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The Virus

The latest virus forecast: The US has had a 9% increase from two weeks earlier, averaging about 184,000 new cases per day, with over 2,600 deaths and 228,000 cases reported on Friday. More than 100,000 people in the US are currently hospitalized with Covid, and one projection has the death toll at nearly 450,000 by March 1 without greater mask use and social distancing, up from around 280,000 now. 

The business impact: The pace of hiring slowed in November, and the share of American adults working or seeking work is near its lowest level since the 1970s. More than half of the jobs created were in warehousing and transportation. The restaurant industry began shedding jobs again, as weather cools and the pandemic intensifies. One-third of US big company CFOs surveyed by CNBC expect more layoffs next year—while US corporations hold more cash than ever, 30% more than a year ago.  The odds of a bipartisan stimulus deal improved in recent days.  

Focus on Corporate Boards and Fair Pay

Resetting companies requires changing how we compensate workers. If we’re really serious about fighting economic inequality, then labor needs to get a greater share of corporate profits, distributed equitably. Paying low-wage workers more is also a direct way to address racial injustice, since people of color disproportionately find themselves in the lowest-paid group. 

Over the past 40 years, corporate boards have presided over a shocking divergence between the soaring pay for top executives and the stagnating wages of the working class. So a new proposal to focus board responsibility for the pay and treatment of the workforce deserves discussion—if directors were more directly held accountable, could that make a difference? 

Leo E. Strine Jr. and Kirby M. Smith, two lawyers at Wachtell, Lipton, Rosen & Katz, believe so, arguing in a forthcoming paper that board compensation committees should be overhauled to be workforce committees with responsibility not just for executive pay but the compensation and treatment of workers across a company. Below are excerpts from my conversation with them this week, edited lightly for clarity. The excerpts here are all from Strine, who is also the former chief justice and chancellor of Delaware. 

What is this proposal meant to address?

The idea of rounding out the responsibilities of the compensation committee and making it a full-blown workforce committee seemed to us to be a quite sensible use of managerial and board talent because it would center in one place responsibility, initially at the board level, for all the related human resources functions that are important to companies. It would allow you to use your human talent in the best way, by not just looking at the few people in the c-suite, but seeing how are we compensating and motivating the many employees and the contracted workers that we use to help our corporation succeed? Are we treating them fairly? Are we actually providing the appropriate incentives for them? And are we, frankly, situating executive pay within the context of a business-like plan that uses all of our human talent? We thought they would actually do a much better job in setting executive pay than they do now, because they would have a broader prism within which to situate the c-suite pay.

We also thought it was efficient because frankly it matters whether a company is free from sexual harassment or racial discrimination. Why is there not a board committee that’s dealing with all the HR issues that provides an avenue for the people in the company who work on those issues to be reporting to the board level? It seemed to us that HR functions were too often bifurcated and put many times into an audit committee that has other things to do. So we also thought it was a logical allocation of talent in terms of focusing on all the important workplace issues in one committee.

Could this be a step toward having worker representatives?

If you focused legal responsibilities in this committee in a way where it’s clear that they have a duty to be equitable towards workers and have their best interests at heart, that you might allow them—as long as it’s not circumventing any union formation—to experiment with things like works councils to get more employee voice so that the boards are actually hearing from them. We are supporters of external labor law reform, and we think a living wage and something like the PRO Act [a proposed bill that would give workers more rights] that’s pending really would fit best with this to create a framework. But this could be a building block along with the PRO Act and the living wage to create fair conditions under which you could have more worker voice at all companies. 

Why do you think it’s worth focusing on compensation committees as opposed to government initiatives to support and protect labor?

You can’t consider this proposal in isolation—it’s not to the exclusion of other action to protect workers. I want to be clear about that. This will not work without living wage legislation, without labor law reform.  But because we have allowed—through decisions like Citizens United—enormous amounts of corporate money into the political process, much of which has been used to prevent legislation to protect the environment, to protect workers, and consumers, many people have concluded that the time when you can just leave the power allocation within the corporation alone and rely on external regulation has come and gone. Unless you constrain corporate power and deal with the power structure within, as part of that solution, you won’t get back to having an externality regulation like you should. And the current system puts the better companies under unfair pressure to keep up with the worst. If you could restrict corporate political spending and require that to be subject to super majority stockholder approval and limit the influence of corporate power on the political process, then you would have more of a chance to pass that kind of external legislation. A step towards that is changing attitudes within the boardroom.

Does the composition of the compensation committee need to change to take on these responsibilities?

Do we need to have boards that have a broader gauge than they currently do? Yes. If you spread the function of the board more broadly to deal with issues that are important to society, you can  increase the effectiveness of boards. You’ll create more diversity in terms of the sources of talent, which means it will be easier to include Black people and women. 

I’ll use an example a little bit out of this space, but Dr. Fauci could not serve on the key compliance committee of many pharmaceutical companies and many food companies. You know why? Because they put it in the audit committee. And Dr. Fauci is expert at public health and science, but he may not feel that equipped as an accounting expert. But we don’t care that we have accounting experts and CFOs dealing with issues like sexual harassment, immigration, inclusion, or in the science area, things like pharmaceutical compliance or food-safety compliance. 

By the way, we’re lining it up in a way that goes with the management, the way they do business at the management level—where they don’t have their accountants do their HR compliance. I at least hope they don’t. I don’t think they have their accountants do their pharmaceutical science compliance. But it’s very common still to be jamming all the hard work of the board on the audit committee. And everybody on the audit committee is supposed to be certified basically as some form of a financial expert. 

What we’re saying is complex companies have a variety of things, things like cyber risk, and that if you actually thoughtfully attend to the committee structure, you’re going to be able to seat board members who have the talent to match up with the managerial talent. You’ll be able to cross fertilize that expertise and you’ll do a better job of anticipating risks and addressing them in a timely and effective way.

You can read more from our conversation, where we discuss the impact on executive compensation, the Business Roundtable stakeholder capitalism initiatives, and other topics.

Content from our partner McKinsey & Company

No one’s having an easy year. But women, LGBTQ+ employees, and people of color are having a particularly hard time. 90% of executives say their organizations are working on being more inclusive, but it’s sometimes a struggle. Here’s what could help.

What Else You Need to Know

Google parted ways with a prominent artificial intelligence researcher after she sent an internal email complaining that there was little progress and no leadership accountability for diversity and inclusion. “Your life gets worse when you start advocating for underrepresented people,” Timnit Gebru wrote, suggesting outside pressure was required for change to happen. Google said Gebru, one of few senior Black women in the AI field, left after the company withheld approval for her to publish a specific research paper. Thousands of staff and others signed a petition demanding Google provide a public explanation.

  • Separately, Ariel Investments co-CEO Mellody Hobson this week said diversity is “the only area where you can talk a lot about something, not make any progress, and still have your job. Everything else we do in corporate America, if we don’t get results, we get fired.” 
  • Hobson said companies need to focus on making diverse senior hires, not just recruiting junior staff of color: “People focus on the pipeline because it’s the most non-threatening thing to focus on when you’re a senior person. Focusing on the pipeline doesn’t give us the senior people at the top that the pipeline can see and say, ‘I could be that person.’”

The four-day work week has new momentum. Unilever said it will shift its 81 staff in New Zealand to a four-day week, while still paying them for five. It’s a year-long test for Unilever to see whether the lessons could apply elsewhere. 

  • Government offices in the Philippines shifted to the four-day week this year amid the pandemic. The Spanish government is studying a four-day week as a measure to boost the number of people employed.
  • And job listings for four-day-work week jobs have risen in the US this year. It’s a welcome counter to the finding that Americans are working more hours since the start of the pandemic, estimated by Atlassian at 32 minutes extra per day on average.

There could be roughly 20% to 40% fewer business trips involving air travel after the pandemic, compared to before. That’s veteran Journal airline columnist Scott McCartney’s estimate after conferring with industry experts. They estimate that roughly 25% of business air travel is related to sales and 20% for events, both categories where in-person travel is likely to persist. But the 20% of air travel for internal company meetings and training could largely be replaced by virtual alternatives. 

  • Bill Gates had recently predicted that over 50% of business travel would go away after the pandemic, so Scott’s estimate is marginally less dire for the airline industry. 
  • Meanwhile, some researchers have raised questions about the exact virus risk from flying on an airplane. They say the risk is probably very low, but research isn’t totally conclusive and some documented cases suggest spread between masked passengers. 
  • Qantas said that once vaccines are available it will require passengers to prove that they’ve been vaccinated before taking international flights. 

Companies are resuming their contributions to employee retirement savings. Freezing 401k matches was one of the belt-tightening moves, along with pay cuts and furloughs, that firms adopted after the pandemic hit. T. Rowe Price said about 10% of plans it administers paused or reduced the company match, but now one-third of those have reinstated it. 

Gender pay gaps are worse in places that are more religious. Researchers from the University of Colorado Denver and University of Minnesota found that women earned just 46% as much as men in countries where at least 95% of people say religion is a daily part of their lives, and 75% of men’s salaries in countries where less than 20% of the population said religion was important to them. Comparing different US states, the researchers concluded that about 17% of the gender wage gap can be attributed to religion in the US, or a $1,734 loss in annual wages on average for women.

Microsoft disabled a feature that allowed companies to monitor individual employees’ activity. As I wrote last week, the Productivity Score feature provided a central dashboard showing how many days specific workers have been using email, chat, and other activities. Facing complaints that it was enabling surveillance of workers, Microsoft said it would no longer display activity data at an individual level. 

Here are some of the best tips and insights from the past week for managing yourself and your team:

  • Lead by doing. New research shows that customers are more satisfied and teams are more productive when managers “exhibit leadership by performing employee activities.” Examples include store managers who sometimes wait on clients or executives who take occasional shifts working on the front lines. 
  • Reconsider whether a college diploma is really needed for any given role, and focus instead on skils. As many as 30 million Americans without college degrees have the skills to take on  jobs that pay 70% more on average. About two-thirds of American workers don’t have four-year college degrees, which disqualifies them for roughly 74% of new jobs in America, even if they have the skills needed. 
  • Use purchasing, philanthropy, policy, and place to be an anti-racist business. They’re powerful levers for using an organization’s resources to promote a more just and equitable society. 
  • Be transparent with customers about what you’re going through. Radically frank conversations—such as sharing in an email newsletter to clients that your strategy for adapting to the pandemic isn’t working, and you could use their help—build understanding and loyalty.  


Attractive people make more money—and researchers say they might be at least partially worth it. Researchers have found that people considered highly attractive on average earn roughly 20% more than peers with merely average looks. They also found that highly attractive people are more socially successful, and on the margins have better health and education outcomes—all presumably the result of discrimination in their favor throughout their lives. So employer bias in their favor when it comes to hiring and promotions isn’t totally irrational—but the researchers suggest a better approach is to level the playing field by training more plain-looking staff: “Anyone can learn these skills.”

Like designer interior paints and seemingly anything else you can use to spruce up the inside of your home, Christmas trees are in high demand this year. An industry group predicts the median tree price will rise 7% to $81 this year. Tree farms are reporting record sales already—though pandemic-related transport-cost increases and labor shortages are crimping sellers’ margins. If you’re in the market, consider noble firs or Nordmann firs, which can potentially last indoors for months. Extending Christmas cheer can’t hurt during this long winter.

The handbook for this new era of business doesn’t exist. We’re all drafting our own as we go along—and now we’d like to start doing so together. You can sign up here to receive this briefing weekly by email. Have a great week!