The popular adage “big risk, big reward” may be the mantra of top executives when it comes to how they approach many facets of their businesses — but in matters of politics, more often than not, business leaders are encouraged to play it safe.
And for a while, a “no comment” here and there was a sure out for a CEO looking to dodge requests to sound off on a hot-button political topic.
But times have changed.
“CEOs in the era circa 1995-2005 were far more reluctant to weigh in on [political] issues. However, in the past decade, the environment for corporate social strategy has changed,” said Irving Schenkler, a professor at NYU’s Leonard N. Stern School of Business.
A divisive 2016 presidential campaign and the ultimate election of a nonconventional candidate are among the newest catalysts for pressuring corporate involvement in political issues.
In addition, in a digital age where corporations manage social media accounts that live on platforms where consumers post about an array of social, political and civic issues, it’s becoming increasingly difficult to separate the voice and identity of brands from those of the communities they seek to engage.
“Millennials and Gen Z want to buy from brands that share their values,” said Matt Powell, a sports industry analyst with The NPD Group. “If a brand’s values do not align with these groups’, they will take their business elsewhere.”
Indeed, activism on the part of trendy brands has been in vogue in recent years. But by some accounts, the racially motivated attacks in Charlottesville, Va., and President Donald Trump’s response — which he doubled down on this Tuesday — have marked yet another critical turning point for corporations when it comes to whether they should take a stand in the realm of politics.
“If you think about the public consciousness and the discussions we have about the issues of the day as a football field and you’re operating between the 20-yard line on both sides, there’s a middle of the road — those are the kinds of debates we have in a vibrant democracy. And how corporations and societies interact in that space is totally [dependent upon the kind of] brand they built,” explained Matt Priest, president and CEO of the Footwear Distributors and Retailers of America. “When comments and actions spill beyond the midfield and they go too far to the left or right, that’s when corporations have to make a decision about whether that cuts against the authenticity they put forth and the brand story they’re telling. That’s when they may need to be vocal.”
Generally, experts still agree that top execs should weigh the impact of speaking out on politics against the consequences on their corporations and stakeholders.
“I would not agree that all companies need or should ‘take a stand,’” Schenkler said. “[It] depends on the issue: Is it a core value for the company? What is the perspective of principal stakeholders on it? How does it affect corporate reputation? How is it tied to corporate identity and image?”
But as a growing number of CEOs — including Under Armour chief Kevin Plank, who stepped away from Trump’s newly disbanded manufacturing council this week — take public steps to distance themselves from Trump, it’s becoming increasingly apparent that the issues at play perhaps have outgrown the political sphere and entered less divisive terrain. (Today, in the wake of harsh criticisms about Trump’s hesitance to criticize the actions of alt-right and neo-Nazi groups in Charlottesville, the president announced his decision to disband two advisory groups involving corporate leaders, the Strategic and Policy Forum and the Manufacturing Council.)
The motivation for many top executives to speak out and condemn the actions of the president may have less to do with corporate strategy and more to do with personal convictions, according to Dana Radcliffe, a professor at Cornell University’s SC Johnson College of Business.
“Effective CEOs are strategic decision-makers — shrewd calculators of the costs and benefits of possible actions. So it is tempting to see prominent CEOs who distance themselves from President Trump, criticizing him or resigning from his advisory councils, as making purely prudential choices to protect their brands,” Radcliffe explained. “I am skeptical of this analysis since, it seems to me, a chaotic White House and a proudly unpredictable chief executive make it impossible for even the most savvy CEOs to gauge the strategic value of publicly supporting or associating with the president.”
Radcliffe believes that these days, when leaders publicly protest Trump’s behavior, most are acting on principle.
“They are expressing moral values to which they are committed, as Americans and as members of society — values such as the rule of law, toleration of our differences and respect for the freedom and dignity of every individual,” he said.
It just so happens that in many cases, these are also corporate values to which their companies are also committed, Radcliffe noted.
And therein lies a critical distinction.
“It’s one of those instances when you can say [to leaders], ‘Take a stand — you’re not going to alienate people, because this comes down to common sense and decency,’” Priest said. “You can be partisan when it comes to decency.”