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Women to Save Pier 1?

I was perusing my online newsletter from Workforce.com when I came across a couple of interesting articles. One about a 4-year study of Fortune 500 companies providing evidence that "Firms with More Women on Boards Perform Better Than Those That Don't." "We have established a correlation between diverse boards and strong corporate performance," says Kara Helander, vice president, Western Region at New York-based Catalyst.

I, then, read an article about Pier 1 Imports' financial woes and their plan to correct their downturn by cutting healthcare costs. The plan includes cutting employees' hours to disqualify them for health benefits (very Wal*Mart-like). Pier 1 CEO Alex Smith is calling it a "cost-efficiency mission." Sounds to me like a nice way to say, "Hey employees, we're screwing you, but keep up the good work because you're improving our bottom line." According to the article, "Pier 1 Imports soon will learn whether cutting health care benefits for the very employees who deliver what the company calls its signature in-store shopping experience will help resurrect the failing retailer or exacerbate its multimillion-dollar losses."

I could go on and on discussing why I think this is a tragic solution to their problem, but given that I just read the Catalyst study, my first thought was, "Huh? I wonder if there is a correlation between their performance and the number of women they have on their Board?" So, I googled Pier 1. Imagine that ... the Board of Directors is made up entirely of men! I'm completely flabbergasted! Pier 1?! All Men?! What are they thinking??? They might do well to heed this statement from the study: "It makes sense that companies with more women on their boards would perform better than those that don't because these companies probably have a better handle on their customer base," says Dale Winston, CEO of Battalia Winston, a New York-based executive search firm.

Recall this passage from Tom's Re-imagine! "All you have to do is look! LOOK AT A DAMN PICTURE OF THE BOARD OF DIRECTORS IN THE ANNUAL REPORT ... hopelessly unrepresentative of the market being served ... I am not championing "quotas" ... I am championing a board whose composition mirrors the market (diversity) and technologies (youth) that represent our biggest challenges." Do you think Pier 1's customer base is made up entirely of men? Given that I shop there, I can say with 100% confidence the answer is NO!!! Perhaps I'll send some enlightened inspiration to Mr. Alex Smith (a copy of Tom's book perhaps?) so instead of disenfranchising his staff, he can re-imagine a strategy to revitalize Pier 1. I'd love a happy ending ...

Darci Riesenhuber posted this on 10/17/07.

Comments

This poses an interesting question of which is the cause and which the effect. Do successful companies value diversity and thus seek to have diverse boards, or do diverse boards cause companies to become successful? My guess (guess only) would be that boards are rarely engaged enough in day to day operations to affect company performance in a meaningful way. That is achieved by management. ("In the years that I've spent on various boards I've never heard a single suggestion from a director (made as a director at a board meeting) that produced any result at all." Robert Townsend (Avis)). Thus a successful company that has embraced the value of diversity reflects that all the way up to the membership of the board.

Posted by Bruce at October 18, 2007 8:22 AM

As a follow-up, Pier 1 has two women on its board: Cece Smith and Karen Katz (Nieman Marcus). The real issue would appear to be senior management: only one woman, Sharon M. Leite - Executive Vice President, Store Operations.

Posted by Bruce at October 18, 2007 8:34 AM

The "old boys" network is still in existence in the realm of the boardroom to a great extent. Leadership on the board will affect change in the company culture and diversity of the executive management team. As every market is transformed, and they all will be, the boards containing those with myopic vision will be wrenched into letting their customers tell them how to be successful instead of vice versa.

Posted by Bryan at October 18, 2007 8:44 AM

Are these people INSANE?

Instead of going down to the floor and asking the people who actually talk to the customers for their input, they're cutting their hours to take away their health benefits?

The very people they need to help turn things around will be worrying about their families and out looking for another job, instead of focusing on the customer's delight.

I ask again- are these people insane?

Posted by Lois Gory at October 18, 2007 9:32 AM

I was just reading this to my wife (who used to enjoy Pier 1 in the late 80's to mid 90's) and she said, "Why don't they update their look and product? They're stuck in the 80's! Cutting or increasing their healthcare costs aren't going to help...get some new inventory and an updated look!"
Generally, women shop(ped) at Pier One, not men. The whole company obviously needs a shake-up. In any event, this particular cost cutting is only going to hurt them. And yes, they're INSANE.

Posted by todd at October 18, 2007 11:05 AM

Thanks, Bruce, for the correction on the Board members. Perhaps new to the team? (given that they weren't listed on the '06 annual report). And, I did notice they have 1 female member on the Executive Team responsible for Store Performance, which seemed like a good thing (I wonder how long she's been on the team).

Perhaps this is old news too, but in their annual report (I believe) there was no mention of Target in their comp. set. I would say that is a major oversight, as well. Perhaps they didn't see that threat coming and were too slow to respond.

I read another article yesterday that indicates that they get feedback from customers and, perhaps as a result, are re-evaluating their product mix. However, I am still curious, to your point Lois, if they engage their workforce at all in these conversations.

To reflect back on your comments, Bruce. Perhaps it is not diversity of the board that matters, but diversity of management (and not so much in sex, race, color, or creed, but of thought). And, I would say if they are using their "whole brain", they know to seek the input of their workforce who is in direct contact with the consumer every day and has a direct impact on the customer experience (hope their disgruntled employees aren't too hard on their customers during all of this...I think Pier 1 might need them right now).

Posted by Darci at October 19, 2007 9:12 AM

The SEC website stores the filings from public companies. From those filings: Karen Katz has been a director since June 2001, Sece Smith became a director in June 2007 and Sharon Leite joined the Company in August 2007.

Posted by Peter at October 19, 2007 7:58 PM