going to talk today. She's currently on the board of Northrop Grumman, Novartis, and formerly on the boards of Unilever, Infosys general and General Electric. Ann, welcome to World of DaaS. 

Ann Fudge 00:38

Thanks Auren. 

Auren Hoffman 00:40

The goal really is to talk about like how to be a great board member. It's an odd skill that no one really talks about as much. I think one of the difficulties of being a board member is this kind of tension between the CEO’s boss, and also like a CEO’s advisor and counselor. How does like a great board member navigate that tension?

Ann Fudge  1:00  

So let me just step back and put some context into, because again, you always sort of are becoming and learning. Experientially, I went on my first board in 1992, which was Clayborn and then Allied Signal which merged with Honeywell. So I've had a lot of experience over time. I think the most important element is understanding how you operate in the meeting itself in terms of the CEO. There are other times, I mean, and I've come to do this a lot more in the last few years, particularly now that you get so much material to read ahead of time. I give the CEO a heads up to say, I'm supporting you on this, but I really have a lot of questions on XYZ. I want you to have that heads up, and happy to talk before the full board meeting. So I try to give that feedback. I've done that with really all my CEOs over the last 10 plus years because there's information available before going to the meeting. I think it's really having been on the other side of the table, I don't believe in ambushing a CEO in a meeting.

Auren Hoffman  2:04  

No surprises essentially. 

Ann Fudge  2:07  

It’s no surprises. I'm always very direct about what I'm supportive of and what I'm not supportive of, and what I think can be done to answer and address some of the questions that not only I would have but my colleagues would. 

Auren Hoffman  2:20  

Are you always interacting directly with the CEO? Or are there other executives that you might be asking or talking to your directly? 

Ann Fudge  2:29  

The duty of being able to get all the information on a board portal now is absolutely wonderful. Most boards load the data and information a week before the meeting. So you have more than enough time to review the materials and say, for example, you have some questions or whatever. My process has always been to shoot the question to the responsible person if that's their part of the presentation, and say, “Great, covered this. Need some more information on why.” So that's how I've chosen to make that balance between being supportive and challenging. Because that is our role is a director. Otherwise, you're not really adding value. The other thing that's particularly important, I find this with the newer board members who haven't sort of settled into the role. You have to remember you're not running the business, and there's a fine line between support and challenge and asking questions as if you were the person's boss, right? Like, yeah, technically you are. If you're a good boss, you want to support the person's development. You want to make it a win-win for everybody. For the shareholder, for the leadership team. So you find a way to insert yourself appropriately and at the appropriate time.

Auren Hoffman  3:40  

You mentioned the board materials. Sometimes these board materials can be like hundreds and hundreds of pages long. It's hard to go through all that. How do you think companies should put together the board materials so that it's most easily digestible by the board members themself?

Ann Fudge  3:58  

As somebody who's the data hound, I'm used to a lot of material, and I prefer that. What some boards have done is have sort of two sets. Like executive summary at the beginning of particular section that you're going to talk about, and then go into the detail. So there are different ways you can approach it. Again, every board member is going to be different in terms of the amount of data they want to consume. I definitely index on the higher data points and more information because sometimes I find that the devil is in the details, but you have to approach it based on working with your board. So let me step back for a minute. One of the things as CEO, the benefit of having a lead director or non-executive chairman is that that's the person that you can talk directly with in terms of the kinds of materials. So, for example, particularly before we go through the strategic plan, we're very specific as a board and lead director on what we want to see from the team. So you provide them some guidance. I think that's part of our role as directors to be able to provide that guidance. So they're focusing on the information that you feel you need to make informed decisions.

Auren Hoffman  5:12  

Some of these board meetings can be like super impactful and super engaging. Some of them can be kind of long and tiresome a bit.

Ann Fudge  5:21  

That's not a good board meeting, long and tiresome. Here's what we've done. You get the data.  I don't want to get too deep into process, but then you say, okay, to eat to the people who happen to be presenting or discussing, “I don't want to see those charts. We've already read them. Here are the questions.” Sometimes people have even—One of my board says, “These are the questions that we would like the board to address.” So if we're on a particular subject area, each section would provide the information and then say these are the questions we’d like your conversation about. So it really focuses the conversation. I find that to be very helpful. I also find that when you say to someone who's doing a particular topic, “We've read the information. Maybe show us two or three charts that you want to highlight, and then let's discuss it.”

Auren Hoffman  6:09  

Some of these boards that could be fairly large boards, how do you make sure--If you're the CEO or you're the executives, how do you feel confident that every board member has read through all the slides so they can get into the meat of the conversation right away instead of presenting the slides?

Ann Fudge  6:25  

That's on the board member. The person can't worry about--If their board member isn't reading the material before the meeting, they shouldn't be on the board.  I mean you have to go in and assume that you're doing they're doing the work. That's one of the reasons that we do annual board evaluations. So large companies of which I've been on a board are very disciplined about doing that, are very disciplined about the lead director or non-executive chair providing direct feedback because you're each evaluated by your peers. There have been times that people have been asked to leave a board because it's clear to their colleagues that they're not doing the work and not contributing. Those days of being a part of a board and not doing the job required are long gone or should be long gone. No one should hesitate to say, “Thanks. We've appreciated your contributions, and goodbye.” 

Auren Hoffman  7:17  

Speaking of like board members. So I'm sure you've been on boards with like super productive board members that you admire and really adding a lot of value, and then maybe some board members that are either not adding any value at all or maybe even adding negative value to the board. When you're thinking about like recruiting board members, what are some telltale signs that they're going to be more value add? 

Ann Fudge  7:37  

The kinds of questions they ask you in the interview process, and that's so much better now. Because there's so much material out there that if somebody really wants to go on your board, they should come in having, on their own, read materials and ask questions. I mean I used to do that when I was considering the board. I'd go in probably with a lot more questions and asking to meet. If the person says, “I'd really like to meet with some of the leadership team to ask them questions,” then you know that the interest is high. I strongly suggest that if that person doesn't exhibit that interest in and desire to delve deeper, that says a lot. 

Auren Hoffman  8:14  

Is there a particular board member you're so impressed with that you learned from or that you try to emulate something that they did?

Ann Fudge  8:23  

So again, you're talking about… Oh my God, every time I think about how long I've been on boards. 30 years now, of course, there have been things that I've picked up. I can't say…The most important is come prepared. That’s like underscore number one. Come prepared, come prepared, come prepared. Have questions. I mean I remember my first GE board meeting, and I really wanted to be prepared, obviously, but I came in. I had my questions. It was an interesting business. I had some very specific questions. I remember Jack at the time saying, “Wow, you're asking a lot of questions for your first meeting.” I have a very high curiosity. So one of the things that you're talking about characteristics. You want somebody who's going to be really interested in the business, right? Again, finding that balance and not trying to run the business but having enough interest that you're going to ask questions and learn as much as you can about a business. If you don't see that energy, that's a big telltale sign. I also have found over time that the people who listen and are not always trying to show how smart they are with a comment tend to be the better directors. I'll leave it at that. They can be, at times you see somebody who's just either trying to impress or just getting into minutiae that like it's not appropriate for the full board conversation.

Auren Hoffman  9:46  

Now how do you think about age? Sometimes you're getting people like in the prime of their career. They might be CEO of some other company at that time. Then there're board members that maybe retired from like running companies day to day. Do you want like some sort of diversity on the board? Or how do you how do you think about that?

Ann Fudge  10:02  

Oh, yeah, absolutely correct. The diversity of the people. One of the most important committees, I think, is the Governance Committee because you're constantly looking at a skills matrix in terms of what the business needs are and what the members bring to the table in terms of, I'll use the word content. So you're always balancing that between a retired CEO who has more time to give versus an active CEO who may not always be there, but when they're there, you get so much. So you're always weighing the benefits of a person's engagement and the level of engagement. You want to have a range of that on the board. 

Auren Hoffman  10:42  

Interesting. What about like size? I know like Northrop Grumman, I think it's 13 people. Novartis is 14. How do you think of like the ideal number of board members at a public company? Because there are all these committees to be on. 

Ann Fudge  10:55  

I really think you don't want to go above 15. My personal opinion after years of experience. The reason that even get to that, and it's probably fluid between 13 and 15. Again, the Governance Committee is always looking at people's time on a board. One of the great rules that I think, well it's been that way in the UK, is a 10 year max and you're done. You can be the best director in the world. I think that's a great rule. Because I started on board so early in my career. In fact, Spencer Stuart placed me on my first couple of boards, and the guy who did, God bless him, said, “Joining at this time, don't think it's a lifetime commitment.” So in my own mind, I said okay 10 years would be about the right amount of time and then and then step down. Which is why you see I've served on more boards because I've sort of done that.

Auren Hoffman  11:48  

So do you think there should be like some sort of term limits for board? 

Ann Fudge  11:51  

Absolutely. I'm a big believer in that. In European, we just added a 12 year term limit at Novartis. US companies tend to lag and more focus on age and not years of service. Most of them have a balance between age and years of service. So Novartis has a 70 year retirement cap, and I'm hitting that this year. I can't believe it, but anyway.

Auren Hoffman  12:17  

I never understood the age thing. I mean we're at a time where our President and our head of our Senate and head of our Congress are all people in their late 70s. Like, why is there an age limit?

Ann Fudge  12:28  

You know what, let me just say this. Because Northrop Grumman is 75, and companies have been creeping up. I think that was a way for time and a way, especially companies didn't have term limits. So my opinion is stick with the term limit. If somebody gets to 76 or 77, that's fine. But stick with the 12/13 year term limit, and you've solved the issue. 

Auren Hoffman  12:52  

Yeah, that makes a lot of sense. I mean, if Warren Buffett wants to be on my board, I'm happy to have him.

Ann Fudge  12:56  

Exactly, right. Totally agree.

Auren Hoffman  13:00  

How do you think about people with specific skill sets? Obviously, there needs to be people on the audit committee. But how do you think about that as you're kind of creating this board team?

Ann Fudge  13:09  

Oh, we absolutely do. I mean, that's almost the starting point. So obviously, now you need financial experts. But you think about that, and I'll give you an example. So audit committee, you should have multiple financial experts. You have to have at least one, but ideally, two or three financial experts on the audit committee. You also want to be thinking about how you alternate chairs of those committees. You don't want a person to be on one committee for like 10 years, right. So we're always looking at how you refresh, which is the word we use, a committee. Because there's some people who obviously have multiple skills, particularly if you have a former CEO who's really got really a full range and complement of skills that they bring to conversations, whether it's the risk committee or the Governance Committee or the technology committee. So you're always looking at, as I say, that matrix of skills, time in the role, time in the committee, and when that person is going to exit, making sure that we've brought in a new board member to have those skills, and make sure it's a seamless transition. So for example, for me leaving Novartis, we always know when people are going to retire. We say, “Okay, we want to bring in a female, perhaps a woman of color, somebody who understands marketing and strategy ESG.” So we tee that up and get that person on a year or two, and we overlap. So as I come off at this year's AGM, that person's already in place and has come up the ramp. So being very conscious of that kind of flow of you're--I'll tell you when I really got good at that was serving on the Unilever board because of the 10 year window. So we had to constantly be aware of who was coming off when, who was going to be the next chair of the audit committee. That requires attention and time, and obviously sort of ongoing recruitment and working with--Typically we worked with a search firm for particular things. Sometimes, we'd already had a pretty deep list of people that we were interested in and just started the process. So I mean, it's an ongoing process. As I said, the work of the Governance Committee, I don't think people truly understand how important it is.

Auren Hoffman  15:28  

Some boards are just like collection of super smart people, but some boards really up level and they're they become a team. The board itself isn't really a team. How does one go from a collection of smart people to the board itself operating as a real team?

Ann Fudge  15:45  

So I'll give you a couple examples, the way people approach it, and I think is particularly effective. You never want your board to just come into a meeting, have the meeting and leave, right. You have to have times when--Team building sounds trite, but in essence it's a dinner the night before with just you and then the chairman and CEO. It's cocktails for 45 minutes or so, but time for just everybody to talk and know each other. So you always carve out time for that to happen. Then get into the meeting. At least one meeting a year, it's off site. So you have a little bit more of that social time together. Because it is a socializing aspect where you can get to know each other. I think all of that ties into how you build that relationship where people can be honest, authentic. It's very interesting, the sensitivity when we're bringing in new board members, and making sure that they feel included and can ask that—I tend to always be there for the new person to say, “If you ever feel like you want to ask the stupid question, feel comfortable asking me offline.” But it takes time. I'd say for the new board member coming in, it's usually 12 to 18 months for them to feel sort of comfortable in all the relationships. But most really good boards really embrace the new person because they want that they're glad to have that talent in that voice at the table.

Auren Hoffman  17:15  

This is a data podcast, World of DaaS. How do you think boards could better use or best use data?

Ann Fudge  17:22  

Well, as I said, the biggest gift to boards has been having board portals because you can get more information. You can have a repository of data. So you have, obviously, your materials for the current board meeting, but you also have a section usually called resources. So what we put in there is information like analyst reports, or industry reports, or other things that that people can read at their leisure and not necessarily for this board meeting. Like you can go into your resources and read it at any time, but that people continue to update materials, I find it very helpful. So Google alerts for me work very well. I have them for my boards. I have them for certain people who I think might add value to commentary on the board. So there's so many places that you can get information from today. Again, it just depends on directors desire to kind of go beyond the basics, which, of course, I have the time to do that and the interest and inclination to do it. 

Auren Hoffman  18:26  

How do you approach like a difficult conversation with the CEO? I mean you're a marketing expert. So let's say you, you think that maybe the CMO at the company is not cutting it and they should I upgrade? Like how do you approach the CEO with this kind of difficult conversation?

Ann Fudge  18:41  

Very directly, very directly, but I don't do it like you should fire this person, right? I just say here's some of the things you should ask the person have they done this? Here are some of the gaps that I'm seeing. There have been many, many times sadly, but organizations are organizations, when you observe things. Then the other very important part of board meetings is executive sessions. I think different boards use them or don't use them. But I think they're very important because you can share information there with your colleagues, and then you'll find, oh, this other person has the same questions about an individual, right.

Auren Hoffman  19:19  

Sorry, this is executive session with the CEO or executive session where the CEO is not even there?

Ann Fudge  19:24  

With the CEO. Then when we have executive session without the CEO, both are very important.

Auren Hoffman  19:30  

Speaking of CEO, you mentioned term limits for boards. Do you think public company should have term limits for the CEO?

Ann Fudge  19:35  

Let me put it this way. I don't know too many CEOs who want to be like CEO for 20 years. 

Auren Hoffman 19:40

That’s true, yeah. 

Ann Fudge 19:41 

Those days are over. So I don't think we have to worry about that going forward.

Auren Hoffman  19:46  

Okay, that's fair. That's a good point.

Ann Fudge  19:47  

We have to try to make sure we keep them for at least you know, eight to 10 years these days.

Auren Hoffman  19:52  

Right. It's a grueling job. Is there a way to make it less grueling?

Ann Fudge  19:56  

No, sadly, it's not. I was just talking with one CEO yesterday, and grueling is an understatement. I don't see anything easing up in the near future. Obviously, having to deal with the pandemic implications of how you get work done. I mean, the job is just so vastly different from three years ago.

Auren Hoffman  20:18  

Maybe it's better because maybe it's just a little bit less travel, which obviously can be a lot of stress on a CEO.

Ann Fudge  20:24  

Yes, and no. I think some people sort of miss the travel.

Auren Hoffman  20:30  

Now, I know you're also on the boards of some really well known nonprofits like WGBH and the Brookings Institution. What are some kind of commonalities and differences between these effective nonprofit boards and the for profit boards?

Ann Fudge  20:46  

That's a really good question. I think for not for profit boards, I want to talk about sort of ethical considerations as well as reputation. So again, early on, when I joined boards, reputation was pretty solid. People respected corporations. In today's world, if you slip on one thing, right, the press can go berserk and you're dealing with reputational issues. That affects both a for profit, but a particularly affects a not for profit because your reputation is what allows you to get people's support monetarily in every other way. So I think the reputational risk challenge is, I have found, even more important for not for profit entities. So we really have to work the communications, the internal behavior, and transparency in critical on all, but particularly in a not for profit.

Auren Hoffman  21:41  

You're also a champion of diversity. There are a lot of different ways that companies bring in more people of color, more women onto their boards and also into their executive ranks. What are some non-obvious ways that companies should be thinking about that?

Ann Fudge  21:54  

I'm going to come back to the comments I made earlier about governance and what kind of skills, and I also use the word voices. What voices do you want to have at the table just beyond sort of the perhaps business skills, but the different experiences that they then bring to the conversation? So I think about that a lot across all my boards. Do we have younger voices? I'm not being ageist since I'm in the age group, but I do think that younger people look at the world differently. We have to have that voice in the room. A big part of one's organization—again, profit or not for profit—is the people, is the talent. I think as we bring people on our boards who are younger, they bring that voice to how we talk about organization and what people want from a career and how we should think about their development. Because your talent is the foundation of the success of your organization. I'm a big believer in that. So I'm a big proponent of having younger voices around the table, but also voices that are balanced and bring a maturity to them. So I mean, I joined my first board at 40. I've grown and learned over the past 30 years. But what I talked about and what I was able to bring to those early conversations, I understand from my colleagues was very helpful. Most of the time, I was always the youngest person on the board. I can't say that anymore. But I really encourage the young people that we bring into the mix to feel confident about expressing their points of view.

Auren Hoffman  23:34  

Now I have a few personal questions for you. One of them is around national security. I know you serve on the board of Northrop Grumman. I think your mom worked for the NSA. What does the average person like not get about national security? It's not always like that popular in tech circles these days.

Ann Fudge  23:51  

Yeah, I know. It's a really hard one, particularly when people see—They think about limitations. I just say there's two sides to every story. The complexity of the world that we live in today, to ensure the national safety is immense. There's a fine line. Knowing that I'm talking with a lot of folks who have that tech background, I would just say try to see it from the other side. Just try to look at it from both sides.

Auren Hoffman  24:18  

I also know you're a product of Catholic school. Is that something you recommend to people? How do you think that shaped you?

Ann Fudge  24:23  

Boy you did your homework. 

Auren Hoffman  24:26  

We don't mess around at World of DaaS. We're a data company, you know.

Ann Fudge  24:29  

So let me just say this, and I'm sure most of your listeners are probably younger than my kids. I grew up in Washington, DC in the 50s, very segregated city. In fact, it surprises me sometimes when I go back and the gentrification of Washington DC is amazing. But back when I was growing up and going to Catholic school, it was all Black. My nuns were Black nuns. I didn't even know there were white nuns until I went to the college. So there you go, my church St. Augustine in Washington, DC, which I hope you will have a chance to go to center in the area. Oldest Black Catholic Church, oldest congregation of Black Catholics. At the time, I didn't even understand that it's like 150 years old. I didn't understand the significance of it as a kid growing up. Just like, it didn't seem different to me being in a community where everybody was Black. Here we are now in 2022 with a very different environment, very different group of folks to go to St. Augustine in a good way, but we still have the gospel mass. Even back then gospel mass didn't technically exist, though. What did I learn? Very simple rules of treating others the way you want to be treated. That, to me, is very grounding and continues to be very grounding. Over time, as I got older learned about other religions, particularly impacted by Buddhism and Hinduism, and just learning the commonalities. You know, Mary in the Catholic Church is a really major figure, and she's in the Qur'an, right? How many people understand the role that Mary played, and that she's in the Qur'an? So I think of myself—Obviously, I was baptized Catholic, but I hope that the respect that I have for all religions is really important to me. 

Auren Hoffman  26:14  

I think you got married and you had your first child while at college, which is also a bit untraditional. Like, what advice would you give to people, maybe aspiring people who want to have a family?

Ann Fudge  26:24  

Well, again, that was 1970. This is 2022. I don't know. I mean it was a very different time. Sometimes I wonder. I'm not rushing my grandkids to get married ones. One’s 26 now. The oldest is 26. The other is turning 24. Then down to 12 and 15. Life is different today. Sometimes I wonder if I'd get married, if I'd have children. You know all those questions that people ask themselves here in the 21st century, I think are very important questions. Luckily, I made the right choice. We're going on 51 years this year. I'm really pleased with my partner and buddy and friend and everything, but it's just so different today. 

Auren Hoffman  27:08  

All right. Well, last question. We ask all of our guests. What's the conventional wisdom or advice that you think is generally bad advice?

Ann Fudge  27:14  

I wish people would stop thinking about—I'll use the word arriving. Like, “Oh, I'm CEO, this is a really big deal.” It's really not. It's not the most important thing in your life, right? I think life is a continuous journey. There's no real end point. I mean even after you leave this space, you're going to go into another plane. I think we put burdens on young people when we talk about getting to this position or getting to this point. People say, “Oh, I've made it.” You know what? You never make it. You really don't. Money is not the thing to make that determinant of your success.

Auren Hoffman  27:47  

Well then how do people know they've had a fulfilling life? Because you've given back or you've had meaning or how should one evaluate their life?

Ann Fudge  27:55  

I mean, that's what it's about. That's exactly what it's about. Honestly, it's what you give. You don't see this when you're a young person because you're just striving so much, but in that striving, sometimes you just miss the value of your existence, which you don't know when it's gonna end, right. You just don't know. So don't you think you should have a little joy along the way and just be constantly striving and making money? I mean, it's sad that you just recognize that usually as you get older, but if you could live your life attending that and putting it all in the right perspective, you'll have a much more enriched life without regret.

Auren Hoffman  28:30  

Great. This has been amazing. Thank you for being with us in World of DaaS.

Ann Fudge  28:33  

Great it's been fun. You guys take care.

Auren Hoffman  28:37  

Thanks for listening. If you enjoyed the show, consider rating this podcast and leaving a review. For more World of DaaS, and DaaS is D-A-A-S you can subscribe on Spotify or Apple podcasts or anywhere you get your podcasts and also check out YouTube for videos. You can find me at Twitter @auren. That’s A-U-R-E-N, Auren, and we'd love to hear from you. ‍

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