Plus: DEI Lives On In Many Businesses |
| While President Donald Trump’s administration is prioritizing the end of diversity, equity and inclusion programs, and many companies have stepped back from their commitments, DEI is alive and well in many companies across the United States. A study released last month by labor and employment law firm Littler found that 49% of C-suite leaders are not considering rollbacks of their DEI programs as a result of Trump’s orders. In fact, only 8% are seriously considering making changes based on the orders. However, business leaders know that this decision to press forward with such programs could be problematic from a legal standpoint. Given the Trump Administration’s posture on DEI, 55% of business leaders say they are more concerned about lawsuits, government enforcement actions and shareholder proposals targeting their positions than before Trump’s inauguration. This fear is felt by a larger proportion of government contractors (74%), public companies (67%) and large employers (65%). And 42% that have decreased their DEI commitments did so because of liability concerns. Even so, six in 10 companies said they would make no changes to their DEI policies until they see or hear more from the White House—including planned enforcement against companies. “Despite the increased scrutiny, many companies seem to be taking a measured approach, rather than rushing to end or scale back IE&D efforts,” Jeanine Conley Daves, Littler shareholder and member of its DEI consulting practice, said in the report. “Leaders are looking for ways to balance legal risks with the value such programs provide to their workforces and company cultures.” While DEI had been seen as an aspect of corporate responsibility before Trump’s second term began, it’s also been important to employees, who want to know that their employer embraces people of all kinds. Employee expectations for DEI programs are a major influencer in retention, the study found. More than 75% of employers with the programs say employees play a role, with 26% indicating their expectations have a large impact on programs. Another tricky policy area is when there is real financial or performance trouble. It often makes sense to work with an asset management firm to help right-size the business, get out of problematic situations and discover value. I talked to Norma Kuntz, CEO of asset management firm Gordon Brothers, about how businesses can work through problems. An excerpt from our conversation is later in this newsletter.
Until next time. |
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| In today’s CEO newsletter: |
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| The chaos of Trump’s economic policies and dim consumer sentiment loomed over a terrible week on Wall Street last week. Tariffs on imported aluminum and steel took effect last Wednesday, and Trump threatened more tariffs on the EU, including a new 200% tariff on European wine and spirits in retaliation for a new 50% tax on imports of American whiskey. If this tariff and tax move forward, they would take effect as part of Trump’s new global reciprocal tariffs on April 2. On Thursday, the S&P 500 officially hit correction territory, falling 10.1% from its all-time high more than a month before. The Dow Jones Industrial Average and Nasdaq also hit their lowest points of the year. Markets were back up on Friday, with the S&P up 2.1%, the Nasdaq climbing 2.6% and the Dow up 1.6%, though this could be due to Congress passing a stopgap measure to prevent a government shutdown. Consumer sentiment dropped nearly 11% in March, according to preliminary readings from the University of Michigan’s continual survey. The decline was almost entirely driven by uncertainty around economic policies. And while most things dealing with Trump are extremely politically polarized, all respondents seemed to feel the uncertainty—expectations were down 10% for Republicans, 12% for independents and 24% for Democrats. One economic bright spot last month: inflation was lower than expected. Numbers from the Bureau of Labor Statistics showed the consumer price index increased 2.8% between February 2024 and last month—0.1% lower than consensus estimates. Core inflation, minus volatile food and energy indexes, was 3.1%. While inflation is decreasing, it’s still higher than the Federal Reserve’s 2% target. These numbers also don’t reflect any of Trump’s economic policies, including tariffs, which many economists have cautioned will add to inflation. Forbes senior contributor Erik Sherman warns that a single month of slower CPI numbers is not a trend, and there are likely to be more changes in the economy in the near future. Forbes senior contributor Mayra Rodriguez Valladares writes that the big banks are warning about an economic slowdown, and given their access and knowledge of financial and monetary data, it’s worth heeding their warning. |
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| Commercial airlines are reporting turbulence ahead in 2025. Last week, Delta, American, Southwest and JetBlue all lowered their outlooks for the first part of the year, writes Forbes’ Suzanne Rowan Kelleher. In regulatory filings, the airlines indicated they were cutting their projections due to reductions in consumer and corporate confidence and more economic uncertainty and softness in domestic demand. Southwest also ended one of its popular policies: Free checked baggage. Starting with flights booked on May 28, passengers not on the top loyalty tiers will have to pay an extra fee for checked bags. This change comes after activist investor Elliott Investment Management took a $1.9 billion stake in the airline last year, amid criticism that the company’s leaders showed a “stubborn unwillingness to evolve.” Elliott urged Southwest to end its open seating policy—which it announced it would do last summer—and drop its free checked bags. While the baggage decision initially boosted Southwest’s stock by about 11%, its share price quickly fell, and Southwest is down more than 2% in the last week. But investors seem to be the only ones who liked the change at all, writes Forbes senior contributor John Brandon. Social media posts showed Southwest employees and passengers were disheartened by the move, with potential customers saying there’s no reason to fly Southwest now; they’re just like other airlines that charge for baggage. |
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| Being a small business owner is tough, especially when you’re new to entrepreneurship. Forbes’ Brandon Kochkodin writes about a small business of its own—Rand Larsen’s SMB Community—that acts as a support group and community for small business owners nationwide. SMB was started after Larsen, who had started his own businesses and spent 14 months learning about entrepreneurship through acquisition working for an Ohio-based mentor, realized that distressed business owners really needed some peers to talk to. SMB is a membership organization for businesses making at least $1 million in revenue. Larsen, who has been crisscrossing the country in a 2019 Dodge Ram ProMaster camper van for more than a year, meets with small business owners, speaks at events and facilitates peer groups of entrepreneurs to talk about the ups and downs of their businesses. “Running a small business can be an incredibly isolating experience,” Larsen told Kochkodin. |
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|  | | Gordon Brothers CEO Norma Kuntz. Gordon Brothers |
| | How Asset Management Can Help Before You’re In Big Trouble |
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When a business with physical assets gets in trouble, they often call Gordon Brothers, a 122-year-old asset management powerhouse, to help them figure out what to do next. Gordon Brothers is an expert in finding the value of business assets and working with property and leases to help companies optimize their footprints. In recent months, it’s taken a leading role in retail bankruptcies, buying the closeout retailer Big Lots and reselling some of its leases. I talked to CEO Norma Kuntz about the asset management business and when companies should look into that kind of assistance. This conversation has been edited for length, clarity and continuity. When should a business start to look at its assets and leases and figure out how to find some of the money it needs to keep going? Kuntz: Always. Day one. When you think about this industry, you think about financial assets or real estate. Those are the two big things that a general C-Suite is always thinking about. But there are lots of other assets within your business that are managed on the day-to-day, or they turn much more quickly like inventory or trucks or even the furniture and fixtures in your stores. One of the things that I have seen since I’ve come into this industry is there’s almost a fear of having a conversation with Gordon Brothers: Does that mean that I’m in a place where something has gone wrong? What we try to say is: No, you’re actually ahead of the curve. You’re stopping something from going wrong. You should talk to us because we can help you determine how to optimize your [asset] portfolio so someone else could lend against it. We could probably lend against it ourselves, or we can help you if you want to sell off some of it or recycle your portfolio and reposition how your asset portfolio looks. Our advice to executives would be: You should be thinking about this at all times and thinking about your assets, just as you think about any other part of your business or your other assets, like you think about your financial portfolio. What are some assets that tend to go by the wayside in terms of what executives are thinking about? It’s driven somewhat by the market cycle and what is available in whatever market we’re talking about. Gordon Brothers has a very big retail business. There’s all the furniture fixtures, leases and all of the different pieces of it. What Gordon Brothers knows how to do best on the retail side is understand how to close your stores. We understand the value of it, and that’s not always what an executive office is going to be best at. Oftentimes, we’ll talk to retailers who say, ‘No, we’ll just close our stores ourselves.’ We have a much better outcome because this is what we do for a living. Working with us to close your stores, you can get a better outcome even if you’re healthy. A CEO of a retailer explained it to me: Your store portfolio is always going to have some really strong performers and some really weak performers. We can help be solution-oriented partners for you on the weak performers, even if your whole business is doing well. On the industrial side, you see a lot more forgotten assets. Oftentimes you have really big corporates that have industrial plants. Or hospitals shove old equipment in a closet. That is worth something but no one has the time to deal with it. We can partner with you and use the data from 120-plus years of looking at assets. We are able to say: the trends of this [item], you might want to sit on this a little bit longer, or we will buy it from you now if you need cash and then we can sell it at a later point in time. What’s really cool about the Gordon Brothers platform is we’re all one company. There isn’t really anyone else in this many industries that does the breadth of what we do. We all sit under one umbrella and we’re agnostic. Do we sell your assets? Do we lend against your assets? Do we appraise your assets for someone else to lend against it? That’s a nice opportunity for our partners, and it’s very much a solution-oriented business. We try to tag ourselves as a solution-oriented asset expertise firm. That doesn’t really mean a lot to people, but that’s how we are thinking about ourselves. What advice would you give to a CEO looking at the balance sheet, thinking maybe things aren’t going the way they want it to: We’re not in big trouble yet, but we should do something to get a little bit more going? Don’t be afraid to have the conversation. Just having a conversation with Gordon Brothers or anyone in the asset expertise industry is not an indication that something is wrong. It’s good management practice. I would say have the conversation early. We’re very creative. We’re not necessarily going to come in and say you should close half your stores. We’re very thoughtful in looking at your problem and how best to solve it. Is it that you have a lot of aged inventory? Maybe our wholesale team can help you sell that off. Or is it that your stores are not performing well? Our real estate team can help you close some of those stores. Oftentimes, what’s stopping people from closing stores is the leases that they’re stuck in. Our real estate team can help them get out of these leases and help them figure out where’s the best place for them to open new stores.
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As he’s stepped back from his day jobs as CEO of tech companies including Tesla, SpaceX and Neuralink to lead seemingly unrestrained cost-cutting in the federal government, Elon Musk has found his public approval dwindling. |
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53%
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Proportion of Americans who have a negative view of Musk, according to a CNN poll. Only 35% have a positive view of him, which is less than Trump’s 45% approval rating
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36%+
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Amount Tesla stock has dropped since the beginning of the year. Last Monday alone, it fell more than 15%
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‘With great difficulty’
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How Musk described the way he’s running his businesses and dedicating so much time to cutting the federal government in an interview with Fox Business
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Leadership is open to anyone willing to embrace it, not just for the brilliant few, former WD-40 Company CEO Garry Ridge writes in his new book, Any Dumb-Ass Can Do It: Learning Moments from an Everyday CEO of a Multibillion-Dollar Company. There’s been a surge of employees taking mental health leave in the tech space. Here are some ways to be more cognizant of your workers’ well-being and prevent them from burning out. |
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