The Risks and Rewards of CEO Activism

Over the past 18 months, the climate in the U.S. has changed dramatically as business and policy have intersected more deeply than ever before. When dozens of CEOs spoke up about the new U.S. administration’s decisions regarding issues like climate change and travel to the U.S. from select countries, for example, social media ignited, protests erupted and media attention exploded. Navigating how to communicate a company’s point of view in this environment is becoming increasingly complex and important. Future generations will only pay closer attention to how companies communicate about their values when it comes to deciding where to work or who to purchase from.

Indeed, nearly one-half of millennials (47 percent) believe that CEOs have a responsibility to speak up about issues that are important to society, far outpacing the sentiments of Gen Xers and baby boomers (28 percent each). An even larger six in 10 millennials (56 percent) say that business leaders have a greater responsibility to speak out now than in years past. This is according to “CEO Activism in 2017: High Noon in the C-Suite,” a study of 1,000 American adults commissioned by Weber Shandwick with KRC Research.

Our study showed that CEOs speaking out on hotly debated current issues comes with both risks and rewards. We recommend the following guidelines when considering a decision to speak out:

1. Establish the link between the issue and the company’s values.

Traditionally, CEOs have been expected to convince investors and other stakeholders why a particular decision is good for the bottom line. Recently, we have seen a segment of CEOs commenting on issues not directly tied to their company’s bottom line or core business, but perhaps reflecting the values of their organizations, such as LGBT rights, climate change, gun control, racial discrimination or immigration policies. Making the “business case” was not a requirement for millennial respondents, as 37 percent of them said they are more favorable of CEOs who take a position on an issue even if it’s not necessarily tied directly to the company’s core business.

2. Acknowledge the slippery generational slope.

Millennials are most in favor of CEO activism and are most likely to positively alter their buying behavior because of it. However, this support declines with age. It is important for companies to get a better grasp on these older generations’ perspectives before taking a stance, especially if they make up a large segment of their workforce or customer base for now. Making a business case for speaking out is especially important for Gen Xers and baby boomers.

3. Ensure market intelligence is up-to-date.

Taking a public position on a hot-button issue may not be fully understood or endorsed by all stakeholders, such as investors, customers, alumni, suppliers, political party members, etc. A vulnerability audit and polling among key stakeholders is highly recommended.

4. Strongly consider employees and prospects.

Assess how employees will be impacted by the CEO’s stance and gauge their support. If some employees disagree with the CEO’s position, will they feel excluded, less productive, less loyal? Make sure there is a plan for employees who might want to opt out of aligning with the CEO’s position. On the positive side, consider that potential employees may be drawn in by a CEO who takes a stand. Millennials in particular say they would be more loyal if their own CEO took a public position that they agree with.

5. Discuss the pros and cons with the board.

Boards do not like surprises. Moreover, once a CEO speaks out on an issue, expect that the assumption will be made that the board agrees. In addition, anticipate that management will be solicited repeatedly for similar responses on different hot-button issues and activism will become a regular boardroom topic.

6. Estimate the price of silence.

Now that the CEO activism movement has gained momentum, there may be some risk in being among the executives who do not take a stand. Consumers think the biggest risk of CEOs not speaking out is criticism from a variety of stakeholders as well as boycotts and decline in sales. CEOs also may see increasing pressure from employees to speak out. Take Oracle, for example, where employees started a petition for the company to sign on to the amicus brief opposing President Trump’s executive order on immigration.

7. Look in the mirror.

Make sure there are no skeletons in the closet related to the issue that the CEO is speaking up about. If your company needs to make improvements, say so before your critics do.

8. Find partners to gather momentum and keep channels open.

Consider engaging other business leaders or experts in the cause. In the aftermath of President Trump’s executive order on immigration, our research found that 13 percent of corporate responses made in reaction to the travel ban were in the form of a joint open letter and 38 percent came from joint legal filings. There is strength in numbers.

9. Fully commit time and resources.

Big issues require long-term, bold and focused dedication. Expect CEO activism to take up valuable executive time, a CEO’s most competitive asset. Expect it to come with a price tag.

10. Involve the government relations or public affairs departments.

“CEO Activism in 2017” finds that millennials identify the need for a relationship between business and government. Decisions about if and how to speak out should involve those who consider the government a stakeholder.

11. Consider the channels, messages and tone of voice used.

Ensure that the reasons behind the CEO’s public stance are clearly and transparently articulated and voiced over time, not just one time when the issue first appears in the news. It can never be communicated often enough. Test out where customers will be listening and use a human voice.

12. Have a crisis preparedness plan for a potential social media firestorm.

Social media and the 24/7 news cycle require companies to operate at lightning speed. Media inquiries, Facebook and Twitter activity, flash social protests, employee questions, and NGO backlash are all but guaranteed when CEOs bump up against politically charged issues. Weber Shandwick has noticed in its research the power of online advocacy groups, such as, Color of Change, Sleeping Giants and 2nd Vote. CEOs should expect that their social media teams will become quickly overloaded and will need support.

13. Develop a thick skin. Expect the pitchforks to come out.

As much as there will be genuine support and admiration for a CEO’s activism, the criticism can be stinging as well. Learning how to not flinch will be critical. In addition, expect the possibility of boycotts as more people become mobilized and issues become more politicized.

Companies and their leaders today must recognize the prevalence of CEO activism and millennials’ expectation of it. As the past year has demonstrated, CEO activism is no longer an emerging trend in the U.S. Although not pervasive, it is not uncommon to see chief executives speaking for or against important societal issues. A segment of Americans believes CEOs have a responsibility to speak out, and this is an increasingly strong sentiment among millennials. Many believe activism comes with the chief executive title.

Written by Leslie Gaines-Ross for CW Magazine.