Speaker Name: G. Kennedy Thompson
Speaker Title: CEO and President
Speaker Company: Wachovia
Good afternoon, and thank you for the opportunity to spend some time with you today. I’m glad my job gives me the chance to do this sort of thing from time to time.
Honestly, I can’t imagine many things more important than spending time with the people who are going to make up the next generation of educators and political leaders and managers in Corporate America.
I hope at least a few of you -- when you complete your studies here at Appalachian State University -- might consider becoming part of the next generation at Wachovia.
Since I finished graduate school -- which was more years ago than I care to admit -- this is the only company I have worked for. It really is interesting how some decisions ... which might not seem all that major at the time we are making them ... can become life-changing events.
In my case, I had opportunities to go to work at several different companies. I chose the company that today is Wachovia, not because I was particularly driven toward a career in financial services, but rather because I sensed in the people who interviewed me a camaraderie -- a team spirit. That felt good to me and I decided I wanted to be a part of it.
I can honestly tell you I have never regretted that decision. The main reason is precisely because of that spirit I identified way back when. And I feel strongly enough about that to suggest to you that it’s a very worthwhile characteristic to use as a guideline when it comes time for each of you to choose among competing job offers.
If you can find a place where people genuinely view their employment as more than "just a job"...if you can identify in the interview process a sincere belief in shared success... I will tell you such a place is worth serious consideration. I was lucky enough to find that place and I feel rewarded for having made that decision every day as I interact with my teammates at Wachovia.
Quite often when I visit a college campus, I find myself thinking back to my undergraduate days -- and especially my experience in a particular econ class.
I got there on the first day of class and the professor announced he would not be taking attendance during the semester. Next, he explained the mid-term was optional. We could skip it and the final would count for 100 percent of our grade.
I had finally found my kind of course.
I never again darkened the doorway of that auditorium that semester, and obviously exercised my right not to take the mid-term. When finals week arrived, I started some serious cramming. After about four days, I recognized I was hopelessly lost. I wound up doing the only thing I could think of -- I took an incomplete and ultimately hired a tutor to get me up to speed over the summer.
I like to think I would manage that situation a lot better today. And I trust none of you folks have ever fallen into a similar trap.
Some of you are no doubt familiar with a novelist by the name of Anita Shreve. Earlier this year, she published a book entitled "Sea Glass." Like many of her efforts, this one is set in the early part of the 20th century. The main story line has to do with two young New Englanders who get married in April of 1929 -- just in time to get caught up in the social and financial wreckage of the Great Depression.
Shreve weaves in several sub-plots. I want to share with you just a bit of one of them by quoting this passage:
"Though McDermott is just twenty, already he is a loom fixer... He has been in the mills since he was twelve... He repairs broken looms and checks others to make sure the cloth is weaving properly.
The work is difficult and McDermott, like almost everyone in the mill, hates his job. Especially since the speed-up. For three months now, the bosses have ordered the machines to go at a faster speed. If the machines produce more cloth for the same amount of wages, the argument goes, then the northern mills might be able to compete with the southern mills that are taking away all the business."
What Shreve has done here is take us back in time to when this country’s textile industry was in the throes of a wrenching transition. After decades of being concentrated in New England, the industry was migrating to our region of the country -- the primary magnet being lower labor costs.
As we all know, the New England companies were unable to win that battle. The industry did migrate southward, and the New England economy had to re-invent itself.
Here in our home region, meanwhile, those textile jobs...and others like them...became the economic boom that would, by the last half of the 20th century, come to be known as "The New South."
Now, here we are in the early years of the 21st century, and, as the saying goes, "What goes around, comes around."
North Carolina today is predominantly a service economy. Transportation services, health-care services, information services and, of course, financial services are the cornerstones.
That economy really has developed over the last three decades. Prior to that, we had been primarily a manufacturing economy -- built on the sorts of jobs we drew away from New England those decades earlier.
Today, computer and telephone networks have created an integrated world economy, and no local market is insulated. Looking ahead, this integration and its effects are only going to expand...only going to become more pervasive.
Specifically, a great many of these low-skill, moderate-wage jobs that New Englanders fought in vain to keep -- that, instead, wound up sustaining North Carolina families for several generations -- have moved elsewhere. Even more of them are following, with an announcement of the latest plant closing seeming to happen every several days.
We have to face this. These jobs are either already gone...or soon to be going. And they will not be coming back. We in The South have no more hope of stemming this economic tide than did our brethren in New England 70-plus years ago. Instead, we have to get on with the job of re-tooling our regional economy.
Our next generation of workers must be prepared for the high-tech jobs and the knowledge jobs of the future. In this still-new global economy, intellectual capital will be the currency. And the only source of that capital is our educational system.
That means you folks here are right at the cutting edge of what must be done.
That’s one of the reasons we at Wachovia are so pleased to participate in programs such as these. This school and its curriculum, and others like it, are vital to equipping the workforce of tomorrow that, in turn, will sustain our companies in the years going forward.
At Wachovia, we have a multi-faceted effort in place to support and enhance education at all levels in each of our communities. Starting with early childhood education and continuing right on through primary and secondary schools to institutions of higher education, we have a range of partnerships and initiatives in place to support the notion that every child, in every segment of every community, deserves the opportunity to receive a first-rate education.
It is efforts such as these that I believe are a huge part of the definition of success for any company or enterprise.
Obviously a company has to have its financial house in order. It has to have its costs under control, manage its resources efficiently, have its products and services sharply focused on its customers.
But to define success as simply being profitable is both short-sighted and lacking in vision. To really be a success, a business -- regardless of size -- needs to make its mark in its communities.
For us at Wachovia, that always has started with our support of education. We have built our other community-focused initiatives on that foundation. It is a point of pride for all of us in the Wachovia management team to be part of a company in which community services and community outreach is a deep and valued tradition.
That tradition has held us in good stead, since much of the world -- and certainly our perspectives on it -- changed so dramatically on September 11 of last year.
One of the things that clearly emerged in the wake of these events was a renewed and intensified spirit of national unity and purpose.
In this context, the business community has a clear imperative: By mobilizing our employees and leading by example, we will help realize the goal of building stronger communities and more robust civic engagement.
Back in June, I was pleased to be asked to join 19 business leaders from a variety of industries who came together at the invitation of President Bush to plan an ambitious and vital corporate agenda for service.
This effort, called "Businesses Strengthening America," calls for us to seize this unique opportunity to alter and refocus our corporate cultures. The goals are to increase employee volunteer service by millions of hours and find ways to incorporate service into every company’s daily business.
We must meet the need for greater private contributions and volunteerism, as more public resources are going toward homeland security and national defense. The place to start is with giving more employees more opportunities to volunteer their time to serve causes they believe in.
At Wachovia, our recently expanded "Time Away from Work for Community Service" policy enables every employee to use four hours per month -- the equivalent of six workdays each year -- of paid time to volunteer.
Civic engagement and community service should not be something that is just implied. Nor should it be something that waits for government to take the first step.
Today, Corporate America has a new and important role to play. While still retaining independence and identity, U.S. corporations can work together to encourage our employees to tap into America’s new spirit of community service. When we do -- and when we harness the eagerness of individual Americans to serve -- we will help to dramatically expand what our President has described as our "opportunities to do good."
More than a dozen years ago, former Secretary of State George Shultz said, and I quote, "Trust is the coin of the realm."
He was absolutely correct. And sadly, the coin of the realm has been devalued.
The activities and events with which Corporate America has been generating headlines in recent months have taken their toll. A majority of Americans no longer believes business managers can be relied on to do the right thing. Nor do they believe financial reporting is credible.
What happened is that in a number of high-profile cases -- and the names have become household words by this point -- decision-makers lost sight of a fundamental truth that has been at the foundation of this economic system of ours that is the envy of the world.
Certainly, as I said earlier, we need to manage our companies so that we produce a solid bottom line. But that, by itself, is not enough. Those results have to be achieved in a principled manner -- through a set of standards to which we all agree to hold ourselves and our business conduct.
In the wake of these violations of trust, Congress has responded to the President’s call for tougher laws. Regulators, too, are pressing for more stringent standards.
While some of this may be timely and appropriate, I am not entirely persuaded of its effectiveness. Very simply, nobody has ever been able to legislate morals or ethics. In other words, no rule or regulation is going to correct this situation without an unwavering commitment from corporate leadership to do the right thing.
Here’s a good place to start: Full disclosure simply must become the best practice.
That’s why Wachovia was one of the first in its industry to announce we would start expensing stock options. It’s also why, in our annual report last spring, we devoted a discrete section to our off-balance-sheet financing, and we explained it in very straightforward language.
I have to admit to being gratified by the feedback. People are saying Wachovia is setting the standard for disclosure -- and I’d be proud to have our company known for that.
We have made it one of the core values of our new company to be open and forthcoming in sharing information. No matter what the issue, we want to present the facts as we understand them and give people the information they need to understand what is going on.
That’s the only way we in Corporate America today -- and you, who plan to be in Corporate America tomorrow -- can hope to rebuild the devalued trust.
The idea of "doing the right thing" must come off the wall of corporate sloganeering -- and be planted at the top of our everyday agendas.
That conviction is what led us to start where we did in putting together our new company. One of the first things we addressed was developing and committing to our "core values" -- a code of conduct to guide our everyday actions.
Sure, we will -- from time to time -- make mistakes. But even when we don’t get it quite right, we still can try to do the right thing...and we can own up to whatever went wrong, explain why, and how we are fixing it.
Meanwhile, I am beginning to suspect that the worst may be behind us. For evidence, I would point to the fact that August 14 largely turned out to be a non-event. You recall that August 14 is when CEOs and CFOs had to take responsibility, in writing, for the numbers in their financial reports. As the deadline drew closer, a number of pundits predicted it would generate another wave of earnings restatements.
As it turned out, the vast majority of CEOs had no problem vouching for their numbers -- apparently sharing my view, that taking responsibility for financial reports has always been part of the job description of a CEO.
And, given that the deadline came and went, and the requisite documents were submitted without creating as much as a ripple -- let alone a wave -- I think we all can start to take heart in the idea that we may be getting this sad episode behind us.
Again, I appreciate the opportunity to spend some time with you today. Thank you.