'Shareholders come last': Billionaire entrepreneur Mark Cuban says CEOs should prioritize employees and their families in coronavirus crisis
Mark Cuban told Just Capital in an interview that shareholders should come last amid the coronavirus pandemic and employees and their families should come first. "If you're a great company, your shareholders will understand and will expand their P/E out of respect, because they're all dealing with the same circumstances," he said. "If you get branded as a company that acted in bad faith, laid off all your employees, or really cut back and you took a bonus or whatever, you're going to get crushed and your brand is going to go straight into the toilet," said Cuban. Read more on Business Insider.
Mark Cuban, the billionaire entrepreneur, Shark Tank investor, and owner of the Dallas Mavericks, has a clear message for CEOs of the Business Roundtable amid the coronavirus crisis: prioritize employees and their families over shareholders right now. "Shareholders come last," Cuban told Rich Feloni in an interview with Just Capital published Friday. "You guys have so much impact on the world that you need to take care of your employees and their families first." He continued: "If you're a great company, your shareholders will understand and will expand their P/E out of respect, because they're all dealing with the same circumstances." Read more: 'The worst bear market of our lifetime': A Wall Street investment chief who predicted the recession says stocks may fall 64% before the dust settles — and lays out 3 trades set to profit from the coronavirus crash The Business Roundtable, which represents nearly 200 leaders of America's largest companies, in August 2019 signed a letter declaring that it views a company's purpose to be not just for shareholders, but for all stakeholders — including customers, employees, and communities. But Cuban thinks amid the coronavirus outbreak, CEOs should go a step further and consider how their actions will be viewed by consumers in the long term. "The reality is by doing the right thing with your employees, you do more to help stabilize the economy. And from there, we have a better chance of getting back to business as usual," he said. "If you just try to nickel and dime everything to try to optimize your earnings per share and keep shareholders happy, and at the same time your employees suffer and struggle, you're going to get hit." Companies that don't do the right thing will face consequences in the future, Cuban said, especially because younger consumers such as Millennials and Gen Z are watching crisis responses. Read more: The world's biggest wealth manager expects the worst of the coronavirus to be over in the US by May — and lists 5 ways investors should prepare for the recovery now "If you get branded as a company that acted in bad faith, laid off all your employees, or really cut back and you took a bonus or whatever, you're going to get crushed and your brand is going to go straight into the toilet," said Cuban. Cuban also said it's up to CEOs to express this to shareholders. "Just say, 'Look, if you want to stick with me, give me a little bit higher P/E ratio so that the stock maintains itself. But the reality is you're not my first consideration right now. And if that doesn't sit well with you, sorry, because my customers, that's the way they think, and long term, if we're looking at five, 10, 100 years from now, that's what my customers will want. That's how we're managing this company and this brand. And if you don't like it, now's the time to sell.'" Cuban said.Join the conversation about this story » NOW WATCH: How running shoes can be recycled into ski boots
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Chris Kenna is a CEO and diversity expert who counts Unilever, L'Oréal, and Amazon among his clients. He shares the steps every leader should take to make their company more inclusive
Summary List Placement Chris Kenna is CEO and founder of Brand Advance, an advertising company that...Summary List Placement Chris Kenna is CEO and founder of Brand Advance, an advertising company that advises brands on appealing to a more diverse consumer base. In light of the Black Lives Matter movement, companies are re-evaluating their approach to inclusion and diversity. A Mckinsey & Co report suggests diversified firms outperform their competitors by 36%, however the survey showed a wide gap between inclusion and diversity leaders and firms which have yet to support diversity. Kenna shared his top five tips for CEOs to improve inclusion and diversity with Business Insider. He urged leaders to take responsibility, and said the "time for talking has passed". Visit Business Insider's homepage for more stories. In 2017, Chris Kenna set up Brand Advance, a media company that advises more than 350 advertisers on how to appeal to a more diverse consumer base. Now, his clients include Unilever, L'Oreal, Amazon, and Mercedes. Kenna, a black, gay entrepreneur, was shortlisted for Chief Executive of the Year at the UK Inclusive Companies Awards 2019 and is a board member of OUTvertising, a lobby group that advocates the representation of LGBTQ+ people in marketing and advertising. "Diverse work groups are more productive than non-diverse work groups," he told Business Insider, "That diversity of culture, that diversity of thought, diversity of everything really, just helps a company grow throughout," he said. Firms with more diverse management teams have 19% higher revenue worldwide, according to Boston Consulting Group. A May Mckinsey & Co study of more than 1,000 companies in 15 countries found that more ethnically and culturally diverse companies outperform their competitors by 36%. Yet Mckinsey's data showed that just a third of companies have improved their top-team diversity since 2014. Since 2017, representation of ethnic minorities in executive teams worldwide had risen only slightly, from 12% to 14%, the report said. In an interview with Business Insider, Kenna listed five actions all CEOs should take to improve diversity and inclusion in their business. Read on to find out more. Less talk, more action Getting on board with diversity doesn't mean simply signing a supportive letter. "We need more. We need tangible actions," Kenna said. Companies cannot afford to return to the status quo, he said — and the more diverse a firm is, the more representative of their consumers it will be. "The job of any market is to get that brand in front of as many people as possible and make them want to buy the product. That's the job. So if you've got things blocking that, then I think they need to be removed." Find external partners If you need help, seek it out. Find partners outside your company that can run internal and external audits, produce reports on your workforce, and help your brand reach all demographics. Kenna's firm does exactly this in the advertising sector. Working with outsiders highlights opportunities to improve, and as a leader, you can seize on that to drive change. Listen to employees from under-represented groups "We need to lead equality from the front," Kenna said. CEOs should liaise personally with their employees at every level of your business and work closely with management teams to "empower everyone to evaluate and make the changes necessary". "I'm a Black, gay CEO and I need to listen even to my LGBTQ+ and black and brown employees — so if you are a white leader, listen more," he said. Own your privilege, and ask questions If you're a leader, understand that you're in a position of privilege, especially if you're white. Use that to ask questions of your employees. You'll get a better understanding of who you are working with and what their concerns are. Inevitably, you'll also get a better picture of your end consumer, and be able to create a more dynamic team that performs better. Correct mistakes, and own up to them Admit that you are behind and correct your mistakes, because "you're in it for the long haul," Kenna said. Don't simply blame a section of your team for any existing wrongdoing and bias, such as HR for job applications. They have responsibility — but a leader must foster understanding within their teams. If your employees have made a mistake, find a polite way to say "Yes, you have done it wrong, but let's learn, grow and correct," Kenna said.SEE ALSO: C-suite leaders are making a big assumption about their workforce — and it's bleeding the economy of $1.05 trillion Join the conversation about this story » NOW WATCH: What living on Earth would be like without the moon
A memo from Airbnb's CEO announcing huge staff cuts is a case study in how leaders can conduct layoffs in a compassionate way
Airbnb is laying off 1,900 employees, which is about one quarter of its staff. CEO Brian...Airbnb is laying off 1,900 employees, which is about one quarter of its staff. CEO Brian Chesky's memo to the company shows respect and compassion for all employees affected. It's a model for how leaders should conduct layoffs. The memo explains how management decided which positions to cut, what will happen to remaining employees, and the level of job support that departing employees will receive. Click here for more BI Prime stories. On Tuesday, Airbnb CEO Brian Chesky announced to employees that the company is laying off 1,900 employees. That's about 25% of its staff. In the last few months, Business Insider's Troy Wolverton reported, the company has laid off most of its contractors, postponed its summer internships, and slowed its hiring process. Layoffs are not a great experience for anyone, and especially not for the people losing their jobs. But Chesky's memo to employees is a prime example of how to do layoffs right, in a way that's respectful, compassionate, and pragmatic. It's rare to find such an example these days. As Business Insider previously reported, startups including the scooter-maker Bird, the employment marketplace ZipRecruiter, and the women's coworking space The Wing have recently conducted layoffs via massive Zoom calls. Some employees at these companies said they were caught off guard and confused about what was happening. Chesky, perhaps taking a hint from widespread indignation at the idea of layoffs via videoconference, did things differently. His memo to employees followed, almost to a tee, the advice that HR experts have previously shared with Business Insider around conducting layoffs. You can read the full text of the memo here. Here's exactly what Chesky's memo did right. It outlined the decision process for cutting positions In the memo, Chesky was transparent about Airbnb's financial decline. "Airbnb's business has been hit hard," he wrote, "with revenue this year forecasted to be less than half of what we earned in 2019." (The company's 2019 revenue was $4.8 billion, Wolverton reported.) To help alleviate some of the financial burden, Chesky said Airbnb is "reducing the size of our workforce around a more focused business strategy," specifically the business of helping people rent out their homes and find homes to rent. The company is "pausing" its investments in areas like transportation and hotels, Chesky added. That means staff who worked in those areas will likely be let go. Chesky listed as one of his "guiding principles" in conducting the layoffs the desire to "map all reductions to our future business strategy and the capabilities we will need." Elaine Varelas, managing partner at career-management firm Keystone Partners, previously told me that executives doing layoffs should let the business' strategic direction and financial situation guide them. "The positions are what's eliminated," she said, and not the people. It made a justifiable argument for why certain employees will be let go Chesky went one step further, outlining how management reviewed each employee's skill set and considered "how well those skills matched our future business needs." Some employees whose teams were not eliminated will be asked to assume new roles, Chesky wrote. Again, Chesky made it clear that these layoffs are about positions and skills, which are more easily quantifiable and justifiable than how much the CEO likes someone. As Buffer CEO Joel Gascoigne (who conducted layoffs a few years ago) previously told me, it's important to identify how and why positions will be eliminated. Otherwise, executives are vulnerable to subjectivity seeping in — and to employees accusing them of making biased decisions. To that end, Chesky also listed as one of his guiding principles the desire to "be unwavering in our commitment to diversity." It explained why information about staff cuts was kept confidential until now Chesky noted in the memo that management opted to "wait to communicate any decisions until all details are landed" because "transparency of only partial information can make matters worse." This decision to keep news of the impending layoffs private was wise. Varelas told me that a common mistake she sees is not keeping information about layoffs confidential until you're ready to make the announcement. That can lead to rumors — and terror — spreading throughout the staff. It prepared affected employees for one-on-one meetings with their supervisors In contrast to the startup execs that conducted layoffs via a mass Zoom call, Chesky wrote in the memo that the employees who were getting laid off would have one-on-one meetings with a senior leader in their department. Yair Riemer, president of career transition services at CareerArc, previously told me that a one-and-done videoconference isn't the right way to announce layoffs, as efficient as it may seem. Similarly, Varelas said leaders should have one-on-one meetings with everyone who's let go, giving those employees time to process the news and ask questions. It addressed the employees who will be staying on, too Chesky dedicated a few lines of the memo to the Airbnb employees whose positions were not cut: "One of the most important ways we can honor those who are leaving is for them to know that their contributions mattered, and that they will always be part of Airbnb's story." He also wrote that some employees would receive emails about their new roles at the organization, in line with the restructuring, as well as invitations to discuss their new role with a manager. Riemer said it's important to explain to remaining employees how the layoffs are going to affect the organization. The result? "You end up losing that talent anyway," Riemer said. "They're going to start thinking about moving to competitors. They're going to start getting poached. They're going to start losing faith and confidence in your leadership." It treated departing employees with respect and compassion The most important piece of Chesky's memo is that it acknowledged what a disruptive life event layoffs can be. Employees may not know where their next paycheck is coming from, or whether they can afford their next visit to a doctor. In the current economic environment, they may not be certain they can find another job. Varelas previously told me that respect for employees is key. No one should be "treated suddenly like they're a criminal," she said, or even like someone who hasn't worked hard to help the company grow. Chesky outlined what will happen to employees' benefits after they leave. Specifically, employees in the US will receive at least 14 weeks of severance pay, with additional severance pay available depending on employees' tenure at the company. Employees in the US will also receive 12 months of health insurance coverage beyond their departure date. (In all other countries, health insurance extends until the end of 2020.) Most notably, Chesky wrote that Airbnb has dropped the one-year cliff on equity for everyone the company has hired in the past year. That means they don't have to wait one year, as they typically would, for their stock options to vest. All employees have the chance to become shareholders in the company on May 25, Chesky wrote. It outlined the support employees would receive around career development Departing employees will receive relatively substantial support as they look for a new job, according to Chesky's memo. That support includes an alumni placement team, made up of some Airbnb recruiters who help find departing employees their next role at another company. Those employees also have access to a company that specializes in career transition and job placement services. And they're allowed to keep their company laptop, which Chesky said is an important tool in finding a new job. These provisions for employees are important not solely because they're the right thing to do, ethically speaking. The business case for taking care of employees after layoffs is that they're more inclined to stay loyal to the company. "This is the moment where brands are built or brands are dented," Riemer said. If the company mishandles layoffs, Riemer added, "it absolutely will impact recruitment and talent because the world is small." When former employees, say, write reviews on Glassdoor, they won't say terrible things that will dissuade prospective hires from applying if they were shown compassion. And should Airbnb ever want to hire these folks back, they'll remember how respectfully they were treated at this time. It will make a big difference.SEE ALSO: The startup founder's guide to letting people go efficiently and compassionately, if you have no other choice in a time of crisis Join the conversation about this story » NOW WATCH: A cleaning expert reveals her 3-step method for cleaning your entire home quickly
Billionaire Mark Cuban says people should 'ignore anything someone like me might say' about sending employees back to work because 'lives are at stake'
Billionaire Mark Cuban says we should be listening to epidemiologists, not billionaires, when it comes to...Billionaire Mark Cuban says we should be listening to epidemiologists, not billionaires, when it comes to deciding when to return to work. "Ignore anything someone like me might say. Lives are at stake," Cuban told Bloomberg. Former executives like Tom Golisano and Lloyd Blankfein are both calling for the economy to be opened up as quickly as possibly, and President Trump is urging for Americans to get back to work by April 12. Visit Business Insider's homepage for more stories. Billionaire and Dallas Mavericks owner Mark Cuban says Americans should be listening to epidemiologists, not billionaires, as the country mulls when to return to work. A new report from Bloomberg's Max Abelson and Donald Moore found that billionaires are pushing for employees to return to work as soon as possible out of concern for the health of the economy. While billionaires like former Paychex executive Tom Golisano and former Goldman Sachs CEO Lloyd Blankfein are encouraging workers to get back to their jobs, Cuban disagreed. "Ignore anything someone like me might say," Cuban told Bloomberg. "Lives are at stake." Workers throughout the US have been staying home in droves as the coronavirus continues to spread nationwide. More than 15 states, including California, New York, Wisconsin, and Indiana, have issued orders to stay at home, and many companies have asked their employees to work remotely to help curb the spread of the virus, which has now reached all 50 states and Washington, DC. But earlier this week, President Trump began urging the US economy to get back to business as usual in 15 days. "WE CANNOT LET THE CURE BE WORSE THAN THE PROBLEM ITSELF," he tweeted on Sunday night. Trump has since said that he wants the country to be "opened up and just raring to go by Easter," which is on April 12. Blankfein also called for a return to work, tweeting that "crushing the economy, jobs and morale is also a health issue-and beyond." But health experts warn that returning to regular life too quickly could endanger lives. The coronavirus is highly contagious and can be easily spread by people who don't show symptoms. Having people return to life as usual could spread the virus to high-risk groups. "I cannot see that all of a sudden, next week or two weeks from now, it's going to be over. I don't think there's a chance of that," Dr. Anthony Fauci, the US's top expert on infectious diseases, said on Friday. New York Gov. Andrew Cuomo has called the outbreak "not a short-term situation" and predicts the crisis will extend as many as nine months from now. The coronavirus has killed at least 826 people in the US and more than 60,000 cases have been reported across the country. SEE ALSO: Facebook has reportedly been cracking down on employees' nonstop chatter on company message boards about at-home farming and DIY face masks Join the conversation about this story » NOW WATCH: Jeff Bezos reportedly just spent $165 million on a Beverly Hills estate — here are all the ways the world's richest man makes and spends his money