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Nasdaq spoke with Tim Wentworth, CEO of Express Scripts, to find out how the company built a culture based on holistic diversity and inclusivity, and nurtured it into a competitive advantage.
Express Scripts Holding Company (Nasdaq: ESRX) is a Nasdaq-100 company that believes "diversity and inclusion are the foundation on which success and growth are built." This company walks the talk, from the boardroom to the front lines of its workforce. The Express Scripts board is over 40% gender and ethnically diverse, while the company's 26,000-strong workforce is nearly 70% female and 40% minority. The average age of Express Scripts' workforce is 43 and over a third of its management personnel are under age 48.
Q: Express Scripts states in its proxy that "broad-based diversity is an important attribute of a well-functioning board." Can you share how diversity contributes to the effectiveness of your board?
A: I'm one of the luckiest CEOs in America, I have a tremendous board that collectively understands and collaboratively analyzes the issues we face in a way they couldn't do if they weren't so diverse.
Many companies view diversity as a goal, rather than a byproduct of how you build the culture, how you run the company, and how you build a governance model. Express Scripts is focused on patients and operates within a very complex health-care system, so it was natural for us to recruit people to the board who represent a broad range of perspectives and come from different backgrounds. It was imperative to create an environment where those views are fully contributing to the mission of making us a better-governed and more effective company.
Express Scripts' commitment to diversity and inclusion starts at the very top of the company, and that is a very powerful dynamic for me as a CEO-and a powerful motivator of our employees.
Q: Express Scripts diversity and inclusion model extends to its workforce. How has Express Scripts achieved such a diverse workforce and why does the company view diversity in its workforce as a competitive advantage?
A: Our workforce deliberately reflects the patients we serve and Express Scripts has been very intentional about diversity for a long time. Diversity of race, gender, age and thought means we reflect our patients and clients and understand their individual needs much better. Our governance committee and our broader board have made diversity a priority. There is not a board meeting that I attend where we don't talk about the diversity of our workforce broadly-and our board specifically-and ask if we are doing enough.
Inclusion is the soil in which diversity can flourish and contribute to competitive success. We continually build programs and initiatives that support our demographically shifting workforce, which ensure we get the best from everybody who comes in the door. By engaging our employees in recognizing and legitimizing the differences that we all bring to work-and identifying how they make us a better company-we have created a workforce that is biased towards action.
Our inclusion model is based on three pillars: culture, engagement and leadership. We built six broad-based employee resource groups (ERGs) that have focused our cultural diversity initiatives and business strategies from the ground up. Every one of the ERGs has an executive sponsor. We have nearly 5,000 employees participating, which on a benchmark basis is very high for a company our size. More importantly, our employee-survey results tell us that members of these groups are the most engaged and the most likely to recommend us as a place to work.
Employees judge us by how we treat, engage with, and support that community. Our resource groups make employees feel better about the company they work for, and that's a very important byproduct of executing inclusion well.
Q: What can other Nasdaq companies learn from Express Scripts about the benefits of a culture of inclusion and diversity?
A: Diversity and inclusion create a culture of unity that benefits everybody. Employees feel part of something larger than themselves; they are no longer just members of a particular community or department, but part of a diverse and unified company from the board all the way to the entry-level of the workforce.
Our employees acknowledge that they work for a company where the words match the music-a company that is committed top to bottom to inclusion. This provides motivation that goes beyond a 3% pay increase.
The benefits of diversity extend to the fiduciary duty of every public company-creating value for shareholders. In Express Scripts' case, this means fulfilling our mission of putting medicine within reach.
Our shareholders can be confident that our board is seeking, and thoughtfully considering, input from across the entire organization in pursuit of that mission. Express Scripts' solid foundation of diversity and inclusion drives alignment around our broader mission, because our employees don't question whether they are included-they know their voices count.
Q: Many companies claim they have a hard time finding diverse candidates for board service. Can you share how Express Scripts overcame that obstacle?
A: There's no question that it's a challenge to diversify a board, but the real obstacle is ensuring the company is attractive to diverse talent in the first place. The goal should be recruiting talented leaders who represent diverse perspectives and come from diverse backgrounds.
Express Scripts' culture works for us when we are recruiting board members. When we were searching for a new board member a couple of years ago, our candidate pool included two extraordinary African-American leaders. These two individuals had unique and important skill sets related to Express Scripts' corporate mission. As a board, we quickly realized we had a chance to bring on two diverse and highly sought after board members, and after minimal discussion decided it wasn't an either/or proposition. The fact that both of these talented individuals were interested in us is indicative of the fact that they felt our culture and our board was going to be a welcoming place for them to contribute.
Kathy Mazzarella, who is the Chief Executive and President of Graybar Electric Co., is another example of a highly talented candidate who was attracted to our board. She's a tremendously strong leader with a great skill set. She saw in us what we see in ourselves - a diverse board that attracts strategic thinkers who can help solve healthcare's biggest challenges.
Q: How does the Express Scripts governance committee define "diverse slate of candidates" to a search firm?
A: It all starts with what your board needs from a skill-set standpoint. It's not sufficient to have a diverse board that doesn't have the right skill sets. All our board members bring complementary skill sets to achieving our business goals and growing value for our shareholders.
The challenge to our search firm was very simple: "These are the skill sets we need. Go find us diverse leaders who have those skills."
We don't mandate a ratio for the slate, beyond sharing our bias towards diversity. I'm not going to fire a search firm that can't bring me a 40% diverse slate if they can bring me one or two terrific diverse candidates we can consider based on the skills that we need on the board.
We also turn to our own board to add people, they know and have worked with, to the slate. An advantage of having a diverse board is that they are a great resource in finding and attracting other highly qualified and diverse candidates.
Q: What are your thoughts on why the diversity needle is moving slowly in corporate America?
A: For the most part corporate America has very good intentions, but a big part of the problem is limiting the talent pool to CEOs. As a sitting CEO myself, I'm not going to be on other company boards. I've got enough to do, right now.
Competition for qualified diverse candidates is increasing because board diversity is in the governance spotlight now. The board members we recently added had many other companies that would have loved to retain them, so we're very grateful that our mission and our culture attracted them.
Given that environment, companies are going to need to broaden the search aperture a bit-perhaps looking at CEOs recently retired, or executives who weren't CEOs but do have C-suite experience. Rick Palmore, for example, was General Counsel at General Mills, one of the most admired companies in America.
If companies expand their searches to SVP-level candidates who have CEO potential or broader leadership potential, they can find high-quality candidates who will benefit from the experience and bring important skills to the table. A talented division president who is diverse and has high potential would be a strong board member for many companies.
Q: If a company doesn't have a diverse board today, what is a first step in that direction?
A: Start with a very honest conversation about the true level of commitment to diversity and inclusion, and what the path is going to be to change the composition.
The path to board diversity isn't just bringing in a face, it's acknowledging that things need to evolve to allow leaders to be successful and contribute in a meaningful way. The board needs to ask honestly "Are we committed to creating an environment where a woman or a minority can be highly productive?"
That journey also starts with the employee base. Prospective board members are going to notice if a board doesn't match its aspirations with its own employee base. If the board is honest about its culture, and the culture of the company it is governing, the rest will follow naturally.
Q: How does a board that has no diversity convince a talented minority or female candidate to join them?
A: Have the courageous conversation around how you got to this point, and have the conviction to share that honest conversation with talented candidates. Focus on where you want to get to, set a course and be tenacious in achieving your goals. Talented, diverse board members are available. Make them available to your company. This article was first published on the Nasdaq Governance Clearinghouse.Express Scripts Holding Company (Nasdaq: ESRX) is the largest independent pharmacy benefit manager in the United States and has been recognized by numerous organizations for their commitment to diversity and equality. Express Scripts scored 100% on both the Human Rights Campaign Foundation's 2017 Corporate Equality Index and the U.S. Business Leadership Network's 2017 Disability Equality Index . For the past two years, Express Scripts was also included in DiversityInc's 25 Noteworthy Companies .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
