Corporate Governance Awards 2016: Best governance for a private company - Graybar
Graybar was founded in 1869 and has been owned by its employees for more than 85 years. While the company is not listed on any exchange, it is registered with the SEC.
‘We have the best of both worlds: all the reporting obligations of an SEC-regulated firm but without the pressures of quarter-to-quarter numbers,’ says Matthew Geekie, Graybar’s senior vice president, secretary and general counsel. ‘The beauty of that model is it allows us to take a long-term view.’
He feels Graybar’s employee-ownership model yields a high level of engagement in the firm’s core values, particularly in the case of integrity. ‘When we do something, we think about how it is going to impact the person down the hall,’ he explains.
Graybar has a long history of reinforcing its values through action, all the way back to the Great Depression when employees would check on their retired former colleagues to ensure they were safe and had enough food and water.
Today, Graybar expects each member of the company’s board and senior management to visit at least 10 facilities per year, to meet employees and hold town halls. While it’s much less extreme than during the Great Depression, Geekie says it has a positive impact on employees: ‘They can see we’re walking the walk and talking the talk. It helps drive a very positive culture of compliance and ethics.’
Graybar’s board comprises only senior leaders within the firm. While it has a detailed working knowledge of how the business functions and has a stake in its success, the lack of independence could lead to concerns of groupthink.
To avoid this, the company enlisted the support of third-party advisers to help design an annual board member assignment that evaluates each member’s selection, performance and core competencies, and examines how aligned the chairman is with the rest of the board.
‘I can’t imagine you will find many firms with board members who know the company and industry as well as this board does,’ Geekie says. ‘But we have to check against complacency. If we get the right balance using outside assistance to challenge what we do, it propels our organization forward.’
Geekie and the other Graybar board directors also turn to other sources for independent verification, benchmarking and validation. Each year the board attends educational programs at institutions like Harvard Business School, Northwestern and Wharton.
Members are all also required to sit on other boards to observe best practice in action elsewhere. When they reconvene, it leads to ‘robust back-and-forth communications,’ Geekie says. ‘We discuss what we want to adopt so we can stay true to our plan to be a company that remains employee-owned but achieves the results of our publicly held competitors.’