Guardrails for CEO Activists
Is CEO activism the wave of the future? Salesforce CEO Marc Benifoff thinks so.
Benioff believes that CEOs as a group are becoming more socially and politically active. “[T]here is a third [political] party emerging in this country,” he recently opined, “which is the party of CEOs.”
Benioff made this comment shortly after several corporate leaders publicly and vociferously objected to the proposed Indiana Religious Freedom law that arguably allowed businesses to deny service to same sex couples. Benioff believes that such outspokenness by CEOs is a trend and that we can expect more CEOs to be similarly outspoken on other issues in the future.
If Benioff is right, what are the consequences for business? Our recent research on CEO reputation touched on the prospect of increased CEO activism. This being the case I believe it desirable to set up some guardrails for CEOs and their teams who wish to go down the road of being outspoken about social and political issues of the day.
We had asked global business executives in 19 markets about CEOs commenting upon public policy or political issues. Executives were divided about CEOs taking such positions. Although 36% said it was important, one out of two — 48% — said it was inappropriate.
In contrast, when it came to whether CEOs should take a stand on community or socially responsible issues, executives were far more positive. They were more likely to say that it was appropriate and important for CEOs to do so.
Here’s the rub. A fine line exists between a political issue on one hand and a socially responsible one on the other. I dare say where to draw such a line is not something upon which everyone would agree. One person’s pleasure is another’s pain – so, the old saying goes – and a CEO who makes such a distinction does so at some risk.
So it is not surprising that there is as of yet no avalanche of CEOs taking on such hot button issues as climate change, immigration, same-sex marriage, gun control, gender equality, human trafficking, and racism. The pool of activist CEOs remains very much in the minority. Even so, as the opposition to the Indiana Religious Freedom law and Starbucks’ CEO Howard Schulz’s ill-fated stand on Race Together seem to indicate, something is afoot. As Benioff predicts, more and more CEOs may well be taking stands on the issues of the day.
So, for any CEO who wishes to be outspoken about political and social issues, here are some best practices worth considering that may lessen the risk of being outspoken about potentially sensitive topics. I say risk because one can never reliably expect broad communal consensus on such issues, and in the absence of such consensus, such stands may not necessarily promote shareholders’ best interests:
- Establish a link between the issue and company priorities or values. For a CEO’s activism to enjoy credibility and rally support, the CEO should articulate why he or she is personally involved and outspoken on a topic. The CEO should explain, if possible, how the issue impacts the company’s business and/or its stakeholders as well as society at large. At all times, the CEO’s stand should demonstrably reflect the company’s values.
- Fully commit time and resources. Expect that CEO activism will take up valuable executive time and cost money. The CEO will find himself or herself attending meeting after meeting to hash out the pros and cons of taking a stance. The return on investment will have to be measured. Remarks to various groups and the media will have to be flushed out and criticism anticipated. And of course, employee and customer attitudes will need to be fully vetted. Research is recommended.
- Design a detailed implementation strategy before starting. CEO activism requires detailed crisis scenario planning. Just as politicians have to test out their every move, so will CEO activists — especially because most CEOs will be less familiar with the political style advocacy which typically is required to promote social and political positions.
- Get the board on board. The CEO may be in position to make use of his or her bully pulpit to go activist, but the CEO must never forget that that pulpit is built upon a business foundation and subject to business restraints. The CEO must accordingly fully apprise the board of the reasons behind the initiative, the potential risks and the reasons why the CEO sees himself or herself having to enter the public arena.
- Conduct a risk benefit analysis on the effects on the company’s reputation. CEOs must not forget that what they do and what they say, no matter how qualified or conditioned, reflects on their companies. When they go public, CEOs are alter- egos for their companies. Dan Cathy, CEO of the restaurant chain Chick-fil-a, proved this very point. He publicly voiced his personal opposition to same sex marriage, stating that gay marriage was inviting “God’s judgment on our nation.” Although speaking out on personal grounds, Chick-fil-a restaurants became a lightening rod for activists in favor of and not in favor of the issue. Since CEOs are inextricably tied to their organization’s reputation, for a CEO to take a personal stand that does not impact a company’s reputation is next to impossible. With social media so ubiquitous, the boundaries between CEOs’ personal and professional opinions are non-existent.
- Have a crisis preparedness plan for a potential social media firestorm. Social media and the 24/7 news cycle require companies to operate at nano-speed. Media inquiries, Facebook and Twitter activity, social flash protests, employee questions and NGO backlash are all but guaranteed when CEOs bump up against politically-charged and politically-polarized issues. CEOs should expect that their social media teams will be on the front lines and their teams need to be ready for 24/7 activity.
- Develop a thick skin. Expect the pitchforks to come out. Genuine support and admiration for a CEO’s activism may arise, but there are always two (or more) points of view to every controversy. Criticism is inevitable and will inevitably sting. Learning how not to flinch is critical.
[Here are some excellent sources to read that have covered the CEO activism trend and help demonstrate that the idea is gaining traction. Well worth your time.]