Levi Strauss | Fix the Diversity Problem
On this episode of HOW Conversations, the CEO of Levi Strauss & Co. Chip Bergh tells Dov Seidman how difficult it was to learn only about 3% of Levi’s leadership management are black. And how he’s leading the plan to fix the problem. ‘A diverse organization at all levels will outperform a homogenous one every single time’ Chip tells Dov. They also discuss the hard choice Chip had to make to lay off staff during the crises and what Chip learned about leadership from the Army.
Transcript
welcome
friends and members of the howe
institute for society’s
next and latest uh how conversation
where we look at issues and topics and
dynamics
in society in our communities in our
organizations through the lens of how
through the lens of how
we do what we do it’s a distinct
and personal pleasure and honor to have
with us today
chip berg the ceo of levi’s
uh chip welcome uh i’m wearing my
uniform for this conversation
a a t-shirt that i’m proud to wear that
you yourself
uh sent me when uh i had the honor of
spending some time with you and your
wonderful global uh
team of leaders at levi well doug first
of all thank you for having me here and
um it’s delighted to be with you i
consider you a great friend
and and mentor and uh partner in many
many ways so
i’m delighted to have the time to spend
with you today
chip i should add in the introduction
and i should add
that you and i are in common cause and
you are a
a member of the howe institute board of
directors and your wisdom and guidance
as a board member uh for that i’m i’m
thankful in an unbounded way
uh we’re in common cause and we’re in
common cause that business
uh and leadership uh can be elevated uh
in society
so again great to have you well it’s
great to be here
you know one of the great things about
this company is
we have 167 year history of what we call
profits through principles
from the very first year that levi
strauss the man who
founded this company made a profit
he gave a percentage of that profit back
to a local orphanage
and and this notion of um profits
through principles that were in business
to do
more than just jeanrate profits but part
of those profits get
get plowed back into doing something
good in society
has been part of who we are from the
very very beginning
and i would argue that our values are
part of the reason the company has been
successful for 167 years
and let’s just put this in perspective
in 2019
uh you had one of the most successful
ipos
of 2019. you were levi was flying high
you were flying high your stock price
was flying high
uh within months of that tell us what
happened
yeah so um you’re right uh we we
um took the company public for the
second time actually the company was
public back in the 1970s and then
the family did the largest leveraged
buyout in the history of wall street in
the early 80s and
and took the company private again and
you know we had a number of really
really strong years uh
in 17 18 and 19 made the decision to
take the company public again
and um and we had had a very very good
run we
have had um up till this current fiscal
year
seven fiscal years in a row of both
revenue growth and profit growth on
creating substantial shareholder value
but also stakeholder value as a result
of that because of
our ability to plow some of the profits
back into the
into doing good in the world and
then the pandemic happened and you and i
were together in late february
here in the bay area at this leader
meeting
and at that point in time we had already
shut shut our stores in most of china
we just we so underestimated even though
we had visibility because we’ve got you
know we’re a big global company we have
a business in china
we had visibility to the impact that it
had in china
and we were just in denial about how
big of an impact it was going to have on
us globally so
we came into this fiscal year with a lot
of momentum
our first quarter goes through february
and
um we had a a really solid first quarter
even though the
the virus had an impact in china
you know the rest of the company had a
really strong first quarter
and then boom the second quarter we just
absolutely got hammered so we came into
this fiscal year expecting that we were
going to be
a little bit over six billion dollars in
revenues
and um you know so in a typical quarter
would be
1.5 billion dollars in revenues
and in the second quarter we did less
than a half a billion dollars in revenue
our stores were closed for 10 of the 13
weeks of that quarter
most of our big wholesale customers like
macy’s and kohl’s were also closed
during most of that quarter and um
you know we were faced with maybe not
quite an existential threat but
um you know certainly a very very
significant threat to the business
and the choice fundamentally was do we
restructure the organization to reflect
the reality
of the fact that we’re going to be a
smaller company coming out of this
so that we can continue to invest in the
things that are important to us
and continue to you know build the
strength of the brand and focus on the
things that will grow the company for
the long term
or do we carry a bloated organization
and slash and burn everything else and
it was
it was a gun-wrenching decision but when
we announced our second quarter results
we also announced that we were going to
lay off about 700 management employees
which is about 15
of our workforce and um you know
we tried to execute in the right way and
we can talk about that but
but you know more importantly this was
about
the sustainability of the company for
the next 167 years
being able to invest in the things that
make us worthy of being around for the
next 167 years
and and thinking about the remaining
employees and the quality
of the opportunities that they’re going
to have
over the next several years and um and
that’s why we landed
with the decision to to move forward as
we did
take us into that world how you went
about it
the the principles of that
allowed you to do your best to to get it
right
i mean you and i both know that what
makes something a dilemma is both
choices
are painful both choices are bad and
you have to make a choice but it’s hard
to feel good
about either one i think it all starts
with a little bit of humility
and being humble and really listening to
people
as as and understanding what they were
going through with the pandemic
and then transparency is also something
that’s really really important to me
and and so when when we began to
acknowledge that we were going to be a
much smaller company
we kind of asked ourselves what does
success
look like through the pandemic success
looks like
number one we continue to lead with our
values that everything that we do is
purpose driven
and um and even if we have to make this
difficult choice about
laying people off that we’re going to do
it the right way we’re going to do it in
a very principled way
and honor them and and you know
so for example we’re laying people off
into a
global pandemic everybody who got laid
off even if they’d only been with the
company one month
got 12 months of medical care
we let everybody keep their company
computer and their company phone
so that they could begin a job search
you know and
for many people their company computer
is their computer
and so we tried to do things in the
right way and obviously had
had packages for everybody as well but
um i was very transparent about the fact
that we were going to have to take
actions to contain our cost
long before we actually executed this
if you were put your teacher’s hat on
and i’m hearing
humility i’m hearing transparency
obviously doing things with them
to round out your playbook of you’re in
crisis
crisis is not self-imposed it’s a
pandemic it came from without
not from within uh
just give me the entire leadership
playbook if you were really trying to
impart it to others uh
now that you’ve had time to at least
think of what got you through this
yeah i know you’re still through it
we’re not through it yet yeah exactly i
was just about to say that
um i i think you know one of the most
important things for a leader is to be
visible at a time of crisis and to be
honest truth really matters
i do this thing you know it’s basically
a town hall but we call it chips and
beer
and you know during a normal period of
time
i do chips and beer on a monthly basis
we webcast it globally
it’s pretty much open mic people can ask
me questions i might
have five or ten minutes a little bit of
an update on the business
and what i can share with respect to the
business and then
then it’s open mic and people can ask me
questions about anything
and i get questions all over the map but
it’s part of how i stay in touch
with where people are and you know
what’s
what what’s out there in the
organization
yeah do you have an example the question
you got that
was a between the i question and how you
answered it
well and for others how do you go about
creating that type of environment where
people can really ask for the truth and
then you give it to them
i would say the toughest questions i’m
getting
now are around um around
the the struggles that parents are
facing
with schools still being done remotely
you know
so and and and this is something that
we’ve really spent a lot of time on
lately is just the mental health of the
organization through the pandemic
you know i’ve listened to a lot of
employees over the last
month or so in particular about this
issue
and you know we had we had i had one
uh single mom three kids one a toddler
one a kindergartner and one in third
grade i think or second grade
and she so she’s trying to manage two
kids
in school a kindergartner who doesn’t
even know how to
log into zoom or you know run a computer
or anything
and a toddler running it around the
house and then still trying to do her
day job and be
on on calls and it’s just it’s an
impossible
scenario for some people to manage we’ve
lost
four women in the last month or so who
um at least two of them are just because
they said
i’m failing at everything right now i’m
failing on the job and i’m failing at
home and
something has to give and so you know
we’re we’re really trying to be very
values driven when it comes to this we
just announced yesterday that we’re
giving everybody
a corporate day off once a month an
additional holiday if you will
once a month the last friday of every
month third friday if it’s
if there’s a holiday already on the
fourth friday
we’ve declared fridays all fridays to be
no meeting days
so that people have alone time so that
they can think
catch up on emails do whatever they’ve
got to do to get caught up
and um and we’re about to roll out an
entire program on wellness
that just kind of takes wellness to the
next level but it’s something that i’m
really concerned you’re getting to
important point because
in society we’re used to the distinction
between some people are breadwinners and
some people are caregivers and there’s
something about this pandemic where
we’re all caregivers we’re caring for
our children our loved ones and you and
i have talked about
uh humanizing business that business
leading businesses are on a journey to
put humanity at the center
of how they do what they do and if we
see people as not just breadwinners but
caregivers and we
embrace and celebrate that part of what
makes them human
is their need to care for their children
for their loved ones and
right and i mean i i
you know this pandemic is has such
epic impact i guess i would say you know
i want people who work for levi strauss
to be able to tell their grandchildren
someday
how the company treated them during this
period of time i want them to be able to
look back and say
the company did the right things you
know i like to talk about the harder
right
over the easy or wrong you know it’d be
easy to say we’re not going to give more
corporate holidays
but people need it right now to
make it all kind of hang together we
talk about stakeholders
one of the most important stakeholder
groups i’ve got are our employees
and and and taking care of them will
just you know
amp up their commitment to the company
and their loyalty to the company as well
the pandemic which challenged you
profoundly and dramatically
also laid bare in society some deeper
truths
uh around uh societal inequalities and
disparities
around racial injustice on july 14th
you joined us for a virtual gathering
of leaders and part of what made the
gathering uh
memorable uh is that you spoke so
compellingly and emphatically
uh around what the pandemic laid barren
society around racial
inequality and what it laid bare for you
inside
levi’s as a company and you just spoke
to the heart of the group and
people are still talking about it so i’d
like to play a clip from that
evening we have a problem with diversity
in our company we’re very diverse
globally
we’re over represented with women if you
look at our u.s population
by ethnicity we’re very diverse
but big but if you strip out our
distribution centers and you strip out
our retail organization
and you really look at where it matters
most we aren’t
we’ve got a problem and i declared it
publicly as a problem
and i take full accountability for it
it’s probably the one place where i’ve
failed more than any place
but we publicly committed to an action
plan take us on
take us into that world and why was it a
personal failure
what did you learn uh where are you in
this
uh dimension of of the journey
because that’s that’s another crisis for
you yeah well
it’s a crisis for society as well i mean
i i do think
you know there has become a reckoning
here
and i’ve done a lot of uh a lot of soul
searching on this
um a lot of introspection uh you know
after
uh after the george floyd
um murder um we took a hard look at
where we are as a company
and in our management ranks
we are not where we need to be and you
know the first
the first step in making progress fixing
a problem is admitting you’ve got a
problem
and and that was the very first thing we
needed to do
but we are um you know particularly
with the black community we are
significantly underrepresented we’re
at about three percent of our management
population here in the united states
are are are black leaders um
and none in the senior ranks i don’t
have any direct reports
who are black um i don’t have there’s
no black leader on our board of
directors um
and and those are glaring holes
and um we’re gonna fix it and and
we’re gonna fix it because it’s the
right thing to do i believe we’re not
as good of a company as we could be if
we were
as diverse as we should be and i really
do believe that a diverse organization
that all levels
will outperform a homogenous one every
single time
you know one thing about this company
that i can say
quite definitively is when we set our
mind on doing something
we get it done and um you know we have
declared
that we we published our diversity data
we are very transparent back to this
point about transparency
and truth we are very transparent with
our data we will publish our data on an
annual basis
and we better make progress and and i
will be held accountable
for making progress and i will hold
myself accountable for making progress
uh and i’m confident that we will we
also publicly declared that we are going
to add a black leader to our board of
directors that search searches on we’re
making really good progress i’m very
excited about the candidates that we’ve
already met
um and and it will make us a better
board
what impact has it had on your team work
that that you have
embraced this as a personal failing and
been so direct candid and wrong with
them that this is a personal failing do
you feel that it’s been an invitation
for them to take responsibility and
accountability around
areas that they control and it’s created
even more honest
dialogue about aspects of how you’re
running the company
well i would say that one of the
positive outcomes
of the i recall it the movement both
at a national level and then inside the
company
is that a real voice has been given to
the black community um and
um you know part of what’s made this
hard for us is
on the outside externally we stand for
equality
we desegregated our factories 10 years
before the civil rights act
when we had factories here in the united
states um
we’ve contributed over 35 million
dollars in the last five
years to organizations that are focused
on social justice and racial equality
and um and 85 of the organizations that
we funded
are led by people of color black or
brown leaders and and so
this is a big part of who we are
externally yet internally
we weren’t where we needed to be so it’s
given voice to the black community
internally um and and i’ve spent a lot
of time
just listening and empathetically
to what they live every single day and
what
what has been hard for me to hear
honestly is not just the challenges that
they have
outside as a black person living in san
francisco
but inside this company
the challenges that they face the the
micro
the you know the the racial biases that
they face
the fact that they feel that they have
to conform to a mold
that they can’t bring their true
authentic self to work
every single day the fact that they
can’t look up the hierarchy of the
company and see somebody like themselves
um all of these things make it more
difficult for them to be successful
and and and and that’s on me
as the leader of this company i can fix
that
and i can drive the change through the
organization
to address those issues and i feel i
feel an obligation to do that
to set them up so that they can be
successful um
nobody should have to go to work feeling
like they can’t be themselves
that they can’t bring their their true
authentic self to work
you know so this word authenticity is
kind of a key word
and um and and people being able to be
their authentic self is part of what
the levi’s brand is all about it
unleashes
people’s ability to be their their true
authentic self
and yet i’ve got employees saying i i
can’t be my authentic self
today at work because i have to fit into
a mold
and and you know we talked about you
know there’s a lot of talk about
systemic racism in the country
and as we’ve talked about this
internally
we’ve landed on on a construct which i
actually like
better which is structural racism
systemic racism suggests
that it’s natural you have weather
systems
structures are man-made and everything
about racism in this country
traces to man-made structures whether
they’re laws
or or just traditions they’re man-made
structures that have created racism
and we’ve got structures in this company
that we have to go back
and really break to really advance
on the the true cause of diversity so
we are where we are because of the
structures that we’ve got whether that’s
whether that’s how we hire people how we
promote people
how we pay people how we assignment plan
people all of those are
structures that we’ve got in place and
we’ve got to go back and challenge
every single one of them because if we
don’t we’re just going to keep getting
the same results
and and that’s part of what’s going on
that i i think the distinction is is
compelling and
there’s also structures of thought
there’s
are there structures in ourselves how we
see things
our thoughts our assumptions are
structured they’ve been taught to us so
there are structures are that are out
there that have been built
but there’s even structures to how we
think and
and how we come to assume what we assume
and how we uh
the structures to what we emphasize in
making distinctions there are structures
in what allows us to believe
that a system is fair and meritorious
when it might not be so
i it also seems like you’re attacking
the internal structures of our thought
processes
exactly yeah and and i mean that speaks
to the whole unconscious bias and
everything else those are structures
inside our brain that
you know have trained us through the
years to be the way that we are
take all everything you’ve been saying
together it relates
squarely to a jeanral broad statement
you’ve made that
ceos and companies have a role to play
to make the world a better place
to make society better speak to that
well
why are you so confident in saying that
business is not just business
why are you confident in your
proclamation of business
has and should play a role making the
world a better place
making society more just for example
well so
first i think somebody’s got to do it
and and governments are
pulling away from it ngos are pulling
away from it you know
our our our structures our systems
you know uh of governance around the
world
are failing us i think particularly true
here in the united states right now
and and i think somebody has to fill the
void but
i i believe that ceos
do have a platform you know i stepped
into a company as ceo
where there was just this long legacy of
the company not being afraid to stick
its neck out
on important issues of the day and so
you know
part of my lens in deciding where do we
take stands
is will history prove us to be on the
right side of the issue
10 20 30 years from now um
so that’s that’s what led us to taking a
stand for ending gun violence it is
ripping this country apart it becomes
even more clear as time goes on
and uh young kids today
their world view is shaped by
the threat of gun violence in school
my daughter’s school when they’re in
school um
they practice lockdown drills more than
they practice earthquake drills in this
and and we live in san francisco what is
your philosophy that allows you to pass
judgment on the future
values are part of it if you’re not
trying to be everybody’s friend and
you’re not trying to please everybody
uh then you need to stand for a b and c
and say
the people who should be our customers
and our stakeholders and our suppliers
and the people who should work here
have to stand for a b and c that’s what
we’re about right
yes so um a couple of things on that
first
we can’t stand for everything um you
know it’s very tempting
for a company that is very socially
active and engaged it’s very tempting
for every issue that comes down the pipe
to want to take a stand for it but if
you stand for everything you stand for
nothing
so you have to choose your spots number
one
number two is we we do use this lens
of of you know what really matters when
it comes to
the world today and to society today and
where
will our voice make a difference you
know this this ending gun violence
remember i served in the military i
swore an oath to the constitution i’ll
raise my right hand
i swore oh to the constitution to defend
the constitution
and you know everything we said is not
about repealing the second amendment
it is just about ending gun violence um
you know simple things like national
background checks federal background
checks
the majority of gun owners support that
and it’s it would it’s proven to reduce
gun violence
um red flag laws are also proven to end
gun violence
a couple of laws like that could make a
dramatic difference
this whole notion of chip berg he’s a
business leader
well you’re a leader your platform is
business
you’re leading a business or you’re
standing i mean our community says that
a person needs a place to stand and a
lever with which to move the world you
stand in the context of business
you stand on a business platform but
you’re leading
you’re leading people to the light
customers you’re leading on issues
and i want to thank you for just just
opening your heart and
with the same empathy that you’re using
to make difficult decisions you’re
sharing
uh learnings uh and your own journey so
in a more rapid fire way i just wanna
just ask you some questions um
you spend some time in the military what
what
lesson or two from the military allows
you to lead in this new context
uh that others can grab ahold of too
and then we’ll go on to some other quick
topics i’ve actually got something on
linkedin that people could look up
i called it uh the top 10 lessons i
learned in the military but
i learned as an officer always
leave a link to it we will link to it on
this chat great
um always eat last as an officer you’re
taught to always eat last
i had a battery commander who told me
always
walk with a sense of urgency and and
i actually expanded that concept to
always operate with a sense of urgency
it creates a sense of urgency in others
um you know another military principle
is take the high ground
it’s true from a military standpoint but
it’s also true
morally right take the moral high ground
the last one i’ll share i’ve got you
know a long list of them but
one of the other um ones that i like is
always walk the track park now the track
park
in the military is where you park all of
your military vehicles your
tanks and everything else and and what
that quote really refers to is you can
tell a disciplined unit
just by walking the track park or the
vehicles
parked straight are they parked lined up
they have full tanks of fuel are they
clean
are they ready to go to war at a
moment’s notice
and if the answer is yes you’ve found a
disciplined
military unit if the answer is no
there’s no discipline and it’s true in
everything
every time i’ve been invited uh so
warmly to spend some time with you and
levi team you’ve asked me to tell levi’s
story
which is easy because i was born in san
francisco and all that but
yeah we’re starting to do a countless
lead by story but but tell me
tell me one click that leave my story
that maybe somebody doesn’t know
okay my favorite levi’s story when i was
a young second lieutenant in the army
um the very first military league that i
took my first vacation
i did a eurorail pass trip through the
nordics
you know and and everybody knows what
that is i stayed
in back i had a backpack i stayed in
either you know
in a tent in a in a campground or in a
youth hostel
and i was in burned in norway staying in
a youth hostel
and and if you’ve ever done those kind
of trips as a young kid
you hop to clean your clothes you hop in
the shower with your clothes on
soak yourself down with your clothes on
wash your clothes
rinse them out rinse you know rinse them
and then hung them out to dry so i went
into the hospital bathroom
took my wallet out of my back pocket
put it on the window hopped into the
shower with my levi’s and white t-shirt
on
soaked them all down rinsed them all out
hung them out to dry
and went to bed and i woke up in the
morning and i realized
i left my wallet with all of my cash
on the windows and i ran into the
bathroom
the wallet was there and the levi’s were
gone
and here you are the ceo of levi’s it
was uh mentoring
his story absolutely true story that was
the power of the brand back in the
late 70s early 80s in europe
how many hours of exercise have you done
so far today
only and i asked that because only one
i think you also spend a lot of time
being healthy so that you can lead
right and i think that’s an important
lesson you know you’ve gotta you gotta
take care of yourself
and uh be strong uh and be resilient
right that’s a big part of
yeah resiliency resilience is a key word
right now during the pandemic and i
think it’s especially true during the
pandemic and
you know we talked earlier about mental
health during this period of time too
but
i’ve always kind of considered myself an
athlete and you know played sports as a
kid and
um and so exercising and wellness
taking care of myself has always been
really really important my wife and i
have a saying where we want to have a
long healthy life together and
um so it is it’s one of my core values
is taking care of myself
and last you know we you and i talk
often about
the pause the that
to lead others we need to pause to
reflect on something going on in the
world or the situation we’re in to
reconnect with our values our deepest
beliefs to rethink
an assumption uh that we’re operating
under or to reimagine just
a better tomorrow or a better path
uh and that to pause you have to ask
yourself questions to be socratic with
yourself
so what do you ask yourself when you’re
pausing
to to really get at what matters
so i love this concept with paws
actually you’ve taught me a number of
concepts and pause and pivot are two of
the concepts that really stick with me
but
i actually i have it right here i keep a
journal
every single day and it’s kind of been
interesting reading through it
you know during the pandemic we’re now
nearly a day 180
and uh just flipping through kind of the
the
transformation that’s happened during
the pandemic but
but i do i try every single day to just
kind of step
back on the day and ask myself did i
make a difference today
and on you know did i touch somebody did
i make a difference in somebody’s life
today
was i helpful to my team today and uh
am i thinking enough about what’s around
the corner and
and where are we going and um
you know are are we making the kind of
difference that we need to make
and uh and then every day i do try to
reflect on
am i living my values and am i visibly
leading by example and making a
difference uh in how i lead
so um what an incredible chip
articulation of
humility just in terms of your own inner
life and your inner journey
just being your own work in progress
to be so successful as you are and to be
such a work in progress uh
we all are we all are none of us we all
are
but but to be self-consciously a work in
progress as you’re
got so much on your plate and you’re
leading so broadly so
uh thank you for sharing wisdom thank
you for sharing
inside thank you for uh your friendship
thank you for
being a wonderful member of the howe
institute for society board and
it’s good to be in common cause and
thanks for enriching us that’s
you’re a brother in arms and all of this
so thank you for
all that you’re doing dove and for the
for the impact you’ve had on me
um so it’s it’s it’s mutual and thank
you for everything it’s really beautiful
happy to wear this today great excellent
