In case you missed it, there is a long and excellent analysis of the new CEO activities in the new HBR. Some highlights below:

 

The world is taking notice. CEO activism has gotten lots of media attention lately, and public relations firms are now building entire practices around it. While this phenomenon has largely been confined to the United States, there’s little reason to doubt that it could develop into a global force. We believe that the more CEOs speak up on social and political issues, the more they will be expected to do so. And increasingly, CEO activism has strategic implications: In the Twitter age, silence is more conspicuous—and more consequential.

All this activity raises big questions that we will attempt to address: Does CEO activism actually change hearts and minds? What are the risks and potential rewards? And what is the playbook for corporate leaders considering speaking out?

Collective action can have greater impact than acting alone. Take what happened with Trump’s economic councils. Though Merck’s CEO, Kenneth Frazier, received a lot of press when he resigned from the president’s American Manufacturing Council in response to Trump’s remarks blaming white supremacists and counterprotesters equally for the violence in Charlottesville, it was only after CEOs jumped ship en masse from that group and from Trump’s Strategic and Policy Forum that the president disbanded both councils—a move that was widely viewed as a defeat for Trump.

CEO activism has sometimes led to charges of hypocrisy. For example, a few conservative websites have criticized Benioff and Cook for denouncing religious freedom laws while Salesforce and Apple continue to do business in countries that persecute LGBTQ individuals. And some activism efforts have come off as clumsy: Consider the widespread ridicule that greeted Howard Schultz’s Race Together campaign, in which Starbucks baristas were instructed to write that phrase on all drink cups in an effort to combat racism.

On the other hand, activism can burnish a corporate leader’s reputation. In the aftermath of the violence in Charlottesville, the CEOs who resigned from Trump’s economic councils (a group that included Plank) were widely praised. The applause for Merck’s Frazier, the first to step down, was particularly effusive. “Mr. Frazier, thank you for your courageous stand,” tweeted U.S. representative Keith Ellison. The Anne Frank Center for Mutual Respect was even more emphatic, tweeting “A HERO: Ken Frazier.”

CEO activism differs from traditional corporate engagement in politics precisely because it is visible and high profile. The CEO needs to decide whether he or she wants all that attention or if the cause would be better advanced by a coalition of CEOs. More than 160 CEOs and business leaders chose to sign a letter by the Human Rights Campaign opposing the North Carolina bathroom law. In taking this approach, they mitigated the risk of consumer backlash and amplified the newsworthiness and thus the impact of their activism. Collective action can also make it more difficult for critics to target individual corporate leaders and thus can be perceived as less risky. But it is slower by design and is likely to be less effective in associating a particular leader and corporate brand with a particular cause.

CEOs also may choose not to weigh in at all. Some leaders may feel that they do not understand the issue well enough, hold an unpopular view, or simply want to focus on other areas. All of those are credible reasons to hold back. But executives should expect that employees, the media, and other interested parties may ask why the CEO has not spoken out, and should be ready to explain the rationale.

 

 

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Posted by Carlos Alvarenga

Carlos A. Alvarenga is the Executive Director of World 50 Labs and Adjunct Professor in the Logistics, Business and Public Policy Department at the University of Maryland’s Robert E. Smith School of Business.

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