"Board Directors Are Asking Far More Challenging Questions Today."

Dr. Wanda Austin, the former CEO of The Aerospace Corporation and former interim president of the University of Southern California, has extensive experience serving on boards, including her current roles at Chevron, Amgen, and Virgin Galactic. She shared her key lessons with me and David Reimer, CEO of The ExCo Group.

Reimer: What are the key lessons you’ve learned from all your director roles?

Austin: If a board asks you to serve, it’s because they believe you have something to contribute, and that your perspective is important. Many people I’ve talked to worry that they don’t know everything about the business or about finance, and that’s not what’s important. What is important is that you bring your experiences and perspective and concerns.

There is a lot of risk everywhere, and sometimes the management team doesn’t see it, either because they’re optimistic or because they’ve got their heads down and they’re focused on their immediate goals. So it’s really helpful to have that fresh set of eyes to spot risks that they may not be addressing. The third thing is to help the management team accelerate to the new normal by giving them permission and encouragement to try new things.

Bryant: We are having a lot of conversations with directors these days about how to get a fingertip feel for a company’s culture. What’s your approach?

Austin: You start in the boardroom. If your CEO is comfortable with having people give board presentations and letting them answer directors’ questions directly, without the sense that they’re filtering their words in terms of what the CEO wants them to say, that’s an important clue about the culture.

The next thing is to ask what the company does with the results of their employee surveys, and how they’re measuring whether they have made progress. Were there any surprises in the surveys, and if so, why were they surprised?

Is succession planning just lip service?

The third thing I look carefully at is people development. What are the turnover and retention numbers, and are there any messages in there? Is there a surprisingly large number of people who are leaving the company after three years, after the company has invested a lot to develop them? If so, you need to understand what’s driving that. And is succession planning just lip service or is it pushed all the way through the organization?

Reimer: As a director, you’re involved in assessing candidates for CEO roles. What are the X-factors that are going to separate a great CEO from a really good CEO?

Austin: Do they show up with real passion for the business? Are they excited about what they are about to take on? Do they have a realistic view of what they’re stepping into? Most of the time with people who are stepping into CEO jobs, things can change pretty quickly and you need to make sure that they’re not wearing rose-colored glasses and won’t miss that they need to engage on something important.

And I’m always impressed by people who can demonstrate that they’ve really put some thought into where the organization can go. Whatever success the organization has had is interesting, but it doesn’t tell you anything about the challenges that you’re facing going forward. Some candidates can talk at a surface level and then there are others who say that they understand the major challenges and opportunities. That is the kind of response that gets my attention.

Bryant: Given how all the uncertainty in the world has challenged the act of planning, what is the role of directors in helping management lead through the fog?

Austin: Board directors are asking far more challenging questions today. In the past, management teams may have said, “We’ve thought about this and here’s where we want to go. This is what we did three years ago and it worked so we’re going to turn the crank and life is going to be great.” Any director hearing that now should have their hair on fire and say, “That could be a possibility, but what if that absolutely does not happen?” The board has to help the CEO look around corners.

Bryant: How do you evaluate CEO performance in a year like this, when the financial results are going to be dismal for many companies?

Austin: How did they show up through the crisis? How did they lead the organization? How did they engage to figure out how to keep employees safe and continue to operate the business? How are they treating people who had to be let go and communicating with the organization about those decisions? Are they being open and transparent? Do they have a fair process or did they just delegate those decisions? 

The CEO sets the tone for everyone else.

This year, performance is going to be judged in part on how well they operated through the crisis and how well they pivoted the organization to a stable platform for the next several years. The CEO sets the tone for everyone else as they work to come up with a plan. Communication is key to keeping the organization focused on what needs to get done and how you want it to be done. 

Reimer: What has been your reaction to the pledges and promises that companies have made this year in the wake of the killing of George Floyd?

Austin: I feel strongly that companies shouldn’t look for a Band-Aid or a sticker to say, “Black Lives Matter, we’ve got the T-shirt, we’re done.” I look to boards to hold the mirror up to their companies and ask, “Have we been tone deaf on this issue?” I look at retention and promotion numbers, and whether we have been paying attention to making sure that our team is diverse.

And if it’s not diverse, do we understand why not? Is there something systemic in our organization that prevents us from automatically having a diverse population at every level of the company? The companies that have taken time to do that have learned a lot and are changing policies and practices that will have a systemic impact, which is great.

Reimer: What are the top two or three leadership lessons you’ve learned in your career?

Austin: We are all leaders right where we sit. Every day, you are influencing people, you’re having an impact, you’re making decisions that can have a ripple effect, and so you have to be thoughtful about how you show up. It’s not about whether you have a title that implies leadership. It’s about how you take advantage of every opportunity to help everybody who’s around you to be their best selves going forward.

Also, I grew up in New York City in the 60’s. As an African American woman, nobody was telling me I could be a CEO. In fact, a lot of people were telling me that I shouldn’t aim that high. What I’ve learned over the years is that each of us has to be responsible for our own performance.

You stay focused on the things that you can control.

If somebody does something that’s stupid, around you or even to you, you’ve got to be careful not to pick up that rock and put it in your backpack and carry it around for the rest of your life. You do what you can to help that individual, but you stay focused on the things that you can control, which is your own performance and how you show up and the decisions that you make.

Bryant: What other early influences shaped who you are today?

Austin: I had the benefit of having a few people who were absolutely encouraging to me in saying, “No matter what other people tell you, you’re good at this. Don’t let anybody tell you that you’re not.” That is a powerful message to put in a young person’s mind, and I had a seventh-grade teacher who did that for me. I’m still in touch with him to this day.

Having that self-confidence is one reason why I give a lot of volunteer time to engage with young students because they need to get that spark of encouragement to be able to have someone tell them “You can do this.” It makes a huge difference in how people see themselves.

On each step on the journey, I had to figure out what was next, but in each case, I had a couple of people who were cheering me on and saying, “I’ve never done what you’re doing, but I’m 100 percent confident that you can get there.” It’s made all the difference for me.

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