Welcome to the Era of the Activist CEO

July, 2017

Today’s political polarization has sparked a renewed sense of activism among business leaders. But such activism should also come with a strong dose of caution. 

On Jan. 27, President Donald J. Trump issued an executive order closing U.S. borders to people from seven Muslim-majority countries for 90 days and suspending acceptance of Syrian refugees indefinitely. The news sparked protests en mass around major U.S. airports, blocking traffic as protesters chanted “No hate, no fear. Refugees are welcome here.”

Drivers of local taxis and ride-hailing firm Lyft Inc. joined in the protests at JFK International Airport; both went on strike in support of the city’s largely immigrant workforce. According to the NYC Taxi and Limousine Commission, only 6 percent of drivers in 2014 were from the U.S. The ride-hailing service’s co-founders, Logan Green and John Zimmer, denounced the order, writing in an email to customers that “Banning people of a particular faith or creed, race or identity, sexuality or ethnicity, from entering the U.S. is antithetical to both Lyft and our nation’s core values.” They went on to say that they “will not be silent on issues that threaten the value of our community.”

At least 153 other large and midsize companies made similar public statements regarding the ban, according to Weber Shandwick Inc., a communications firm, and 84 percent of the statements came directly from those companies’ chief executive officers. Furthermore, 48 percent of firms took an action in response to the ban, which was later revised after legal scrutiny. Lyft donated $1 million to the American Civil Liberties Union. Meanwhile, Lyft’s rival, Uber Technologies Inc., didn’t halt service during the protests, a move that sparked criticism of its then-CEO, Travis Kalanick, who was also under fire for joining Trump’s economic advisory council. These actions — including a Twitter campaign of #DeleteUber — resulted in a 7 percent larger customer base for Lyft between late January and mid-March, according to the Los Angeles Times. Under pressure from employees, Kalanick quit the council six days after the travel ban’s announcement. “There are many ways we will continue to advocate for just change on immigration, but staying on the council was going to get in the way of that,” Kalanick wrote in an email to employees, according to The New York Times.

The corporate reaction to Trump’s travel ban comes amid a wave of renewed political and social activism from the business community, particularly from those in the C-suite. Even before Trump’s surprise November 2016 election — an event that showed how divided Americans are on a number of issues — corporate chiefs had shown a penchant for speaking out on social issues, even those with seemingly little direct influence on their companies’ business interests.

Still, CEOs who take a public stand on hot-button issues face a delicate balancing act, experts say. On the one hand, CEOs should be able to express themselves freely when they feel passionate about an issue. On the other hand, they need to convey those messages in a way that doesn’t alienate employees, customers, investors and other stakeholders.

“It’s complicated,” said Robert Glazer, founder and managing director of Acceleration Partners, a performance marketing firm headquartered in Boston. If a CEO were to announce that they support a political candidate, and many of their employees do not agree, workers could feel that their values don’t align with their boss’ values.

Instead, business leaders should make statements around how social issues and behavior of political candidates align to their values. The best time to make a statement is when there’s clear alignment with or away from a company’s culture and values. “Then I’d actually expect a CEO to either comment on things that are congruous or incongruous with those values, without making a political point out of it, per se,” Glazer said. Employees should hear or read a CEO’s statement and think, “Politics aside, that totally supports why I work here and why I believe in this company,” Glazer said.

Technology industry workers, for instance, joined in protests against the travel ban in droves. They felt particularly compelled to protest because the industry’s talent pool is flush with immigrants. According to the “2016 Silicon Valley Index” from Joint Venture Silicon Valley, the tech hub’s population is 37.4 percent foreign-born residents, compared to the national average of 13.3 percent. Furthermore, the National Foundation for American Policy has researched startups in the U.S. valued at $1 billion or more in its study, “Immigrants and Billion Dollar Startups,” and found that at least one immigrant founder contributed to the success of 51 percent of these companies. “This illustrates the increasing importance and contributions of immigrants to the U.S. economy,” the report stated.

If skilled talent is in short supply, employees could potentially go so far as to demand that their leadership act on behalf of the workers. Grassroots organizations like Tech Workers Coalition and Tech Solidarity provide ways for those in the industry to connect with their communities, as well as join together to influence CEO behavior. “Our goal is collective action by employees,” Tech Solidarity founder Maciej Ceglowski stated, according to a March article in Quartz. Ceglowski went on to say that these highly skilled workers threatening to leave their employers act as a leverage tool to prevent companies from agreeing to government policies that don’t act in their best interests.

Starbucks Corp. is another company that’s known for its socially conscious CEO, so much so that when Kevin Johnson took over for Howard Schultz on April 3, he knew speaking about issues would be part of his role. With this transition, if employees felt that their leadership no longer supported the causes they care about, how would they react? Johnson acknowledged that part of the company’s talent strategy is to be vocal about issues that affect his workers and align to their principles. “It helps us attract great talent, but it also shows that we care about helping create opportunities for people,” Johnson said in an April interview with The Wall Street Journal. “One of the reasons people come to work at Starbucks is because we stand for something. It’s about human connection and having a sense of humanity.”

However, this approach may not work for leaders of companies in other industries, nor is it applicable to all geographic areas of the country. “Culture underlies all of this,” Acceleration Partners’ Glazer said. In Silicon Valley near San Francisco, politics mixes with many areas of life, whereas people in sleepy, rural towns might not react as positively to discussing societal issues in the office, Glazer said.

For example, companies in Silicon Valley that rely on immigrants to fill open roles will likely see more job applications when a CEO sticks their neck out on this issue. Meanwhile, a CEO leading a company located in a more rural, homogeneous part of the country might not be met with similar enthusiasm, since many workers in those areas have a less favorable view of immigration’s influence on the workforce, Glazer said.

Why now?
The stakes related to CEO activism these days are higher thanks to today’s robust digital ecosystem. Whether it’s product details, company earnings, employee sentiments or a CEO’s background, information today is easily accessible via a quick online search or scroll through social media. This democratization of information means customers and prospective employees can gather many pieces of information when they decide to support a business, according to Ravin Jesuthasan, managing director and global practice leader at research and advisory firm Willis Towers Watson. “We also increasingly are asking the question of is this a good company?” Beyond what they sell, companies that contribute to the betterment of society are becoming more popular. “All of those things sort of come together to form a composite view of the organization in my mind,” Jesuthasan said.

These trends put an impetus on organizations to be open and honest about their beliefs. “In the past, you could maybe just rely on providing a good product and not need to disclose some of those other things about your organization or your leadership,” Jesuthasan said. “Versus today, it’s awfully difficult to hide anything.” Also, polarizing political discourse around the world now requires corporate leaders to be more visible about their views and perspectives, he said.

Although some leaders might not be comfortable speaking out on sensitive issues, avoiding the conversation can be damaging as well. “I think the recent rise of a number of CEOs coming out and taking positions maybe puts a spotlight on those who don’t, particularly within a similar industry,” Jesuthasan said. For those CEOs who do vocalize their stances, they could benefit from a halo of social activism, sparking increased support from employees and customers.

“The recruitment brand, quite honestly, is shaped by what CEOs say or don’t say,” said Justin Hirsch, president and HR executive search lead for Jobplex Inc., a DHR International company focused on executive search and project recruitment. Prospective applicants often read or hear CEO commentary on an issue and they make judgments based on how they align.

“It creates the feeling of what they’re perceiving as the corporate culture represented by the CEO,” Hirsch said. If aligned to the CEO’s stance, the candidate becomes more excited about working at that company and being among its culture; if they’re not aligned, that can work against the recruiting effort. “I’ve seen it work both positive, and I’ve seen it impact negatively a potential candidate’s experience,” Hirsch said.

What should leaders vocalize?
Outside of CEOs going out of their way to vocalize their more passionate viewpoints, there is a tactical side to executive activism that is important for leaders to engage in. CEOs looking to take a more calculated approach to social activism can look at it by identifying safe and dangerous topics to engage on.

One safe topic that tends to excite job candidates is outward support for military veterans. “It’s a bit more inspiring in getting a candidate to really engage. As recruiters, we pivot, and we highlight that,” Hirsch said.

Other safe causes to support are those around issues that most reasonable people can agree are universally good or bad, said Deb Gabor, CEO of Sol Marketing, a brand strategy consultancy based in Austin, Texas. This includes supporting pet adoption, ending child sex trafficking and researching cures for cancer and other dangerous diseases, among others.

Still, executives should proceed with caution. “When you speak out about a particular social issue, you are basically branding yourself alongside that particular issue,” Gabor said. Treat the decision to speak out as if it were any other marketing arrangement, working diligently to understand the company’s ecosystem internally and externally to mitigate any potential loss of support.

Naturally, it’s not only the CEO who is leading the company; they must also answer to board members and other executives. Public companies must also answer to shareholders. “Investors are kind of a customer of the company,” Gabor said. When it comes to appeasing them while also speaking out, there are many factors that determine the success of this approach. Financial arrangements make a big impact on this, Gabor said, and if the company is in good financial standing, a CEO could have more leverage to speak their mind.

In September 2016, AT&T Inc. CEO Randall Stephenson passionately spoke with his employees about race during a companywide diversity event. Prior to making the speech, which supported the Black Lives Matter movement, Stephenson ran it by colleagues and friends, many of whom were minorities, according to an onstage interview he gave at the annual Great Place to Work conference in Chicago in May. The speech encouraged more open conversations about race at the company and outside of work. A video of the talk taken by an employee quickly went viral online.

“Sadly, racial tension is ripping apart the very fabric of our communities right now,” Stephenson said in the speech, according to the video. “Tolerance is for cowards. Being tolerant requires nothing from you but to be quiet and to not make waves, holding tightly to your views and judgments, without being challenged. Do not tolerate each other. Work hard, move into uncomfortable territory and understand each other.”

Stephenson’s speech, which he never intended to make public, drew wide applause from employees and observers of the video. It took Stephenson months to read all the emails he received as a result of the speech, according to his remarks onstage at the Great Place to Work event.

Regardless of how active a CEO is on social issues, they have to be prepared for the fact that not all of their stakeholders will agree with them. George Polisner, an employee at Oracle for more than 15 years, resigned from the company after CEO Safra Catz joined the then President-elect Trump’s transition team. In an open letter on LinkedIn posted on December 19, 2016, Polisner wrote, “I am not with President-elect Trump and I am not here to help him in any way. In fact — when his policies border on the unconstitutional, the criminal and the morally unjust — I am here to oppose him in every possible and legal way. Therefore I must resign from this once great company.” Polisner’s resignation shows that business leaders should carefully consider where they focus their efforts, while also being prepared for the inevitable talent attrition that may result.

Gabor’s Sol Marketing does pro bono work for some nonprofits, including her office’s local NPR station. She and her employees feel strongly about the mission of public radio, especially with the spread of fake news that readers see today. “Employees will join the bandwagon, mostly because I make them. It’s part of their job, and they like it,” Gabor said. However, every organization that they work with has to be something that ultimately aligns with Sol’s brand. Decisions to take on pro bono work go through the same criteria as when they choose paying clients. Therefore, employees don’t have issues devoting time to these projects, Gabor said.

Such careful consideration is important when it comes to CEO social activism. The messaging around the issue should be thoughtful, not lip service. Gabor saw the intense, immediate online backlash from the April 2017 Pepsi commercial, which portrayed Kendall Jenner leaving a photoshoot and then seemingly repairing tension with police by handing them a can of Pepsi at a Black Lives Matter protest. The ad missed the mark. Commenters online mocked the simplification and outward commercialization of the issue. While it can be beneficial for brands to align with the social issues that represent the values held by their target audiences, how they go about conveying those messages is equally important.

This applies to internal company policies as well. Thinx Inc., a company that creates women’s underwear for use during menstruation, initially branded itself as a feminist startup. “I think about feminism through innovation and I think about it by offering products and inventing things that support women and make them feel less shame about themselves,” the company’s founder, Miki Agrawal, said in a March 2017 interview with Stephen J. Dubner, host of the “Freakonomics” podcast. “But I don’t necessarily wear the badge loudly and proudly. And I do — I am a feminist. But I don’t have to wear that ‘Feminist AF’ sweater to be a feminist. You know what I mean?”

Unfortunately for her employees, they felt that her feminism stopped there. Nearly a third of her staff quit between January and March 2017, citing subpar pay, sparse benefits and unpleasant working conditions, according to a March 29 report from Quartz. Chelsea Leibow, a former Thinx employee, filed a complaint with the New York City’s Commission on Human Rights alleging Agrawal touched employees’ breasts and made inappropriate comments, according to New York magazine. Agrawal then faced an inquiry from her board and an onslaught of criticism. Her brand’s messaging obviously didn’t align with her behavior at the workplace. She stepped down as CEO mid-March.

How should leaders decide what to say?
When Sol Marketing’s Gabor advises clients who express interest in corporate responsibility, she tells them first and foremost to know their audience, and to ask themselves the following questions when considering speaking out on a social or political issue:

  • What is it going to say about us as an organization that we align with this social issue?
  • What does it say about customers who use that brand that is associated with an issue?
  • Will we lose people along the way? If customers and employees depart from the company, be ready to lose them.

“I want them to look outside and inside the organization and make sure that that’s something that is going to be sustainable for them in terms of their ability to attract both talent and customers,” Gabor said. “This really is a case of know your audience.”

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