Keesa Schreane: Thank you for joining the Climate Money Work podcast. I'm Keesa Schreane. Purpose, governance, strategy, decision-making, risk management, and accountability. These are the areas that a corporate board focuses on. Today, geopolitical, climate, and economic risks are all very interconnected. The right data analytics and insights can be so very valuable. Now, quite frequently, I get asked by board members about these risks and about the data that can help them make decisions and lead and govern effectively, and that's why I am so excited today to discuss some of these topics with Tracy Harris on our show.

Now, Tracy serves as a Bally's Board of Director, Audit Chair on ESG in governance. She also is on the Council of Institutional Investors Board of Directors. Her focus is on being an advisory council member, and previously, she worked with the Council of Institutional Investors on their board as the U.S. Asset Owners Advisory Council member. Additionally, Tracy has extensive experience as a chief financial officer with fantastic insights on how to govern impactfully, and Tracy, like me, enjoys a great book, which I really appreciate. Tracy thanks so much for joining. 

Tracy Harris: Thank you for having me. 

Keesa Schreane: So to set the stage here, first, tell us about your introduction to corporate board work and how you came to the committees that you serve on now.

Tracy Harris: Sure, as you mentioned, I'm a CFO. I've got 30 years of experience across public and private sectors, working in anything from, you know, Economic development, governance, international finance. So I've been in finance for about 30 years now. I came to board work really as a natural progression on my work as a CFO. I'd always interacted with boards, and so now being on boards was something that was much more of an interest to me. So I started pursuing that work about 15 years ago and luckily made my way onto several boards in addition to Bally's Corporation. I'm on the boards of Blue Cross Blue Shield and 1847 Holdings.

Keesa Schreane: Now, Tracy, do you find that with these boards that there are certain committees that carry greater weight than others? You know, thinking about audit or cybersecurity or internal controls. What is your thought about the committees in terms of the weight that they carry? 

Tracy Harris: I think all of the committees are important because they all focus on risk areas that are critical to an organization's strategic success and growth, but I think right now, we're getting a lot more interest in SEC-related dictations that come out about fiber governance. You know, every company is a technology company now, and so every company is worried about their data, they're worried about their customers, they're worried about their clients, they’re are worried about their finances, and making sure that that governance piece is captured through cybersecurity and through internal control and through audit all of those things are critically important to the board. 

Keesa Schreane: In terms of the worries that a corporation has and that maybe even a board will have, going back a couple of years when Engine No. 1 got seats on Exxon's board, I think that people and board members really begin to lean into understanding more about shareholder activism, and understanding the objectives of shareholder activism. I want to know if this activism is really changing the game in terms of the way corporate boards work in terms of how they're engaging. Is it different from what we saw years ago? 

Tracy Harris: I think it is because right now, you know, typically they would just rubber stamp the board of directors. So what you're saying now is activist shareholders may nominate their own candidate and they aren't approving a hundred percent of the boards of directors, you know, their proxy battles that are going on, they're asking for strategic changes, they're asking to know about ESG, and how companies are doing related to climate initiatives, and social initiatives, and governance initiatives.

There are also legal and regulatory considerations because companies and activists have to navigate the kind of legal and regulatory environments that are getting more and more complex. It's the long-term impact of what these activists will do and how they will impact the organization overall.

I think sometimes successful activism can lead to meaningful changes for companies and their policies and how they treat their workers. I know Amazon has had problems with that, and how they treat their workers, and the delivery workers in particular with people in the factory. So activism can help organizations, and you should listen to the activists.

It doesn't necessarily mean you agree with everything they're saying, but if they're legitimate concerns as an organization to protect your value and to protect your workers, you want to pay attention because there could be legal ramifications that come from those things, from not listening to real critical advice from the outside.

Keesa Schreane: Just in terms of, I guess politics is the word I'm looking for, in terms of the politics of having investors, institutional investors, some of them having larger shares than others, some of them having a greater influence than others. How does that work? If you're a new board member, say, and you really need to learn how to navigate, or if you've been there for a while and the season, the navigation tools you used before, need to shift, what sorts of things are important to operate in this environment where you do have different agendas, but you also have a different level and a different weight in terms of how much ownership there actually is?

Tracy Harris: Well, you know, I'm also on the board of the District Columbia Retirement Board and as an institutional investor there, you know, it depends because what we think is significant, in a $5 billion fund or a $3 billion fund, may not be as significant as a CalPERS or an NYSLRS, which are the larger  New York or California funds that are truly huge, huge market movers on the institutional side. So institutional investors have things that within their investment policy statements that they want to see happen. They want to see certain ESG-related issues resolved. They want to see some diversity, equity, and inclusion if that's what the fund has promoted that they're going to be doing. They want to see the things that you came to them with this fund and you told them that, hey, this is what we're going to do. If we're going to invest in energy, it's going to be clean energy. We want to make sure that that's happening.

So investors are pretty much adamant about making sure that if they're going to put their money to use, it's going to be something that number one, that their members are supportive of, by approving their investment policy, and that the companies that they invest with are not going to flip the script on them and do something that they didn't disclose.

So it's really important from an institutional side to make sure to monitor your investments over time and to make sure that they're doing the things that you've asked them to do. 

Keesa Schreane: I want to dive into some of those issues that you mentioned, but before that, I want to just talk operationally about how you do what you do.

There are clearly emerging technologies in the corporate board and governance space. I wanted to know, how do you use the tools, whether we're talking about agenda tools,  just to literally create and distribute the agenda, whether we're talking about note taking, you know, have you seen any tools that have really made an impactful difference in terms of how efficient and effective that a board can be?

Tracy Harris: Well, remember, everybody used to use paper. Now everybody uses their iPad, or you can use a board portal and log into the portal and all the documentation is in the portal. There are several different types out there. Diligent has a portal board, WordBook, I think is the name of the other one, and Govenda, or just different companies that provide that. So that makes it much more efficient to distribute information early enough for people to read and take a look at, and to ask questions, and to jot notes down. Typically, you know, you want to make sure that people see the information a week or two in advance so they can really get an understanding of what's going on in the last quarter or so.

It also helps with data analytics, and cyber security, making sure that everything is secure and you don't have papers kind of roaming around like you used to previously. So that's really good. We haven't really used any, you know, AI or any of that stuff yet, but I'm sure that that's probably out there for other, more sophisticated, technologically superior boards, but not on any of the ones I've done yet.

Keesa Schreane:  So if you had a magic wand and you could create something that would make the work a lot more effective, maybe less time-consuming, and just to help you as board members, to really support your efforts, what would that look like? If you had a crystal ball or just a wand, rather a magic wand, to just tap it and just have it appear in front of you?

What would you love to create that you think would just make things simpler and give you the opportunity to do more with less time?

Tracy Harris: You know, there's no shortcut on the board. You really do have to read everything and really understand what's going on at that business. I don't think technology is going to ever change that to where you're not wanting to know what the financial results are or where the growth is coming from or where their problems and all of those things. You have to really pay attention, read, talk to people within the organization to get clarity on. I don't think technology is ever going to replace that, just yet. I think as a board member, you want to give it 100 percent of your time and focus. You're there to be prepared, you're there to understand the issues that are facing your organization, and to come up with strategies to help them be more successful.

So I don't think there's any technology at this point that is going to get you there beyond being able to get documents earlier so that you can review them. I mean, if you had someone read you the documents, maybe, but, I don't know if that's not the same, and I do think that there's something different about physical documents versus digital documents because I think there have been studies shown that if you physically read and touch something, you tend to recall it more than just reading it on the screen, and I’m one of those people that I need to touch things.

So even though I have it, I'll print it out if there's something that's really particular of interest, and underline it, and write notes and things like that. That's important to me. I'm still very much kind of a Luddite. 

Keesa Schreane: This is fantastic insight and something I'm sure that your colleagues and peers would definitely have some similar sentiments and thoughts about. I want to get into these specific areas that you are seeing that are really impacting how you operate and what's important to the board. So I'm just going to throw out a couple of them, and we can go one by one if you'd like, or if we're missing some geopolitical factors, the labor market, inclusion efforts, and then we'll talk about supply chain and just pricing. So if you want to kind of dive into one of those, how are those things impacting your work?

Tracy Harris: Well, I mean, geopolitics is particularly one of those things where even in America the political landscape has changed dramatically and the threats of violence and things like that going on in organizations.

I know that there've been several shootings, even over the weekend in the dollar store and other businesses, where you can't really manage that risk. Ballys operates hotels and casinos across the country and internationally, so any type of issue of that nature, or instability of that nature, all ups the risk factor for any organization.

I think that is something that boards need to be aware of because it could be a potential disruption in business. It could lead to an environment that's more costly because of security and because of the security measures that you have to take. Although casinos are probably some of the most secure organizations in the world, you still need to stay on guard for that. I think gaming is a highly regulated environment. So any regulatory changes that come as a part of that is very important. I know that most of our facilities require lots of equipment, so making sure that the supply chains are resilient and that we can get the machines or whatever we need to operate in those types of facilities is important because we're an international organization. Currency fluctuation is another piece. That's really something we need to consider and look at, but, you know, managing your brand, managing your reputation, those types of things are all key considerations in this environment right now.

It's a highly regulated environment. Being able to respond to the regulator is critical, and whether they be domestic or international, you've got to be able to mount your response fairly quickly to make sure operations continue and things go smoothly in your organizations now, given the environment, because things are changing and boards need to know how to navigate those waters effectively.

Keesa Schreane: You mentioned Bally's and some issues that are really, I guess, specific to the gaming industry. As we roll into ESG conversations, ESG investing, I know that that might be considered to be one of the sin socks is one of the old school terms for it. 

Tracy Harris: Oh, not it’s not. 

Keesa Schreane: Okay, make the case.

Tracy Harris: No, it's not. You know, I've looked at what these types of facilities mean to the communities that they serve. In Bally's case, these are places where there was a lot of disinvestment in those communities. Now, they have jobs, they have a place to go, they have a community, they have a partner who works with the government to make sure that there's a safe area.

We're about to open a casino in Chicago. That's really the talk of the town because they've not had that kind of investment in communities, and they've not created the types of jobs and the wage level of the jobs. I mean, these are serious, 24 seven, operations that really can restart a community. So I don't think that it's a sin. I think it's an adult sport that needs to be measured and I think people enjoy it. I think that people enjoy getting together. There are hotels and restaurants that benefit in the immediate vicinity. I kind of disagree that it's a sin. I think yes, people do have problems with gambling, but that happens before you open the casino. 

Keesa Schreane: So we talked about brand a little earlier and you mentioned the importance of brand and building the business. So what I'm hearing from you is that there is an opportunity to look at the casino as a community reinvestment tool, as an asset that can be used to talk about how to build up the community. 

Tracy Harris: And a job creator and a tax generator.

Keesa Schreane: So in the context of those sustainability, investing, sustainable finance discussions, instead of seeing it in the old school or classic way, I'll say, there is a way that it can be viewed as a positive and is really generating wealth, generating income for communities.

Tracy Harris: Absolutely.

Keesa Schreane: Have you seen a lot of those conversations happen where literally that sort of conversation has been able to be executed successfully?

Like, let's not see it as this, rather, this is the reality of the situation, and we really need to look at reframing how we view this. What's a conversation that you're having right now?

Tracy Harris: It's a conversation that Ballys has in every community that it operates in and serves because it is generating economic activity in places where there's a lot of disinvestment and they're creating jobs, they're creating vendor relationships there. You know, there's a whole ecosystem that works to support, a 24 seven-casino operation, and I think that the communities are benefiting from it in part of having, not only in terms of socialization and having someplace to go where you can have a meal or see a show or blah, blah, blah, blah, but also in just having something in the community that's generating multiple tax streams to support other areas within that community.

Keesa Schreane: I want to talk about one of the other pieces, too. We've talked about the community development aspect, geopolitical concerns, supply chain, etc. I want to talk about generative AI do you see that as a legal, or maybe perhaps in the future, regulatory issue, and how do boards need to handle that? How would you say in your experience, how could that be successfully managed?  How can members even learn about it? Because it's not a small piece of information, there's quite a lot that we could all stand to learn about it, so how do you think that should be executed in terms of learning and in terms of implementation? 

Tracy Harris: I think we're all at the beginning of learning about generative AI and how it can be used for good and not good within a corporate environment.

I don't think we know enough yet. I know I don't know enough. I think this is one of those additional risk factors that if you're doing a risk management assessment of your organization, it's something that you definitely have to put top of the list because you don't know how it can be used against you and you don't know how it can be used against your brand or against members of your organization, or how it can find its way inside of your infrastructure or your technology.

So I think us, we all have a lot to learn because we don't really know how powerful this tool is yet. We don't know how it should or can be used to help us. I'm sure it can be used to help organizations be more successful and improve growth, but I can't say that I know exactly everything about generative AI right now. It's on the learning curve on that 

Keesa Schreane: One thing you're not on the learning curve on, you fully master is, the finances, being a chief financial officer, on audit committees, et cetera. I know that you said earlier that you think that boards basically have equal weighting in terms of the committees, there's not one that has a higher weight than others, but I would say most folks would say the audit committee is pretty important.

Tracy Harris: I think it's very important because it's your face to Wall Street, it's your face to the SEC, it's your face to the investor, it's your face to the world.

How are you doing financially and making sure that your books and records are clean and balanced, and you're making fair assessments of your risks? So yeah, the audit is important. It is. 

Keesa Schreane: So with that said, I was going to ask, how can you do that? Do you follow models? I mean, and obviously, you come from a fantastic, long, CFO background, but with that said, would you be able to boil it down into three steps in order to successfully, whether we're talking about investments, revenue generation, or just making sure that those internal controls are spot on. What are the top three things that you would tell an organization, a board member, to really focus on? 

Tracy Harris: The quality and the skill set of the CFO, the audit firm that you utilize, you want to make sure that they're top in class, you want to make sure that they are very much up to date on what's going on with GAP and any other pronouncements that are coming out as it relates to the FCC, and you also want to make sure that your internal control environment is tested regularly so that you know, especially when you're doing financial implementations and any type of technology implementations, that you really are making sure that your data is secure, and that your data is accurate, and that your data is most up to date in terms of your finances.

So a lot of that technology that you're using can really make or break you, but the people who interpret that technology and utilize that technology, like the CFO's office and the auditors, also need to be top-notch as well. 

Keesa Schreane: In terms of the boards and really, you mentioned the CFO needs to be top-notch, the auditors as well as the internal controls, can you talk a bit about investments and revenue specifically, and how the board helps to make those investments and how they help to generate revenue in your experience?

Tracy Harris: On the board of care for a super awesome shield, for example, we manage our investment portfolio. We're working with a wonderful investment advisor, and we're making sure that not only from a regulatory standpoint, we have our reserves in place, but also that we're maximizing the revenue that we generate from the investments that we make. That takes a lot of time and a lot of thought, and a lot of long-term planning, and strategic planning, to make sure that you not only have enough revenue generated for future investments, but you're also providing enough revenue for operation. Operations are very different from investments because you need that money on a daily basis, So investments can tend to be longer term, but just making sure that that mix is right and making sure that your advisors are kind of putting you into investments makes sense given your business model is critical, I think, but our investments are used on that for to to to further our revenue growth. We invest in healthcare businesses at various stages, and that has been successful. 

Keesa Schreane: I want to talk about moving from investments and revenues to corporate culture and to get your thoughts on the board's role in creating corporate culture. You mentioned, I think, Blue Cross would be a great example, it is health care and also Ballys, but that might be a really good example for us to lean into in terms of, do you help to set it? Is it something that you help to reinforce? What has been your role in that? 

Tracy Harris: I think the board's role in culture is to set the tone at the top and to make sure that number one, people feel included. They feel listened to, they feel safe at work, they feel that their work has meaning and value and they're adequately compensated for it. Culture comes across in a lot of different ways when it's not good. It comes across in customer service, it comes across in performance, it comes across in earnings, it comes across in a variety of ways, and so you want to make sure that from the top down, people understand that building a successful culture, a sustainable culture, really revolves around the people, and the management, and making sure those managers are trained on how to treat people.

I don't know that we're doing enough in terms of helping people understand how to manage because it's very different from doing a job. Managing others, encouraging others, supporting others, educating and training others, is a very different set of skills than actually doing the work. It's a much-needed set of skills if you want to have a culture where people feel that they are rewarded for their performance, they are given direction when needed, and they are supported when needed. I think it kind of communicates that experience to the customer, that they're getting the services they need, if they're feeling good about the products that are being created if they feel good about the conversations that they're having with the people in the workforce that they're talking to on the phone.

All of that is culture and it has to be a priority for the board to make sure that people want to, in the example of Bally's, is the culture such that you want to come back to this organization again, and do you feel good when you walk in the door? Do you feel safe when you walk in the door? Do you feel like you're respected when you ask a question or do you need some help? Do you feel that the staff is attentive to your needs? Those are experiences people want and expect when they're coming into an organization where they're spending their money. So we need to make sure that the culture within those organizations from top to bottom understands how we treat people and how they feel when they leave.

Keesa Schreane: I love the fact that you mentioned managing people, being a leader, is a lot different than knowing a skill set very well. How can we train leaders better? Is it not necessarily something that we need to lean on technology to do? Is it something that we need to lean on mentorship to do or sponsorship? What are the key elements that are missing and how can we teach them, train them, and mentor them better? 

Tracy Harris: You know, that's a really good question because I feel that a lot of people get promoted because they have a certain skill set, and that skill set is they can do one thing well, and it may not always be that they know how to deal with other people and how to treat other people with respect and dignity and encouragement.

They also have to manage performance and they have to figure out the right people for the right spots. I mean, management takes time and it's not something that I think is going to necessarily immediately generate a return, and I think a lot of people get that confused with something else. Management is something over time. If you want somebody in your organization for five or six years or longer and they don't have good management, they're not going to be there because the average person leaves a job in three to four years, and they leave because of management. They leave because they don't feel like they're supported, they don't feel like they have a place to go, they don't feel like there's any room for growth within that organization, or that their manager is not supportive of them and their career, or it's an environment that's toxic and hostile because of the management and the worst form of behavior you allow sets the culture.

So it's important that people understand that if you want to get people–it's why people are having a hard time coming back to the office because they've been away from such toxic activity for so long, they don't want to go back to it. They want to just be able to do their job, and not have to deal with all the negative interpersonal activities that go on in offices, and people don't understand that's just, that's a form of bad management when you have a situation that way. Most people, if they felt that their environment was safe and healthy and they could perform and do their jobs effectively and efficiently, and create company revenue and growth, I don't think they would complain so much about going back to the office three days a week.

It's the other thing that you can kind of do without, and that's a function of management, whatever you tolerate, that becomes your culture, and people know it and see it. They might not say anything about it, but it's definitely something to see. 

Keesa Schreane: Wow, very well said. Well, Tracy, I want to just get your thoughts about moving into board work. You had such wonderful feedback on being a leader, and I'm sure some of that crosses over, but when you talk to folks who are interested in being on corporate boards, maybe they have experience on not-for-profits, and they want to make that transition. What sorts of things would you say are most important from a skill set perspective, as well as more of a leadership, you know, qualitative character perspective? What sorts of things do you communicate and advise them on? 

Tracy Harris: Well, I would say, first of all, you want to have the technical skills and capability within Senior level management to be on a board. You want to have a background that is really strong in terms of technical skill, whether it be finance, or whether it be marketing, or HR, those types of things. You really do want to be technically capable of serving at the board level, but you also want to have some leadership experience. You want to make sure that you're at a point in your life where you're not easily intimidated by people, and you can state your opinions, and be very clear about why you're feeling the way you're feeling, and also collaborate with your other board members and those are skills that are a little softer, but your communication skills on the board are so critical when you're discussing different heated topics and you have differing opinions and the board needs to speak with one voice, so you have to figure out a way to get to that one voice, but at the same time, sharing what you feel is important and sharing your ideas because that's why you're there. You're there to share your knowledge and you want to make sure you're bringing that to the table as well. I think you want to have some idea of the organization and the business that they're working in. In that space, whether it's industry knowledge, you want to know exactly, if you can, what are the key drivers within those businesses that you want to be on those boards for? You want to understand how those boards are governed and what the governance structure looks like.

So you want to understand what the regulatory environment looks like, so you want to start thinking, what boards would I best be suited on? Because everybody can't be on every board. Everybody has a certain skill set and they need to find that board that matches the skill sets that they have and could benefit from that.

Keesa Schreane: Are you seeing opportunities brought for women and women of color specifically over the last few years, or would you say that things have stayed stagnant? 

Tracy Harris: I think there are more opportunities because there's been more effort to diversify boards and remember the women or the diversity working on those boards are more than qualified to be on those boards, regardless of their diversity.

You have to have a basic set of skills. You have to understand the market. You have to have some experience. I think diversity brings another point of view that you might not know or have experienced. So if you're in a group where there's only a bunch of kids or a bunch of men who went to college together and they've had the same friends and the same ideas for the last 50 years, I don't think you're getting diversity there.

If you bring in a woman, or if you bring in someone who's diverse, or you bring someone from another country or someone from a different age group, I think you do. You get a different opinion about the world. I think if you're a company operating in today's environment where everything is changing, all at once, the geopolitical environment, the risk environment, the financial environment, the health environment, all of these things are always dynamic and always changing all at once. You want to have as many people in that room who understand the different kinds of spikes on the wheel of life that can help you make a better product, help you produce a better idea, help you engage for a better merger or acquisition, help you understand another country or another culture.

You want those people in the room to help you figure out how to grow your business because, you know, businesses are in the business of growth and revenue production, that's the business and you need people in those rooms that can help you achieve those goals.

Keesa Schreane: Finally, Tracy, tell us something that we did not know about leadership and your leadership journey, what you've learned, what's been the most important thing. Tell us something we didn’t know.

Tracy Harris: Well, they talk a lot about imposter syndrome, right? About people feeling like they don't necessarily deserve to be in the rooms that they're in.

I feel that's kind of a cop-out because if you're in that room, you deserve to be there and you've got a lot to add, you've got a lot to contribute, and I know in my journey over the last 15 years to get into the boardroom, I've learned a lot in that journey, but one thing I've never questioned is my ability to be there, and my ability to contribute. I think if there is any room in any country where people are making decisions about your life or the life of your children about your money, or about your environment, you deserve to be in that room.

I would love to see more women step up and get into those rooms because they're desperately needed. There are a lot of things that I think we all need to lean in to do more of, and that is whether it's a not-for-profit, a church, a political organization, anywhere there’s a boardroom where decisions are being made about you, your family, and your life. There needs to be equal representation in that room. Make sure it's fair and balanced for everyone. 

Keesa Schreane: Great words from Tracy Harris. Get in that room. That's really the best way to lead, to make sure you have fair and balanced leadership. Thank you so much for your time, Tracy. This has been fantastic.

Tracy Harris: Thank you.