Milliken & Company is a global company whose expertise in research, design, and manufacturing is seen in some 18,000 different products around the world. Drawing on thousands of patents and a portfolio with applications across the textile, flooring, chemical and healthcare businesses, the company harnesses a shared sense of integrity and excellence to positively impact the world for generations.It is also one of the few companies that has been a World’s Most Ethical Companies® honoree every year the list has existed. Halsey Cook, Milliken’s President and CEO, talks about the power of a culture of integrity, how “the air gets thinner” for a world-class ethics and compliance program, and how alignment is everything. Interview by Bill Coffin.
Can you talk about some of the specific ethics and compliance challenges or opportunities that are present within your industry and how Milliken’s ethics and compliance program addresses them?
I’ve been here almost four years, and this award was important in my decision to come to Milliken. When we talk about what it means to be part of Milliken, this award is a shorthand way for us to describe our culture. Staying in that winner’s circle for sixteen years is a great source of pride for us, and I think over time it has really helped us sharpen who we are from a values standpoint.
Sustaining a compliance culture takes constant vigilance, and that’s a big challenge. You can get some fatigue in the organization around doing the amount
of training that we must do, for example. And the application process itself can be exhaustive and a lot of work. Yet, in maintaining focus on these activities, we get better year-in and year-out. We find new ways to reach the levels of excellence that we want.
The networking that goes on around the application process is also a huge benefit. Our compliance organization matches our compliance culture and consists of a federated approach. It doesn’t just come from command and control at the top. It bubbles up naturally because associates from each functional area in each of our main businesses serve on a corporate-wide council we call the Compliance Federation, where issues, policy, and process improvements are discussed and assigned for implementation.
I think that, ultimately, the thing that makes it all work is that we are able to create a high level of trust between our associates and the company. In our culture, we emphasize five values. The first one is integrity, by which we mean simply to do the right thing. We also have a strong emphasis on excellence, particularly around our operations, safety, and financial reporting. We also have sustainability, innovation, and people as strong values. Those five values define us, but we always start with integrity and doing the right thing.
There’s always a risk that people get punished for doing the right thing. Their boss might tell them it’s a bad idea, that they’re not practical and P&L-focused enough, that it’s going to cost the company too much money.
I’ve worked in those types of cultures, and it becomes difficult for people to feel like they can take the risk to always do the right thing and not be put in the penalty box. As a chief cultural officer as well as a Chief Executive Officer, I really try to protect that trust factor. Little decisions along the way make a big difference in how people perceive the culture. Every time you make a decision, there is always a silent test about whether you are serious about doing the right thing.
As an ethics and compliance program matures, you set higher and higher goals. Part of our commitment to our associates, for example, is not to have a data breach. We’ve never had a data breach, so as you try to be perfect, zero is what success looks like. We have the same goal for safety – zero injuries. That’s where the air gets thinner, and it becomes more challenging to live up to your own standards. It pushes us to really try and achieve excellence at the highest level.
Once you get outside of core Milliken, where we’ve got a whole process and a system working around compliance and excellence and doing the right thing, and into your supply chain, things become even more difficult. We must continually expand the circles of compliance into our supplier base, business partners, downstream dealers and people selling our products. We can’t compromise on what we’re doing because that is the extended enterprise, and we do not have as much control. We must constantly be vigilant.
You mentioned that Milliken’s culture of integrity was a factor in your decision to join the company in 2018. We often hear about how a strong culture helps to attract and retain talent, but rarely from a CEO. Could you talk a little more about that?
I have some 30-plus years in business. And along the way, you decide on the types of jobs you want to do, and the types of companies you want to work for based on how they fit your personal value structure. I went to a high school, a college, and a graduate school that all had honor codes. Very simply stated, you don’t lie, cheat, or steal. And if you do, you’re expelled from the community. I always found that to be really powerful, because it meant you could leave your doors unlocked, and you knew that it was a level playing field because people were not cheating on tests. And that was the type of environment I wanted to be in.
Through various parts of my career, I was in some great organizations that operated like that. But others didn’t. In the organizations that didn’t, not only did it become uncomfortable because you weren’t sure exactly how the game was being played, and shortcuts would get rewarded in the short-term. You see, though, that bad behaviors ultimately turn into bigger issues. At one company I worked with, a group of competitors got caught for systematic price collusion at trade shows, and the penalties by several European governments went into the hundreds of millions of dollars. There is a huge potential cost to lack of compliance, and it is so much better if you do not have to learn that lesson the hard way.
My early lessons around honor codes played out for me in business, as I saw that the businesses that were built to last were built on ethics and a strong level of trust between the company and the associates. Milliken seemed like that type of company to me, and I think the Ethisphere award was a quick way for me to confirm that. It has absolutely been as advertised. You can talk about compliance and doing the right thing and being a purpose-led organization. But if people sniff a disconnect between how things actually happen and what you’re saying, it can destroy your authenticity and trust.
Looking back at the last year or so, what ethics, compliance, or culture achievements are you particularly proud of?
As we looked at our product portfolio, we revisited our mission statement. It was not a short process. We really dug into the history: all the documents we could find, 157 years of purpose and value statements and right back to the some of the original letters written by the first owners of the company. We came up with a 14-words statement: Together, we strive to positively impact the world around us for generations to come. And each one of those words means something important to us.
As we started the sausage making of deep strategy inside of our four divisions and our 24 different business units, we found that developing products in alignment with that purpose statement was really something that people wanted to do.
For example, we did some sustainability goal setting as part of our strategic plan. And people were quoting the purpose statement and saying they’ve got this great new product that is circular that uses more natural inputs and could be right in line with where the market is moving. We started judging the sustainability of our acquisitions by virtue of how they would help us move forward for generations to come. Is the sustainability quotient in this acquisition exactly where it needs to be? Will it make us better in those areas? Does it make our values come alive?
In organizations, people generally put purpose and strategy in different boxes. The way that they emerged together for us at Milliken was a surprise and very powerful. It’s still going on. And it’s so much fun for me to watch because the research scientists and the business leaders are way out in front of what I imagined we could do in that time frame. That’s the ideal scenario: for the CEO to feel a little bit like they’re catching up with people who are out in front of them.
We have seen a recent call for greater corporate accountability and more ethical business leadership. How does a company’s behavior position itself for the leadership role it plays in society?
That’s a great question, and, I think, one of the more difficult questions facing CEOs as time goes on.
CEOs are expected to make comments on a whole range of issues. I released a statement after the George Floyd murder because what we saw there was not in alignment with our values, and we absolutely stand against that kind of violence. On other issues, we’ve chosen not to make a public statement.
I think it is increasingly difficult for CEOs to not to give an opinion as the social and political environment gets more extreme. We’ve all seen the Edelman Trust Barometer, and as a lot of social institutions seem to be on the decline, people are looking to businesses to take a bigger role on social issues. That can be a little intoxicating for CEOs who want to take the stage and use it as a bully pulpit on political issues. But, I think, it is not always appropriate to take a public stance on every issue. Instead, I try and keep it in the context of our values and our business.
When I was in business school, there was a big debate about the purpose of business. There were the people who said the purpose of businesses was to earn profits for the benefit of the people who own the business, period. End of the story. And there were the people who said, wait a minute, businesses operate in communities. They use water from the river. There are soccer teams that their children play on. We need to take a much broader stakeholder approach to the way we think about business as an institution inside of a community. Over time, in this era of ESG, that latter outlook has certainly become more the norm than the exception. There’s a clear consensus around a stakeholder view, and I think it works.
Look at the financial returns for the World’s Most Ethical Companies. Milliken tracks against the S&P 500, and we consistently outperform those numbers on a 10-year basis by trying to focus on doing the right thing. CEOs are in a lot of different forums where their opinions are being sought out. I think you’ve got to be absolutely convinced and in alignment with your values on everything you say, but if it’s not within the purview of the markets you serve and the products you make, or those values, I generally will opt out of a statement because I feel it is too far afield.
Milliken has been recognized as a World’s Most Ethical Companies honoree 16 times, which is quite extraordinary. If another company looking to get on this list for the first time reached out to you and asked what your secret is, what would you tell them?
It is more perspiration than inspiration. I think the one of the great things about the Ethisphere award is that the process of applying makes you a better company.
Recently, we noticed that one of our lowest scores from the application process was for our director training program. That caused us to focus on that program and revamp it, which will now make us stronger because our directors are going to be better at asking the right questions of our teams.
Another important factor is a total commitment from the top, which not only includes management but also the ownership. The engagement of Milliken’s private ownership is one thing that I think has really helped us excel. They celebrate with us. They want to win. They want to know that their company is recognized for doing the right thing.
An example of this is a decision we made not long ago for our Blacksburg, SC facility. Our lowest-cost option was a furnace that would generate the steam we needed but would burn either coal or fuel oil. Through the lens of our greenhouse gas reduction goals, though, a much better solution was a complete transformation of the whole system into a modern and efficient one powered by natural gas, one that could also drive a turbine to supply our largest industrial site with its own electricity. Basically, off the grid. It cost 30 times more, which made the payback on the project much longer and put pressure on management to keep earnings growth on target, but it immediately dropped our greenhouse gases globally by over 10 percent.
When we brought it forward, the support from the ownership was absolute and immediate. This was the right solution for the environment and for the company on a multi-year, multi-generational basis, and we should move forward. Management felt the same way. You need complete alignment around the concept of doing the right thing for the long-term even if it means a longer payback, which is not always an easy thing to agree on. But we did it, and that system went into operation at the end of last year. Our dashboard on the amount of CO2 we are producing shows a massive drop. It’s wonderful to see, and now everyone is enjoying the benefit.