In 2019, CEOs will get political

In 2019, CEOs can expect their role to get increasingly political. Whether the pressure comes from employees, customers, or their own sense of right and wrong, company leaders will spend more time next year navigating this highly politicized moment.  

Employees are Making Demands

Insider activism appears to be on the upswing among employees who are making demands on two fronts: fairer treatment at work and ethical business practices. Employees at McDonalds and Google participated in walkouts to protest how their companies have handled sexual harassment. Employees at Microsoft wrote a letter addressed to CEO Satya Nadella protesting the company’s work with Immigration and Customs Enforcement, stating that the company should put children and families above profit. And, in an interesting shift, union membership is on the rise among Millennials. 

What these examples point to is that employees are not just talking about politics at work and hoping for better working conditions – they are now mobilizing, pushing their leaders to take action, and holding them accountable. 

Consumers are Watching

In the age of social media, leaders can quickly find themselves in the eye of the storm. As Duke business school professor Aaron Chatterji explains, breaking stories “play out on social media, which is basically just a microphone that’s always on. And that means that the people behind the microphone, the CEOs in this case, are expected to speak and have opinions on things. And that wasn’t the case, even just five or 10 years ago.”

Consumers appear to welcome CEOs speaking out on issues. A 2018 survey by Edelman found that 64% of global consumers agree that “CEOs should take the lead on change rather than waiting on government to impose it.” And a new survey by the Rock Center for Corporate Governance at Stanford University found that 65% of the public overall (and 71% of millennials) think that CEOs of large companies should use their position and influence to advocate for the social, environmental, or political issues they care about personally; One third of the public does not.     

Depending on the issue, consumers can applaud or condemn a leader’s or a company’s actions. When Merck CEO, Kenneth Frasier, resigned from President Trump’s American Manufacturing council in the wake of Trump’s tepid response to white nationalist violence in Charlottesville, Frasier was praised for, in his words, “taking a stand against intolerance and extremism.” 

On the other hand, just last month companies like Walmart and Union Pacific came under intense scrutiny for donations they made to then Mississippi Senate candidate Cindy Hyde-Smith after her controversial remarks about attending a public hanging. In the wake of consumer uproar, both companies have asked for the donations to be refunded.

CEOs are Taking Stands

Conventional wisdom has long held that companies and leaders should stay out of politics in order to avoid alienating any customers. But the intense political polarization in the U.S., as well has the pressing nature of many issues like gun violence and climate change, has made steering clear of politics more difficult. 

Recently, several big brands have taken big stands: Toms shoes announced a 5 million donation to end gun violence; Patagonia will donate the 10 million the company will get due to the tax cuts to environmental groups; Dick’s Sporting Goods and Walmart restricted gun sales by raising the age to buy guns to 21; American and United Airlines publicly condemned the separation of immigrant families at the border and said they would not use their planes to transport children being taken away from their parents; and Nike featured Colin Kaepernick as the face of their “Just Do It” campaign. 

Emerging research on this topic points to the conditions under which there are favorable outcomes when companies take a stand. For example, a study found that when companies are guided by a set of values, consumers have a more positive response when that company takes a position. In fact, when a company purports to be driven by values but then abstains from taking a stand, it can signal to consumers that it is hypocritical and deemed dishonest. Another study found that respondents had a greater interest in buying Apple products after reading about Apple CEO Tim Cook’s opposition to Indiana’s “religious liberty” law because it could discriminate against LGBTQ people – especially if they were supporters of same-sex marriage. Of course, depending on the issue, taking a policy position could turnoff some consumers, or even elicit backlash. In fact, when asked, people are more likely to remember a product or service they use less of because of a position the CEO took (35%) then those who could remember using a product or service more (20%).   

The political swirl surrounding business will likely intensify in 2019. To prepare, leaders need to get clear on their own and their company’s values, decide which issues make the most sense to weigh in on, and pre-plan how they will respond – or at least establish a process for dealing with situations that need a rapid response. Importantly, leaders will need a different kind of communications executive on their team. With multiple stakeholders now taking an active role in the political fray (employees, consumers, politicians, shareholders), PR will need to be much more nuanced and move beyond simply what Wall Street thinks. 

You can read more about the 50 Big Ideas for 2019 here

Follow Marianne on Twitter @Coopermarianne and like her on Facebook For more on how families are coping in an uncertain age see Marianne’s book Cut Adrift: Families in Insecure Times.