Episode 44: Carol Tomé

Janice Ellig, CEO and founder of Ellig Group, sits down with real leaders in this series of game-changing conversations, bespoke to fellow champions of change. Heralded by Bloomberg Businessweek as one of “The World’s Most Influential Headhunters,” Janice is often consulted for her expertise and commitment to gender parity, equity, inclusion, and diversity.

We are honored to present this month’s episode of Leadership Reimagined, “A Culture Carrier for a Global Courier” with Carol Tomé, Chief Executive Officer, and director of UPS. 

One the UPS board since 2003, Carol was appointed as CEO of UPS in 2020, making her the first female CEO in the 114-year history of one of the world’s largest shipping couriers. Twice named to the Forbes list of The World’s 100 Most Powerful Women and among the top 50 most powerful women in business by Fortune Magazine.

Carol Tome Headshot 443x459-1

Prior to joining UPS as CEO in 2020, Carol served as Executive Vice President and Chief Financial Officer of Home Depot, a company she joined in 1995 as Vice President and Treasurer. Prior to Home Depot, she was at Riverwood International, United Bank of Denver (now Wells Fargo) and Johns-Manville Corporation. With nearly 20 years on the UPS Board of Directors, Carol was prepared to step into the role as CEO at a point in her career that she describes as “her calling” and advises those around her to “do what you love and do it so well that people can’t take their eyes off you.”

It is our privilege to share this episode of Leadership Reimagined “A Culture Carrier with Global Courier” with Carol Tomé!

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SHOW Notes: Carol Tomé

 

Carol Tomé on taking over UPS during the COVID pandemic

It was so interesting to onboard during the beginning of the pandemic because what I thought I would be doing didn’t happen. I thought I would be traveling the world, meeting the UPS team, meeting our customers, spending time with our communities in which we serve. But the world shut down. And instead it was a mad dash to make sure that UPS would stay essential because we knew we had to deliver products to the world as they were sheltering in place. And candidly, we weren’t ready for that. We didn’t have all the masks, hand sanitizers, gloves, or operating procedures necessary to make sure our people were safe and that we could take care of our customers. So we scrambled about and we got all of that put together.

I had the opportunity, rather than traveling the world, to spend time with people one on one. And that allowed me to get into the heart and the soul of our company in a way that I hadn’t done before as a UPS board director. It enabled me to go deep into our business model and to see the levers we could pull to actually unleash the revenue and the profits and the culture. So I was very blessed in many ways that I onboarded during the pandemic because I was able to study the company, get to know our people, and bring strategic clarity to our business. I had an amazing team of leaders that supported me in that effort. We operationalized our strategic platform of “customer first, people-led, innovation driven.” And we did that under the theme of “better, not bigger.” That meant we were going to lean into the parts of the market that really valued our end to end network, we were going to shed businesses that were value-destroying, and we were going to unleash the power of our more than 500,000 people by focusing on making UPS the best place to work. And I will say now, after two years of serving in this role for this amazing company, we’ve actually done a lot. We’ve delivered the highest revenues and profits in our customer history, and our Likelihood to Recommend score is the highest it’s ever been.

Carol Tomé on how to mobilize a company of scale

We are a company of scale. We deliver packages in more than 220 countries and territories around the world every day. The way you do it is to land on purpose. We deliver 25 million packages a day. That’s what we do. But we hadn’t declared our why. So early on in my tenure, I put together a cross-functional team of UPSers and challenged them to help define our why. They did a masterful job of interviewing UPS retirees, customers, and communities. They brought back themes of our why, i.e. our purpose, and we iterated and iterated. Finally, we landed on our purpose: moving our world forward by delivering what matters. And no matter what position or role you have at UPS, you know what that means because you can impact that in so many different ways. It’s not just about moving goods. It’s about doing good, too. And that rallying cry, it’s pretty simple. Not very many words, but it’s a rallying cry that everyone at UPS can get their head around.

Carol Tomé on UPS corporate leadership helping out on the front lines during the holiday season

I believe in servant leadership. That’s what we leaders are all about. We’re not here for ourselves. We’re here for the men and women who are delivering packages for our customers. So during the holiday season, we were all out delivering packages. And I’ll tell you what, it’s hard work. I did really well until my very last delivery. We park our package cars on the street, and then we walk up the driveways to the home. And my last delivery stop was a home on a hill. Okay, fine, I can walk up a hill, but it was seven cases of wine. I’m like, oh my gosh, I need some help. I had to call in some reinforcements to get those packages delivered.

Carol Tomé on why UPS’s CEO role is “her calling”

I had an amazing career prior to my retirement, most of it at Home Depot, and what an experience that was. I started when the company had just 400 stores and a $14 billion valuation, and now it’s almost 3000 stores and hundreds of billions of dollars. It’s an amazing company, and I learned so much. But I had retired and I was out on my farm, enjoying the life. My husband and I had set up a family foundation, and I was doing a lot of board work, at UPS and elsewhere. Life was good. But when the UPS was working on their CEO succession plan, they developed a profile of the skills and attributes the next CEO should possess. And when they matched that profile against the existing leadership team, they said, well, this is a terrific team, but no one really matches exactly. So they decided to search outside the company, and since I fit the profile they were looking for, they asked if I wanted to be the next CEO.

I spent a while reflecting on why I would come out of retirement to do this, and there were a few reasons. First, I really do like to create value. When I was CFO at the Home Depot, the shareholder value creation under my tenure was 450%. When UPS approached me, their stock had been flat for about six years. I thought, “gosh, if I get off the board and inside of the company, I think I can figure out the right levers to pull to create value. And wouldn’t that be fun?” 

The other thing I love to do is develop people. I’ve lost count of the number of people who worked for me who are now CFOs of publicly traded companies. I think it’s more than 16. Others who worked for me are now CEOs of publicly traded companies, including Ted Decker, the CEO of Home Depot, and Hal Lawton, who is the CEO of Tractor Supply. I realized that if I took the job leading UPS, I’d have great opportunities to develop people. Wouldn’t that be fun? 

Finally, I talked to Ramon, my husband of now nearly 40 years. I asked him, “what do you think about me going back to work”? And he said, “would you please go back to work? You are driving me crazy.” So I had his support, which is really important, and I was incredibly blessed that the board asked me. It’s been an amazing experience.

Carol Tomé on diversifying UPS’s board and pivoting towards technology

Timing is everything. When I was onboarding as CEO, we had an opportunity to remake the board because of retirements due to age or people leaving the board due to business conflicts. So I was able to bring in five new board directors who were women and people of color, which was extraordinarily exciting. Just as importantly, we brought diversity of experience, and we dropped the average age of the board. That was important because while most people think of UPS as a shipping company, we’re really morphing into a technology company. Having people who are contemporaneously in the world of technology was really important to me. The dialogue of the boardroom has changed a lot over the years. Years ago, our discussions were about people not fastening their seat belts on the floor of one of our hubs or packaging centers. We don’t talk about seat belt fastening anymore. We talk about digital fluency, about frictionless and seamless experiences, about moving all our technology off our mainframe and into the cloud. We always talk, though, about culture and about the importance of people, and that hasn’t changed. Those values were instilled in us by our founder, Jim Casey, 115 years ago. So the core of the company, our secret sauce, our values, stay the same. 

I’m putting what I call the top of the house –  the top 150 leaders of our company – through a two-week training program in partnership with Emory University here in Atlanta, Georgia, to increase our digital fluency because we must. I wasn’t born with a cell phone in my mouth like all the kids are today, but we’ve got to increase our digital fluency because everything is moving to a simple frictionless experience, and commerce is being conducted on a phone. And if we don’t have that experience for our customers, we’ll get left behind. I’m super excited about what we’re doing in that space. And our board and our leadership team are all in.

Carol Tomé on career advancement within UPS

Working to develop people is especially important now because there’s a war on talent. It’s crucial for our front-line employees to have paths to advance within the company. I like to say that our front-line jobs aren’t jobs, they’re careers. You can start with us as a part-time seasonal worker and end up running the company. This is an amazing company that creates careers internally. So many people I’ve talked to here have had ten different jobs around the world. We invest in people’s ability to grow their career. We have a number of different development programs. We’ve just kicked off a brand new leadership development program for our part time supervisors, which I’m super excited about. There are about 38,000 of them in the United States, and we’re training all of them on leadership because the soft skills are as important as the technical skills. The way we keep people engaged is by investing in them. Our jobs also pay well. That’s a motivation too. Get into the [UPS] family because you can make a good living for your family.

Carol Tomé on driving up earnings at UPS

We’ve done a number of things. We identified the markets that we wanted to serve that value, our end to end network, and leaned heavily into those markets. One of those was small and medium sized businesses. Before I joined the company, we had lost share in that segment for seven years in a row. When I onboarded, I asked, “what’s getting in the way? Why can’t we gain share in this segment?” It’s a very profitable segment. I was told, “well, we don’t have the fastest ground time. We’re behind when it comes to time and transit.” When I asked what it would take to fix that, the answer was money. And we had money, so we pulled the investment forward. I delivered it nine months ahead of time, and as soon as we improved our time and transit, we started to gain share. We’ve gained share in that segment every single quarter since then. Our SMB penetration will be about 30% this year. I’ve been very pleased with that, and it certainly helped in terms of the revenue quality coming into our business. 

We’ve also looked at productivity differently, not as a one and done, but actually as a virtuous cycle. Productivity for us is simply measured by packages per hour. So by investing in automation, in technology and in methods, we are improving the packages per hour – that is, the productivity – of our business. We are also very disciplined in how we allocate capital. We had been a bit adventurous when it came to capital allocation. Now we’re very strategic, very disciplined, and it’s showing great results. Our return on invested capital increased 900 basis points last year from what it had been the prior year. The team’s doing a really nice job of driving value here. 

Carol Tomé on UPS’s plan to be carbon neutral by 2050

We are greenhouse gas hogs. We drive a lot of vehicles, we fly a lot of planes. In fact, we emit over 35 million metric tons of greenhouse gasses every year. Our commitment is that by 2050 we will be carbon neutral. In other words, we will reduce our carbon emissions or we will deploy carbon offsets that help us reach that goal. We’ve already started. We have, for example, a rolling laboratory of vehicles that are powered by alternative fuels. For example, electric vehicles or vehicles powered by compressed natural gas. We have started to change how we power our buildings by using renewable energy. The two data centers that power our network are now powered by renewable energy. To put that into perspective, that’s the equivalent of powering 5,000 homes. We believe reducing our emissions is not only good for business, but also good for the planet. 

The most difficult hurdle is sustainable aviation fuel. We fly about 600 planes every day, and there is not enough sustainable aviation fuel available in the market today. So we’re working with the airline industry and alternative fuels manufacturers to find a solution. This isn’t just a problem for UPS, it’s a problem for anybody who’s flying a plane. One really exciting prospect is the work we’re doing with a company called Beta Technologies to procure electric vertical takeoff and landing (EVTOL) aircraft. We’ll take delivery of that aircraft in 2024. It’s a cargo plane powered by a battery. It doesn’t carry a lot of cargo, and it certainly can’t fly across the ocean, but it could be a feeder aircraft. So if you think about small feeder aircraft that are flying around, helping us move packages around the country, we could replace all those with this electric aircraft. We’re super excited about that. 

Carol Tomé on her family story and progress for women

I knew my great grandmother as a little girl, but what I didn’t know about her until I was an older person is that she was a wagon train homesteader at a time when women couldn’t even vote in this country. So as I looked at that photo [of my great-grandmother, grandmother, mother, and me as a baby] – four generations of women – I was amazed. We often say women haven’t come very far, but we’ve come a long, long way in four generations, and we’re just getting started in so many ways. When I was a girl, my mother, my grandmother, and my great grandmother would say to me, “you can do anything, and you can be anything.”

Carol Tomé on her own career path

Never in my wildest imagination did I think I’d be doing this. Never. I started as a banker. I really wanted to work for my dad, who was a community banker in Jackson, Wyoming. It’s a beautiful place, and I wanted to take over his bank when he retired. But my dad called me my last year of school and told me he was divorcing my mom and selling the bank. So that was the end of that plan, but I still wanted to be in banking. I was a banker in the West until I decided I wanted to grow my corporate finance knowledge and experience base. I also wanted to own something, because bankers don’t really own anything; they just work on deals. So I left banking and went to work for one of my clients who was in Chapter 11 and needed help on their reorganization plan. Then I ended up taking a company public through an IPO, which brought me to Atlanta, where I got into Home Depot. At that point, I realized my career was going in directions I’d never expected. I still loved finance, so when I became CFO, I loved that too. But I kept getting opportunities to do different things, and my toolkit just kept expanding. I found myself running strategy, and that was when I realized I love to develop people. I started thinking, “maybe I could be a CEO.”

In 2014, I was one of three people who were being considered to replace Frank Blake as CEO of Home Depot, because he was retiring. I didn’t get it, but Craig Menear, the guy who got it, was fantastic, and I ended up working for him until I retired in 2019. He’s a great CEO, and I learned through that experience too. It wasn’t my time – I think God has a plan for us, so let your career happen. Because if I had gotten that job, I wouldn’t have gotten this job. And this is why I’m here. I am here for UPS. 

Carol Tomé on her transition from retail to transportation

There are more similarities between a retail company like Home Depot and a courier like UPS than you might imagine. At UPS, our customers are all the large retailers. So I really just flipped from one side of the equation to the other. It’s extraordinarily helpful for me, because I understand how the retailers are thinking about things like upstream, downstream logistics. 

Janice Ellig:
You knew retail, but besides your roles as an executive in the corporate world, you’ve also served on the Federal Reserve Board of Atlanta, The International Business Council of the World Economic Forum, and the board of Verizon, just to name a few. Did all those experiences also lead up to your role as CEO of UPS? 

Without a doubt. I’m incredibly blessed that I’ve had lots of experiences. I started working back in ‘81, so my personal toolkit is really full of tools that I’ve built along the way. Here we are, facing incredible inflation in the United States. When I started working back in 1981, it was also highly inflationary – in fact, the interest rates were double-digit back then. And I remember exactly what we did to manage through a highly inflationary market. 

When I was on the Federal Reserve Board of Atlanta, it was during the 2008 financial crisis, so I was going up and meeting with Ben Bernanke and that whole team the whole time. So when we went through the recent pandemic crisis, I knew how to manage through it because I’d already gone through this once before. It may not be exactly the same experience, but there are enough similarities that it can help manage through whatever comes our way. Beyond that, I don’t lean too hard on my own intuition or my own tools – I leverage the power of an incredible team. 

Carol Tomé’s career advice for aspiring leaders

I always go to Maya Angelou, my favorite poet, who said, “don’t make money your goal. Instead, do what you love and do it so well that people can’t take their eyes off of you.” I think that’s the first place to start. 

The second piece of advice is: don’t aspire, but rather serve. I’m a big believer in servant leadership. If you put others ahead of you, if you are there to serve them, it’s amazing what comes back at you.

I listen a lot. I read all my emails. No one scans any of my emails. UPSers and customers are really great at sending me notes. It’s extraordinarily helpful because rather than poo-pooing what they say, I go check it out. Oftentimes that leads me to an opportunity I didn’t know was there. When I go out to one of our package centers or hubs, I don’t bring a list of things they need to do. I bring back a list of things we need to do for them. I’ll just sit at the table with our drivers or whoever is willing to spend time with me and listen to them. And they’ll tell me, “this van isn’t working.” They’ll go through the list, and sometimes there are things we can’t address, but oftentimes there are things we can. One of the biggest issues facing our country is available childcare for working parents, particularly working women. So we’re going to pilot two childcare centers in 2023. I don’t know how it’s going to go, but we’re going to pilot it for working people, because I think it could be transformative if we can figure it out. 

Carol Tomé on the Power of Purpose

The Power of Purpose has been a rallying cry for our company – moving our world forward by delivering what matters. And as leaders, I think we need to focus on our personal purpose. I’ve reflected on this a lot during my tenure here at UPS, and I’ll share it with you. My purpose, which keeps me centered in this crazy world, is: lead to inspire, serve to create, give to remain. I can recite those words even at 03:00 in the morning when I’m worried about something. I remind myself “this is why you’re doing it.” And I just get up and go. I don’t get too stressed out. I get up and go because I know why I’m doing it.