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Memo to a CEO Considering Social Activism

Memo to a CEO Considering Social Activism

Given the increase of CEOs taking public stances on controversial social issues, the following illustrative memo dissects the reputational and business risks that these leaders and their companies assume, and recommendations for how such positions might be thoughtfully developed, vetted, governed and communicated.

To:Margot Bixby, CEO, XYZ Corp.
From:Ed Reilly, Senior Advisor
Re:Taking a Stance on a National Policy Issue

Dear Margot,

I am flattered that you’re asking for my advice on your plan to engage publicly on a positively important but potentially incendiary national policy issue.

I understand you’re reticent to share your stance – these issues can be very personal and I respect the way you always put the company’s brand and reputation first.

I’m sure you’ve arrived at your position after a great deal of thought, and my objective is not to sway your position in one direction or another.

Rather, I aim to provide you with some considerations you should bear in mind before climbing the steps of the bully pulpit – and, ideally, give you a sense of the reaction you can expect once you enter the public arena.

Before I begin, let me tell you that your instincts in this case are correct – while you’ll need to take a careful, measured approach to what you say and where you say it, your desire to speak your mind on a matter of conscience is appropriate.

I say this confidently because I know and trust you, and because times have changed. Today, the public isn’t just comfortable with CEOs engaging in thought leadership – they expect it of them, and silence is not automatically respected as it once was decades ago.

You’re in Good Company

The numbers tell a powerful story: back in 2014, FTI Consulting conducted a study that found policymakers, institutional investors and the general public want CEOs to play an active role in national policy debates, so long as that engagement was related to the business a CEO is running.

Particularly in the last year, the parameters of CEO public engagement has broadened to include social activism. I’m sure you’re familiar with Starbucks’ Howard Schultz’s advocacy for tougher gun control regulation, and his open letter on Starbucks’ website requesting that patrons not bring guns into his shops, even in those states that permit it. Similarly, Salesforce’s Marc Benioff not only came out in opposition to North Carolina’s Public Facilities Privacy & Security Act (the “bathroom law”), he called upon other CEOs – including Dow Chemical’s Andrew Liveris – to join him. And many did. In fact, Liveris credited Benioff’s proactive stance, stating that “Marc rallies CEOs…particularly on noneconomic issues.” I think you’ll agree that even 10 years ago the idea of the CEO of a $50 billion-plus company commending a colleague for his focus on “noneconomic issues” would be far outside the norm.

But as I said, Margot, times are changing and CEOs are taking positions on social issues to a greater extent than ever before. Apple’s Tim Cook spoke out against Indiana’s Religious Freedom Restoration Act (RFRA) last year, before and after it was signed into law, and Angie’s List CEO Bill Oesterle responded to the passage of the RFRA by cancelling a $40 million project to expand his company’s headquarters in Indianapolis.

This activism cuts across all sectors. Perhaps it’s not surprising that tech giants like Cook, Benioff and Facebook’s Sheryl Sandberg (a leading voice for workplace gender equality) and Mark Zuckerberg have become outspoken public figures. The technology sector naturally lends itself to that type of social progressivism – Silicon Valley is, after all, within shouting distance of San Francisco.

But Mr. Liveris runs a Chemicals business – and he’s joined by Lloyd Blankfein at Goldman Sachs, who has publicly supported gay marriage, and Jamie Dimon at JP Morgan, who recently penned an open letter stating his intention to raise minimum wages of some 18,000 lower-level workers at his bank. I’m sure you’ll agree that chemicals and financial services companies enjoy a different reputation than tech firms.

So you’ll be in good – and diverse – company. As Allstate CEO (and client of ours) Tom Wilson has said, “Shareholders must get a good return, but at the same time corporations must work to be a force for good in society.” I agree with him.

Gridlock at the national level is stymying discussion and action on key issues – and creating a leadership vacuum the private sector is beginning to fill.

The Changing Role of the CEO

Why is this happening now? You might say it’s the democratization of markets. You could say it’s the connectivity brought on by the social media revolution, but whatever the root cause, stakeholders today have more information about and ability to engage with (or about) companies and their leaders than ever before.

Well-articulated social activism can still be a risk – but it can also be a competitive advantage.

This increased scrutiny of CEOs and their management teams by investors and customers, and the greater transparency expected by all stakeholders, has made leadership’s values and sensibilities a major factor in where consumers take their dollars.

This is especially true of Millennials, a generation increasingly concerned with companies’ social policies and how they mitigate their impact on the environment, both physical and political. This is the consumer as social activist, and it’s a wave that has not yet crested. Indeed, a field study published by the Harvard Business School in July 2016 found a “higher intent to purchase Apple products among respondents who were exposed to Cook’s CEO activism than among those who were not.” Tim Cook isn’t just standing up for what he believes in – he’s speaking to the values of the company he leads.

Today, CEOs are taking on a greater role in framing public discourse, and this has expanded the CEO’s role from that of guardian of the business and shareholder value to a figure who helps define the company’s brand, culture and values. And when those values align with the company’s strategy, taking a public stand on important societal issues can in turn contribute to that company achieving its long-term business objectives.

There are, of course, certain caveats, and one was expressed by retired Gen. Colin Powell, a Salesforce director, at the company’s annual shareholder meeting last year. Regarding Benioff’s advocacy for gay rights, Powell reportedly told him, “Be careful how far you climb up the tree. It will expose your backside.” And yet Salesforce’s stock price is near an all-time high – it would appear that Benioff has yet to ascend into dangerous territory.

Have the Courage of Your Convictions

As I said previously, I’m not advocating a reckless, scattershot approach to social activism. It’s important that any social engagement comes off as genuine, and just as important, thoughtful. Otherwise you risk being perceived as a dilettante – or worse, an opportunist. I mentioned Howard Schultz’s well-received call for gun control, but another Starbucks initiative should serve as a cautionary tale and example of how social activism can backfire – badly.

I’m speaking, of course, about last year’s Starbucks “Race Together” cup fiasco. If you recall, Starbucks asked its baristas to write or place stickers with “Race Together” on coffee cups to spur discussion about race relations in America. This was at the time the “Black Lives Matter” movement was gaining momentum, and Schultz’s desire to engage was both understandable and admirable. But attempting to unpack perhaps the most complicated and sensitive issue in American history during the sleepy 30-second interaction between a barista and a commuter was decidedly not well-received– the cups were widely panned as a marketing ploy, and perhaps more than a little exploitative, no matter how well intended. Starbucks ended the program shortly thereafter.

By contrast, let me go back to Allstate CEO Tom Wilson, who has long been involved in efforts to reduce youth violence in Chicago, specifically with the “Get in Chicago” initiative, one of the largest public-private projects for at-risk kids in the country. Combatting violence makes a lot of sense for an insurer, I’m sure you’ll agree. Not only that, getting Allstate agents involved in strengthening their communities also serves to raise their stature there, and that’s good for Allstate in many ways. It enhances its corporate reputation, helps it attract and retain excellent, committed workers, and places the company in a favorable position to work with political leaders to frame policies that benefit everyone, including its policy holders.

And that brings me to an important point, and one that is easy to miss. When considering your stakeholders in the context of potentially engaging in a public issue, do not overlook your own employees, especially the up-and-coming talent in your organization. As I mentioned, Millennials are far more attuned to the social – rather than just economic – performance of the brands they interact with, especially their current and prospective employers. That sensitivity can give you license – and motivation – to opine on a variety of social issues. That’s where Benioff is coming from: “I'm doing this really on behalf of my employees,” he told CBS.

How to Proceed

I hope I’ve answered your question about whether you should take a public position – even if that answer is, “there is no easy answer.” Now comes the how.

Look Before You Leap

As I said, be careful about the issue you choose to address.

  • You’re going to have to live with the position you take for a long while, so you want it to be something you’re truly passionate about, something that you’re willing to stick with, and something that makes sense in the context of your business.
  • Make sure it’s an issue you’ll still want to be identified with 6 months from now – not just when it is in the news today or tomorrow.
  • What you say now will become part of the public record, and more importantly part of your legacy. You don’t want to be perceived as a gadfly flitting from issue to issue. A public stance should truly reflect your beliefs and values. And when you do express yourself, speak in your own, authentic voice. If there’s a whiff of inauthenticity, or self-interest in your statement, it will not turn out well for you or for your company. Contrast Howard Schultz’s open letter on gun control – well-received, from the heart – to the ill-fated “Race Together” initiative. Authenticity – or lack thereof – can mean the difference between acclaim and condemnation.
  • Ask yourself – will your leadership matter to you a year from now – and will it have made a difference?
  • Ask yourself – what are the opportunity costs? If you speak out and commit yourself to an issue today, what are the activism opportunities you’ll have to defer tomorrow and over the next year? After all, one of the reasons CEO Thought Leadership resonates is because of it scarcity – because CEO’s don’t speak out about every issue under the sun. Don’t dilute the currency!
  • Work to align your position, and the way you express it, with both your brand and your company’s values.
  • Try to get your board behind you. That won’t always be easy. Among a board’s many corporate responsibilities is the company’s public image and it will want to understand the implications of your position from both a financial and reputational standpoint. In my experience, most boards are understandably conservative, and many are uncomfortable with actions that are outside the normal operation of the business. Further, the board is always accountable to shareholders and a fiduciary for how their money is spent. As such, they may ask you as CEO to connect the dots between the position you’re taking and shareholder benefit, providing quantitative measures of value. This may sound difficult, but boards are sophisticated – they understand that reputation has an undeniable impact on financial performance. If you can convince your board that your position will provide the company greater operating leverage – say, to recruit and retain top-tier talent – you will have gone far to convey the power of your engagement’s halo effect. When a company is viewed as thoughtful, forward-looking, and engaged, there are real business benefits that anyone can see. Just think about the remarkable way Walmart married the environmental passion of the Walton Family with its power in the marketplace to make supply chain decisions that resulted not just in store shelves full of sustainable green products – but which created a competitive advantage for producers of those products.
  • Ultimately, you may decide to take your stance without the board’s unanimous or completely enthusiastic backing, but even if you suspect that will be the case, don’t let your statement take them by surprise. That would be neither wise nor effective.
  • Be ready in advance with the answers to the questions that the press will pose; have one spokesperson chosen; and make certain that your internal practices are consistent with your pronouncements, so as not to open yourself to claims of inconsistency.

I hope you have found this thought provoking and of some assistance in making your decision. I look forward to hearing (and reading about) what you ultimately have to say.

Best regards,
Edward J. Reilly

Published November 2016

© Copyright 2016. The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.

About The Author

Edward J. Reilly
Senior Advisor
Strategic Communications
FTI Consulting

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The views expressed in this article(s) are those of the author and not necessarily those of FTI Consulting, Inc., or its professionals.
©Copyright, FTI Consulting, Inc., 2012. All rights reserved.