Top Reasons Why CEOs Are Becoming Activists
Updated: May 19
CEOs are the faces of companies and the beacons of light for many in the business world—think Steve Jobs, Jeff Bezos, Mark Zuckerberg, Bill Gates and Howard Schultz. Chief executives are known for revitalizing dying companies and paving the path for the future of technology and business, shaping how we live. In today’s world, CEOs have even heftier tasks. According to Stanford University’s Graduate School of Business, CEO activism is “the practice of CEOs taking public positions on environmental, social and political issues not directly related to their businesses.” Consumers demand that companies take progressive stances on hot issues, but is it worth the risk?
Ask and You Shall Receive
According to Weber Shandwick’s 2017 study on CEO activism, around 38 percent of Americans believe that CEOs have the responsibility to speak out on hotly debated issues that are important to society. 40 percent of consumers say they are more likely to buy from a company when they agree with the CEO, versus 45 percent of consumers who say they are less likely to buy if they disagree. Especially because millennials and Generation Z are the future of consumer spending and base purchases on brand activism and corporate responsibility, CEOs face the convoluted effects if they take stances on issues. The topics that consumers want addressed are training, equal pay and sexual harassment, and the topics these purchasers least want addressed are gun control, marijuana legalization and abortion.
Under Pressure - Queen
The pressure from stakeholders cannot be disregarded—as seen by the events of the school shooting in Parkland, Florida, passionate consumers pressed companies to sever ties with the National Rifle Association. Delta decided to stop offering discounted fares to the N.R.A. amidst the tension, drawing bitter backlash from conservative lawmakers who threatened to revoke Delta’s $50 million sales tax exemption.
In addition, these business leaders cite their companies’ corporate values to support positions on controversial issues, according to Harvard Business Review. For example, Paypal's CEO, Dan Schulman, halted plans to build an operations center in Charlotte, North Carolina, after the state passed a law that required individuals to use bathrooms based on the genders on their birth certificates rather than gender identities. He said,
“The new law perpetuates discrimination and it violates the values and principles that are at the core of PayPal’s mission and culture.”
In contrast with the famous quote by Milton Friedman who said, “the social responsibility of business is to increase its profits,” many CEOs believe that corporations have higher purposes. Marc Benioff, chief executive of Salesforce, said,
“We must also hold ourselves accountable to a broader set of stakeholders: to our customers, our employees, the environment and the communities in which we work and live.”
Consumers aren’t the only group insisting on CEO activism. Being vocal may build loyalty with employees. According to NPR, employees want to know that employers stand with them and that the companies’ values align with personal beliefs. The effects of CEOs’ values on recruiting and turnover is apparent.
You Miss 100% of the Shots You Don't Take
Being expressive about your opinions will almost always draw censure from others. Social media is no stranger to polarization and contention, and CEO activism is just another magnet for altercation. People use platforms to intensify conversations and loyalties to certain causes. With social media, employees, companies and consumers can directly speak to one another, leading corporations to make efforts to appeal to stakeholders. According to Regina Luttrell in “Social Media: How to Engage, Share, and Connect,” developing a comprehensive plan to deal with crises is essential to communicate with key audiences, especially when weaving these causes into your company.
Although CEO activism is becoming more popular, companies must tread carefully. Some of its effects are known, but the impact in the long run is ambiguous. There is no clearly defined set of rules for this unprecedented movement—speaking out is dangerous yet seemingly necessary, and silence is loud.