Corporate and Political Leaders Discuss Job Creation at Yale CEO Caucus
In a rooftop tent with a spectacular view of the lighted U.S. Capitol dome shining in the background, a group of business executives and politicians shared ideas about one of the biggest challenges facing the U.S. right now: how to put people back to work despite the uncertain economy.
The event was the inaugural Yale CEO Caucus, a program launched by the Chief Executive Leadership Institute at the Yale School of Management to examine the business implications of urgent national and global events that span economics, diplomacy, security, energy, environment, regulation, and politics. In attendance were some 50 CEOs, elected officials, and academics, including leaders from Dow Chemical, the Business Roundtable, Bain Capital, Burson-Marsteller, ITT Exelis, Stanley Works Black & Decker, Scotts Miracle-Gro, J.C. Penney, Tenet Healthcare, and Honest Tea.
After a tribute to the newly named deputy secretary of defense, Yale alumnus Ashton Carter, the evening opened with remarks from Senate Republican Leader Mitch McConnell. He provided a frame for the discussion of public and private efforts to spur job growth by pointing out that, historically, periods of divided government have offered opportunities to do "big, tough stuff." Dow Chemical CEO Andrew Liveris, co-chair of President Obama's Advanced Manufacturing Partnership, and the author of a new book entitled Make it in America, offered a comprehensive set of business strategies for domestic manufacturing.
The event was moderated by Jeffrey Sonnenfeld, Yale SOM's senior associate dean for executive programs and Lester Crown Professor in the Practice of Management, who used occasional flash polls to identify sentiment within the room. In one instance, he asked participants to select the top reason why U.S. business is not creating more jobs from a list of nine options; the top choice was permanent structural change in the U.S. economy, followed by fear of a double-dip recession.
While the assembled leaders expressed confidence in the ability of the U.S. economy to adapt to structural change over time, there was uncertainty on what will emerge in the future. Some advocated support for the high-growth entrepreneurial sector. Others sought a revival of domestic manufacturing.
"Rebuilding a country is no different than rebuilding a company," said Lynn Tilton, the CEO of Patriarch Partners, a private equity firm with a manufacturing focus that currently owns 76 companies, employing 120,000 people. She called the restoration of U.S. manufacturing jobs a patriotic mission that the country must take on. "A plan that allows real sharing of pain and gain will get broad support," she said.
With labor accounting for just 10–12% of costs in the manufacturing sector, she said, U.S. wages are not a reason to move overseas. Instead, she pointed to subsidies of raw materials around the world as the key issue crippling the competitiveness of American manufacturing.
Uncertainty was a regular refrain. It came up with respect to the economy and around policy frameworks for taxes, energy, environment, trade, and tort reform. Uncertainty around healthcare, participants said, raises concerns on costs and what will be required of businesses as reform is implemented.
While much of the discussion looked to the future, governance activist Nell Minow, a founder of Institutional Shareholder Services (ISS) and editor of GovernanceMetrics, sounded a note of caution: "The brand of American capitalism has been severely diminished." She added that the best way to recover would be "to have some consequences to the failures of Wall Street."
Sonnenfeld's Socratic approach put leaders in the role of students. They fielded questions from Sonnenfeld and from their peers. The free-form discussion was punctuated by video clips from news coverage and even from Jon Stewart's Daily Show.
After the event, Sonnenfeld commented on what made it unique. "Despite the volatility of global markets, regulatory uncertainty, frequent political paralysis in between our nation's elected officials in Washington and the finger-pointing of outraged citizens in street protests, many progressive-minded business leaders are tackling our nation's toughest economic problems, working on global competitiveness, employment, community responsibility, and investor confidence through how they skillfully navigate their own enterprises," he said. "While all other gatherings of corporate titans in D.C. put these prominent figures in the roles of being advocates, public policy advisors, politicians, and lobbyists, our non-partisan, educational forums uniquely position these CEOs where they most excel-that is, serving as business leaders with peer-driven learning on how they overcome today's formidable management challenges. We pulled industrialists, financiers, social activists, professors, and billionaires together with U.S. senators and policy officials to talk candidly about how all can contribute to constructive job creation initiatives instead of wringing hands in frustration."
In an interview after the event, Lynn Tilton said that she arrived at the CEO Caucus having just closed on a new company that she believes can grow and create new jobs. She added that she appreciated the high quality of the dialog at the Caucus. "People speak from the heart here," she said. "They're not talking for stockholders, not for the press. They simply say what they truly think."
The corporate sponsors of the CEO Caucus include UPS, CNBC, Korn/Ferry, Burson-Marsteller, and NYSE Euronext, with generous support from Lynn Tilton, CEO of Patriarch Partners, the Miller Foundation, and Leslie and Steven Saiontz..