Should CEOs become the moral voice of corporates?

Employment & Skills | Reports

Written by Dr Achilleas Boukis, Lecturer in Marketing, University of Sussex Business School

An increasing number of brands are taking a more active stand on environmental and socio-political issues.
Firms like Ben & Jerry’s, Starbucks, CrossFit, Nike and Lush, have all recently used marketing campaigns and adverts as platforms to start a public debate around the importance of sustainability in consumption, racism, gun control and the importance of LGBT rights and diversity, among others.

Not surprisingly, this activist orientation that many firms have embraced is often broadcasted through their CEOs, with a number becoming more vocal and more willing to step forward and discuss political and social values that go beyond their company’s core business.

Tim Cook’s challenging of a law by the Indiana state legislature allowing firms to refuse service to gay and transgender people, Starbucks’ Kevin Johnson closing stores so his staff could receive racial bias training after a high-profile incident, or Mark Parker of Nike standing by the Colin Kaepernick advert, are all indicative of the rise in CEO activism.

However, quite often CEOs speaking out can put them under the spotlight and result in major controversies, not only for themselves but for their firm as well.

High polarization among consumers, calls for boycotts and social media firestorms are some of the crisis that brands have to face.

It took only a tweet from Houston Rockets’ GM Daryl Morey in support of protesters in Hong Kong (“Fight for Freedom, Stand with Hong Kong”) to create a major diplomatic incident with China which threatens to derail years of work by the NBA to open up a $4 billion market.

With so much at stake from just 140 characters, many boards might well ask is it worth the risk of having an outspoken CEO who wants to engage with controversial public issues.

One of the reasons for taking that risk is to create awareness through a CEO’s power and profile to support environmental causes that can lead to companies being viewed more favourably by consumers.

Multiple CEOs of FMCG firms (including Coca-Cola, Unilever, General Mills) collectively signed an open letter calling on world leaders to “meaningfully address the reality of climate change” before a key UN climate change summit.

The success however is reliant on whether consumers’ view this stance as sincere.

If not, it can be seen as a cynical ploy to attract positive news headlines or increase the firm’s global awareness.
To be successful, CEOs should make a stand on issues that resonate with their firm’s objectives; understand whether their target market desires them to speak out as well as the relevance of the cause to the business.

Another benefit for businesses of CEOs going public on socio-political issues is the potential to increase their own staff’s engagement and loyalty to the brand.

This can be particularly relevant when voicing the key issues that concern Millennials, who make up an increasing proportion of the workforce in many labour-intensive companies.

In tech firms like Google, Salesforce and Facebook, employees have a loud voice and often put pressure on the management to take a stand in line with their own views on social challenges that they think need to be tackled urgently.

For instance, Google employees wrote an open letter calling their employer to kill Project Dragonfly, which was heavily criticised by human rights proponents and politicians as an effort to create a censored search engine in China.

However, despite these benefits, promoting a CEO’s activist persona can often be viewed with scepticism by consumers.

News agendas can become saturated with green-washing stories where firms self-promote their community efforts through sophisticated public relations and social media campaigns purely to increase sales and consumer goodwill.

Even more destructively, some CEOs unreasonably jump into controversial debates or share regressive and unpalatable views that polarize their audience and put at risk the value of their brand.

Chick-fil-A restaurants have endured a decade of bad press, boycott and protest because of CEO Dan Cathy’s denouncing of gay marriage while Under Armour’s CEO Kevin Plank was criticised after describing Donald Trump as “a real asset for the country” in interviews which directly affected company sales.

Such actions can be harmful in the short-term and they are not always welcome from shareholders.

But my own ongoing research seems to indicate that CEOs who are consistent and authentic in voicing their concerns and speaking out about what their own brand stands for does build up company reputation over time, despite the initial backlash and polarization created among its audience.

While further study is needed into the longer-term implications for activist CEOs, this is a phenomenon that is not going away and many will feel that CEOs have a duty to take a stance and have a say on some of the most fundamentally important political and social issues, for example when US business leaders collectively stopped working with the Trump administration in the wake of Charlottesville.

As customer expectations of brands and their values increases in this era of consumer sovereignty, firms will increasingly come under pressure to step up, take real actions to support societal well-being and create shared value for others beyond their direct shareholders.

Especially in high-tech industries and newly emerged sharing economy brands, such as Airbnb and Uber, CEOs cannot afford to stay silent, as their staff often speaks out for them.

Recently, 650 Salesforce employees signed a letter asking their CEO, Benioff to reconsider the contract with CBP, which is a law enforcement agency that carries out Donald Trump’s anti-immigrant agenda.

To make the most of these opportunities and grow their company’s public standing and customer base, CEOs need to be seen to be taking a stand on important social injustices and to choose causes that are most relevant to their firm and its corporate history champion. Getting this right, can be worth its weight in gold.

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