Featured case: Jane Joins the Club:
Diversity & Corporate Governance in Practice

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The case

whoWho – the protagonist

Jane Pruitt, Chief Financial Officer of Mack Co., a privately held metalworking machinery and equipment manufacturer.

What?

In an attempt to increase financial rigor and board diversity, shareholders persuaded CEO and founder Gary Hess to recruit a CFO. Jane’s name topped the short list of candidates identified by a search firm hired by Gary.

Why?

Jane was at the top of her game. With a tenure on Mack Co.’s board under her belt, she would be ideally placed to take on a CEO position.

The 54-year-old’s determination, excitement and appetite to implement fresh ideas was soon dampened, however.

The all-male board meetings involved Gary briskly moving through the agenda, with little time for discussion before important votes were held.

Jane would list her observations and concerns, but the strict board structure and ‘old boys’ club’ atmosphere meant Gary got his way with little opposition.

When?

After 18 months of frustration, Jane didn’t know to respond to her husband in July 2018 when asked how the latest board meeting went.

whyWhere?

Mack Co. is headquartered in downtown Chicago in the US.

Key quote

“I don’t even know where to start. This meeting wasn’t much of an improvement over the previous five since I came on the board. At least they appear to have stopped calling me ‘Miss Pruitt’. You can see it on their faces, in the way they fast-track through the agenda to get investment approved and cut discussion off just as we’re getting to the issues that need to be addressed.” – Jane talking to her husband.

What next?

Later that evening, Jane was stunned to receive a phone call from Gary’s personal assistant informing her that the CEO had collapsed and died of heart failure three hours after the board meeting.

Milner, a fellow Mack Co. director, then called Jane and said the majority of the board nominated her as board chair.

Jane would of course consider the proposal, and she started thinking about the many tasks ahead. Now was the time, Jane decided, to address the corporate governance of Mack Co., but how would they evolve into a more functional, effective board?

 
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Jane Joins the Club: Diversity & Corporate Governance in Practice
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Teaching note
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The author

author

Roy Richards, Jr.

Roy discusses how he drew on his own experiences in his career to produce the case, passionate discussion amongst all participants in class, plus much more.

On the outside looking in

Roy said: “I wrote this case from my observations about a woman who joined a board I chair, who, initially, was struggling to fit in.

On the outside looking in“At one level the case is about the actual experience of any outsider on any team, who is working in a ‘clubby’ setting where everyone else at the table knows one another, and have long histories together and almost everything in common.

“This may apply to a female on an all-male team, a Christian on an all Hindu team, to name just a couple of examples. It’s tough being the outsider. But the case also offers an opportunity to look at the merits of board diversity, and to explore good team process and functionality.”

Speaking from experience

Roy commented: “I have been in boardrooms for 30 years and find it a lot easier to write about my own long experience than someone else’s. These problems of being the outsider, and diversity in general, are really about human behaviour. I just don’t know how you can make them interesting if they are in the abstract or second hand. What I have tried to do is bring them alive, and tell a story with multiple teaching opportunities.”

Strong discussionStrong discussion

He continued: “This story was easy to write because I wanted to tell it. The convenient thing is that everyone in the class has been an outsider at some point. So, it is easy for students to identify with the protagonist (Jane), and in the classroom, this becomes a very easy case with which to stimulate strong discussion.

“The end of the case presents an unexpected and interesting question: Should Jane step up and begin to lead this board? Or does she prefer to remain the outsider? This presents a moment to talk about leadership and the tactics one might use to be successful in a new role.”

Every student contributes

He explained: “This case gave me an opportunity to talk about stereotypical male/female group behaviour, from Jane’s point of view, some of which she finds really troublesome. A lot of this is a complete revelation to some male students, which is interesting to observe. “But it also gives women in the room an opportunity to validate those behaviours for their male colleagues, which I think is really useful.

“When this conversation begins, the classroom gets serious and there is a lot of learning going on. Every student in the class has something to contribute to that discussion.”

Challenging human behaviour

Roy concluded: “Frankly, it is easy to talk about diversity in the abstract. But in the boardroom or on a start-up team, the diversity discussion quickly becomes one about human behaviour, biases, and stereotypes. That is the practical place I wanted to take this case, and I think that is where the classroom discussion needs to be.”

About the author

Roy Richards, Jr. is Adjunct Professor of Strategy at IE Business School.
e rrichards@faculty.ie.edu

 

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