Good morning. Goldman Sachs got some unwanted attention yesterday for its reported plans to scrap DEI criteria for its board, about a year after erasing diversity goals for its workforce. Many other companies have done the same amid a federal crackdown and several state lawsuits over corporate DEI efforts. (Starbucks won a dismissal last week after Missouri challenged its DEI initiatives, freeing up time to battle a recent suit in Florida.)
When asked, every CEO tells me that they remain committed to creating a diverse, equitable and inclusive workforce, even if those words are being erased from public documents. They cite the studies that diverse teams perform better, arguing efforts continue behind the scenes. They just don’t want to talk about it. One exception is Costco CEO Ron Vachris who continues to publicly affirm the retailer’s commitment to diversity even as rivals have scaled back.
Boards are another matter. Investors want results. Along with setting CEO compensation, directors manage succession and hold management accountable. U.S. boards tend to be more diverse than the companies they oversee, with white men occupying fewer than half the board seats on Fortune 50 boards for the third year in a row. But that’s changing, as the Conference Board reports that the number of companies disclosing directors’ race and ethnicity in the S&P 500 has dropped dramatically, and ISS-Corporate reports white men made up the majority of new directors in that group for the first time since 2017.
Given the challenges facing companies right now, the case for diverse perspectives is compelling. A staggering number of women are leaving the U.S. workforce, for example, many because of caregiving costs and responsibilities. Part of a board’s job is to recognize and press leaders on such issues. One CEO told me that issues like childcare and flexibility became part of boardroom talent discussions after a third woman joined their board.
Who is in the boardroom also impacts who lands in the C-suite. Boards are training grounds for the next generation of leaders, a place where they can see leadership in action and get direct exposure to issues they’ll face in CxO roles. Getting a board seat is not just a culmination of a career well spent but an opportunity to ascend to the top ranks. Finding top talent is hard enough without limiting opportunities to develop it.
Contact CEO Daily via Diane Brady at [email protected]
Top leadership news
Klarna CEO predicts AI will shrink headcount
Klarna CEO Sebastian Siemiatkowski says he expects white-collar headcount at the buy now, pay later company to fall by one-third by 2030. “The reason for that is because I’ve seen the acceleration of AI,” said Siemiatkowski, who’s already overseen a 50% reduction in Klarna’s workforce in recent years. The company claims its OpenAI-powered customer service chatbot can do the work of 800 full-time agents.
Goldman Sachs predicts drop in U.S. immigration
Net immigration in the U.S is expected to drop 80% from the roughly 1 million people who entered the country annually on average through the 2010s, according to a new Goldman Sachs report. As a result, the firm estimates that the U.S. now needs about 50,000 new jobs per month to keep unemployment in check, down from 70,000.
A WFH comeback?
New data from the National Bureau of Labor Statistics suggests that remote work could make a comeback as millennials and Gen Z move into managerial roles. Data shows that as CEOs get younger, work-from-home days tend to rise.
The markets
S&P 500 futures were up 0.59% this morning. The last session closed up 0.1%. STOXX Europe 600 was up 0.87% in early trading. The U.K.’s FTSE 100 was up 0.96% in early trading. Japan’s Nikkei 225 was up 1.02%. Chinese markets are closed for the New Year, as are South Korea markets. India’s NIFTY 50 was up 0.37%. Bitcoin was at $68K.
Around the watercooler
Why your boss loves AI and you hate it: Corporate profits are capturing your extra productivity, and your salary isn’t by Eva Roytburg
Anthropic was supposed to be a ‘safe’ alternative to OpenAI, but CEO Dario Amodei admits his company struggles to balance safety with profits by Marco Quiroz-Gutierrez
Ray Dalio warns of ‘great disorder’ period for world economy, marked by ‘clash of great powers’—just like the 1930s by Jake Angelo
You need $2 million to retire and ‘almost no one is close,’ BlackRock CEO warns, a problem that Gen X will make ‘harder and nastier’ by Sydney Lake
Billionaire Trump supporter blocks sale of Texas warehouse for use as ICE jail by Jacqueline Munis
CEO Daily is compiled and edited by Joey Abrams, Claire Zillman and Lee Clifford.
