Activist CEOs Beware

Are the Rewards of Social Activism Worth the Risks?

3/8/19 – – Recent opinion research suggests that employees and consumers, especially millennials, want CEOs to speak up more and take the lead on hot-button social issues. Gone are the days when it was wise for a business leader to steer clear of politics and stay out of contentious public debates not directly relevant to his or her company’s bottom line.

Corporate heads are being encouraged to get out from behind their desks and embrace the new normal of activism. They’re being warned to take action or risk irrelevance.

If you are a CEO or advise one, I suggest you slow down and take a closer look at what the research findings and common sense are telling us.

People do appreciate and support activism when it aligns with their beliefs. They highly resent it when it doesn’t. A 2016 Weber Shandwick survey of American consumers found 40% of respondents more likely to purchase from a company when they agreed with the CEO’s position, but 45% less likely to be buyers when they disagreed. A 2018 Stanford Graduate School of Business study (“The Double-Edged Sword of CEO Activism”) confirmed this important reality:

The most surprising result of the survey is that, while Americans claim to change their purchasing behavior depending on their agreement with an activist CEO’s position, respondents are significantly more likely to remember products they stopped using or use less because of the position the CEO took than products they started using or use more. Specifically, 35 percent of the public could think of a product or service they use less, while only 20 percent could think of a product they use more.

The Stanford researchers concluded:

CEOs who take public positions might build loyalty with employees, customers, or constituents, but these same positions can inadvertently alienate important segments of those populations.

In Chapter 3 of The Crisis Preparedness Quotient – Measuring Your Readiness to Weather a Reputational Storm (“Where Crises Come From”), we focus on politics as one of the primary sources of career-threatening crises. CEOs tackling sensitive issues need to consider the fact that the American public is pretty much split down the middle between Democrats and Republicans, liberals and conservatives. Both ends of the political spectrum hold passionate beliefs and have little patience for opposing views. Pick a side and you’ll almost certainly offend large segments of the population, your customer base, and, if you’re managing a public company, your board of directors.

The 18th century French Enlightenment thinker Voltaire (or his biographer, Evelyn Beatrice Hall) is credited with articulately expressing this bedrock tenet of democracy and free speech:

“I disapprove of what you say, but I defend to the death your right to say it.”

Regrettably, that laudable principle is gone from public discourse. Today it’s more accurate to say, “I love and admire you if you agree with me, but if you don’t, shut up.”

While some business leaders are going into battle despite the hazardous environment, most remain cautious. A January 2019 survey of CEOs by Chief Executive magazine and the University of Southern California’s Annenberg Center for Public Relations found a majority of corporate heads more focused on “using their communications channels to sell their products and build their brands.” Here’s what they discovered:

When asked which societal issue they planned on speaking publicly about, 60% of the 210 CEOs surveyed said they were unlikely to communicate about any social issue in 2019. For those CEOs who are planning to speak out this year, the most pressing topics are data privacy (18%), healthcare (17%) and diversity and inclusion (11%). Speaking out on more controversial issues like immigration and “fake news” isn’t part of the plan for the vast majority, with those hot-button topics garnering just 6% and 5%, respectively.

I’m not suggesting that it’s never right for CEOs to take on controversial public battles. But that decision has to be made with a healthy respect for the dangers that await and the requirements for success. (See my 10/25/18 blog, “Patagonia and Politics – Are the Company’s Candidate Endorsements a Step Too Far?”).

Much more on all this in future blog posts.

https://hbr.org/2018/01/the-new-ceo-activists

https://chiefexecutive.net/survey-ceos-sales-social-issues/

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