CEO Activism

CEO activism is the practice of CEOs sharing their personal opinions about various contentious issues in the areas of environment, sustainability, political issues, human rights, diversity, inclusion and other social issues. The reason to do so is not always a personal preference but because of the pressure of consumers and employees. The business world, as well the global dynamics, are changing rapidly. What was once off-limits is no longer considered so. According to various surveys conducted, most people have been in favour of CEOs taking the lead on major issues like climate change rather than waiting for the government to modify laws. In fact, 56 percent of the people in one study said they had no respect for the CEO who chooses to remain silent on important issues. 

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The question often asked though is which statements qualify as activism. 

CEO Activism has been taken up by some corporates for ulterior motives. They gauge the sentiments of the customers to check the issues their target customers associate themselves with and how speaking on these topics can fill their pockets. CEO activism which is done after analyzing the cost and benefits can hardly be considered activism. It is only a business strategy. In such situations, statements made go pass through many levels of filters within the organization, from the communication and public relation team to the legal team to the sales executives. It is sometimes also referred to a polling agency or survey firm to know the viewpoints of customers before it is out in public. It is further crushed and modified when succumbing to the pressure from other stakeholders like investors and potential customers on social media accounts.

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By this time, the statement has lost its true meaning and become just artificially refined politically correct words.

So when should CEOs get involved?

Five evaluation parameters include -

1. CEO's Persona - his/her traits, leadership style and public image. A philanthropist like Bill Gates speaking up on social issues is expected.
2. Employee Demands - If the issue deeply affects a large section of his/her employees, a CEO must take up that issue.
3. External Stakeholders' Expectations - Whether the company's customers and other partners are comfortable with the company taking a firm stand on it.
4. Company's Mission - If the issue relates to the company's mission or its values or is out of context. 
5. State of the Business - By observing if the current position of the business means it has a lot or nothing to lose by speaking up on that issue.

CEO activists generally employ two tactics to support their cause:

1. Raising awareness: This involves reaching out to customers through news and social media to garner support for the cause. The chairperson and MD of Biocon, Kiran Mazumdar-Shaw uses Twitter to raise voices about the rampant urbanization in Bengaluru, gender issues, social hypocrisy, and consumer awareness initiatives.

2. Leveraging economic power: This involves putting pressure on the government and local bodies economically to reject or change the legislation or providing monetary support to third-party groups that support the cause. For example, Bill Oesterle cancelled the expansion of Angie's List in Indianapolis as a response to the anti-LGBTQ act of the local government body.

CEOs must understand that their stand affects the perception of the entire corporation and its stakeholders; hence, they should keep all the internal stakeholders informed and aligned. Also, the issues supported must be authentic to both the leader and the business. This leads to many positives:

Firstly, as more millennials become consumers and decision-makers, they want organizations to take a stand on issues that they care about. Thus, CEO activism in the sphere of, say, environmental conservation or LGBTQ rights shed a positive light on the company.

Secondly, activism transforms brands from stoic organizations to entities having opinions and feelings about the world, much like another person. This helps with connecting with the audience, which helps in the process of differentiation from competitors as consumers would have such brand names at the top of their minds while making purchase decisions.

The geographies in which the companies operate has a major effect on CEO activism. While we do find that activism from the top echelons of the company has both positive and negative effects such as Tim Cook standing up for LGBTQ rights or when Keurig's coffee dispensers were broken after they pulled their ads from the show of an American opinion host. In India recently, companies such as Parle and Bajaj pulled their ads from Republic TV, and they were branded as "anti-national" companies and calls for their boycott was trending on social media. Thus, companies and CEOs need to be very aware of their geographies and their audience and customers before taking up such initiatives. These initiatives could hurt the sentiments of the local people, which could lead to a major backlash and reduce the brand equity market share.

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While this was not a concern for many businesses till a decade or two ago, CEOs now, along with their traditional jobs, are practically obligated to make decisions every time a hot-button issue gets widely discussed. It can be said that as leaders of not just profit-making entities, but of organizations of people, CEOs must be representative of some viewpoint and must take a stand. At the same time, must they not stick to their jobs and leave activism to activists who do not have profit or brand equity on their agenda when they speak out? While this debate is not likely to see a conclusion very soon, there is no denying the magnitude of influence of CEO activism in today's world and that it is here to stay. Business managers have to to find the line between genuine, ethical activism and customer retention, and customers have to decide how much of their purchase decisions they base on the "personal" opinions of those running the companies selling everything they need and love.

Authors:

Purushottam Mishra, Naman Chaturvedi, Prateen Dhara, Ruchi Agarwal, Sreeja Ray, Utkarsh Motwani