As strategic advisors, we base our counsel on an examination of an organization’s operations, business model, strategic plan and culture as well as an ongoing study of the powerful external trends driving change in our world. We try to help clients stay ahead of the curve by pointing out opportunities and challenges so there is sufficient time for deliberation and course adjustments that will lead to the best outcome.
Having determined that a confluence of factors has dramatically shifted stakeholder expectations of CEOs, IQ 360’s founder, Lori Teranishi, wrote a series of articles that describes the reasons business leaders need to reexamine how they view their roles and responsibilities. In the blogs – which we’ve combined for easy reading and sharing – Lori reports on the new pressures CEOs are facing from employees, customers, investors, regulators, politicians and local communities. She also gives recommendations on how to respond. Above all, she stresses the need for leaders to consider moving out of their comfort zones rather than hold on to old ways of thinking that may no longer apply.
1. Broaden Your Job Description
Over the past year, America has been transformed by events such as the coronavirus pandemic and the killing of George Floyd, which ignited the Black Lives Matter movement. A wave of change is leading CEOs to reconsider their roles and the value created by their businesses.
How did this happen?
COVID-19 forced many businesses to close or change the way they conducted work. Most notably, millions of office workers found ways to carry out their daily responsibilities on computers at home. Business norms, corporate cultures, workplace protocols and more were adjusted to accommodate a new reality that was a physical, emotional and social break from the past.
After a year of everyone working from home, the hierarchal power relationships within organizations have been eroded by zoom meetings in which everyone is reduced to a small image on a screen. Online, people who had offices (and the implicit prestige) are equal to those who work in cubicles or open areas. Likewise, pet noises, ringing doorbells, the sudden on-screen appearance of children, technical glitches and other humbling realities have eroded formalities that were standard in pre-pandemic meetings. Consequently, the “boss-worker” relationship has become more level and infused with more humanity, which opens the door to workers expressing opinions on a broader range of topics.
The reaction many people had to the Black Lives Matter movement was quickly injected into workplace discussions. At company town hall meetings and in response to employee surveys, people demanded not only that companies do more about equity and inclusion in their workplace, but also that their leaders be speaking publicly against systemic racism and pledging to help build a more racially just society.
With the traditional wall between societal issues and business concerns eroding, employees want their CEOs to lead change on issues such as healthcare, gun safety, the wealth gap, LGBTQ rights, personal data security, the technological divide between rich and poor, the housing crisis and more.
CEOs are responding, becoming more vocal and active on a host of issues, primarily because social and environmental concerns are important to worker recruitment and retention. Surveys have found growing activist inclinations among workers of all ages, regardless of political affiliation. Pragmatic CEOs are changing their attitudes and behaviors because they believe it will enhance their company’s competitive performance in the marketplace.
“You will need to become a student again on many issues, develop new networks, join new coalitions and, possibly, adjust your business plans. It does not all have to be done in a day or even a year, but the journey must begin now.”
Here’s what strategic communications advisors are urging CEOs to do:
Broaden your scope of responsibility to address social and environmental issues. Educate yourself about the changing expectations employees and other key stakeholders are developing. Assume these expectations will become increasingly relevant over the coming years. Assume they will influence the quality of your workforce, your ability to raise capital, your relationship with elected officials, your shareholder relations (if you are publicly traded), your company’s news coverage and your overall permission to operate. Fairly or not, you must think and behave more like a high-level elected official, tackling issues and policies you previously considered none of your business.
Once you have devised an expanded role for yourself, discuss it with your board and your senior management team. After taking their feedback into account, you will need to become a student again on many issues, develop new networks, join new coalitions and, possibly, adjust your business plans. It does not all have to be done in a day or even a year, but the journey must begin now.
2. Address Environmental and Social Concerns
The private sector is becoming a hotbed of environmental and social activism. Recently, General Motors announced a switch almost entirely to electric vehicles by 2035. Oil giant Total changed its name to TotalEnergies, signaling a shift away from fossil fuels to wind and solar. Amazon has identified itself as the largest purchaser of renewable energy and pledged to be carbon neutral by 2040.
Beyond environmental concerns, companies are tackling social issues. Levi Strauss built coalitions to promote employee voting on November 6. After the violence in Washington on January 6, dozens of companies condemned the insurrectionists. Some went on to suspend donations to the 147 Republican members of congress who officially objected to the congressional certification of the election of Joe Biden as president, a stance which many believe fueled the rampage.
On Inauguration Day, software giant Oracle announced that its employee PAC would, “pause contributions to anyone who voted against certifying the November 2020 election results.” Walmart said it was “indefinitely suspending contributions to those members of Congress who voted against the lawful certification of state Electoral College votes.” Dow, the chemical company, also indicated it would suspend donations for one election cycle to any member of Congress who voted to object to the certification of Biden’s win.
These are just recent examples of corporate America’s increasing involvement in political and social issues. They reflect CEOs grudging acceptance that their roles now require them to speak out and to sometimes take action on policy matters they previously avoided. In 2020, few failed to pledge their support of the Black Lives Movement. This was in addition to recent stands taken by corporate leaders on laws banning gender-free bathrooms, gun sales, educational disadvantages related to technology, child labor in the developing world, and many more social issues.
What’s going on?
CEOs are responding to pressure from their employees, customers and investors. In part this reflects a widespread awareness that today’s challenges are too large, complex and expensive for the public sector to handle. Governments are perceived to be ineffectual and in debt. NGO’s are seen as well-intended but dependent on grants or donations. Only the private sector has the expertise, money and operational capacity to bring about significant change. So, pragmatically, people are turning to the institution that can make things happen, even if the business community would prefer that its role be delivering shareholder value, per Milton Friedman.
Pressure from the investment community is exemplified by Larry Fink, head of BlackRock, the world’s largest asset manager. Fink recently made public his letter informing CEOs that his company will be less supportive of corporations that are not addressing global warming, indicating that it may use its shareholder voting power to push management teams that fall short of their environmental responsibility.
Wall Street is following BlackRock’s lead, becoming more insistent that corporate leaders address the risks posed by the earth’s worsening environment.
“These are legitimate business concerns because society and key stakeholders now believe this to be true. Ultimately, your permission to operate will be withdrawn by society if you fail to meet these new expectations.”
Here’s what strategic communications advisors are urging CEOs to do:
Show leadership with regard to both environmental and social issues. Relinquish your sense that these matters are beyond your scope of responsibility and that funds allocated to address them are wasted. These are legitimate business concerns because society and key stakeholders now believe this to be true. Ultimately, your permission to operate will be withdrawn by society if you fail to meet these new expectations.
The positions your company takes, the policy decisions it reaches and the operational changes it makes must be substantive. Outcomes must be measured and reported. Everything must be consistent with your company’s mission, vision, values and culture. Keep in mind that your employees and many outside observers will be watching to see if your commitment and behavior is genuine.
3. Prepare for Opinions
More and more, CEOs who do not display greater societal engagement will be criticized not only by activists and social media troublemakers but also by their employees, the general public, and the financial community. Their criticism cannot be dismissed, as it will increasingly lead to product boycotts, lackluster recruiting, activist shareholder challenges, brand damage, and even difficulty securing needed capital.
This change is pushing CEOs into uncomfortable waters. For decades, they accepted that their performance would be subjected to “feedback” (either praise or criticism) from key stakeholder groups associated with the running of their businesses – customers, business partners and investors. A small portion of these CEOs, mostly the heads of Fortune 500 companies, engaged with media on these issues; and an even smaller group engaged publicly with elected officials and regulators.
Technology changed this manageable situation to one that is increasingly complex and harrowing. Now CEOs at organizations of all sizes must be ready for scrutiny and criticism on a 24/7 basis, with everyone feeling free to express their opinion on social media.
CEOs garner much more attention than the average person not only because they are viewed as powerful and highly paid but because they are viewed as stand-ins for their entire company. So, for example, Jeff Bezos is talked about as if he is personally responsible for everything happening at Amazon and all its subsidiaries like Zappos and Whole Foods. Every accomplishment, failure and controversy in any part of Amazon’s business is attributed to him, regardless of whether he even has any involvement.
This phenomenon explains why, as companies get drawn into more and more issues, their CEOs are increasingly expected to be part of the solution. Global warming, racial justice, LGBTQ rights, gun control, digital privacy, the wealth gap, healthcare, the housing shortage, equal access to technology and many other matters are just some of the issues which corporate leaders are being pushed to address.
The most pressure is coming from employees, especially younger generations, women and non-whites, who comprise an increasingly large part of the labor force. Workers are urging their leaders to speak out and take stands on social issues, especially those that are perceived to be relevant to workplace dynamics. These include racism, sexism, diversity, inclusion, wage inequity, personal data security, health safety and doing business with customers perceived as exploitive, destructive to society, unethical or discriminatory.
“Don’t be surprised by increasingly activist language and behaviors among your employees. In a way, this is a compliment, because they believe you have the power and influence to make things better both inside and outside the workplace.”
Here’s what strategic communications advisors are urging CEOs to do:
Expect scrutiny and commentary from people who have no direct relationship with your company. Don’t brush it off as irrelevant. Don’t assume it can’t alarm and distress your employees, cause friction with business partners; and invite local politicians to leap into the fray.
Don’t be surprised by increasingly activist language and behaviors among your employees. In a way, this is a compliment, because they believe you have the power and influence to make things better both inside and outside the workplace.
Your best defense is to go on offense. Decide what values are core to your enterprise and educate all employees about this stance. Make sure that you have programs where this thinking is evident. Speak out publicly about these programs and demonstrate support of public efforts based on similar concerns.
When others pressure you to address their issues, you can point out that you are focusing on your top priority and cannot dilute your efforts to tackle every social ill.