Crain's Chicago Business by crainschicago

REAL ESTATE: Buyers of ‘second first homes’ fuel a boom in New Buffalo. PAGE 3

CHICAGO COMES BACK: Now is the time to take it slow. PAGE 4

CHICAGOBUSINESS.COM | MAY 31, 2021 | $3.50

A MOVEMENT OR A MOMENT?

Kimbell follows a tough act at a tough time When Dave Kimbell takes over as CEO of Ulta Beauty next month, he’ll inherit a challenge his predecessor never faced: pulling the beauty products retailer out of a severe slump. Bolingbrook-based Ulta was a growth machine and a Wall Street darling during Mary Dillon’s eight-year tenure. Annual sales nearly tripled to $7.4 billion by 2019 as Ulta’s store count surged

to about 1,260 from less than 600. Ulta’s share price leaped past $300 from about $100; for the 10 years ended in 2019, it was the third-best-performing stock among public companies in Illinois. But the pandemic battered Ulta, as customers stayed home, donned masks and stopped wearing makeup on the bottom half of their faces. Sales, which rose by double-digit percentages throughout Dillon’s tenure,

Allstate grabs more customers, but holding on to them? Not so much. Dave Kimbell sank 16.2 percent to $6.2 billion in 2020, and net income fell 75 percent to $175.8 million. Sales at stores open at least a year, a key retail performance metric that hit a peak growth rate of 15.8 percent

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BY STEVE DANIELS

See ULTA on Page 24

Allstate has a fan in vaunted activist investor Carl Icahn, who’s endorsed CEO Tom Wilson’s strategy of cutting costs and emphasizing insurance sold directly to consumers rather than via the company’s army of agents. But Icahn and other investors

appear to be ignoring the potential fallout from sales-force unrest that boiled over with a recent lawsuit alleging multiple violations by the company of its agreement with roughly 10,000 agents around the country. While Northbrook-based Allstate is attracting more new customers than it used to, the recent record of holding on to the policyholders it already has is its worst in memory. The net result so far of Wilson’s See ALLSTATE on Page 29

YOUR VIEW

GREG HINZ

Getting back to the office is what we need to do, Google exec writes. PAGE 10

Taking a look at Lightfoot’s own track record on diversity. PAGE 2

5/28/21 2:12 PM

CREDIT

Slipping through the Good Hands’ fingers

Ulta’s new boss looks to reignite growth BY ALLY MAROTTI

GETTY IMAGES

Corporate Chicago grapples with racial diversity in the year following a flood of pledges to improve commitments to equity. PAGE 13

2 MAY 31, 2021 • CRAIN’S CHICAGO BUSINESS

GREG HINZ ON POLITICS

As mayor pushes diversity, a look at her own record held over from the Emanuel administration: business affairs Commissioner Rosa Escareño, City Colleges chief Juan Salgado and Public Building Commission Executive Director Carina Sanchez. The four newer people Lightfoot appointed: Corporation Counsel Celia Meza, procurement services Commissioner Monica Jimenez, human relations Commissioner Nancy Andrade and Intergovernmental Relations chief Manuel Perez. The eight together comprise 17 percent of the management team, about half the Latino share of Chicago’s population. When I asked Lightfoot’s office why there were so few, her team went on offense. “Mayor Lightfoot’s commitment to Latinx hiring is reflected in her recent appointments,” the office says in a statement. “With one of the most diverse administrations in the city’s history, we are working hard to do our part to make sure the city government reflects the vibrant, vast diversity of our city, and we hope Crain’s commitment to hiring diverse journalists follows suit.” Crain’s does need to hire more Black, Latino and Asian journalists, just like other news organizations in Chicago. But I also approached Latino leaders to see what they think, and their response was somewhat different DOES LIGHTFOOT’S MANAGEMENT than Lightfoot’s. TEAM REFLECT THE CITY’S DIVERSITY? “There’s more work to be done,” says Valencia. “This is an imDon’t take my word for it. portant discussion to have.” Here’s the facts—and what Latino Policy Forum PresiHispanic leaders have to say dent Sylvia Puente terms the about this. Lightfoot staffing list “a lost I put together a list of 48 opportunity.” While bringing people who are, in effect, the in Meza as the city’s top lawyer leaders of Lightfoot’s governwas a good move, she adds, “in ment. Included are top aides, a city that is one-third Latino, the directors or principals in we don’t have anywhere close every city department or agento that in key decision-making cy listed on Chicago’s official jobs.” website, and the CEOs of other “There’s a problem here,” governments that the mayor says Ald. Gil Villegas, 36th, controls, such as the Chicago chairman of the City Council’s Transit Authority, Chicago Latino Caucus and Lightfoot’s Public Schools and Chicago former council floor leader. As City Colleges. I ran the list he counts it, using a smaller set by Lightfoot’s office to see if of jobs, only 8 percent of top I missed anyone, and got no slots in the Lightfoot adminiscomplaints. tration have gone to Latinos. Of the 48, the largest group “We’re two years into this adis whites, 17 people. African ministration, and I can tell you Americans are second, holding I’m not happy. . . .What’s the 16 spots. There also are six plan” to make things better? Asian Americans, and the first I can’t answer that. I can say Native American to ever hold a that it sure will be interesting top city job (Building Commisto see where Lightfoot lands as sioner Matthew Beaudet). And the city prepares to draw new there are eight Latinos. ward maps after a decade in The latter include City Clerk which the Latino population Anna Valencia, who won rose by tens of thousands and office in her own right, and the Black population dropped. three people whom Lightfoot Mayor Lori Lightfoot is talking a lot about employment equity lately as the second anniversary of her inauguration as Chicago’s CEO rolls by. “Black or Brown community leaders often reach out to me or my team to complain about implicit—or explicit—bias in one piece of coverage or another in your outlets,” Lightfoot wrote members of the City Hall press corps, announcing a decision to give second-anniversary interviews only to journalists of color. “Diversity matters, and without it how can you truly speak to the needs and interests of the diverse and nuanced community you claim to serve?” The mayor’s comments sparked quite a debate. That’s proper. Still, to move that debate along, I thought it might be interesting to see if Lightfoot has lived up to her own standard and assembled a management team around her that truly reflects Chicago’s diversity, one that hires Black and Brown people according to their numbers in a city that’s roughly one-third white, one-third Black and one-third Latino. The bottom line: She’s done well in bringing in Black people and Asian Americans. But Brown people—Latinos—are a different story.

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Bring $100+ to this steakhouse and leave the bare belly behind A River North establishment’s detailed dress code and high-dollar minimum spark social media snark. And industry consultants say the guidelines could backfire. BY ALLY MAROTTI A River North steakhouse has put in place an extremely specific dress code and a high-dollar minimum on patrons’ tabs, sparking a social media backlash. And industry consultants say the moves could backfire on the establishment. Steak 48 tells customers on its website they will be required to spend at least $100 per person on food and beverages—not including tax or the 18 percent minimum gratuity added to all checks—“in order to ensure that each guest enjoys the total experience of food, service and atmosphere.” And speaking of atmosphere, there’s Steak 48’s clothing guidelines. It lists more than a dozen bullet points of prohibited garments. Among the forbidden items: exposed undergarments; men’s tank tops; corsets, bandeaux and tube tops, unless worn under a waist-length jacket; and “any clothing that is excessively revealing and shows an overly bare midriff or excessive cleavage.” It’s unclear exactly when the steakhouse updated its policies, but Twitter and Facebook posts responded to the rules last week. Restaurants have undoubtedly struggled during the pandemic. In Chicago, indoor dining is still limited to 75 percent capacity, and restaurants have to keep 6 feet of distance between tables. With limited capacity and months of losses, many establishments are doing what they can to cut costs and watch their margins. At the same time, reservations are

Steak 48 in River North hard to come by, and restaurants want to ensure they aren’t left with no-shows. Many are implementing cancellation policies or requiring deposits on reservations. The $100 minimum could be in response to that concern, says Natalie Stanichuk, a partner at Page One Public Relations, whose restaurant clients include establishments in River North and elsewhere in the city. However, it could also turn people away at a time when most restaurants have a lot of revenue to make up. The dress code only increases the restrictions on who will patronize the restaurant, Stanichuk says, and she would advise clients against it— especially one so specific. “They want their regulars to come back and they want new people,” she says. “By putting restrictions in place, whether it’s a dress code or a minimum, I think it’s counterproductive.” Steak 48 is likely trying to create a sense of exclusivity and target affluent customers, says Darren Tristano, CEO of Chicago-based research and consulting firm Foodservice Results. But alienating people who are un-

willing to abide by a certain dress code or pay $100-plus for a meal could ultimately drive a place out of business. Such a high minimum also means a restaurant needs to offer something a customer can’t find anywhere else. “My guess is, they don’t have anything that can’t be replicated,” Tristano says. “There’s way too many steakhouses out there and restaurants to go to have a nice experience, and that’s going to be a learning experience for them.” Steak 48 is part of a small Phoenix-based chain of steakhouses and is named after Arizona, the 48th state to enter the union. It also has locations in Philadelphia, Houston and Charlotte, N.C., according to its website. The River North outpost opened in July 2017. In a statement, Steak 48 says it has a business-casual dress code policy across all of its properties. “Like many restaurants in our industry, we’ve had to make some updates to our policies, like the $100 per-person minimum in effort to support our staff and restaurant’s operations” the company says. “Our standard 18 percent minimum gratuity also helps ensure our staff is supported, especially as our community continues to re-emerge after a challenging year.” Before the Chicago location opened, then-Senior Vice President Oliver Badgio told Crain’s the average tab was expected to be about $100 per person, including drinks. He said it cost more than $5 million to open Steak 48, which had a 10year lease.

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CRAIN’S CHICAGO BUSINESS • MAY 31, 2021 3

Supply pressure is building

Liz Roche is an @properties agent who has recently sold several of the highest-priced properties in New Buffalo.

Shortages of everything from steel to drywall squeeze construction biz

‘Second first home’ buyers sail into New Buffalo How the pandemic is reshaping a market that’s now seeing $4M-plus prices

A BEACHFRONT HOUSE in New Buffalo will set a new benchmark for the southwestern Michigan town when its sale closes within a few days of Memorial Day. It will be the fourth home in New Buffalo to sell for $4 million or more in the past year. That’s a high-end sales rush New Buffalo hasn’t experienced before. But the pandemic has been bringing surprises everywhere. “It’s a new thing for us,” says Liz Roch, an @prop-

BY DENNIS RODKIN

“(THEY’RE) BUYING THE PLACE WHERE YOU CAN HAVE ALL THE FAMILY . . . STAY TOGETHER.”

erties agent in New Buffalo, which is an 80-minute drive from the Loop, “but we’re happy to have it.” The boom is not only at the upper end of the market. According to data from the Southwest Michigan Association of Realtors, in the 16-mile strip of shoreline towns from New Buffalo to Bridgman, home sales were up 48 percent in the first

Rob Gow, Berkshire Hathaway HomeServices Chicago agent

See NEW BUFFALO on Page 28

ZAC OSGOOD

BY DANNY ECKER Andy MacGregor sought out a price quote earlier this month from one of his drywall suppliers for wall studs his construction firm needed to build out an office for a client downtown. He was told they wouldn’t be available for up to eight weeks. “That’s like going to the store and not being able to buy milk, or you’ll need to wait a week and a half for that, or eggs,” says MacGregor, president of Chicago-based Accend Construction. “You’re seeing things affected that we’ve never really seen affected at that level.” Such is the life of a contractor in 2021 as the COVID-19 pandemic wanes. Like it’s done to many industries trying to jumpstart a comeback from the crisis, a nationwide squeeze on supply chains and manufacturing is now wreaking havoc on builders, and it’s spilling over into the commercial real estate sector. Crucial components for construction such as drywall, electrical conduit, sheet metal and copper are not only hard to come by, but rising demand amid a recovering economy has sent prices for those and other items soaring. The problem stems from what many in the construction industry describe as a perfect storm of factors—some tied to COVID and others unrelated—that have added a new layer of uncertainty about the recovery for developers and companies alike just as the fog of the past year is starting to lift. See CONSTRUCTION on Page 29

It turns out people miss meetings. Really. BY JOHN PLETZ Margaret Mueller says “the switch flipped” on May 13, as soon as the Centers for Disease Control said people who have been vaccinated against COVID-19 could ditch their masks in most situations. She was scheduled to speak at a small networking event just a couple of hours later. “I walked in and not a single person was wearing a mask. People were going to shake hands, people were hugging,” says the CEO of the Executives’ Club of Chicago. “My calendar is blowing

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up with invites for in-person events: breakfast, lunch, dinner invitations.” After more than a year of connecting virtually, people want to get back to doing business in person, even if it’s not exactly how things were before the COVID-19 pandemic. With restrictions quickly easing, networking groups and private clubs suddenly are considering in-person options again. It will start slowly, with small events this summer, but larger networking events likely will be back later in the year. In the meantime, people are testing the waters

with one-on-one meetings or meals. “We’ve seen a material change in usage for business entertaining in the past two months,” says John Spidalette, general manager of the University Club of Chicago, a private club overlooking Millennium Park. “You’re starting to see some planning for 200-person luncheon meetings.” Ed Wehmer, CEO of Rosemont-based Wintrust Financial, says he’s started getting calls to host events in the bank’s historic grand hall on LaSalle Street. Several charities have planned events for the fall, he says. See IN PERSON on Page 24

JOHN R. BOEHM

After a year on Zoom, in-person business confabs are back

John Spidalette says business entertaining is increasing at the University Club of Chicago.

5/28/21 2:48 PM

4 MAY 31, 2021 • CRAIN’S CHICAGO BUSINESS

CHICAGO COMES BACK

Now is the time to take it slow, leaders A map detailing some of the expanded services Amtrak is proposing.

Amtrak details its big Chicago dream

The passenger train operator offers flashy new specifics in a sales pitch for a lot of new services around the city BY GREG HINZ Amtrak laid out substantial new details of its “vision plan” to boost service out of Chicago and nationwide, and if you like the idea of riding the rails to Toronto, taking the train to Green Bay to see the Bears beat the Packers or tripling daily service to Detroit, you’re going to love it. The details, an expanded version of the initial proposal that came out in April, is still very much a work in progress. Implementing it depends on lots of new money, some from the federal government but also from states like Illinois, which would have

THE TITLE OF THE DOCUMENT AMTRAK RELEASED SAYS IT ALL: “MORE TRAINS. MORE CITIES. BETTER SERVICE.” to pick up the costs of some local service after a startup period. But the title of the document Amtrak released pretty much says it all: “More Trains. More Cities. Better Service.” In a letter to members of Congress and an accompanying press release, Amtrak specifically asked for passage of dedicated, predictable and “sufficient” funding; development of corridors in the Midwest and elsewhere beyond the existing Northeast Corridor that gets special attention; and measures to prevent freight trains from blocking new and expanded service. Those will be difficult to pass, like the $75 billion over the next 15 years that the national rail service wants just for regional corridors. But it may not be impossible, with President Joe Biden a

big rail fan who has included tens of billions of dollars for railroads in his proposed big infrastructure plan. Here are the key details of what Amtrak proposes to do by the end of 2035. Expand round trips from Chicago to Milwaukee from seven a day now to 10 a day. Continue some of those trains north and west, with four round trips to the University of Wisconsin at Madison, three to Green Bay, Wis., and three to Minneapolis/St. Paul. Trains from the Twin Cities would go even farther north to Duluth, Minn./Superior, Wis. Two new round trips a day to another Big Ten town, Iowa City, via Moline. Continued improvements on the Chicago/St. Louis line, with one train a day going to Kansas City. Two daily trains to Rockford and improved speeds on the notoriously slow line to Carbondale, with a new daily link to Champaign/Urbana. Doubled service to Detroit to six trains a day, with one a day traveling at speeds of up to 110 mph to Toronto, the first new international train route out of Chicago in many decades. Resumed service to Indianapolis four times a day, with some trains continuing south to Cincinnati and Louisville, Ky. What could give the overall Amtrak plan some political legs are extensive plans for corridors in other sections of the country, such as links among Dallas/Ft. Worth, Houston and San Antonio, “front-range” links among cities on the eastern edge of the Rocky Mountains in Colorado, or a huge bump in new service out of Atlanta. Will it work? We’ll see. Your member of Congress is waiting to hear from you.

JOE CAHILL

WILL RETURN NEXT WEEK

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BY EMILY DRAKE AND TODD CONNOR Chicago Comes Back is a weekly series on ChicagoBusiness.com providing leadership insights to help your business move forward, written by leadership consultants Emily Drake and Todd Connor. Drake and Connor facilitate Crain’s Leadership Academy. Drake is a licensed therapist, owner of the Collective Academy and a leadership coach. Connor is the founder of Bunker Labs and the Collective Academy and is also a leadership consultant. Check out previous installments at ChicagoBusiness.com/comesback. EMILY DRAKE: We’re always working at the intersection of health and leadership, so it’s been somewhat comforting to honor the fact that all of the emotions I’ve felt in the last week, day and sometimes hour—anxious, excited, sentimental, discouraged—exist in the context of a really weird time. The economy is moving in fits and starts, some of us are commuting to the Loop regularly now, more people are flying for work trips and in-person events are happening; it can feel urgent to “return,” and meanwhile, it feels like my body and brain are trying to catch up. TODD CONNOR: For sure. Bridge phase is here, but am I ready? Chris Hoff, one of our favorite psychologists, normalizes how transitions are hard for humans—that time between activities, which can sometimes be called liminal space or slack— is uncertain by definition. We need to acknowledge that there is uncertainty, that we may even self-sabotage and that we’ll need a collective strategy to return in some form together. Taking action is our default, so I like the invitation to pause for a beat and check in. ED: Me, too. May is Mental Health Awareness Month and feels right on time for what we may collectively need: to slow down a bit. Workplace well-being, like the economy, is in a weird— but maybe wonderful—transition, too. Mental health issues have never been more common, and while it could be because there’s less stigma, or more prevalence, what we seem poised for is a new level of support of employees’ mental health—from an honest place. TC: That’s the hard part. How do you, as a leader of an organization, create a space for people to get support and do it in a way that’s true to your values? We won’t answer that in today’s column, but that’s the question on the table. So many of our columns have focused on telling the truth, but what we may not have said is how hard it is to do. Unless we have to be honest, especially with ourselves—i.e., we burn out and our health fails—and within our organi-

GETTY IMAGES

AMTRAK

Workplace well-being is in transition. We can rethink the role they play in mental health issues—and if they take the lead, they can guide public policy makers.

zations—i.e., we’re flat-footed without a strategy for increasing diversity—it’s easy to ignore or avoid the truth: that we sometimes can’t manage what’s being asked for us and we need help. Sometimes it’s help we can find around us, and other times we will have to go looking for it. ED: And help costs money, time and energy. But our invitation is always going to be for the long game—the careful consideration of strategies and tactics and programming that builds sustainability, endurance and resilience—versus what any employee can feel: a “check the box” approach to an issue fundamental to being human, experiencing grief, loss and, increasingly, burnout. It’s complex. TC: Burnout, defined as chronic workplace stress, is now a medical condition, designated in 2019 by the World Health Organization. And I don’t think it’s an overstatement, as McKinsey noted last December, to say that there is a “coming revolution” in how companies “think about, talk about and cope” with the role they have to play in all forms of mental health issues. This is another area where companies can take the lead or at least guide public policy makers. A study of more than 36,000 people found that 76 percent of people with anxiety disorders do not receive treatment. Why do you suppose that is? ED: I’ve talked to hundreds of leaders last year, in groups and

individually, and we’re surveying as many right now through our Working Toward Wellness leadership survey. And here’s what I know: Inquiring about how someone is coping and if they need help is scary. It’s scary, in large part, because we have an outsized sense of our responsibility to do something about it. It’s the classic woe of leaders. We want to fix it now, we want to go fast and questions slow us down. So, I think my invitation would be to ask: “Can you grow slower? Can you allow for space in your day to think, create and involve others in ways that you have not historically?” I think that kind of approach, even in small doses, is fulfilling and also effective, if not yet muscle memory. TC: I agree, and in weird times especially, as we are in now, it pays to slow down and to remind yourself of what you value, and then to act accordingly. We will do this all imperfectly, of course, because we are human, after all, but employees will recognize and honor a sincere attempt. That’s why we are so committed to developing emotional agility—Susan David is the guru on this—so you can model it for your teams. And even further embracing the space for mental health may require us to say no to other things that come at us as opportunities. After all, author Grace Bonney says, “Learning to say no is learning to accept that offers and opportunities are merely an indication that you’re on the right path.” Keep going, slower.

5/28/21 10:47 AM

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6 MAY 31, 2021 • CRAIN’S CHICAGO BUSINESS

The time is right for apartment developer JDL

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A rendering of the North Union project on part of Moody Bible Institute’s campus.

YOCHICAGO.COM

BUIDLING IN PHASES

Though North Union, which will cost about $1.2 billion, is larger than One Chicago, it’s not as risky because JDL isn’t building the entire project at once. It will develop the site in several phases, a process that could take as many as 10 years, Letchinger says. The project encompasses 13 buildings and 11 attached single-family homes designed by Hartshorne Plunkard Architecture. “It’s a really big project, but it’s not a really big project at one time,” he says. With One Chicago, “there was no turning back” after construction was underway, Letchinger says. With North Union, “you can stagger (the phases), you can accelerate them, you can slow them down depending on the market. . . .It will all depend on the market and the capital world.” The market could be improving just in time for One Chicago. Designed by Goettsch Partners and Hartshorne Plunkard, the project includes two towers, one at 14 W. Superior St., rising 76 stories, and the other at 23 W. Chicago Ave., rising 48. At 971 feet, the 76-story high-rise is the eighth-tallest building in Chicago, according to the Council on Tall Buildings & Urban Habitat. One Chicago’s condos, all on the upper floors of the tall tower, start at $1.7 million. For $28 million, you can buy a two-floor, 10,400-square-foot penthouse at the top of the building with 1,000 square feet of terraces. “It’s got views of the world,” Letchinger says. But it’s “not for

Two buildings at the south end of the site, along Wells Street.

One Chicago should be ready for its first residents in October.

JDL IMAGES

Chicago developer Jim Letchinger is wrapping up construction of his biggest residential project yet as he gets ready to start something even bigger. More than two years after breaking ground, Letchinger’s firm, JDL Development, is preparing to open the leasing office for One Chicago, which rises 76 stories next to the Holy Name Cathedral in River North. It’s a whopper, with 735 apartments, 77 condominiums and an $850 million price tag. While JDL courts residents for One Chicago, Letchinger is moving ahead with plans for North Union, a 2,700-unit development on land nearby that he’s buying from the Moody Bible Institute. The project cleared a major hurdle last week, when the Chicago City Council approved JDL’s plans for the 8.1-acre site. Letchinger says he’s already in talks with investors and lenders interested in financing his acquisition of the property and funding construction of North Union’s first two apartment buildings, a tower at 878 N. Wells St. with about 450 units and one at 920 N. Wells St. with about 300. “We’re very eager to get ready,” Letchinger says. “The faster the better, as far as I’m concerned.” He may have caught the market at the right time. The last year has been rough on downtown apartment landlords and developers, as the coronavirus swept into the city, corporate offices closed, rioters trashed properties and demand for high-rise housing plunged. Pessimism prevailed: People questioned whether the appeal of urban living would ever come back. Filling more than 700 apartments at One Chicago seemed like an impossible task—Letchinger admits there were “definitely some nervous moments along the way”—and some wondered who would live in nearly 2,700 more homes at North Union. “Eight months ago, people would have said ‘Are you insane?’ ” Letchinger says. But the apartment market is rebounding quickly, and its outlook is brightening as more companies reopen their downtown offices. With more professionals returning to work, many will choose to live in apartments nearby. “I am incredibly confident that the market will support (North

Union), as well as many of the others that have been proposed,” Letchinger says. The City Council approved a planned development proposal for North Union that allows the construction of 2,656 residential units on JDL’s site, which is bounded roughly by CTA Brown and Purple Line tracks and Oak, Chestnut and Wells streets. Letchinger declines to say how much JDL is paying Moody for the parcel. The plan passed by City Council also permits construction of another 1,372 units on land within the Moody campus that the school is not selling to JDL. That change could deliver another financial reward to Moody in the future: At some point, the institute could sell the land to another developer that would build the homes.

JDL IMAGES

BY ALBY GALLUN

JDL IMAGES

Firm is getting ready to begin leasing at One Chicago, an $850 million project in River North, as it works to secure financing for an approved 2,700-unit project nearby

A view of North Union looking south, toward Willis Tower. those who are fearful of heights.” JDL started marketing the condos in 2020 but put sales on hold last April as the pandemic brought the city to a halt. The developer restarted sales this month, and buyers have signed contracts for about a dozen condos so far, Letchinger says. The One Chicago apartment leasing office opens the weekend of June 5-6. Letchinger says he ex-

pects the first residents to move in Oct. 1, about six months ahead of schedule. With rents averaging about $4 per square foot, near the top of the market, it will be an expensive place to live. One Chicago will include 22 units classified as affordable under the city’s affordable-housing ordinance. Eager to fill their new buildings, developers typically offer tenants

one or two months of free rent. But JDL is confident enough about the market that it doesn’t plan to offer incentives at the start. “We’ll see what demand looks like,” Letchinger says. He’s hoping that a Whole Foods Market and Lifetime Fitness at the base of One Chicago will help generate some of that demand. “You don’t need to leave the building,” he says.

5/28/21 11:22 AM

CRAIN’S CHICAGO BUSINESS • MAY 31, 2021 7

Two familiar Chicago names joining forces: Culligan and Byron Trott

Connect with a business banker anywhere.

Trott’s BDT Capital Partners is taking majority ownership of the supplier of drinking water and filtration systems BY STEVE DANIELS

abroad, particularly over the past five years. Culligan has done about 90 acquisitions in that time, growing its revenue by an average 30 percent annually. Organic revenue growth— that is, through the company’s own sales rather than through acquisitions—is in the high single digits annually. The company is on course for $2 billion in revenue early next year, he says in an interview. As it prefers to do, BDT opened talks with Culligan and its owners

ALAMY

Byron Trott’s BDT Capital Partners is acquiring a local company whose name is familiar to generations of Chicagoans through a memorable, long-running ad campaign. The private-equity owners of Rosemont-based Culligan International, maker and distributor of drinking water and filtration systems to homes and businesses— whose television ads going back decades ingrained the tagline, “Hey, Culligan man!” into the brains of locals— are selling to Trott’s Chicago-based firm. Terms weren’t disclosed May 25 in a statement, but the deal values Culligan at about $6 billion, according to the Wall Street Journal. The purchase is one of Culligan’s television ads go back decades. the largest to date for BDT, which manages $18 billion in assets before there was a formal sales proand invests in closely held compa- cess underway. A mutual friend of nies, often owned for generations BDT and Culligan’s management by the same family. Other promi- made the introduction. BDT was nent holdings include Peet’s Cof- the best option for new ownership, fee, Panera Bread, Krispy Kreme Clawson says, but it wasn’t as if Doughnuts and Ripon, Wis.-based Culligan had few choices. “We had commercial laundry-equipment plenty of options,” he says, including an initial public offering. maker Alliance Laundry Systems. That remains an option in the fuThe Culligan deal is a little unusual for BDT, which typically buys ture, but there will be no pressure directly from family owners rather from BDT, he says. Part of BDT’s than another investment firm like marketing appeal to family owners itself. Cashing out in the transaction of large companies who are looking is Centerbridge Partners, which to cash out at least some of their eqacquired Culligan in 2012 as the uity is that its investment time horidebt-saddled company was nearing zons are longer than the typical private-equity firm, which often seeks a bankruptcy filing. Culligan’s other major owner, to sell after five years. “They are long-term investors, global private-equity firm Advent International, will continue to be an so there’s no timeline to go public,” Clawson says. investor alongside BDT. In the meantime, Culligan’s strategy isn’t changing—more global A RARE EXAMPLE Trott built his reputation as a market penetration, much but not go-to dealmaker for the nation’s all of it through acquisitions, with wealthiest families on Warren Buf- the increasing desire and need for fett’s pronouncement years ago that healthy drinking water around the Trott was his favorite investment world driving the momentum. Culligan is perhaps the best recbanker. He views Culligan as a rare example of a very old business with ognized brand for water filtration in the U.S. and parts of western a vast growth potential. “Our partnership with Culligan Europe. Emmett Culligan startis consistent with our strategy of ed the company 85 years ago in investing long term in high-qual- Northbrook. Franchise dealerships ity, closely held businesses, and sprouted around the country, many will enable the company to further started by soldiers returning home accelerate its consumer strategy, from World War II. There are more extend its international footprint than 400 of those today in North and continue investing in innova- America, with dealerships owned tive products and digital initiatives,” by the company mainly handling Trott says in an email. “Culligan is sales and service abroad. For Clawson, 56, the time is ripe also experiencing significant industry tailwinds in a fast-growing, to accelerate growth. Environmental $35 billion global consumer water worries cloud the future for plastic services market, driven by health water bottles. Concern about lead and sustainability trends, including in cities’ aging water pipes in cities the global need for improved water has grown. In Asia, Africa and parts quality and the reduction of sin- of Europe, large populations don’t have access to clean drinking water. gle-use plastics.” “We are quietly building a global Culligan CEO Scott Clawson, who’s run the company since 2012 network,” he says, aided by acquiand will stay on in the job, has ex- sitions of small water providers in panded the firm into new markets markets throughout the world.

P007_CCB_20210531.indd 7

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8 MAY 31, 2021 • CRAIN’S CHICAGO BUSINESS

More apartments, offices pitched for Fulton Market Trammell Crow plans more buildings in a neighborhood it’s trying to cultivate as a life sciences destination Pending City Council approval and Trammell Crow landing fiThe Texas developer trying to nancing to build them, the projturn the western portion of the ects would mark the firm’s third Fulton Market District into a des- and fourth major developments tination for biotechnology and in a neighborhood that appears pharmaceutical companies is rais- to have regained the momentum it had before the COVID-19 ing its bet on the neighborhood. In what would be its largest pandemic. Trammell Crow has led Fulproject to date in the former meatpacking corridor, Trammell ton Market’s charge into the Crow wants to build a 26-story fast-growing life sciences sector, office and retail building on one converting part of an office buildside of the 1100 block of Carroll ing at 1375 W. Fulton St. into lab Avenue and a 33-story apartment space for pharmaceutical and building on the other, according biotech research and developing to a zoning application filed last Fulton Labs, a 425,000-squarefoot life sciences-focused buildweek. Under the plan, Trammell ing due to open early next year at Crow would raze a low-slung in- 400 N. Aberdeen St., just north of dustrial property at 315 N. May the Carroll Avenue sites. A spokeswoman for DalSt. along the southern edge of the block between May and Aberdeen las-based Trammell Crow destreets and develop a building on clined to comment on the new the site with 650,000 square feet proposal, but a source familiar of offices and 15,000 square feet with the plans says the office of retail and restaurant space. building will cater to both tradiAt 1112 W. Carroll Ave., along tional office tenants and life scithe northern edge of the block ences users. The project would bolster the would be the residential building, with 378 apartments, 96 parking western half of Fulton Market as spaces and a ground-floor retail an emerging cluster of life sciences buildings. City and state officials have FULTON MARKET APPEARS TO HAVE prioritized the development of such propREGAINED THE MOMENTUM IT HAD erties to help Chicago retain biosciences BEFORE THE COVID-19 PANDEMIC. companies that are born at local univeror restaurant space overlooking sities but typically move to more open space along Aberdeen and mature life sciences markets when Carroll, according to the applica- they grow. In addition to Trammell Crow’s other projects, Chition. Though the apartment building cago developer Mark Goodman would have more floors, the office is planning a 500,000-square-foot building would be substantially life sciences lab building at 400 N. taller, at 410 feet compared with Elizabeth St. Trammell Crow is also jump359 feet for the residential develing on an increasingly crowded opment, plans show.

DANNY ECKER

BY DANNY ECKER

Trammell Crow wants to build an office building and apartments at 315 N. May St. and 1112 W. Carroll Ave., just south of its Fulton Labs project due to open early next year. bandwagon of developers proposing residential projects in Fulton Market north of Lake Street, a project type that was banned until earlier this year as the city sought to encourage new development in the area amid the pandemic.

RESIDENTIAL SIDE

Chicago-based Fulton St. Cos. submitted a zoning application to redevelop the Revel Fulton Market event space property on the 1200 block of Fulton Street with a 350-unit apartment building, while Chicago-based LG Development last month submitted plans for a 20-story, 179-unit apartment building along the north side of Lake between May

and Racine streets. LG also is planning a residential project at 210 N. Aberdeen St. that would include almost 400 more apartment units, while Fulton St. Cos. is lining up a deal to develop two more apartment buildings totaling close to 600 units along the north side of the 1200 block of Fulton Street. To meet its affordable-housing obligation for the residential project, Trammell Crow would include 38 affordable units in the new building and commit to developing another 38 units offsite, according to the zoning application. The residential building would be developed on what is now a Ryder truck rental lot. The prop-

erties Trammell Crow is targeting are owned by ventures of Thomas Comforte, whose family has cashed out on many of its longtime Fulton Market properties since the neighborhood began to transform into a corporate destination for the likes of Google and McDonald’s and a hub of upscale restaurants and hotels. The Comforte family for decades ran heating and air conditioning firm Climatemp out of the May Street building before moving it to west suburban Broadview. The family initially put the May Street property up for sale in 2013 after Google announced it was moving its Chicago office to the neighborhood. Comforte declined to comment.

Proposed tower in the South Loop would rise 30 stories BY ALBY GALLUN About two years after completing a 16-story apartment building in the South Loop, one of the neighborhood’s most prolific developers has proposed a residential tower nearly twice as tall across the street. Chicago-based CMK has filed plans with the city for a 30-story, 299-unit high-rise at 1400 S. Wabash Ave., a property it acquired last year. It’s familiar turf for CMK, which developed Coeval, the 261-unit project across the street and another 307-unit apartment building one block north. CMK is seeking the city’s approval for its latest project as the downtown apartment market bounces back from a severe downturn due to the coronavirus pandemic. With vaccinations ris-

P008_CCB_20210531.indd 8

ing, COVID-19 cases falling and downtown professionals getting ready to go back to the office, the outlook for developers and landlords in the South Loop and other neighborhoods is brightening. If Coeval is any indication, the market has already rebounded. The property’s occupancy rate has risen to 95 percent, up from 92.4 percent a year ago, according to real estate information provider CoStar Group. Including concessions like free rent, rents in the building at 51 E. 14th St. have risen 3.6 percent over the past year but are down 1.9 percent from two years ago, according to CoStar.

ALL-IN ON APARTMENTS

CMK already has a lot riding on the South Loop market. In addition to its other Wabash Avenue properties, the firm is still leasing

up Imprint, a 349-unit apartment building at 717 S. Clark St. that opened last year. And it also plans a major residential development called Riverline along the Chicago River south of Roosevelt Road. The document CMK filed with the city does not say whether the developer plans apartments or condominiums at 1400 S. Wabash, but apartments are the preferred choice of most developers these days. CMK President and CEO Colin Kihnke and the firm’s attorney did not return calls. Designed by Chicago-based Pappageorge Haymes, the proposed high-rise would stand 305 feet tall, with 110 parking spaces and 3,100 square feet of groundfloor retail space, according to CMK’s plans. The project also will include 15 units classified as affordable under the city’s affordable

GOOGLE STREET VIEW

CMK, one of the neighborhood’s most prolific developers, plans a 299-unit residential building on Wabash, across the street from an apartment project it completed in 2019

The site of a proposed 30-story, 299-unit high-rise at 1400 S. Wabash Ave. housing ordinance. The ordinance requires CMK to include another 19 units in the building, but it plans to meet that requirement by exercising an option to pay into a city housing fund instead.

CMK is seeking a zoning change for the project from the City Council. Before breaking ground, the developer also would need to secure financing for the building.

5/28/21 11:28 AM

CRAIN’S CHICAGO BUSINESS • MAY 31, 2021 9

United offers pilots cash to get COVID vaccines

The airline isn’t yet making vaccines mandatory. As overseas travel returns, it wants fliers to get the jab. United CEO Scott Kirby has talked a lot about mandating COVID-19 vaccinations, but for now, he’s offering to pay pilots to get their shots by June 30. The airline will give an extra 13 hours of pay to pilots who’ve already been vaccinated or receive their first shots by June 1, said the Air Line Pilots Association, the union representing flyers at United. Pilots who receive their first shots after June 1 will get 12 hours pay, and those who get their first doses after June 10 will earn 10 hours of pay. There’s no incentive for those who haven’t received their first shots by June 30. “Many governments, airlines, corporations and colleges have instituted vaccine mandates and restrictions, and United has repeatedly and openly discussed its desire to do so for its employees,” says

Todd Insler, chairman of ALPA’s master executive council at United. “The MEC’s focus has been on encouraging maximum voluntary participation in lieu of any such mandate.” United is offering both carrots and sticks to pilots. The maximum incentive pay works out to between $1,200 and $4,600 per pilot, depending on seniority. After Aug. 1, United pilots who don’t get vaccinated can be dropped from trips to destinations that require vaccines, without being paid. The airline isn’t prevented from requiring pilots to be vaccinated in the future. The move comes as international air travel begins to rebound and some countries, such as Italy and Spain, are allowing foreign travelers to bypass quarantine restrictions if they have vaccinations. Among major U.S. airlines, United is the most dependent on foreign travel. United said it’s giving away

United Airlines is offering vaccine incentive pay of up to $4,600 per pilot, depending on seniority.

BLOOMBERG

BY JOHN PLETZ

free travel for a year in a lottery aimed at encouraging customers to get vaccinated. In another sign that air travel demand is perking up, ALPA said 756 flying jobs that have been idle because of weak demand will be reopened to pilots. Kirby reached an agreement with ALPA to avoid furloughing pilots, but many were not flying their usual assignments. United also is hiring 300 new pilots to account for voluntary buyouts and a wave of mandatory retirements by baby boomer pilots. The second class of new pilots hired since the pandemic began is scheduled to begin training this week.

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10 MAY 31, 2021 • CRAIN’S CHICAGO BUSINESS

EDITORIAL

The corporate risk we need to discuss now

ANN DWYER

arlier this month, the world learned that a Chicago company paid what appears to be the largest known ransom to recover its computer systems from hackers. The company was CNA Financial, one of the biggest names in the global insurance sector. CNA reportedly paid $40 million in late March to regain control of its network about two weeks after a trove of company data was stolen and officials were locked out. We didn’t become aware of the full extent of CNA’s misfortune via the company, however. Bloomberg News was first to report on the hack and the ensuing negotiations over the size of the ransom, citing two people familiar with the situation who asked not to be named because they weren’t authorized to discuss the matter publicly. CNA, for its part, told Bloomberg it followed the law as well as federal guidance on the handling of ransomware attacks, sharing information about the electronic incursion with the FBI and other law enforcement authorities. CNA in its 10-Q disclosed that the attack took place but didn’t say it had paid the $40 million. The company said that particular detail was “not material.” It’s understandable that no company wants to publicly admit its data systems are vulnerable to the point it must pay millions to today’s version of Blackbeard. But it’s time for corporate America and the officials who advise companies on cyber-

security to acknowledge that just about every enterprise is vulnerable to attack nowadays. And shareholders as well as the wider public are entitled to understand the extent of the problem. As Bloomberg points out, it’s estimated that victims of cyberattacks paid about $350 million in ransom last year, a 311 percent increase over 2019. The recent digital raid of Colonial Pipeline, which grabbed

global headlines for sparking fuel shortages up and down the Eastern Seaboard, was reversed only after Colonial paid the hackers nearly $5 million. The FBI discourages organizations from paying any such ransoms because it only makes additional attacks more likely. Plus, there’s no guarantee data will be returned. The ransomware menace is emerging as one of the chief corporate risks of our

time, and yet it only seems to be discussed when a computer shutdown has the sort of aftereffects that cause John and Jane Doe to line up at their nearest service station to fill shopping bags with gasoline. Too much is at stake, however—from power grids to water systems, personal financial data to intellectual property—for us to continue to pretend digital assaults aren’t happening. The Center for Strategic & International Studies publishes a monthly timeline of significant cyberincidents worldwide. In April alone, the organization tracked 11 incidents, including a malware attack that triggered an airline reservation systems outage that affected 20 airlines around the world. That same organization also recently estimated that the cost of global cybercrime has reached over $1 trillion: monetary losses in the neighborhood of $945 billion plus spending on cybersecurity, which was expected to exceed $145 billion in 2020, the most recent data available. The bottom line seems to be that there’s no stopping cybercrime—rather, it’s a new reality that must be managed intelligently. One way to start is by being sure our own organizations are secure and each team member is aware of even simple risks, such as how to spot a phishing email. But on a larger scale, it’s becoming increasingly clear that we need a better federal response to the ransomware threat—as well as more transparency about the scope of the problem.

b o sa fi co co ca cl ra “a in to

Group

Assista

YOUR VIEW

Google workers return to HQ—here’s their plan

e’re coming back. As the city’s COVID-19 rates have dropped, we Chicagoans are returning to our restaurants, bars, shops and, most notably, our offices. I, for one, am excited to do all of these things, thanks to the hard work of those who came up with a very effective vaccine. One silver lining in this COVID cloud is that we’re getting a chance to re-imagine the ideal workplace and think about the ways we can make it work better for everyone. And we’re encouraging other business leaders to join us in this effort, for the sake of this city that we love. If we want to kick-start the recovery effort and get Chicago’s economy humming again, we need to get back in the office. Our new mindset goes beyond just “maximizing productivity,” “leveraging our employees’ assets” or whatever business-speak might apply here. We realize the importance of giving employees their freedom, while also encouraging camaraderie and collaboration—keys to a dynamic and innovative culture. That’s why we’re creating a remote/in-person hybrid

Karen Sauder is the site leader and vice president in Google’s Chicago office.

arrangement for our 1,400 Chicago workers that provides the best of both worlds. Essentially, we’re undoing the regimented, overcrowded open-office plan that has become the standard over the years. Instead, we’re replacing it with multi-purpose offices and flexible workspaces that incorporate new video technology, seamlessly connecting office with those joining

employees in the virtually. We’ve changed our policies, as well, introducing new types of paid leave for parents and caregivers and adding additional global paid time off to help employees rest and recharge. We know that members of our extended workforce are impacted by our reduced office schedules, so we committed to compensating them for the time they would have worked.

And we are eager to become part of the economic recovery—to help our city and those around the country rebuild from the devastation that was caused amidst the pandemic. That’s why we announced a $7 billion Investing in America effort, which includes $25 million for growth in Chicago. Practically speaking, Chicago needs the business community now more than ever. CTA trains are about one-third full compared to pre-pandemic levels, Michigan Avenue is dotted with shuttered businesses and mid-week pedestrian traffic downtown still feels like a random Sunday afternoon. Now that restrictions are lifting and we can get out into the city, that’s exactly what we should do. But if we just head back into the world and return to business as usual, then what have we really learned? Here’s one of the biggest takeaways I’ve gleaned from the last 15 months: While I plan to continue to benefit from the convenience of video calls on the go, we still need those casual collisions in the hallways and conversations in the micro kitchens. It’s where we riff on each other’s ideas and

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Chicago Business, 150 N. Michigan Ave., Chicago, IL 60601, or email us at letters@chicagobusiness.com. Please include your full name, the city from which you’re writing and a phone number for fact-checking purposes.

P010-P011_CCB_20210531.indd 10

come up with some of our best solutions. Some people might be hesitant to go back to work in-person after more than a year of working remotely. I get that— there’s no doubt that it’s been nice to wear sweatpants and take calls outside on warm mornings. But I’ve also learned that I miss my commute time, where I have freedom and space to let my mind wander or turn over a problem I’m trying to solve. I miss taking in new scenery and being in motion, both important fuel for my brain. For the good of everyone and the good of Chicago, it’s time for those of us who are able to venture back into the city, walk its streets, visit its restaurants, shop in its stores and head back to the office. And when we do that, it helps not just our work and our mental state, but the small businesses that depend on our presence and the families they support. So to Steve’s Flower Market, I’ll be picking up some blooms on my way into work. To the waitstaff at D’Amato’s, I’ll be by for a sandwich very soon. And to the good people at Do-Rite Donuts, my colleagues are ready for their Friday morning pickup.

Sound off: Send a column for the Opinion page to editor@ chicagobusiness.com. Please include a phone number for verification purposes, and limit submissions to 425 words or fewer.

5/28/21 1:46 PM

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CRAIN’S CHICAGO BUSINESS • MAY 31, 2021 11

LETTERS TO THE EDITOR

Merger won’t solve rail congestion

was disheartened to read a complete dismissal of the village of Matteson and other Chicago suburbs offered by Canadian National in their recent op-ed endorsing their merger with Kansas City Southern, making the country’s first Canada-United States-Mexico rail connection (“CN’s proposal will reduce congestion, traffic and pollution in Chicago,” May 4). Canadian National actually claimed to “solve Chicago’s longstanding rail congestion problem” by simply going “around the core of the city” and bypassing “downtown Chicago by about 30 miles to the south, looping through Matteson

Chief executive officer KC Crain Group publisher/executive editor Jim Kirk

Associate publisher Kate Van Etten *** Editor Ann Dwyer Creative director Thomas J. Linden Assistant managing editor/ Joe Cahill columnist Assistant managing editor/digital Ann R. Weiler Assistant managing editor/ Cassandra West news features

and then heading east towards Indiana.” Those comments indicate everything I fear about a CN-KCS deal: The dramatically increased traffic flow of a CN-KCS combination hinges on its ability to run additional trains through our communities on the Elgin Joliet & Eastern Railway line. If this merger proceeds, we stand to see even longer wait times at crossings, increases in Metra delays, increases in noise level for residents living near the tracks and increased environmental impacts on local communities. And in case it hasn’t been made clear to CN: Matteson, Joliet, Barrington and

many more communities on the EJ&E line are very much a part of the Chicago metro area. Our congestion problems feed into the city’s congestion problems. Our Metra and Amtrak delays feed into the city of Chicago’s delays. It’s all interconnected. MAYOR SHEILA CHALMERS-CURRIN Village of Matteson

Supply chain trouble hits steel, too I have a better one in the realm of manufacturing for the structural steel and miscellaneous metals industries: We are not only seeing prices up 100 percent year over

year, but lead times into the first quarter of next year (“Supply chain squeeze: It’s not just about computer chips and cars anymore,” May 7). More difficult is the fact that these materials are making it harder to let the clients know that their job will be on hold for nine months. With that, they are looking to alternative methods for project delivery and finding alternative materials to build with, i.e., concrete and/or modular materials. This is 100 percent going to affect the structural steel industry. DAN ZARCO Arcorp Structures, Chicago

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12 MAY 31, 2021 • CRAIN’S CHICAGO BUSINESS

PEOPLE ON THE MOVE

Advertising Section To place your listing, visit www.chicagobusiness.com/peoplemoves or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

ARCHITECTURE / DESIGN

DESIGN / BUILD

HEALTH CARE

LAW

REAL ESTATE

HKS, Chicago

Clayco, Chicago

Zing Health, Chicago

Levenfeld Pearlstein LLC, Chicago

Renovo Financial, Chicago

HKS welcomes Rich Smith as a Principal and Life Science Practice Director. Rich is highly recognized within the industry and has more than 35 years of experience working with higher education, corporate/commercial, governmental and health care clients. His work includes public and private science and technology projects designing life sciences, physical sciences, engineering research, educational facilities and R&D campuses. Rich will be based at the firm’s Chicago office.

Alan Lurie has joined Clayco as Project Executive. With over 35 years of project management experience in design, construction and real estate, Alan brings to the firm a large portfolio of mission critical projects, including large data centers for high profile commercial clients. In this role, Alan will be responsible for new client development and overseeing the design, construction and commissioning of mission critical projects. He holds a B.Arch from the Illinois Institute of Technology.

Chicago-based Medicare Advantage plan company Zing Health welcomes Trent Haywood, MD, JD, as chief medical officer. In that role at the Blue Cross Blue Shield Association, Dr. Haywood led innovations to address social determinants of health, including a partnership with Lyft to provide transportation to medical appointments. He also pioneered alternative payment models at the Centers for Medicare & Medicaid Services. Dr. Haywood will advance Zing Health’s commitment to underresourced seniors.

Levenfeld Pearlstein is delighted to announce that Laura Marinelli has joined the firm as a Partner in its Community Associations Group. Marinelli has nearly 20 years of experience representing condominium associations and common interest community associations in connection with various injunctive and equitable remedies, as well as governing documents, covenant enforcement, developer issues, mixed use property disputes, and breach of fiduciary duty matters.

Renovo Financial is pleased to announce the promotion of Brandon Moulton to Managing Director of Chicago. Brandon joined the company in 2015 and worked his way up from Loan Officer, to Vice President, to Senior Vice President. “Brandon’s drive to make sure both his team and clients are successful has resulted in the team’s significant growth over the past six years. He’s an asset to Renovo, and an inspiration to his colleagues across the country.” -Daniel Rosen, Co-founder Renovo Financial.

ARCHITECTURE / ENGINEERING

EVENT MARKETING / PRODUCTION

INFORMATION / DATA TECHNOLOGY

NON-PROFIT

Ardmore Roderick, Chicago

Kindle Communications, Chicago

Unisys Corporation, Chicago / Blue Bell

Chicago Lights, Chicago

Ardmore Roderick, one of Illinois’ largest minority-owned infrastructure engineering and construction management firms, welcomes John Conroyd, PE, SE as Senior Program Manager. John has over 30 years in the design and construction industry, successfully delivering major capital construction programs. His experience in K-12, transit, institutional, and mission critical facilities will play an integral role in expanding Ardmore Roderick’s Buildings and Facilities Group.

Kindle Communications is pleased to announce the addition of Ann Marie Czerwinski as Vice President, Client Services and Business Development. Ann Marie comes to Kindle with 20 years in the biopharmaceutical industry with a focus on sales and health systems management. At Kindle, Ann Marie will help cultivate relationships with new clients across all industries and continue to maintain the exceptional reputation the brand has established.

Unisys is pleased to announce Teresa Poggenpohl has joined the company as CMO and SVP of Marketing & Communications. She will spearhead Unisys’ marketing efforts to accelerate awareness for its solutions and help position the company for future growth. She previously served Accenture for 33 years, most recently as chief marketing & communications officer for North America. She serves on the Board of Directors for the Chicago Children’s Museum and is a member of the Economic Club of Chicago.

Chicago Lights, an organization that creates opportunities for Chicagoans to overcome systemic barriers, announced Nicholas VanDerSchie as the incoming President of the Board of Directors. The global head of strategy and execution for Morningstar’s Investment Management group, VanDerSchie engaged with Chicago Lights nearly two decades ago, beginning as a tutor/mentor in 2002. He has served on the Board of Directors since 2017, most recently as Board Treasurer and executive committee member.

HEALTH CARE

LAW

CONSTRUCTION

Sinai Chicago, Chicago

Croke Fairchild Morgan & Beres, Chicago

W.E. O’Neil Construction, Chicago

Sinai Chicago announces the addition of Dr. Christopher Sprowl as President of Sinai Medical Group/Ambulatory Enterprise. Dr. Sprowl will provide oversight of the medical group across Sinai’s ambulatory/community, acute, emergent and post-acute care settings. Previous leadership positions include Community Health Programs of the Berkshires, SSM Health and MaineHealth. He graduated from State University of New York at Buffalo and served his residency at St. Joseph Hospital in Denver.

W.E. O’Neil Construction is pleased to promote Stephanie Cotey to Director of Project Management, reinforcing her contributions to the firm as a key resource for project operations. In her new role, Cotey will oversee internal project management processes including project financials, virtual design and construction and QA/QC. She is recognized for her leadership and mentorship within the company and the AEC industry and continues to be a catalyst for W.E. O’Neil’s growth.

CHICAGOBUSINESS.COM I DECEMBER 7, 2020 I

THE TAKEAWAY

Suzanne Yoon Yoon, 45, is founder and managing partner of Chicago private-equity firm Kinzie Capital Partners, which invests in lower midmarket consumer, manufacturing and services companies. Her parents brought her to the U.S. from South Korea when she was a baby. She was raised in the Chicago area. Today, she lives in Ukrainian Village with her husband and three sons.

> What’s your favorite sport? Today, it would be golf. Previously, I would do anything that had me running around. I just enjoy games generally.

As a spectator? It’s a tie between pro football and my boys’ baseball games. I’m an unfortunate lifelong Bears fan.

You also fish? I fish a lot because becau causee my my husba husb hu band is a die-hard die-hard hard d fisherman. fis fisherma fi herm herman an. So it’s partly just going going along for husband the he ride ride, r de but b t I do d enjoy eenjo n it. it.

What’s your best catch catch? atch? h? My largest fish was a 60-pound 60-po ound sail sail-fish caught in the Florida Keys, KKeeys, eys, and a the he hardest catch was a 660-pound 6000-pound tuna from the he Gulf side of Mexico. Mexico. xico.

Why not?

What’s What’ W hatt’’s one ha one of your y favorite things abou aboutt K ore o rea ean an culture culture? ltu Korean I still illl love love ve Korean oreean food. The focus on education orean du ation a o aand and ffamily amilyy values. valu va lues lu ues es. s My M mother h was definitely de d fi i l a ““Tiger Tiger M om m.” TThere here was a lot of discipline in the house. Mom.”

Reprinted with permission from Crain’s Chicago Business. ness. © 2021 Crain Communications on ns Inc. ns IInc nc. n All A All rights ghts hts reserved. reser res reserved erv rv www.chicagobusiness.com/ m/ m/sec m /sect c on/reprints. ction/reprints. n/reprints. reprints. eprints. s. #CB21042 #CB2 #CB21 #CB210 B210 B 2 42 42 Further duplication without permission is prohibited. Visit www.chicagobusiness.com/section/reprints.

Reprinted with permission from Crain’s Chicago Business. © 2021 Crain Communications Inc. All rights reserved. Further duplication without permission is prohibited. Visit www.chicagobusiness.com/section/reprints. #CB21042

When you have an afternoon to yourself, how do you spend it? Sometimes I clean. I like to keep my life simple—I like to simplify; I’m a purger. For relaxation, I’m into mediation, yoga and working out.

PROMOTE.

What did your mother otherr d do o fo for a living? She was a nurse who ho wou woul ld sometimes ometim work work two tw wo shif fts ts a day. Today, she’s direct or off would shifts director homee business. nursing for a nursing g hom business.

What makes you tick? I come from an immigrant family and was raised by a single mother after my father passed away in an armed robbery when I was 10. I’ve never taken a single thing for granted in my life.

What’s your call on working remotely in the COVID-19 era? We started to go back into the (downtown) office in October—we took a vote, and it was unanimous everyone wanted to be back in.

#25 Overall #18 Small Businesses #25 Overall #18 Small Businesses #25 Overall #18 Smallll Businesse Businesses es

remotely in tough times: cash for office equipment and child care, additional PTO to deal More than a year into pandemic, mostt officewith workers are still d do doing oing o ing ngg theirr thing th t g ffro from rom om with COVID challenges. Once again thisthe year, Crain’s partnered Best are Companies lunches, tablea tennis aand n nd d happy happy ppy py hours hou mo m moot home, making perks Group to survey employees and office identify the like 100 catered Best Places to Work, list that gets p with ways to suppor rt the rt ttheir heeir troops h t ops p wo w orrk orkin orking o rrkin kkiiin n ngg But the best companies came up support working more competitivepoints. each year. uipment and child care,, additional add dit di iti tionall PT tional PTO TO to TO to dea d al remotely in tough times: cash for office equipment deal dw itth B Best Comp Co om mpanies p with COVID challenges. Once again this year, Crain’s partnered with Companies o Wor W Wo ork, a list tthat h hat att ggets Group to survey employees and identifyy the 100 Best Places to Work, more competitive each year.

You’re one of the few women leading a private-equity firm anywhere in the U.S. Is that a lonely role? I don’t think it is, because I have such a good network of other women. It’s not like it was five years ago, or 10 years ago.

More than a year into the pandemic, most office workers are still doing their thing from home, making office perks like catered lunches, table tennis and happy hours moot points. But the best companies came up with ways to support their troops working remotely in tough times: cash for office equipment and child care, additional PTO to deal with COVID challenges. Once again this Crain’s most partnered Bestare Companies More than a year into theyear, pandemic, officewith workers still doing their thing from Group to survey home, employees andoffice identify thelike 100catered Best Places to Work, list that gets making perks lunches, table atennis and happy hours moot more competitivepoints. each year. But the best companies came up with ways to support their troops working

Andrew Gilbert joins Croke Fairchild Morgan & Beres as corporate partner, providing legal and strategic counsel on public and private company transactions, private equity, fundraising and general corporate matters. He brings more than a decade of work experience in global legal and financial institutions, having guided clients in multiple sectors through transactions valued as high as $40 billion. Prior to joining the growing Chicago law firm, Andy was a Senior Associate at Hogan Lovells in D.C.

Is there a future forr wo women omen in private priv eq equity? quiity? t I see more women in private privvaaatte eq equity than ther re have have been, beeen, be n,, soo I think tthi thin th hink inkk it’s itt’ss getg get ge there have modest. ting better. The inroads oads h ave been b modest.

Reprinted R eprinted with permission permission n from f om Crain’s Chica fro Chicago aggoo Business. ago Busines Busi Busines Bu Business i s. © 2 in 2021 021 021 Crain rain n Communications Communicatio ommunicatio Inc. All rights rrig res rese reser reserved. errv rvveeed d. Further duplication without prohibited. Fu urther duplicatio on w itho out pe permission p e is prohibited hib bi d. V Visitt www. Visit www.chicago www.chicagobusiness.com/section/reprints. www.chicagobusiness.com/section/r www.chicagobusiness.com/sect www.chicagobusiness.com/section/reprints .chi hicagobusiness.com/section/rep agob obusiness.com/section/reprints. b sines ine com/section/reprint m/section/reprints. / ti tio /re i t #C ##CB21015 B2 B21015 210 10 015 15 5

For more information contact: Lauren Melesio • Director, Reprints & Licensing lmelesio@crain.com • (212) 210-0707

PUBLIC AFFAIRS Iluminara Public Affairs, Chicago Chicago-based planning and management consultant Paul Stewart has launched Iluminara Public Affairs, a minorityowned shop offering strategic public affairs Stewart consulting services to clients across myriad sectors and industries. Iluminara develops penetrating public affairs campaigns and targeted community relations strategies. Rounding out the senior management team at Iluminara is Newman SVP Lisa Newman, who brings years of media and event management experience from past roles as VP of Development for the Chicago Urban League; and Managing Partner and Chief Development Officer at Creative One Consulting, where she led the development of marketing and fundraising strategies for several foundations, corporate boards, and community organizations.

SOFTWARE / CLOUD-BASED TECHNOLOGY Pricefx, Chicago Ronak Sheth joined Pricefx as President and Chief Revenue Officer. He will oversee the newly unified marketing, sales, ecosystem and customer organizations. Sheth brings more than two decades of experience in executive leadership and board management roles at earlystage and high-growth technology companies. For the past year, Sheth has served as a board member and board advisor to several B2B and B2C technology and consumer products companies after leaving his role as CEO of Label Insight.

TECH / TELECOM UScellular, Chicago Deirdre Drake, EVP, Chief People Officer and Head of Communications at UScellular, has been named to the UScellular Board of Directors. Deirdre joined UScellular in 2014 and leads the HR and corporate communications functions. She delivers integrated HR solutions that enable the achievement of UScellular’s strategic objectives and collaborates with various teams to ensure there is appropriate communications and support for the company’s mission of providing an excellent customer experience.

CRAIN’S CHICAGO BUSINESS • MAY 31, 2021 13

CARE COALITION: Chicago hospitals and clinics take meaningful steps on improving health equity. PAGE 14 WHERE TO START: Co-founders of DEI firm chart a course for turning talk into action. PAGE 18

CRAIN’S ILLUSTRATION/GETTY IMAGES PHOTO

WORKPLACE DIVERSITY

A TIME TO TWEET: Corporate twitter accounts embraced diversity in the aftermath of George Floyd’s killing. PAGE 21

MORE FORUM ONLINE See Crain’s in-depth stories, interactives and guest columns on Workplace Diversity and these previous topics:

A MOVEMENT OR A MOMENT?

Corporate Chicago grapples with racial diversity in the year following a flood of pledges to improve commitments to equity | BY DEBORAH SHELTON Gun Violence and COVID-19 Manufacturing The Future of Capitalism Lake Michigan Work-Life Freight Regional Planning Health Care Education Police Reform

Transportation COVID-19 Racial Gaps Economic Development Taxes Jobs & Wages Cannabis Water Gun Violence Housing Pensions

ChicagoBusiness.com/CrainsForum

After protests erupted over the murder of George Floyd by a Minneapolis police officer a year ago, scores of business leaders committed publicly to advance racial diversity, equity and inclusion in their companies. Companies formed task forces. Others scrutinized their hiring practices. Minority-owned businesses won contracts. In a tweet last June, ComEd and parent company Exelon vowed to “reject hate, intolerance and discrimination of any kind and stand in support of our employees and the communities they serve.” Melissa Washington, ComEd’s senior vice president of government and external affairs,

says, “It’s not just about giving people an equal chance. It’s about giving people a fair chance.” To some, those actions signaled a turning point. Others were skeptical. Beyond the news releases, check writing and social media proclamations, where does diversity stand today? Are companies making good on their pledges? How much has changed? The answer isn’t simple. Businesses are rethinking a wide range of practices and policies, from recruiting, promotion and retention to how to engage with communities of color. But perceptions of the state of diversity and inclusion in the work-

place vary depending on whom you ask. A report in April from Glassdoor, a company review website, found that African American employees are less satisfied than their white peers with D&I at their workplaces, a gap that has widened since 2019. At the current rate of progress, it will take 95 years for African Americans to reach parity (12 percent representation) across all levels of U.S. private industry, according to a McKinsey & Co. report published in February. Removing barriers in hiring, promotions and retention, however, could result in parity in 25 years. See MOVEMENT on Page 20

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Health care coalition finds its footing in social justice fight In the 12 months since committing to improving health equity, 44 organizations are making progress on policy changes Illinois hospitals and clinics are getting ready to take a meaningful stride toward social justice. Last June, in the wake of George Floyd’s killing and as the COVID-19 pandemic magnified racial fault lines, more than 30 health care organizations in Chicago joined forces to declare racism a public health crisis. In an open letter, the coalition— including large hospital chains like Advocate Aurora Health and community-based clinics like Esperanza Health Centers—committed to providing anti-racism training and promoting leaders of color, among other measures aimed at improving health equity across the city. But as Rush University Medical Center’s Dr. David Ansell says: “You get one point for pointing out the problem and 100 points for fixing it.” Along with the Illinois Health & Hospital Association, the coalition—an offshoot of the city of Chicago’s Racial Equity Rapid Response Team—is launching a new program to help health care organizations across the state reduce systemic racism and health disparities. As the coalition expands beyond Chicago, it’s bolstered by Illinois’ new equity-focused health care law and the nation’s renewed focus on racial justice. Even before COVID-19 started spreading, disparities in access to food, housing, education, safety and wealth led to a 30-year difference in life expectancy between Streeterville and Englewood. But the pandemic forced Chicago-area business leaders to acknowledge the link between structural racism and poor health outcomes. African Americans make up less than one-third of the city’s population, but as of May 26 they accounted for 39 percent of COVID-19 deaths, according to the Chicago Department of Public Health. The death rate for Black Chicagoans is more than double that of non-Latino white residents. Meanwhile, Latinos make up roughly 30 percent of the city’s population, but they accounted for 33 percent of deaths. “If it hadn’t been for George Floyd and all these unfortunate injustices that happened in our country, I don’t think all 44 (health care) organizations would have come together like this,” says Brenda Battle, who co-leads the coalition and is vice president of the University of Chicago Medicine’s Urban Health Initiative. “If we hadn’t seen the impact that COVID has had in our communities, it just wouldn’t have happened.”

JOHN R. BOEHM

BY STEPHANIE GOLDBERG

Brenda Battle is vice president of the University of Chicago Medicine’s Urban Health Initiative. Although the reports won’t be As anchors in the communities Kohlrus, assistant vice president they serve, health care organi- of quality, safety and health pol- made public, they eventually will zations “have a responsibility to icy for the trade group, which be used to create a plan to imend these issues of injustice,” Bat- represents Illinois’ more than 200 prove pay equity and charity care, among other policies, Kohlrus tle says, but it takes leadership to hospitals. Participating hospitals and says. ensure initiatives such as this one Providing anti-racism training clinics will report what they’re don’t fizzle out. That’s why coalition leaders doing to promote board diversi- and increasing access to health and the Illinois Health & Hospi- ty and ensure that the commu- care services are among the sevtal Association in June are rolling nities they serve are represented en resolutions agreed upon by the coalition last out a “racial equity year. While all the progress report” for “YOU GET ONE POINT FOR POINTING OUT THE commitments are health care orgaconnected, it’s parnizations to comPROBLEM AND 100 POINTS FOR FIXING IT.” ticularly important plete annually. The Dr. David Ansell to focus on hiring “quality improvelocally and promotment tool”—developed with support from the Civic in the makeup of their workforce, ing leaders of color, says Ansell, Consulting Alliance and consul- among other racial equity met- who co-leads the coalition and is tancy Oliver Wyman—aims to rics. The goal is to have more than senior vice president for commudetermine each organization’s 150 organizations complete the nity health equity at Rush. “The baseline and identify opportuni- first progress report by year-end, health care industry has a huge opportunity to create career ladties for improvement, says Adam Kohlrus says.

ders into wealth from our communities,” he says. In addition to the work being done collectively, hospitals and clinics are reviewing their internal policies and procedures in the midst of a transformative moment for the industry and the country. For example, Access Community Health Network, which has its own task force on racial justice and health equity, aims to make sure at least 30 percent of the vendors it works with are minority-owned. “The more we’re transparent in what we’re doing, the more our boards will hold us accountable and—more importantly—the community will hold us accountable,” says Access CEO Donna Thompson. “That’s the piece now that’s different. It’s not just one community voice like you saw 20 or 30 years ago. There’s a lot of voices, and these voices aren’t going away.” It’s not just private organizations working to address systemic inequities in the wake of high-profile police killings and the pandemic. Gov. J.B. Pritzker last month signed the health care pillar of the Illinois Legislative Black Caucus’ anti-racism agenda. The law aims to address long-standing health inequities by mandating that medical professionals undergo implicit bias training, lowering taxes on blood sugar testing products and requiring a racial equity impact assessment for future hospital closure applications, among other measures. At least 10 measures didn’t make it into the legislation as lawmakers focused on pieces they knew would pass, says state Sen. Mattie Hunter, D-Chicago. That’s where S.B. 1840 comes in. The stand-alone bill aims to further hold hospitals accountable by requiring more transparency around charity care and financial assistance data. For example, hospitals would be required to report the total amount of free care provided to low-income patients in the emergency department, and chains would be required to report such data for each individual hospital within the system. As of now, the largest hospitals in Cook County, with the exception of Cook County Health’s Stroger Hospital, spend a minuscule percentage of their revenue on charity care. “We have to seize the moment and take advantage of everything that’s going on to bring about change,” Hunter says, “because we don’t know when the next time something is going to happen that’s going to bring everyone together.”

JIM KIRK PUBLISHER • ANN DWYER EDITOR • CASSANDRA WEST FORUM EDITOR • THOMAS J. LINDEN CREATIVE DIRECTOR • JASON McGREGOR DIGITAL DESIGN DIRECTOR • KAREN FREESE ZANE ASSOCIATE CREATIVE DIRECTOR • SCOTT WILLIAMS COPY CHIEF

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‘You cannot fix something you’re unwilling to face’ writing a check to the United Negro College Fund or the Thurgood Marshall Scholarship Fund. But Companies that make pledges to building a recruiting partnerimprove their track records on racial equity often don’t take into ac- ship with one of the historically Black colleges or universities to count the full scope of what those diversify your talent, that’s not pledges should entail, says Nichlow-hanging fruit. That takes time. olas Pearce, a clinical professor of management and organizations at That takes relationships. That requires building trust. That reNorthwestern University’s Kellogg School of Management and found- quires posting every job opening. A lot of organizations . . . started er and CEO of the Vocati Group. In with sincerity at the level they unthis Q&A, Pearce offers questions derstood it. But as it became clear that companies need to address what this journey would demand before “credibly” undertaking any of them, it did begin to test true diversity efforts. intentions. CRAIN’S: Do you think most busiWhen I’m talking with my ness leaders are sincere when students about these issues—and they say they are committed to even talking with clients—we’ll advancing racial diversity? talk about how helpful or unhelpful the notion of meritocracy is for PEARCE: Many companies are righting these wrongs. We always clueless. They don’t know what land on the point that meritocrafixing it—quote, unquote—ency is a wonderful idea. But at this tails. They will say, “We want to be equity-centered.” They will say, stage, it’s simply an ideal. It’s an aspiration. It is not a current real“We want to be inclusive.” They ity. If we want to level the playing will say, “We want to be anti-racfield and have true meritocracy, “WE ALWAYS LAND ON THE POINT THAT it is going to have MERITOCRACY IS A WONDERFUL IDEA. BUT to involve people giving up their AT THIS STAGE, IT’S SIMPLY AN IDEAL.” unearned advantages. And that will feel like oppression to them. ist.” But when the time comes to engage in the work and they start What should companies be to see just how penetrating this doing to overcome these work is, many organizations will opt out because they were looking challenges? It is critical to understand that this for the quick fix. is not simply a question of how You’ll start hearing conversado we get more Black and Brown tions about low-hanging fruit—

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BY DEBORAH SHELTON

PHOTOS BY ALEX GARCIA

CRA tech com

Nicholas Pearce is a clinical professor at Northwestern University’s Kellogg School of Management. people into the company and up the ranks. Any organization that wants to credibly undertake the work of diversity, equity and inclusion has to be focusing not only on its internal workforce, but also on its workplace. How inclusive is it? How do they remove barriers to entry for all people into the organization? How do they make sure the playing field is level as they evaluate, source and interview talent? How do they make sure to get as diverse and excellent a subset of applicants that they possibly can? The workplace dimension focuses on the experiences of employees at work. Do people feel like they are subject to unconscious bias or collective bias? Do they feel that there are glass ceilings or bamboo ceilings? Do they

feel like there are certain levels of leadership that aren’t attainable for them? What does mentoring look like in the organization? What does sponsorship look like? What kind of benefits do employees have? There’s also the marketplace dimension. How do a company’s products, services and operations impact the community around it—consumers, customers and other stakeholders? Where do they have their dollars for pension funds or 401(k)s? Do they have as options Black- and Brown-managed funds? Are they insisting upon diverse professional services providers: accountants, auditors, tax consultants, lawyers? Are they sourcing minority-owned and women-owned businesses to spend money with?

Who are they buying their coffee from? Who are they buying their paper from? What is a good starting point if the leadership is truly committed to change? What I would say to any organization that wants to do this work credibly is that before they reach to the tried-and-true shelf of tactics that they first align on why diversity is important to them and align on a shared picture of the current state of where things stand in the organization. A lot of organizations are struggling with the “current state” conversation because they don’t want to be transparent about how ugly things are. You cannot fix something you’re unwilling to face.

BY DEBORAH SHELTON In 2016, #AirBnBWhileBlack started trending on Twitter. The hashtag was penned by Quirtina Crittenden, a 23-yearold Chicago business consultant, who said she was often rejected by Airbnb hosts when searching for a short-term rental even when the housing was advertised as being available. She suspected she was being discriminated against because she is African American. She tested her suspicions by shortening her name to Tina on her profile and replacing her photo with one of a Chicago skyline. After that, she had no prob-

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lems finding housing. Earlier that year, Harvard Business School researchers ran an experiment exploring racial discrimination at Airbnb. The study found that, on the Airbnb platform, applications from guests with distinctly African American names were about 16 percent less likely to be accepted than guests with distinctly white names. A previous study by the researchers found that people of color earned less money than white people when renting out their properties. “Our founders’ lived experience had not prepared them for the fact that people would bring

their biases, conscious and unconscious, onto our platform,” says Melissa Thomas-Hunt, Airbnb’s head of global diversity and belonging, who didn’t work for the company at the time. The company responded by creating a “commitment and anti-discrimination attestation,” removing 1.3 million people from the Airbnb platform for failure to consent. It also sought to build partnerships with civil rights groups, seeking input on stakeholder experiences and improving policies based on their recommendations. An anti-discrimination product team now makes recommendations to mitigate discrimina-

BLOOMBERG MERCURY

Charged with racial discrimination, Airbnb promised to ‘mitigate the bias’

Airbnb launched Project Lighthouse to “uncover” discrimination. tion across the company. And it launched Project Lighthouse in summer 2020 to “uncover, measure and overcome” discrimination when booking or hosting on Airbnb.

“Our efforts are ongoing,” Thomas-Hunt says. “We have much work to do to mitigate the bias that real human beings often bring with them. We are committed for the long haul.”

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CRAIN’S CHICAGO BUSINESS • MAY 31, 2021 17

‘Most of the solutions are at the top of the funnel’ chain are appealing because you can identify them more easily. I advise companies to ask for referrals and use good networking practices to expand the top of the funnel. Most of the solutions are at the top of the funnel. It’s getting more awareness to communities of color that jobs are available in the tech industry, that they qualify for them, that they don’t need 100 percent of the qualifications on a job posting to apply. That’s how change is going to happen.

BY DEBORAH SHELTON When it comes to identifying job candidates outside of the typical networks, tech companies need to rethink their job descriptions, says Waverly Deutsch, DEI consultant and clinical professor of entrepreneurship at the University of Chicago Booth School of Business. And that’s probably one of the hardest challenges companies face, she adds. Here Deutsch talks about other critical obstacles that need to be addressed to bring more diversity to the tech startup sector.

PHOTOS BY ALEX GARCIA

CRAIN’S: What do you advise tech startups about how to become more racially diverse?

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DEUTSCH: You have to actively network outside of your typical networks and not rely on your university or business school networks. You have to be networking constantly. You have to tell your HR people, your recruiters, your employees, that you want them actively sourcing diverse populations for job candidates. It’s about stating the commitment and then putting that commitment into processes, into action.

What other obstacles need to be addressed?

Waverly Deutsch Some of the companies I advise hold off on hiring until they can surface candidates of color. Some companies are hyper-aware of creating promotion opportunities within the company so that they’re not losing diverse talent because they don’t have an upward path for them. Why don’t they already do some of these things? Candidates that work for competitors or complementary companies or companies in your supply

When we define a certain experience path for a job, we need to understand other experiences that give people the same expertise and competence. For example, many venture-capital firms seek candidates with banking experience. If you haven’t had banking experience, but you’ve had finance experience in a corporation or nonprofit, it can help on the fundraising side for a venture. In grant writing, you have to identify metrics of success and articulate how you’re going to achieve those metrics. You have to

understand reporting capabilities and things like that. Those skills are all valuable to a venture-capital firm. It seems like there’s a disconnect between what companies search for and what they need, which exacerbates racial inequities.

different job at a different type of institution? If you can, it can help you write your job descriptions in a way to become more inclusive. Probably one of the hardest challenges that companies face is changing the way they evaluate their hiring processes, recruitment and job description writing.

A lot of the venture-capital hires What’s an example of a job decome out of a handful of schools. scription that was off the mark? How do you identify the core I was looking at a job description competencies that lesser-known that had a lot of science requirecolleges are great at, particularments but had very little science ly state schools—which attract in the job. It was just a matter of more people of color—historicalbeing able to talk the language. I ly Black colleges and universities, wondered: Are we going to be able or programs that attract more to find a science Ph.D. who wants Hispanics? A school may rank to do this administrative type 167th as a college overall, but it might rank in the top 20 to 30 for a particuWE NEED TO UNDERSTAND OTHER lar program. Can you identify EXPERIENCES THAT GIVE PEOPLE THE those programs so that you can recognize SAME EXPERTISE AND COMPETENCE. that that academic of entrepreneurial support job? credential is the same as one from Having such specific language in a more prestigious school that the hiring documentation means you’ve hired from in the past? we’re losing great candidates beCan you identify that a past job cause we’re asking for credentials at a particular institution would, that aren’t critical to the job. in fact, give similar skill sets as a

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18 MAY 31, 2021 • CRAIN’S CHICAGO BUSINESS

MONITORING AND TRACKING

Accountability is impossible without real transparency I

76 percent of employees and job t’s been nearly a year since seekers said a diverse workforce the start of the country’s was important when evaluating reckoning with the impacts companies and job offers. of systemic racism. Millions In recent JUST Capital polling, of Americans have made their 95 percent of Black Americans voices heard in what’s likely the said it is important for compalargest movement in our nation’s nies to promote racial equity in history. And recent events in the workplace and over 80 perMinnesota only serve as a recent said companies have more minder that it’s far from over. work to do, signifying that talk We’ve seen a sweeping Yusuf George is number of statements and managing director of commitment is not enough. There’s also a clear business commitments from corporate of corporate encase. Our research shows that America pledging to advance gagement at the companies that disclose racial equity. But their words, JUST Capital, EEO-1 data are outperforming while a marked departure from a platform that industry peers. how they might have responded tracks and meaYet, a report from McKinsey even a few years ago, can often sures corporate and PolicyLink indicates that, on be just that—words. Without performance. the current trajectory, it will take transparency around the actions about 95 years for Black employees to reach companies are actually taking, employees, customers, investors and other stakeholders talent parity, or 12 percent representation, across all levels in the private sector. We can’t hold them accountable. For compacan’t close this gap without knowing where nies, transparency is an opportunity they companies currently stand. can’t afford to pass up. As Mellody Hobson, That’s why, at JUST Capital, we started president and co-CEO of Ariel Investments monitoring which of the nation’s largest and Starbucks board chair, recently said, employers are disclosing their diversity, companies that don’t have a real diversity equity and inclusion, or DEI, actions in our agenda risk “dying as an organization.” Corporate Racial Equity Tracker. The trackPolling from JUST Capital shows that er includes 22 specific measures ranging nearly 70 percent of Americans believe from workforce demographic data disclocorporate leaders should take a stand on important social issues. And for younger job sures to whether companies offer a re-entry policy. What we noticed in compiling this seekers, diversity isn’t a preference. It’s a requirement. A Glassdoor survey reported that data is that the companies that are leading

on disclosures are often the ones who are further along in their DEI work—they’ve established quantitative targets, conducted pay equity assessments and are transparent about the racial and ethnic makeup of their workforce. Our research shows that out of the 100 largest U.S. employers we’ve assessed, only 18 have at least one disclosure that addresses all six dimensions of racial equity we’re measuring. To better understand how companies are progressing on their commitments, they must be transparent. Their stakeholders recognize that advancing racial equity is a journey, making transparency even more important. Intel’s chief diversity and inclusion officer, Dawn Jones, recently shared that the company’s transparency on DEI, while sometimes uncomfortable, adds a layer of accountability that creates a sense of urgency to improve—and that a lot of companies might not want to feel that discomfort. But I’d argue that companies are going to need to be willing to get uncomfortable to uphold their racial equity commitments. The data points captured in our tracker reflect what we can hold companies accountable to based on what they’re comfortable sharing. We know, however, that this isn’t a full picture of what we should be measuring. To get that holistic look, companies need to be transparent at every step in their DEI journey. They also need to examine how they’re

advancing racial equity in their workplaces, the communities they operate in and society at-large. A true commitment to advancing racial equity is embedded across these three pillars, not just in workplace policies or monetary support. At the societal level, moves by companies to shift lobbying and political giving practices highlight how

they trans In corp direc more able even

CHANGING THE LANDSCAPE

What it will take to turn talk into action and results

ly?” start expe if it m

w Believe and accept other truths As a DEI-consulting organization, our

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Brynne Hovde, left, and Tiffany Hudson are co-founders of Nova Collective, a Chicago-based diversity, equity and inclusion firm. firm, Nova, often finds that many people flat out refuse to believe the experiences of their co-workers or employees of color. Consider this backdrop of social change: Black people have been saying for centuries that we have a policing issue, and white people are only outraged when it is “proven” by being filmed. Similarly, workers of many different marginalized identities report feeling discriminated against or “othered” at work, and leaders are hesitant to believe or accept the truth

BLOOMBERG

ne year ago, many leaders in corporate America did not know about Juneteenth, the African American celebration of emancipation from enslavement. And these leaders never thought their companies might issue statements standing with Black Lives Matter. It was unfathomable to them that they might host “healing” or “listening” sessions with their employees. And here we are, in 2021, and these conversations have become part of the “normal” organizational landscape. Corporate America has come a long way, and we have miles yet to go. There have been important strides this past year—cracking open centuries-overdue conversations about how to care for people at work and what responsibility companies have to the social fabric. But what will it take to turn talking into action and results? Layers of factors—identities, contexts, circumstances and more make our path in 2021 increasingly complex— but here are some places to start:

Signs left by demonstrators are taped to a construction fence near the White House in June 2020. without “proof.” Nova performs research across a number of industries. We leverage quantitative and qualitative methods to uncover DEI issues and concerns. Even with all

the graphs, charts and “data” we can pull together, we are often met with, “Well, I’m still not sure this is an actual issue” or “What’s the accepted sample size of complaints that we have to take serious-

5/28/21 12:01 PM

w Tak At N to be Yes. com sque mov push muc envi expe oppr of en they clim tion (Hin need impr any sour

w Cle Last lenc (and head the c and publ

CRAIN’S CHICAGO BUSINESS • MAY 31, 2021 19

BEYOND PLATITUDES

GETTY IMAGES

Reflections on racial bias in the tech world A

ull

”

BLOOMBERG

aces, ociancese ies el, nd

they can act—and are, again, grounded in transparency. Increased attention to racial equity in corporate America is a step in the right direction, but stakeholders want to see more. And, at JUST Capital, we want to be able to track more. We need transparency even, and especially if, the data shows

companies still have a long way to go toward reaching their goals. Understanding how corporations use their influence in the workplace, communities and society is the only way to see how they’re actively combating the impacts of systemic racism. This is what true corporate accountability on advancing racial equity will look like.

ly?” Let’s have 2021 be the year leaders start to believe people about their own experiences, and accept their truths, even if it means discomfort.

ing. The trauma, exhaustion and outrage doesn’t just continue; it compounds. It is likely your organization’s employees of color are beyond tired, beyond sad or mad. Rather than doubling down on efforts to engage your employees. consider what it would look like to give them space. Especially for your employees of color: How can you provide a release of pressure, rather than an increase in burden?

w Take responsibility At Nova, we often hear “everyone needs to be part of the solution” for DEI at work. Yes. And: If leaders won’t step up to make commitments to DEI, if they won’t be the squeaky wheel, if they rely on “grassroots movements” (also important!) only to push forward change—there won’t be much progress in 2021. In any given work environment, most employees may not be experiencing discrimination, exclusion or oppression. So relying on a critical mass of engaged employees to be the change they want to see is setting them up to climb an exhausting hill. If your organization is structured with hierarchical roles (Hint: It almost certainly is.), leadership needs to be aggressively pursuing DEI improvements the same way they pursue any other strategic initiative— with resources, metrics and accountability. w Clear some space Last year our nation saw horrific violence and trauma against people of color (and specifically Black people) make headlines. For many, these events were the catalyst for renewed calls for change and progress. In 2021, this horrible and publicly shared violence is still happen-

P013-P022_CCB_20210531.indd 19

w Time is almost up Maybe you’ve read about Basecamp’s statement recently. Perhaps you’ve also heard the “other shoe,” where one-third of the company resigned en masse. Employees are no longer tolerating a regressive approach to DEI: Research shows that 83 percent of Gen Z employees think a company’s commitment to diversity and inclusion is important when choosing an employer. If you’ve been secretly wondering when this will all “fade away,” here is your answer: never. The time is now, the time is yesterday, to get on board and embrace the transformation that is looming in our workspaces. This next year will be telling for the corporate landscape, particularly in the U.S. Do we collectively have what it takes to evolve? Can we be the leaders we need to be, in the face of the historic opportunity that lies before us? Or will we sit back and watch the world move on without us? Only time will tell.

ing a defective subcontractor s I contemplate the year manufacturing process that since George Floyd’s caused the radar system murder and the racial failure. reckoning it has brought to One of the most insultmany workplaces across the ing career experiences was U.S., I’m painfully reminded of when a contracting compamy past experiences within the ny extended a job offer with engineering and technology an agreed-upon starting fields. salary. A few weeks later, I should have realized that the company wanted to day years ago when my calKevin Barnhart reduce the offer by several culus professor handed back is the founder of thousand dollars. When I our exams that being Black Barnhart Diverrejected the lower offer, the in white spaces would mean sity Consulting, company asked me to prove being underestimated. I had which helps that I had made a higher earned the highest score in organizations salary during my career. the class. A white student saw transform their my exam paper, looked at me culture to one that What’s even more ridiculous is that this position paid incredulously and said, “You! advocates, menless than my previous role. You got an A!” He was truly tors and champiThey assured me everything stunned, although we sat next ons the developwould be fine, if I would to each other in class daily, ment of people of only provide them with a tax hearing the same concepts, color throughout return, previous pay stubs, assigned the same homework all levels of the basically any documentasets. Yet my skin color made organization. tion that would prove that I him disbelieve what he saw. was indeed worth the salary That was only the beginning of the doubt, second-guessing and cred- they originally offered me. The absurdity of their request caused me to refuse any ibility challenges I would later endure offer to work with them. Again, white throughout my engineering career. The colleagues hired by the same company examples are exhaustive. didn’t experience this. Early in my career, I worked for a By no means is this the full list of company that circulated an internal demeaning incidents I endured in my memo to managers stating that they career. Eventually, I left the engineering were to ascertain the Black engineers’ field. Today, I work with companies weaknesses as quickly as possible so across various sectors, helping them remediation training could occur. The identify and rectify the implicit (and inherent assumption was that we were explicit) biases like the ones I experiinferior and not up to the job. Beyond enced. being insulting, this assumption imDespite it all, I want to believe that pacted our paychecks. The company employed a formula to calculate starting younger Black engineers will not be subjected to the workplace humiliasalaries for new engineers that ranked tions I encountered. I want to believe historically Black colleges and universithat companies are sincere when they ties lower than predominantly white institutions. I actually was paid more than pledge to root out racism. However, the current lack of diversity in tech indimy Black peers because my engineering cates that things have not changed that degree was from a predominantly white institution instead of a historically Black much. There remain many examples of persistent racial bias across the indusone. try. For instance, artificial intelligence Later, I worked as a senior guidance algorithms misidentify Black faces, system engineer on a cruise missile which has led to people being falsely project. During acceptance testing, arrested. Another algorithm underthe missile failed a critical radar test estimated the health needs of Black that prevented it from distinguishing between high-value targets. I decided to hospital patients. These examples show the ongoing stop the production line to investigate need for a diverse workforce throughout the issue, which meant that the U.S. Navy would not receive the missiles and all levels of the technology industry. My hope is that the tech community our subcontractor would not be paid until the issue was resolved. While my race was never explicTHE CURRENT LACK OF DIVERSITY IN itly mentioned, the subcontractor contacted my boss, concerned about TECH INDICATES THAT THINGS HAVE my “lack of experience.” When that NOT CHANGED THAT MUCH. failed to have me removed from the project, the subcontractor reached can push beyond platitudes and unfulout to my department head to request a filled intentions and demonstrate real more senior engineer be assigned to the top-to-bottom change for the good of project. In other words, the subcontracthe industry. That is what I want to see tor was seeking a white engineer, given for young Black engineers, who deserve that I was the only Black engineer on the a chance to thrive, unhampered by the project. Luckily, I worked with a strong burden of bias—so that they can make management team that had my back. I contributions that reflect the true value assembled my team and was able to pursue the investigation, eventually uncover- of their skills and talents.

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20 MAY 31, 2021 • CRAIN’S CHICAGO BUSINESS

MOVEMENT The slow pace of change has led to calls for more transparency from customers, investors, activists and shareholders. Proponents say disclosing detailed data by race and ethnicity—such as employee attrition or compensation—would bring greater accountability. Companies with more than 100 employees are required to disclose workforce demographic data, such as gender and race/ethnicity, to the Equal Employment Opportunity Commission, but businesses do not have to make it public. “(Corporations) are not transparent about the actions that would show whether they are making real progress,” says Yusuf George, managing director of corporate engagement at JUST Capital, an independent nonprofit that has launched a diversity tracker to monitor progress. George says only 31 of the 100 largest U.S. employers in the Russell 1000 disclose pay equity data, and only 29 share their quantitative diversity targets. “That’s just not good enough,” he says. Racial diversity remains a sensitive topic for many organizations. A half-dozen corporations headquartered in the Chicago area declined to be interviewed for this story. Boeing recently revealed that it fired 65 employees and disciplined 53 others between June 2020 and April 21 for “racist, discriminatory and otherwise hateful conduct.” Black employees make up 6.4 percent of Boeing’s U.S. workforce and 4.4 percent of its engineers, according to newly released company data.

‘THE OPPORTUNITY TO ACCELERATE’

The racial makeup of local boards of directors and executive ranks has come under closer scrutiny in recent years. A state law passed in 2019 now requires publicly listed companies headquartered in Illinois to submit an annual report on the gender, race and ethnic composition of their boards and the process for identifying and appointing directors and executive officers.

Continued from Page 13

Chicago United, an organization that works to achieve parity in economic opportunity by advancing multiracial leadership, published a report in December that found changes in the composition of boards and senior leadership at Chicago’s 50 largest public companies have been “minimal, but incremental.” “Increases in minority representation were most notable in the C-suite, growing by 10.2 percentage points over the last eight years,” the report says. Minority makeup of boards rose 4.4 percentage points. In 2020, however, 10 of the top 50 companies in Chicago still had no minority representation in their executive ranks. A University of Illinois analysis released in March reported that 19 of 74 publicly traded companies in the state had no people of color on their boards. Among firms that provided information about their racial and ethnic makeup, 33 (52 percent) had no Black board members. ComEd’s leadership is more diverse at the vice president level and above (64 percent are people of color) than for its workforce overall (almost 50 percent). A company spokeswoman did not have racial or ethnic breakdowns for its C-suite or executives. “We don’t believe in an excuse of, ‘We’ll definitely make the C-suite more diverse; we just need to find the appropriate candidate,’ ” Washington says. “We make sure we invest in our people so that we can have a strong pool of candidates.” Beginning this year, every manager must have a D&I performance goal. ComEd’s commitment includes training people in disinvested communities with the skills necessary to get construction jobs. On a recent Friday, 92 trainees graduated from the company’s CONSTRUCT Infrastructure Academy. Community groups recruit for the program; matchmaking events connect graduates to jobs, executives say. Jonita Wilson, vice president and chief diversity officer at Discover Financial Services, says the com-

Melissa Washington is senior vice president of government and external affairs at ComEd. pany has become more strategic by creating clear goals. “But the pandemic, as well as racial injustice— George Floyd’s murder amongst countless others—gave us the opportunity to accelerate,” she says. Executives have focused on four areas: workforce and leadership representation, inclusive environment, equity in opportunity and community impact. “We want to make sure that the work we’re doing also helps drive economic opportunity in our underserved communities,” Wilson says. Black employees made up 10 percent of the financial services firm’s U.S. workforce in 2019. Discover prioritized supplier diversity and decided to locate a new call center in the South Side community of Chatham. The company says it will generate about 1,000 jobs by 2024. A D&I task force of more than 30 employees across the company helped define Discover’s goals,

CHICAGO CORPORATE BOARD REPRESENTATION

Jonita Wilson is vice president and chief diversity officer at Discover Financial Services.

IN THE C-SUITE

A December report by Chicago United found that changes in the composition of boards at Chicago’s 50 largest public companies have been “incremental.”

Ten of the 50 largest public companies in Chicago had no minority representation in their executive ranks in 2020.

MINORITY STATUS OF BOARDS OF DIRECTORS

MINORITY STATUS OF C-SUITE EXECUTIVES

ETHNIC MAKEUP OF BOARDS OF DIRECTORS

9.0%

100%

African American

4.2%

Hispanic

2.9%

0.5%

Asian American Unknown

ETHNIC MAKEUP OF C-SUITE EXECUTIVES IN CHICAGO 4.7% 5.9% 0.4% 6.3%

100%

African American

Non-minority: 83.4%

REP IN C

Hispanic

Asian American Unknown

RACIA AT CH 2%

Non-minority: 82.7%

Chicag ture fi by Ch ethnic The d

Hispa

Minority: 16.1%

Minority: 16.9%

82.7%

83.4% 0

2012

2014

Sources: Chicago United, Crain’s reporting

100 P013-P022_CCB_20210531.indd 20 80

2016

2018

White

2020

2012

2014

2016

2018

White

2020

Notes: On the minority status charts, totals do not equal 100% because the “Unable to verify ethnicity” category was not included. Largest 50 Chicago-based public companies by revenue as listed in Crain’s Chicago Business in December 2019. 100 100 100

80 60

100%

5/28/21 3:04 PM

Afric Amer Source:

019.

PHOTOS BY ALEX GARCIA

CRAIN’S CHICAGO BUSINESS • MAY 31, 2021 21

which are measured and tracked, Wilson says. Like ComEd, Discover requires managers to set D&I performance goals. The company plans to increase representation of minority leaders to 40 percent by 2025 from a 2020 baseline. In 2020, minorities represented 27 percent of officers and 24 percent of directors. At Walgreens Boots Alliance, diversity factors into every aspect of the business, says Carlos Cubia, senior vice president and global chief diversity officer, including “how we make decisions about the products on our shelves, where we locate our stores, how we give back to the communities that we do business with—whether it’s through our supplier diversity efforts or taking a stand on social justice issues.” The company is targeting a 2 percent annual increase in people of color in senior leadership. Ten percent of corporate bonuses for leaders is now tied to meeting DEI goals. Walgreens requires racially mixed interview panels for senior-level positions and diverse candidate slates. Otherwise, “we’re not going to even have a conversation about starting the interview process,” Cubia says. Expectations about diversity should be set early, even before a job offer, says Melissa ThomasHunt, Airbnb’s head of global diversity and belonging. Every job candidate at Airbnb is asked about prior experiences in advancing D&I at work, and every executive is required to develop a diversity and belonging plan. In 2016, Airbnb got unwanted national attention after studies by researchers at Harvard Business School and consumer complaints pointed to racial discrimination by its hosts. New practices were put in place to address it.

‘THE NEW FIRM MIGHT BE MORE CAPABLE’

REPRESENTATION IN CHICAGO TECH

Chicago:Blend asked 92 Chicago venture firms and over 100 startups backed by Chicago’s VCs how many racial and ethnic minorities worked at their firms. The data included 588 employees. RACIAL AND ETHNIC DISTRIBUTION AT CHICAGO VC COMPANIES, 2020 9% 2% 2% Hispanic

Asian American

African American Source: Chicago:Blend

Other

81%

White

Disrupting the status quo means confronting biases and moving people out of their comfort zones. Managers, for example, can be reluctant to give minority contractors a chance, says John Hudson III, president and CEO of Nicor Gas. “An easy excuse is, ‘We’ve been dealing with this company for 40 years; let’s not take a chance with a new firm,’ ” he says. “But the new firm might be more capable than the firms that we’ve been using. And that’s the exact result that we’ve had when we focused on diversity and it became a priority for us.” Midsize companies also are grappling with diversity. Greeley & Hansen, an environmental engineering firm in Chicago, has provided training for managers on unconscious bias, microaggressions, privilege and racism, says CEO John Robak. The firm employs more than 300 worldwide, including 100 in Chicago. “Those are programs that we customize as much as we can for our industry and for our business,” Robak says. “We don’t have the large department that some bigger companies might have to do some of those things. But we do them anyway.” The company has partnered

with Chicago United, where Robak now serves as board chair, to provide professional development opportunities for employees, including a nine-month talent development program. White employees represent 52 percent of Greeley & Hansen’s workforce, compared to 85 percent in the architecture and engineering industry; African Americans account for 14 percent, compared to 6 percent for the industry.

SAMPLES OF TWEETS BY CHICAGO-AREA COMPANIES LAST YEAR IN THE AFTERMATH OF GEORGE FLOYD’S KILLING

A MOMENT OR A MOVEMENT?

Will all the current talk about diversity translate into meaningful and lasting change? For that to happen, says Tiffany Hamel Johnson, president and CEO of Chicago United, leadership must commit to “the highest degree of intentional action and accountability” because progress won’t happen automatically. Waverly Deutsch, a professor at the University of Chicago’s Booth School of Business, says companies should start by targeting historically Black colleges and universities and other schools that attract large numbers of students of color. Employers should consider conducting résumé reviews that are “race-blind” during initial candidate assessments, meaning that names and addresses are removed, she says. “We know that résumés with names like José and Jamal can get very different treatment,” Deutsch says. “Academic research has proven this time and time again.” Technology can help if algorithms are written that root out bias early on when people can be unfairly ruled out, she says. BMO Harris invested in an automated candidate tracker that more efficiently follows leads and ensures that promising job seekers are directed to company recruiters and hiring managers. As part of its Zero Barriers to Inclusion goals, BMO said it would increase the number of people of color in senior leadership roles to 30 percent or greater in the U.S. and Canada by 2025, according to its 2020 Sustainability Report and Public Accountability Statement. Minorities currently hold about 20 percent of senior leader roles at BMO, which has about 14,000 employees in the U.S., about half in the Chicago area. The company has put big money behind its promises to foster economic equity. In November, BMO Financial Group announced it was investing $5 billion over the next five years to remove key barriers to economic advancement faced by minority businesses, communities and families. The funds will be directed at mortgage lending, affordable housing and other initiatives. To make headway, more companies are forming partnerships with civil rights, community and faith organizations, says Hattie Hill, president and CEO of the T.D. Jakes Foundation, which provides skills, education and training to increase D&I through science, See MOVEMENT on Page 22

100 P013-P022_CCB_20210531.indd 21

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22 MAY 31, 2021 • CRAIN’S CHICAGO BUSINESS

technology, engineering, arts and mathematics jobs. Corporations are “connecting with trusted voices” because they want to build long-term relationships and see lasting results, says Hill, who worked in D&I for multinational industries. “In my 30-plus years of doing this work, I’ve never seen collaborations like that.” Companies that set themselves up to succeed view DEI as being as critical as hitting profit targets or achieving other high-stakes financial goals, experts say. They assess their progress year over year with specific, measurable targets. They are transparent and accountable. Some tie executive compensation to meeting goals. “If you’re not measuring and there’s no clear strategy of how you’re increasing the pipeline with people of color, you can’t truly measure the impact,” says Johnson at Chicago United. “Companies are starting to do that. But it’s what I like to see more of.” Chicago United’s report, in fact, revealed troubling trends. Black representation in middle management actually fell slightly between 2007 and 2018, which

Continued from Page 21

could affect the diversity of the talent pipeline in the long term. Venture-capital firms and startups have a steep hill to climb when it comes to diversity, according to an analysis by Chicago:Blend, a collaborative of local venture capitalists committed to advancing D&I. In Chicago, 82 percent of VC executives are white. “Venture capital traditionally has been a white male-dominated industry, and we see a slow shift,” says Chicago:Blend founder Lindsay Knight, a partner at Chicago Ventures. “But we want to make sure that firms are hiring and building internal processes and doing that responsibly.” Last year, through a partnership with the University of Chicago’s Polsky Center for Entrepreneurship & Innovation, the group collected race, ethnicity and gender data from 92 Chicago VC firms and over 100 startups backed by Chicago VCs. Chicago:Blend publishes the data and analysis on its website. It found that the industry overall is 81 percent white, down from 86 percent in 2018. One of the group’s goals is to make it easier for firms to report data. Standardizing survey fields

GETTY IMAGES

MOVEMENT

Demonstrators rally in Chicago on May 30, 2020, to protest the death of George Floyd. might encourage early-stage companies to collect and report employee demographics, Knight says. “We believe that Chicago has the potential to be one of the most inclusive business ecosystems in the world because of the (racial and ethnic) makeup of the city itself and because companies are thinking about all of this work holistically early on,” she says. Even so, many companies resist sharing their data. Last year, Wilson’s team at Discover created a dashboard that

gives leaders on-demand access to diversity data so they can track where they are trending. “But as far as being more transparent externally, it is a project that we are embarking on,” she says. A number of companies interviewed for this story echoed that view. Nicholas Pearce, a DEI consultant and professor at Northwestern University’s Kellogg School of Management, doesn’t think most organizations will hold themselves accountable, and he questions their commitment.

“The key thing that I look for is the teachability of the executives, the sincerity of the organization and their courage,” he says. “I can teach you how to advance justice, equity, diversity and inclusion. But I cannot teach you to care about it in your heart.” Deutsch says it’s too soon to know the true impact of the Black Lives Matter movement on the business community. “It will probably be five to 10 years before we’ll know whether anything major has changed,” she says.

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CRAIN’S CHICAGO BUSINESS • MAY 31, 2021 23

YOUR VIEW

Is the media racist?

swered patiently every question demonstrating how a unified Black America could elect a president.

ayor Lori Lightfoot said, “I have been struck since my first campaign trail back in 2018 by the overwhelming whiteness and maleness of Chicago media outlets, editorial boards, the political press corps, and yes, the City Hall press corps specifically.” By pointing this out earlier this month, she caused a press stir. Racism is a complex subject to discuss in America. Yes, race matters. We are beginning to see Black varied perspectives on national news shows. When President Barack Obama occupied the White House, new faces offered political analysis. Yet during a change in the national landscape, a white reporter from the Washington Post said we lived in a “post-racial society.” Really now?

THE CREATIVE EXCHANGE/UNSPLASH

EXAMPLE 4: A Black female TV reporter here in Chicago was told she was too dark for television. The Black community was incensed at the idea and organized a protest led by the late Rev. Willie Barrow and Black radio station WVON. Her contract was renewed. This is an example of colorization racism.

HOW IS THE MEDIA RACIST? EXAMPLE 1: The New York Times, the nation’s top paper delivering all the news that’s fit to print, just began to capitalize the “B” in Black on July 5, 2020. By their admission, they didn’t capitalize the “N” in Negro until W.E.B. Du Bois wrote letters to mainstream media requesting the capitalization, pointing out the insult. His effort took four years. Not capitalizing the “B” in Black was a disrespectful gesture. EXAMPLE 2: If you need evidence of the drastic difference between white reporting and Black reporting, here’s a brief Hermene Hartman is publisher of N’Digo and founder of the Hartman Group, a Chicago-based public relations firm.

history lesson. Take a look at what white papers wrote about the killings of Black Panthers Fred Hampton and Mark Clark. White media portrayed the panthers as a notorious gang that was a public threat. Chicago police killed them in their sleep with 80 bullets on a cold December day in 1968. Read the account in the white papers, Chicago Sun-Times and the Chicago Tribune. Then read the Chicago Defender and the Chicago Crusader. It is a lesson on a racist narrative, a real contrast on viewpoint, whereas we have since come to learn the murder was likely ordered by J. Edgar Hoover, the then-FBI chief.

EXAMPLE 3: When the Rev. Jesse Jackson ran for president of the United States in the 1980s, the story from white columnists was: “Why is Jesse Jackson running? What does he want for real?” These were typical interview questions. Black pundits wrote another story: “Run, Jesse, run” was the sentiment as he forcefully explained the demographics of the South and Democratic voting patterns. Black reporters presented another perspective. The white male columnists were curiously disrespectful and thought the impossible was evident and, in some instances, painted Jackson as an egotistical maniac who was out of control. He an-

EXAMPLE 5: Finally, here’s what the mayor didn’t say. There is a different standard and attitude when white reporters cover Black politicians. The game played is “gotcha” or attack for Black politicos. Think of Todd Stroger when he was president of the Cook County Board. The white press attacked him unmercifully and viciously. His was the only municipal budget, at that time, to be balanced. He was criticized every step of the way rather than applauded. His political career ended. So now where are we as the mayor recognizes and calls out the racism in the media? How about, fix it. Do the right thing. In this midterm time, the mayor has her hands full in dealing with Chicago problems like the pandemic, the reopening of the city, union votes of no confidence, crime in the streets, reopening the schools and her big ideas of a casino located in Chicago proper and the rebuild of downtown Chicago. Not to mention an investment plan for the South and West sides of the city. Don’t get mad at her as she tells the truth and speaks to a problem long overdue for genuine discussion and new practices.

Illinois must change the way it funds higher education

Alex Seeskin is Director of the To&Through Project at the University of Chicago. Dominique McKoy is associate director of engagement.

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ANDRE HUNTER/UNSPLASH

ver the past 15 years, Chicago Public Schools has dramatically increased the percentage of graduates who immediately enroll in college after high school. Yet while college enrollment rates have been increasing in Chicago, the percentage of enrollees who actually complete college has remained mostly flat, at below 50 percent. Unsurprisingly, college completion rates for CPS students differ by race, gender, test scores and other factors, but we now know from empirical research that high school GPA is actually the best predictor of college completion. Indeed, 84 percent of CPS students with a GPA above 3.5 complete college in six years, compared to just 43 percent of students with a GPA between 2.5 and 3.0. If Chicago is going to significantly increase the completion rate for all CPS graduates, the next step is to focus on providing more systematic support for CPS graduates with less than a 3.0 GPA. These students, who make up more than half of CPS graduates, don’t always have access to selective schools with high graduation rates, but they are accepted into college, they want to earn certificates and degrees and some do graduate. However, many require additional academic, financial and social supports on campuses

While many Illinois colleges and universities have made progress in re-imagining plans to better support their most vulnerable student populations, the problem is that the state continues to grossly underfund higher education. Illinois currently ranks 47th out of 50 in funding for two-year colleges and 46th out of 50 in funding for public four-year colleges. As the 2021 Illinois Board of Higher Education’s budget points out, as funding for higher education has remained stagnant—and declined by half when accounting for inflation—universities have largely shifted the costs to students: In 2002, 72 percent of state reve-

nues came from state funding and 28 percent from tuition and fees; in 2020, those figures were 36 percent and 64 percent respectively. With Monetary Award Program grants, which provide financial support for low-income students, underfunded over the same period of time, students have had to take out more and more debt to attend college. In addition to increasing overall funding, the state also needs a more equitable funding formula that is at least partially based on the high school GPAs of incoming students, along with family income and first-generation status. The University of

Illinois at Urbana-Champaign, which primarily serves students with high GPAs and a smaller percentage of in-state, Pell-eligible and Black students, still receives more than a quarter of the state’s total appropriations for public colleges and universities, despite earning more revenue from tuition and having larger endowments than other public universities. On the other hand, Chicago State University, which serves a primarily Black student body with lower high school GPAs and family incomes, relies on roughly the same allocation it received 20 years ago, creating barely-viable margins and little in the way of resources to support their students. If we want to create an equitable education system where all students receive the support they need to be successful, then universities that serve students with low high school GPAs deserve a greater share of public funding. Luckily, there is momentum in this direction. Recently, the Illinois Board of Higher Education has advocated for a different funding formula in their new strategic plan, and there is currently a bill—SB815—making its way through the Illinois General Assembly that would create a commission to distribute funding more equitably to higher education institutions. Three years ago, Illinois passed a more equitable K-12 funding formula that gave the most money to districts that serve the most vulnerable students. With college students across the state struggling to persist in the midst of a pandemic, now is the time to do the same thing for higher education.

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24 MAY 31, 2021 • CRAIN’S CHICAGO BUSINESS

Ulta’s new leader confronts a shifting beauty business altered by COVID-19 under Dillon, tumbled 17.9 percent last year. Rekindling growth as COVID-19 recedes will require more than waiting for customers to toss aside their face masks and start buying lipstick again—which they’ve already started to do. The pandemic has changed the beauty market in ways that will require adjustments to Ulta’s strategy, which has relied heavily on rapid store openings and big-name brands. Kimbell, Dillon’s top lieutenant since 2019, must now steer the company toward recovery while fighting to keep Ulta relevant as online shopping increasingly drives retail growth. There’s Amazon to contend with, the shifting whims of younger consumers and a deal to open stores inside Target starting later this year. Kimbell also has to figure out how to spark growth with fewer new store openings after an expansion into Canada was put on hold last year. Much of his challenge comes down to merchandising. An onpoint product selection would draw in new customer groups and keep Ulta top of mind for consumers while boosting profit margins—a key measure of success for a company unlikely to recapture the 9.9 percent average annual growth rate of the Dillon era, prior to 2020. Beauty merchandising has become increasingly difficult, as shoppers flit among an array of emerging online brands. Ulta should scour online channels for hot products, add them to its lineup and quickly dump less-popular items, says David Swartz, an equity analyst at Morningstar. “Ulta is going to have to be constantly churning brands,” he says. “If they can get in the product, then customers will follow. That’s what Ulta’s been really good at over the years.” Dillon noted on the company’s

first-quarter earnings call May 27 that Kimbell’s background in merchandising is one of the reasons he was picked for the top job. Kimbell, 54, was promoted to chief merchandising and marketing officer in 2015, about a year after he joined the company. Questions about merchandise on earnings calls usually went to Kimbell. He became president of Ulta in 2019, and in that role he oversaw Ulta’s loyalty program and e-commerce, two areas that have become vital to the company. The year Kimbell became president, Ulta’s loyalty program boasted more than 34 million members who drove 95 percent of sales.

LOYALTY REIGNS

About 3.3 million members dropped away in 2020, as stores closed for about two months during state-mandated shutdowns and store-only guests failed to move online. Kimbell has emphasized how important the loyalty program is to Ulta. “Everything we do is for our loyalty guests,” he said during a March earnings call. The company is working to reconnect with lost members, he said. “We know who they are. We know that they didn’t have a bad experience with Ulta,” he said. “They just changed behavior in the short term.” Kimbell said on the company’s earnings call May 27 that Ulta added back 1.7 million members in the first quarter, boosting the loyalty number back up to 32.3 million. Kimbell’s marketing knowhow will likely come in handy with continued loyalty program growth, says Danielle McIntee, senior retail analyst at consulting firm Creditntell. Kimbell joined Ulta after a stint as chief marketing officer at mobile phone company U.S. Cellular, where Dillon was CEO. The trick will be getting new customers gained online during the pandemic to shop in stores, too. Omnichannel customers at

ULTA

ULTA from Page 1

Some of Ulta’s in-store services have come back, but social distancing and capacity restrictions may be holding back higher customer flow. Ulta spend three times more than those who shop through only one channel, McIntee says. Beauty is a high-touch category. Customers want to come into stores, try on samples and sit with experts. The pandemic took much of that away. But makeup is poised for a recovery, McIntee says. Mask mandates are falling and sales of lipstick and similar items are rising. Though some of Ulta’s in-store services have come back, company leadership said on the earnings call that social distancing and capacity restrictions are holding back higher customer flow. Kimbell said he was encouraged with first-quarter results. Net sales increased 65.2 percent over the year-earlier period to $1.9 billion. That was also an 11.2 percent increase over the first quarter of fiscal 2019. Same-store sales rose 7 percent compared with the 2019 quarter,

which was unaffected by the pandemic. Ulta swung to a quarterly profit of $230.3 million last quarter, compared with a $78.5 million loss in the first quarter of 2020. Results topped Wall Street expectations, pushing shares about 5 percent higher May 28. It’s not clear if Ulta’s first-quarter sales rebound is a sign of future growth rates. Kimbell attributed the surge in part to federal stimulus payments, which gave consumers a one-time burst of disposable income to spend. A deal Dillon made with Target earlier this year could help expand Ulta’s reach. Among Kimbell’s top priorities is the opening of 100 Ulta boutiques in Target stores starting this fall, with plans to expand to more of the mass merchandiser’s outlets. Kimbell must ensure those Target locations do not cannibalize Ulta’s own sales. Ulta declined to make Kimbell available for an interview, but his

public statements walk a fine line between acknowledging the need to adapt and assuring investors that Ulta won’t change too much. “Of course, our strategies have and will continue to evolve, but we feel that we are operating from a position of strength,” he said during a JPMorgan virtual conference in April. “So you shouldn’t expect a radically different approach to the business or strategies under my leadership.” Analyst Brian Yarbrough at Edward Jones notes that the CEO succession was years in the making and includes a continuing role for Dillon during the transition. She’ll serve as executive chairman for a year after Kimbell becomes CEO. Still, Yarbrough warns that no CEO transition is without risks. “He was a big part of their success over the years,” Yarbrough says. “With that being said, being the CEO of a company is a whole different animal.”

Businesses see in-person events and meetings resume as mask mandates fade IN PERSON from Page 3 “Everyone wants to get back to normal,” says Wehmer, who began calling on customers in person in April and has been having business dinners two to three nights a week. “It’s refreshing to see people again, to do your pitch in person. Doing it

“PEOPLE ARE ANXIOUS TO GET BACK TO MAKING MONEY AND DOING BUSINESS.” David Flom, Chicago Cut Steakhouse

online isn’t that easy: It’s hard to make the connection. Everybody’s distracted.” David Flom, who in April reopened Chicago Cut Steakhouse, a downtown restaurant popular for business meetings, says demand has taken off in the past few

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weeks as top leaders at law firms and other companies began returning to their offices. “People are anxious to get back to making money and doing business,” he says. Now they’re starting to book events, generally for five to 20 people. He knew the traction was real when an employee needed help responding to the volume of inquiries about events. A May 13 ribbon-cutting ceremony for Portal Innovations, a life-science incubator in the West Loop, drew 85 people. Afterward, most of them went to a rooftop deck for a reception. Last summer, a groundbreaking for a related project a block away drew about 15 people, and only three or four stayed for a reception. “This one felt great,” says John Flavin, CEO of life-science incubator Portal Innovations, which is part of

both projects. “People are craving to get out.” Mark Tebbe, chairman of ChicagoNEXT, which helps attract and retain tech companies, says he’s been scheduling meetings in person whenever possible. People want face-to-face interaction, he says. In-person meetings also are more productive, he says, recalling a recent site visit. “Something that would have taken us two to three meetings on Zoom, we were able to get knocked out in one.”

BACK IN BLACK TIE

Another test of the return to doing business in person will be large events, such as the Economic Club of Chicago’s black-tie gatherings that draw more than 1,000 of the city’s corporate and political elite to hear high-profile speakers. Like others, the club switched to virtual events during the pan-

demic. It will hold some small in-person gatherings starting in June, gradually ramping up the size in August and September, with plans to host a large black-tie gathering by the end of the year, says CEO David Snyder. Mueller says the Executives’ Club, whose calendar winds down with the summer, will hold its last event of the season, a women’s leadership dinner for about 30 people, in person but outdoors in June. She’s starting to plan for the club’s biggest event, the annual economic outlook meeting in January, which has drawn 1,500 people in the past. It drew twice that many virtually this year. The next one will be a hybrid. “Doing one or the other well is one thing. Doing both well is going to be tricky,” she says. 1871, a co-working space for tech companies operated by the Chicagoland Entrepreneurial

Center, is planning an in-person option for its annual fundraiser, the Momentum Awards, in September. Last year, the event was virtual. CEO Betsy Ziegler expects 350 to 500 people to attend in person, compared with 750 pre-pandemic. Many organizations will closely watch the Chicago Network, an invite-only group for women in leadership, which is hosting its annual fundraising luncheon June 29 in person at Navy Pier, with virtual attendance as well. Capacity restrictions limit in-person attendance to 800, or half the usual crowd. The group polled sponsors about whether they wanted to attend in person, given that most companies had not yet returned to their offices. “We were surprised,” says CEO Maria Doughty. “The majority wanted some in-person tickets, with the caveat that they might want more.”

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SPONSORED CONTENT

TRANSFORMING THE FOOD AND BEVERAGE INDUSTRY

MOVING FORWARD POST-PANDEMIC

While COVID-19 forever altered consumer shopping and eating habits, the post-pandemic landscape will challenge brands to stay ahead of the curve and adjust to the evolving food and beverage landscape. Three Chicago-based executives shared their unique perspectives on what’s ahead for the industry with Crain’s Content Studio.

How is your organization involved with the food and beverage industry? Suzanne M. Alton de Eraso: Benesch has been a part of the food and beverage industry for decades, representing all types of clients who are part of the food supply chain, including food and beverage manufacturers, processors, packagers, distributors, wholesalers and retailers. We assist at all stages of the product lifecycle, from product development to advertising, marketing and distribution—advising clients on almost any legal issue that may arise along the way. John Wober: Airbrands teams with some of America’s leading hospitality, retail and entertainment brands. We help identify, develop and manage expansion of their concepts. As a minority-owned firm, we also help ensure that projects with minority business enterprise (MBE) or airport concession disadvantaged business enterprise (ACDBE) requirements deliver on their diversity goals through strategic partnerships, joint ventures and board participation. We typically focus on non-traditional locations such as airports and other large venues.

What’s the number one challenge you’re seeing in the industry, and how is your organization working to address/resolve it? Krusinski: Our biggest current challenge is the lack of availability of resources related to both materials and the workforce. Compounding that is the rapidly rising cost increases for numerous construction materials and components. This is creating a “perfect storm,” pushing the limits of client budgets and schedules— sometimes to the breaking point of postponing, re-designing or cancelling proposed projects. We’re in constant communication with suppliers, manufacturers, subcontractors, design teams and our clients to assess alternative solutions for materials or building systems, as well as securing pricing and lead times to mitigate future risk caused by price escalation and extended schedule increases. Wober: We need to see the return of foot traffic and indoor capacity to pre-pandemic levels. The financial impact of COVID-19 has eliminated many of our favorite bars, restaurants and entertainment options. Diminished traffic wreaked havoc on our airport locations. We’re happy to see Chicago

SUZANNE M. ALTON DE ERASO Associate Benesch saltondeeraso@beneschlaw.com 312-212-4977

demanding more transparency with respect to how consumables are sourced and from where; this creates considerable risk from a consumer class-action perspective. It’s important for businesses to scrutinize consumer advertising before it reaches the public to eliminate any potential

“NOW MORE THAN EVER, COVID-19 HAS BROUGHT CONSUMER SCRUTINY TO FOOD AND BEVERAGE SUPPLY CHAIN ISSUES.”

expand dining capacity and offer creative ways to draw people back out. Industry groups such as the Illinois Restaurant Association have been advocating for us with the state and city to increase capacity, hours and restrictions. Those efforts are key to helping both restaurants and venues of all sizes get back on their feet. In our airports, we’ve been advocating for rent relief and additional flexibility to see us through this. In what ways has the pandemic changed the services or products your organization provides?

JOHN WOBER

President Krusinski Construction Co. jeffk@krusinski.com 630-573-7700

President Airbrands jw@airbrandsinc.com 312-767-8715

misunderstandings about product sources or attributes. Additionally, the pandemic changed how consumers shopped. It’s important for companies to think beyond the label and consider all product representations made at point of sale, including online sales, now that so many consumers are

purchasing food and beverage products online. Krusinski: As a company and an industry, the pandemic forced us to find new processes and protocols to continue building safely. We can’t physically build buildings by working

“Benesch always does a good job of explaining what our options are and giving us counsel from a very pragmatic approach aimed at keeping matters moving forward and reaching effective agreements.”

—SUZANNE M. ALTON DE ERASO, BENESCH Jeffrey J. Krusinski: Krusinski Construction Co. is a general contractor firm. We work with commercial real estate developers and directly with food and beverage industry end-user clients, from concept to completion, to deliver the facilities where they operate their businesses. Our involvement is as broad and diverse as the industry. Among the applications we’ve worked with include cold storage, freezer-cooler space, food production, processing and packaging, R&D, food labs, test kitchens and warehousing. In the last five years we’ve completed millions of square feet of food and beverage constructions valued in excess of several hundred million dollars, including Flavorchem’s R&D facility in Downers Grove and the 1.2 million-square-foot Ferrara Candy Co. distribution complex in DeKalb.

JEFFREY J. KRUSINSKI

FRITZ KOHMANN CFO, Shearer’s Snacks

MY BENESCH MY TEAM To learn more about our relationship with Shearer’s, visit beneschlaw.com/myteam.

Alton de Eraso: Now more than ever, COVID-19 has brought consumer scrutiny to food and beverage supply chain issues. Consumers are

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TRANSFORMING THE FOOD AND BEVERAGE INDUSTRY

MOVING FORWARD POST-PANDEMIC remotely, so at times we had to become part nurse/medical staff, part lawyer, part CDC guidance expert and part counselor to figure it out. As a company we’ve always been extremely focused on safety. But job site safety and pandemic safety are at opposite ends of the spectrum. We instituted protocols and procedures to first and foremost protect our workforce, but also had to minimize any cost or schedule implications to our clients. It was scary at first because of so many unknowns and unclear guidance at the state and federal levels. However, our team did an incredible job rising to the challenge, allowing us to continue building safely for our team and effectively for our clients. Wober: Pent-up demand has consumers craving dining and entertainment “experiences” more than ever. Businesses have to offer best-in-class service to gain customer loyalty. We look to increase our customers’ net promoter scores, which is a metric we track to determine how likely someone is to recommend—or not recommend—a brand. That’s something you do by building a great corporate culture and solid management, on all fronts. Actively listening to employees’ and customers’ needs and incorporating that information into the feedback loop can take a company from good to great.

Are there other specific COVID-related issues you’re dealing with in this industry? Krusinski: Like many other industries, construction and commercial real estate firms are dealing with staffing related issues. Specifically, in an environment where we’re seeing consistent and even increasing levels of construction activity, we’ve already grown our team significantly—by more than 40 percent in one year. And we’re looking to hire good people at all levels within the organization—including management and in the field. Other segments that are closely connected to our industry, such as suppliers of critical construction materials, are facing similar challenges. Because of the consistent levels of development and construction taking place, suppliers of steel and steel products and other products like concrete tilt-up walls are quoting long lead times. It’s not just a matter of demand for the product, but also the laborers involved in the manufacturing. It’s a complicated process, and one that has a significant impact up and down the supply chain. Alton de Eraso: The increasing number of businesses adopting online apps for ordering and delivery creates specialized issues with respect to consumer data and privacy. We’re helping our clients move forward

with these innovations by offering appropriate disclosures and obtaining consumer consent on the front-end to avoid future litigation. Wober: Getting people back to work continues to be a challenge in the hospitality industry, as much of the experienced staff has been absorbed into other industries or isn’t quite ready to return to the workforce. We’re becoming very creative with digital advertising and offering incentives to reach, attract and retain talent. We’re currently piloting a childcare program and are encouraged by the results. We’re also having to overcome some supplychain constraints and cost increases that impact our profitability. We expect these headwinds to subside as we fully reopen and conditions stabilize.

Krusinski: My advice is to follow the research, innovation and technology that are establishing or reinforcing new best practices. It’s changing rapidly. Those who are in step with

With construction costs increasing and lead times for materials lengthening, what can food and beverage companies do to ensure their future real estate needs can be accommodated as efficiently and cost-effectively as possible? Krusinski: More than anything else, food and beverage companies need to be flexible and respond thoughtfully and decisively when making key decisions. In most situations— especially in new construction projects but also in tenant build-out projects—the leadership of food and beverage companies will need to answer the question, “What’s more important, time or money?” In many

“FIRMS WITH HIGH MARKS FOR ETHNIC DIVERSITY ARE BY FAR MORE LIKELY TO FINANCIALLY OUTPERFORM THEIR PEERS.” —JOHN WOBER, AIRBRANDS

What advice do you have for food and beverage companies as they look to address issues like workplace safety, product/food safety and consumer health?

WE BUILD FOR YOU Krusinski Construction Company is a leader in comprehensive construction services for complex building projects, serving a wide-range of industries with national reach. Our team works closely with you throughout the entire design and construction process, delivering exceptional performance and building long-lasting partnerships along the way.

Let’s Start Building. Visit krusinski.com to learn more. 2107 Swift Drive, Oak Brook, IL 60523 | 630-573-7700

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Wober: The food and beverage, hospitality and entertainment industries have embraced the public health guidance and augmenting our existing practices to lead the charge to reopen. If we should face another public health threat, the data supports that when we adopt these measures, we can safely continue to service customers while we deal with the crisis. Moving forward, companies should have a well-articulated safety plan to include updated standards and mitigations that can be communicated and applied to staff and patrons.

and adapting to the changes will move to the head of the class, creating new opportunities as they move forward. Alton de Eraso: Keep up the efforts. These issues are going to be on consumers’ minds for the long haul. What impact is the recent focus on diversity and inclusion having on the industry? Wober: Chicago is a culturally rich city and our magic ingredient is our diversity. As a world-class entertainment destination, it’s crucial for the long-term success of Mayor Lightfoot’s economic development vision that inclusion continue to be a major priority. As a local, Latino-owned business, our company is excited about these opportunities to work with our community stakeholders to ensure both the Chicago casino and airport expansion include equitable and diverse participation. In addition to responsible corporate governance, it’s simply good business. Firms with high marks for ethnic diversity are by far more likely to financially outperform their peers. Alton de Eraso: The impact cannot be understated—everyone wins when businesses embrace D&I efforts. From a business perspective, D&I expands and retains the internal talent pool. It also allows a business to freely advertise its values and communicate that they align with today’s value-conscious consumers. In turn, consumers know that when they spend money with the business that it’s money well spent, and many consumers will pay a premium to purchase goods and services from a business where there’s a clear valuealignment.

construction situations, there are options to consider. Yet each decision, to one degree or another, will have an impact on the time it takes to complete a project or its final cost. For example, we always provide our clients with the options available, their impact on project cost and delivery, and our recommendations. Ultimately, it’s up to our clients to determine whether the immediate opportunity cost—getting their projects completed and fully operational—is more or less important than the hard financial costs. Wober: Increased lead times have given us an opportunity to revisit some of our design and vendor requirements. Longer lead times can give our construction partners the opportunity to formulate more competitive bids. Real estate owners are also providing additional incentives and flexibility during our lease negotiations. We’re also pivoting to alternative materials that are more readily available—such as prefabricated millwork and fixtures— and taking advantage of any energy incentives to help offset costs. What’s the greatest opportunity you’re currently seeing for the industry? Wober: Given the shift to homebased entertainment options, I see opportunities for food and beverage and entertainment brands to extend their brand reach through multiple channels such as cloud kitchens, licensing and grocery store items. The gaming industry is also seeing a rapid uptake in mobile wagering, reaching customers at home. Opportunities exist to engage with our customers beyond brick and mortar. Operators should embrace these trends by reevaluating their existing operations to gain efficiencies through technologies to

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SPONSORED CONTENT gain a competitive edge. There are also opportunities to access new sources of capital. Although, many of these sources will require ongoing funding and appropriations, operators should stay current on programs such as Economic Injury Disaster Loans, Shuttered Venue Operators Grants, and Restaurant Revitalization Funds. Chicago has also created a Chicago Vendor Impact Fund to help minorityowned vendors currently doing business with the city. Krusinski: The opportunity for even further growth, driven by the almost insatiable consumer demand, is tremendous. The best opportunity lies with companies that can best manage the shift in where that demand is derived. The pandemic created major disruptions to many typical points of sale, such as bars, restaurants, sporting and concert venues. Consumers transitioned from those consumption points to local stores and direct to homes via trips to the neighborhood supermarket or online orders that were shipped direct. Many products and businesses thrived and grew during that time while others struggled. The ability of a company to adjust its products and distribution channels to service the consumer from a B2B and a B2C structure will continue to prosper. To that end, I feel there will be increased M&A activity to serve the businesses and consumers on so many different levels. Alton de Eraso: Now is the time for businesses to set themselves apart from their competitors, be it their supply chains, their commitments to sustainability or animal welfare, or their commitments to their communities or their employees’ well-being. Consumers are listening, and they care about these issues. So now is the time for businesses to highlight the commitments they’re making to the future. When do you expect to see Chicago’s food and beverage industry fully recover, and what would need to happen for it do so? Alton de Eraso: Thankfully, we’re headed in the right direction, and for many businesses, relief is on the way as more of the population is vaccinated and COVID-19 restrictions continue to be lifted. Two components need to align for a full industry recovery. First, we need to get to a point where capacity limits are fully restored for indoor dining. But on the flip side, consumer confidence is equally important. Just because a business can seat at maximum capacity, doesn’t mean that all diners will be comfortable with pre-COVID crowd levels. The most successful businesses will be those that maximize and rethink their floor space, offer carryout or delivery options, manage crowd control and make customers feel like sanitation is a top priority.

Krusinski: I’d be hard-pressed to say that the food and beverage industry as a whole has suffered, based on what we see and hear from our clients in the industry, and the forwardlooking plans they’re making. Without question, bars and restaurants have been devastated during COVID 19. As restrictions are being lifted, we’re seeing a somewhat speedy recovery, giving hope to this segment that they will soon be on solid footing like the many other segments that are thriving. Throughout the pandemic, food producers generally found a way to get products in the hands of consumers, and those who serve consumers. As a company, we believe there’s a healthy level of pent-up demand. Satisfying this demand while also plotting growth opportunities will allow for further development and create a need for new and/or expanded facilities. Wober: We’re hopeful that the worst of this is behind us, and by next year we’ll see a return to normalcy. In the short term, we need higher vaccination rates to drive employees back to their workplaces. The industry relies heavily on the lunch, happy hour and dining traffic from locals. Likewise, higher vaccination rates and heard immunity will likely lead to rebounds in tourism and conventions, which drive traffic to our airports and airlines. Our reopening can’t come soon enough, and the return of summer festivals and events like the Chicago Auto Show and Lollapalooza are welcome announcements. The key to our success will be getting the vaccinations rates up within some of the hardest-hit communities. Industry employee and community-focused vaccination efforts are helping. When I was finally vaccinated, it felt amazing to get back out there.

ABOUT THE PANELISTS SUZANNE M. ALTON DE ERASO is an attorney in the litigation practice group at Benesch, an AmLaw 200 business law firm. She focuses her practice on class-action defense and commercial litigation, defending clients against consumer fraud, unfair and deceptive practices, breach of contract, false advertising, unfair competition and trade disparagement claims. She also defends patent, trademark and copyright infringement claims, from pre-filing investigations to discovery management to trial preparation, and provides regulatory advice to ensure that clients are compliant with federal and state advertising regulations.

JEFFREY J. KRUSINSKI is president of Krusinski Construction Co., which provides comprehensive construction services throughout the Chicago area and nationwide. He joined the 48-year-old family business in 1994, working in a variety of jobs—from master planning to executive oversight— before assuming his current role in 2016. His responsibilities include establishing new client relationships, strategic company growth and developing new markets. He chairs the economic development committee of the Oak Brook Chamber of Commerce, where he’s a longstanding board member.

JOHN WOBER is president of Airbrands, a minorityowned airport concessions, consulting, and brand management firm focused on public-private partnerships. He has over 20 years of experience licensing, consulting and operating national brands in a variety of industries, including retail and hospitality. A first-generation American, he appreciates the value of diversity and frequently partners with local business and community stakeholders as an advocate for equity and inclusion. He regularly volunteers in the Latino business community as an adviser, panelist and speaker. and customer safety protocols. We’re already seeing trends to expand menus to include more plant-based proteins. A host of new technologies in the kitchen and delivery are emerging. We’ll also need to rework our risk management strategies. The insurance industry may need to redefine what constitutes a business

interruption or insurable event. Landlords, tenants and creditors will need some lease protections and plans for contingences. The banking industry may need to include forbearance options. This will likely require collaboration among regulators, legislators and the private sector. Initially, we underestimated

the impact of the pandemic and perhaps overcorrected in some areas. However, we learned a lot from this experience—what works and what doesn’t. We’re better prepared today on how to mitigate these events, shorten their duration, and how avoid a total paralysis if faced with a future public health crisis.

How do you see the industry evolving over the next five years? Krusinski: The industry continues to advance with creativity related to new products, sustainable packaging, automation and logistics. There’s no end in sight to the advances being made in the industry. The research and development of innovative products is astounding as you see it in just about every facet within the food and beverage industry. Responding to consumer demands for healthier options, transparency in food origin, online ordering and shipping has generated some immensely successful products, services and companies. It’s exciting to witness. Equally as exciting, the companies that are being the most innovative and making the greatest strides represent a combination of start-ups and established names. That bodes well for the industry and all of those who partner with them to execute new plans and visions. Wober: We expect to see adoption of enhanced food handling, employee

“MY ADVICE IS TO FOLLOW THE RESEARCH, INNOVATION AND TECHNOLOGY THAT ARE ESTABLISHING OR REINFORCING NEW BEST PRACTICES.” —JEFFREY J. KRUSINSKI, KRUSINSKI CONSTRUCTION CO.

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28 MAY 31, 2021 • CRAIN’S CHICAGO BUSINESS

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This house on Peninsula Drive in New Buffalo is listed for $4.75 million.

New Buffalo sees $4 million-plus home prices NEW BUFFALO from Page 3 quarter of the year from the same time in 2020. In the first three months of the year, 98 homes sold in those towns, which also include Sawyer, Lakeside, Union Pier and Harbert. April data is not included because Michigan’s real estate industry was shut down by governor’s order in April 2020, so a comparison would be lopsided. As is true all over the map, the hot housing market in 2021 continues the heat that first showed up in late spring 2020, when people realized the pandemic had shifted their housing needs. New Buffalo is also benefiting from a different change wrought by the pandemic, according to Rob Gow, a Berkshire Hathaway HomeServices Chicago agent based there. Because families couldn’t travel together, some people with the means “are buying the place where you can have all the family come and stay together,” Gow says.

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Call them “second first home” buyers. They’re not quite buying a second home as a getaway for weekends and vacations, but as a primary residence for the duration and maybe longer. They may keep their primary residence in Chicago, but think of New Buffalo as home for now and will see how things evolve after the pandemic is fully in our rearview mirror. While there’s no official data on where the buyers come from, two items suggest many of them are second first home buyers: Jeff Leslie, superintendent of the New Buffalo Area Schools, says the K-12 district grew by about 34 students, or 6 percent, in September 2020, after “our enrollment had been going down for at least a decade.” About half the newcomers were from the Chicago area, and the others were from Indiana, St. Louis and other places, Leslie says. “It’s reasonable” to think some of these will return to Chicago or other cities’ schools down

Home sales have jumped up among a 16-mile stretch of lakefront Michigan towns. the line, he says.

Chad Gradowski, a Coldwell

It’s not the few marquee properties that are keeping Roch, Gradowski and others busy, they say—it’s the second-tier properties, those that are off the water but still with the space and finishes to command more

Banker agent and 30-year resident of southwestern Michigan, says that in previous years his sales have been “90 percent second homes and 10 percent main homes” but that in the past year “it’s been BUYERS THINK OF NEW BUFFALO AS more like 65-35.” This is not to say HOME FOR NOW AND WILL SEE HOW that New Buffalo is awash in $4 mil- THINGS EVOLVE AFTER THE PANDEMIC. lion-plus sales. There have been three, soon to be four, than $1 million. They are more in a year, but that’s twice any pre- numerous and affordable by vious year. more people. The Marquette Drive home Put one on the market, and that’s due to close any day now “multiple offers roll in,” Gradat $4 million-plus was previous- owski says. “That’s not what we ly priced at over $6 million and used to get.” “only became interesting” when On April 9, Roch listed a the price came down to just un- five-bedroom house on just under $4.5 million in January, Grad- der an acre on Westway Drive, owski says. He’s representing the with access across the street to buyer. an association-owned stretch of beach. The asking price was just under $2 million. Three weeks ‘OFFERS ROLL IN’ Ethics rules prohibit Gradows- later the sale was complete, at ki from disclosing the final price $2.4 million, or 20 percent over before it closes, but he indicates the asking price. Roch, like other agents in the it would be close to the asking price. The house, five bedrooms region, declines to discuss the in almost 7,000 square feet, has a details of her buyers and sellers, pool on the terrace and 152 feet both of whom she represented in this transaction. of Lake Michigan frontage.

5/28/21 3:58 PM

CRAIN’S CHICAGO BUSINESS • MAY 31, 2021 29

CONSTRUCTION from Page 3 Contractors normally account for the fluctuating cost of materials when they bid on projects, but prices normally don’t swing drastically enough to throw off the economics of a deal. The scope of recent price hikes and spikes in lead time is far more severe: The price of copper for plumbing, sheet metal for heating and cooling systems and wire for light fixtures have all jumped by at least 20 percent since January, according to an analysis done by commercial real estate services firm Colliers International using data from Chicago-based Power Construction. It’s due in part to slowdowns in materials manufacturing last year amid COVID restrictions, but also issues that have piled on, like February’s ice storm that crippled parts of Texas where much of the country’s latex supply was located and went bad. That drove up the cost and availability of taping compound for drywall. “It is like nothing I’ve ever seen in my career,” says MacGregor, who launched Accend in 2019 after nearly a dozen years with Chicago-based Skender Construction. Delays in actually getting materials cause an equally thorny problem. With COVID bolstering residential homebuilders—residential construction starts in the Chicago area over the first four months of the year rose 30 percent from the same period in 2020 to $1.6 billion, according to New York-based research firm Dodge Data & Analytics—the nation’s wood supply has been sapped. Now wood door suppliers that would normally get them into buyers’ hands

in a few weeks are quoting more than three months for delivery, some contractors say. Bar joists that support floor structures have gone from 12 weeks for an order to come through to upwards of nine months. Some suppliers are forecasting six months to get insulation products.

CUTTING AMBITIONS

The shock is starting to reverberate in the office world, where tenants looking to renovate workspace for their soon-to-return employees are finding it may take two or three times longer than expected to complete certain parts of the job, and it could cost a lot more. Colliers leasing broker Michael Lirtzman says some tenants that were hoping to make major changes to their space have scaled back plans because of pricing uncertainty. “Some have said we’re going to stay put and kill construction for now or rein in the scope significantly. Two or three years ago it was the opposite, when every tenant wanted to push the envelope,” Lirtzman says. One downtown landlord who declines to be identified was prepared two months ago to finance a major office upgrade for a tenant in exchange for a lease renewal, but the company came back this month asking them to cover a construction budget that was 30 to 40 percent more expensive. “It’s putting the deal at risk,” a spokesman for the landlord says. Some of the rising costs have been mitigated by contractors desperate to keep their workers busy and bidding so low on jobs that they virtually erase their profit on

some projects. But that’s expected to fall away as the pandemic dwindles and development picks up. “Higher material prices are expected to continue through the end of this year and are the most significant downside risk facing the sector,” Dodge Chief Economist Richard Branch says in a statement. The price volatility is especially tricky for companies that want to renovate or redesign their workspace for a post-COVID world but are waiting to see how employees want to use their space before making any long-term decisions, says Mike Yazbec, president of Chicago-based office interior build-out specialist J.C. Anderson. As companies try to budget for how much that work will cost 90 days from now, contractors can’t make any confident predictions. “We’ve got big, bold letters on every proposal that say we can only hold this price for 15 days,” Yazbec says. Some developers are considering putting projects on hold entirely with the hope things will normalize during the second half of the year, though inflation on the horizon could mean it’s going to get worse. Joe Pecoraro, who oversees multifamily construction work for Skender, says some apartment developers that have spent the past year or two lining up projects are now facing the reality that they may cost up to 10 percent more than they budgeted because of the cost of materials. With little visibility into if or when the price of certain materials will return to more normal levels, he’s advising clients to either buy certain materials way ahead of time or be more flexible with designs to

DANNY ECKER

Commercial real estate businesses feel the squeeze of supply chain shortages

Wood and other materials sit on an office building construction site at 1045 W. Fulton St.

MATERIAL CHANGE The price of basic construction materials has skyrocketed since the beginning of 2021, complicating development and other commercial projects as the pandemic wanes CHANGE IN CONSTRUCTION PRODUCT PRICES Refined petroleum Lumber and wood Steel mill Cold rolled steel sheet and strip Plastic construction

Copper wire and cable Gypsum building materials

200%

143.2%

150 100 50 0 -50

Apr. May June

July Aug. Sept. Oct. Nov. Dec.

Jan. Feb. Mar. Apr.

Source: Source: U.S. Bureau of Labor Statistics, Skender Construction

ensure they don’t run into trouble. “If you know you want your building lobby to be tile, you could say you want that exact200 tile and get it now, or you could say you want 150 a tile of this quality and whatever

we get when we get it is what we use. You can’t straddle the middle in no man’s land,” he says. “If your project is being delayed because you’re waiting on a tile, that’s a bad situation.”

100

Agent unrest undermining Allstate’s ‘transformative growth’ plan ALLSTATE from Page 1 “transformative growth” strategy: The company is running in place. Auto policies at Allstate at the end of March numbered 21.8 million, exactly the same figure posted at the same point last year. The company generated new business of 929,000 policies, up more than 5 percent from 881,000 in the first quarter of 2020. So why were there no gains? Just 86.7 percent of customers with expiring policies renewed them in the first quarter. That ratio was 87.4 percent the year before. Over the years, renewal rates have been considerably better—in the high 80s, reaching 88.5 percent as recently as 2018. The source of the problem for Allstate is clear. Agents, who’ve in the past two years had their commissions changed to reward them more for sourcing new customers than retention, are showing signs of struggling at both. The new-business gains are coming from sales over the internet or phone, which surged 33 percent in the first quarter compared with the previous year. New policies brought in by agents dropped 3 percent year over year. Given that Allstate is pricing auto insurance 7 percent cheaper when sold direct-

P029_CCB_20210531.indd 29

ly than through an agent, that’s not surprising. In the past, agents drove Allstate’s historically enviable retention rates, responding to customers when they get upset and helping with claims when accidents happen. Now agents are paid less to provide service, and Wilson is openly saying that the company can serve customers more cheaply from call centers than through agents and their staffs.

QUANDARY

The early results are setting up a quandary for Wilson: The instability stemming from his demand to transform the Allstate agent’s traditional role from service to sales seems to be fueling more customer defections. In other words, is the new strategy really just transformation without the growth? “If you’re an agent and you’re focused on new sales, that’s a good thing. You’re excited about it,” Wilson told analysts on a May 6 conference call. “If you’ve been focused more on service and not on growth, then you’re not going to be as excited about that change because it changes your business model.” An Allstate spokesman didn’t respond to a request for comment. Asked to account for the increased customer churn, Wilson

told analysts he couldn’t pinpoint the reasons. Glenn Shapiro, Allstate’s president of personal insurance, said he’s not concerned. “That number will move around a little bit on retention, but our focus is to create a lot of new business,” he said. “That’s what transformative growth is about. We’re going to create a lot of new business so that the undulations of retention don’t mute our overall growth.” That comment flew in the face of what Allstate executives have said repeatedly for years, which is that new business generated isn’t the most important lever for increasing policies. Retention is. That is because with nearly 22 million auto policies, a single percentage point decline in renewals means the loss of more than 200,000 policies. “Retention is actually a bigger influence for us than the new business on our total items in force,” Shapiro’s predecessor Matt Winter said less than four years ago on the company’s second-quarter 2017 earnings call. Winter’s assessment then seems borne out by today’s numbers. Better retention enabled Allstate to grow modestly over the past four years. Auto policies sold directly to consumers or by Allstate agents grew an average 1.3 percent a year from March 31, 2017, until March 31,

Refined petr Lumber and Cold rolled s Steel mill pr

New p 2020 2021

RUNNING TO STAY IN PLACE

Allstate is performing better at bringing in new auto insurance business, but net results are flat because it’s keeping fewer of the customers it already has. ALLSTATE INSURANCE SNAPSHOT

2021. Over the past year,-50 the slipping retention meant no policy growth at all. Agent unrest is at a high level thanks to Allstate’s cuts in commissions for renewing customers and various demands and restrictions on how agents conduct their businesses. The National Association of Professional Allstate Agents, which has more than 1,000 members, sued the company in May, alleging breaches of contract, claiming restitution for agents who alleged they’d been forced to sell their agencies on the cheap and asking a judge to stop Allstate from compelling agents to use its phone system rather than their own. Commenting on Bloomberg TV, Icahn said May 26 that he invested heavily in Allstate late last year due to a large valuation discount to archrival Progressive. His investment, which the Wall Street Journal reported was about $400 million, looks good so far as it’s trading around $135, up from what he said was about $90 when he invested. Indeed, Allstate’s stock soared more than 50 percent since November, while Progressive’s is up just 7.4 percent in that time. But Allstate still badly trails in valuation. Even after the run-up, Allstate’s stock is trading at less than 10 times estimated 2021 earnings, while Pro-

ALLS

2020 v

1Q 2020 vs. 1Q 2021 New auto policies 2020 2021

881,000 929,000

Renewal percentage 2020

87.4%

2021

86.7%

Total auto policies 2020

21.83 million

2021

21.82 million

Source: Investor disclosures

gressive is at nearly 18 times. Icahn said he never had to rattle Wilson’s cage as he’s done with so many other CEOs because Allstate “lived up to what they were saying they were going to do, which was to transition a lot of their model. In other words, they would take out a lot of costs that were excessive, we thought, and go more directly to the consumer.” Whether Icahn’s big win gets bigger from here will depend a lot on how Wilson manages an agent force that still is responsible for the vast majority of Allstate’s business.

5/28/21 4:12 PM

Renew 2020 2021 Total 2020 2021

30 MAY 31, 2021 • CRAIN’S CHICAGO BUSINESS

Big film studio campus planned for South Side

A producer of ‘The Chi’ television series aims to capitalize on the soaring demand for production space and create a catalyst for economic development in South Shore BY ALBY GALLUN

A producer of “The Chi” television series and longtime associate of the rapper Common is pushing ahead with plans for a big film studio in South Shore, an operation that could employ several hundred people and give the South Side neighborhood an economic jolt. A venture led by Derek Dudley filed a zoning application with the City Council last week for Regal Mile Studios, a proposed film production campus just around the corner from the historic Avalon Regal Theater. It’s personal for Dudley, who lives in Atlanta but grew up in South Shore. He aims to capitalize on the soaring demand for studio space and create a catalyst for economic development in a neighborhood that has suffered from decades of underinvestment. “I’m all in. We’re all in,” he says. “This is about creating meaningful change in this community.” Estimated to cost $60 to $70 million, the project would include

multiple buildings on a 7.4-acre property near where Stony Island Avenue connects with the Chicago Skyway. The vacant site, proposed for a Super Kmart store about 20 years ago, is bounded roughly by Stony Island, East 77th Street and South Chicago Avenue. Dudley is pursuing the project at a good time. Demand for studio space in Chicago and the nation far exceeds supply amid an ongoing video entertainment boom, as Netflix, Amazon Prime and other content providers churn out new shows for binge-watching customers. The productions include “The Chi,” a Showtime drama set on the South Side that’s now in its fourth season. The series is filmed at Cinespace Chicago Film Studios in North Lawndale, which is adding as many as 19 soundstages to keep up with surging demand. “We want to make Chicago the Hollywood of the Midwest, and there’s no reason why we can’t do that,” Dudley says. Dudley has assembled a team

that includes James Reynolds Jr., chairman and CEO of Loop Capital Markets, a Chicago-based investment firm that will help raise debt and equity for the development. Like Dudley, who lived at 70th Street and East Euclid Avenue, Reynolds grew up in South Shore, near 80th and South Jeffery Boulevard. “It’s really a homecoming for us, and we are so excited about doing this development in that area,” Reynolds says. Hundreds of people, possibly more, would work at the studios, though Dudley declines to provide a specific figure. Employment would fluctuate based on what productions rented the studio space. But Dudley offers a hint: “The Chi” employs about 400 people on two Cinespace soundstages, he says. The first phase of the Regal Mile project, covering about 220,000 square feet, would include about six stages, he says. The project also would diversify the local labor market, bringing new career options to high school

A rendering of the proposed studio in South Shore. graduates in the neighborhood. Dudley aims to work with Chicago Public Schools to set up internships at Regal Mile for 11th- and 12th-grade students. “It provides exposure to a profession that children might otherwise not be exposed to,” says Ald. Leslie Hairston, 5th, who represents the neighborhood and supports the development. Equally if not more important, the project has the potential to create a ripple effect, boosting demand for restaurants, stores and other nearby businesses that would cater to the people who work there. South Shore’s commercial strips are suffering from high vacancies and could use a boost. “They’re in dire need of meaningful investment that will uplift the community,” says Dudley, 50. “It’s been forgotten. It’s not the South Shore community I grew up in.” He says he’s received plenty of support from the administration of Mayor Lori Lightfoot, which has targeted film and television production

as a growth industry for the city. A task force the mayor formed to generate ideas to turn around the Chicago economy singled out the sector in a report it released last July. “Film and TV production can quickly create a variety of jobs that benefit our communities—a mix of high-paying and low-skill jobs including catering, security, construction and more,” the report said. The film industry employs about 14,000 people in Illinois, according to the report. Though production dropped off in 2020 because of the COVID-19 pandemic, the industry returned to pre-COVID production levels in the first quarter of this year, adding more than 1,775 jobs in the state, according to the Illinois Film Office. Dudley and Reynolds plan to finance their project with private capital—no tax-increment financing or other subsidies from the city. But they need the City Council to approve a zoning change for the studio campus. Dudley aims to begin construction by the end of the year.

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5/28/21 1:44 PM

For $15 million, a Lincoln Park villa on a huge lot

VHTSTUDIOS PHOTOS

CRAIN’S CHICAGO BUSINESS • MAY 31, 2021 31

The family of five enjoyed having a suburban-scaled yard in a city neighborhood even before the pandemic forced everyone to stay home BY DENNIS RODKIN “A SUBURBAN-SIZED YARD is rare to find in

the city,” Andew Killion says of his home, long and slender with its narrow end facing the street so that virtually every room looks out the side onto terrace, lawn or garden. “That’s why we bought it.” About half the 90-foot breadth of the lot is house, the other half yard. Inside the house, that means “no matter what window you look out, you’re not looking at the neighbors,” Killion says. “You’re looking at trees or garden.” For a family of five, having a huge yard was a pleasure even before the pandemic, he says. There’s room enough for family members and friends to barbecue, play basketball, jump on the trampoline and read a book, all simultaneously, yet “we’re a block from Armitage and Halsted, with all the restaurants and shops, and Oz Park. When we were looking around to buy, we didn’t think this was possible.”

In 2018, Killion and his wife, Sandy, paid $11.9 million for the mansion, built a classical villa style on about a quarter-acre on Burling Street. They have since redone the interior with an emphasis on lightening its once dark, traditional look and improving the kitchen and landscaping, among other upgrades. Late last year, the couple bought a home in their native Australia, where they will live full-time, says Andrew Killion, CEO and co-founder of Chicago-based Akuna Capital. They’re listing the Lincoln Park home, six bedrooms and 8,000 square feet on an 11,700-square-foot lot, at $15 million. Debra Dobbs of @properties is the listing agent. The $15 million price tag raises the ante in Lincoln Park, where in the housing boom of the past several months, mansions have sold for $11.9 million and $12.5 million.

MORE PHOTOS ONLINE: ChicagoBusiness.com/residential-real-estate HOW TO CONTACT CRAIN’S CHICAGO BUSINESS EDITORIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312-649-5200 CUSTOMER SERVICE . . . . . . . . . . . . . . . . . . 877-812-1590 ADVERTISING . . . . . . . . . . . . . . . . . . . . . . . . . 312-649-5492

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