Should CEOs Comment on Politically Contentious Topics?
Two experts square off on whether CEOs should feel free to weigh in on hot-button issues.
The polarization that plagues the U.S.—on seemingly every important and not-so-important issue—poses a challenge for corporate leaders. Many feel pressure to take a stand on the topics that their employees, customers and investors are passionate about, or feel that it’s simply the right thing to do. But speaking out can provoke a backlash that can hurt a company’s business and fuel discord.
So, what’s a CEO to do?
Ronnie Chatterji, a professor of business and public policy at Duke University, says he believes that playing it safe can backfire on CEOs, damaging their business and doing society no good. Andrew Ward, a management professor at Lehigh University, says the greater danger for both companies and society lies in CEOs taking public stances on controversial issues.
YES: It’s part of being an effective leader
By Ronnie Chatterji
Back in 2015, my colleague Michael Toffel and I used the term “CEO activism” to describe the wave of corporate leaders speaking out on controversial political and social issues, ranging from LGBTQ rights to immigration policy and the appropriate response to climate change. Over the past eight years, the landscape for CEO activists has changed dramatically.
Many of those who once cheered these outspoken executives on are now more skeptical that strong words will lead to progress on the issues in question. Some politicians, investors and customers are pushing back on “woke” businesses and appear to be raising the costs for CEOs and companies that take a stand. The debate has now shifted to whether CEOs should just stop talking about politics.
But that approach won’t lead to better business or a better society.
CEOs should feel free to keep speaking out on issues that impact their business. This kind of communication is an important part of being an effective leader. That doesn’t mean that every business leader needs to weigh in on every public controversy. And CEOs and their boards certainly need to be aware of the risks in taking a stance on any issue. But sticking to platitudes on a narrow set of issues that some might consider safe for business leaders simply isn’t an option in 2023.
For one thing, many of the most controversial political and social issues of our time are also critical business issues. For instance, the debate over whether and how we address climate change has implications for the flow of trillions of dollars of capital and will affect every major company in the world. America’s role in the world, notably our relationship with China and our posture toward foreign trade and investment, will shape the opportunities firms have to grow and deliver a return for shareholders. Finally, declining trust in government and other democratic institutions fosters a narrative that our political and economic system is corrupt, which can lead to social instability that is ultimately bad for business.
Just as it wouldn’t make sense for CEOs to stop speaking out about issues like tax policy or environmental regulations, they ignore these broader issues at their peril.
CEOs will also continue to be motivated to speak out by their own employees and consumers. A recent report by communications firm Edelman found that six out of 10 employees said they wouldn’t work for an organization that failed to speak out against racial injustice. Another recent poll by Morning Consult found that 69% of U.S. adults believed that CEOs should speak out on political, social and cultural issues, and the percentages were higher among the younger Americans that many top companies are seeking to sell their products to.
In other cases, CEOs will have strong personal convictions that compel them to speak out. CEOs who are immigrants, part of the LGBTQ community or followers of a religious faith may feel they have to take particular stands as a matter of social responsibility. And company mission statements might matter too. For companies that advertise their customer focus, strong employee culture and corporate social-responsibility programs, remaining neutral on debates that directly impact their customers, employees and communities would directly contradict their stated mission and values.
Taking a public stand needn’t contribute to polarization, as some fear. Indeed, it isn’t inconsistent with facilitating dialogue and reducing polarization. CEOs could invite fellow business leaders or even employees with the opposite view to discuss the issue with them and promote constructive dialogue in doing so.
Some argue that vocal executives could drive dissenting employees away—a blow to diversity in the workplace. But in some cases, employees who agree with the CEO’s stance may feel much more intensely about it than those who disagree. Speaking out in these cases could increase retention among supporters without alienating many opponents.
Of course, sometimes the opposite could happen. That’s why CEOs need to carefully assess if and when to speak out. Some will choose to be more vocal than others. But in general, CEO activism will continue, with corporate leaders weighing in on debates—even the most controversial ones—that ultimately influence the performance of their companies.
Ronnie Chatterji is a professor of Business and Public Policy at Duke University. He can be reached at reports@wsj.com.
NO: It will only alienate many employees
By Andrew Ward
Recently, CEOs have increasingly weighed in on social and political issues, from Black Lives Matter and voting access, to stances on Florida’s Parental Rights in Education (known as the “Don’t say gay” bill), to abortion restrictions in various states. The reasons executives have for becoming more vocal are clear, but they don’t justify the negative effects such public stances can have on their companies and on society.
One reason executives are speaking out more is that businesses have become our most trusted institutions in a world where polarization and a lack of trust in government and the media dominate. Indeed, the Edelman Annual Trust Barometer found that 64% of people think that we can’t even have a civil debate on key issues any longer due to this political polarization. Instead, people are looking to companies to take a stand and place a stake in the ground for common sense to prevail.
Companies also are feeling pressure from their employees to take stands on social and political issues. A recent survey of millennials about their expectations of employers, conducted by Atlassian, found that 61% of millennial workers preferred companies that take a stand on social issues and 49% said they would quit a job that didn’t align with their values. Furthermore, a survey by the National Association of Colleges and Employers found that the most important value to graduating college seniors was diversity and inclusion, with 71.8% stating it as a top priority.
On the surface, this sounds very positive: Young people are taking an active role in critical societal and political issues and compelling their companies to take a strong stance on these issues, filling the void left by the failures of political and media institutions. But it isn’t positive at all. In fact, it is a disaster waiting to happen.
If, as surveys indicate, employees really want their companies to take a strong stance on social and political issues, and will leave those companies that express a stance that doesn’t align with their own values, what this logically leads to is monolithic companies whose employees all have the same set of views on these divisive issues. That defeats the idea that the benefit of diversity and inclusion is having people who not only look different from one another but also hold diverse opinions and views on many issues.
A better approach for companies is to seek to foster a healthy dialogue on issues among their employees, by providing a platform for such discussions and communicating to employees that both sides have legitimate arguments. In this way businesses can use their trusted status to facilitate the kind of conversation that has become so difficult in today’s polarized society—and help seek solutions to society’s challenges rather than adding to the conflict by choosing sides.
If business fails to stand above the divisiveness in society and instead jumps in and adds to it, then society as a whole, and even those businesses individually, will become poorer for it.
Not speaking out publicly doesn’t mean CEOs are ignoring important issues. On some issues, their actions speak for them. For instance, many companies are acting on climate change to ensure their own long-term sustainability, including how their customers view them. Some other issues—such as geopolitical and diplomatic issues, or the political debate around respect for the law and democratic institutions—are explicitly and inherently political issues that should be decided by the ballot box. People elect their political leaders knowing their policies or viewpoints on these issues, and companies should respect voters’ choices, not try to undermine those choices. If people don’t like the policies adopted by the government, it is their right alone to change that at the next election.
Those who are concerned that not speaking out could alienate some employees and customers are missing an important counterargument: Speaking out on contentious issues is guaranteed to alienate a large portion of a company’s employees and customers. It is more valuable for a company to be able to maintain diversity across the political spectrum among its employees and customers.
CEOs’ personal beliefs are a bit more complicated. In a private or family business, it is reasonable that the company will reflect the values and beliefs of the CEO. But in a large public company, where the CEO is there to promote the long-term interests of the company, its shareholders and various other stakeholders, the CEO’s responsibility is to represent the company and its interests, not the CEO’s own personal convictions.
Andrew Ward is Chair of Corporate Governance and a professor of management at Lehigh University. He can be reached at reports@wsj.com.
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First Published:1 Oct 2023, 03:03 PM IST
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