“I just think it’s insincere to not stand up for those things that you believe in. We’re also stewards of our companies; we’re representatives of the people that work with us. And I think we’re cowards if we don’t take a position occasionally on those things that are really consistent with what our mission is and where our people stand”. Jeff Immelt, former CEO, GE.

As the world grapples with a slew of social, political and environmental issues, there is a growing expectation for corporate leaders to step into the fray. The Edelman Trust Barometer 2020 revealed that 74% of respondents (up from 65% in 2018) now expect CEOs to “take the lead on change rather than waiting for government to impose it”. Chief executives of some of the world’s most prestigious corporations have stepped boldly into activism, including Dan Schulman of PayPal, Brian Moynihan of Bank of America and Howard Schultz of Starbucks. Staying quiet is no longer an option.

Yet, taking a stand is also fraught with risk. Advocacy around hot-button issues – such as climate change, diversity, social equality, politics – can trigger strong reactions among employees, consumers and shareholders. The more polarizing the issue, the greater the peril.

So, this week, my message focuses on corporate leaders taking a stand on issues that fall outside the traditional scope of business. What are some of the pros and cons? And is there a better, more thoughtful way for company leadership to speak out?

Why speak out

In some ways, it’s the ideal moment for leaders to take a stand and drive the conversation. Customers as well as employees increasingly expect them to speak up on societal issues. Millennials, especially, prefer to work for organisations that actively embody their values and take on a stewardship role in society. A similar trend has been observed among millennial consumers, who factor in corporate activism while making purchasing decisions.

While some leaders take a stand based on specific company values, others do so because they believe the time has come for business to have a higher purpose – beyond increasing shareholder value. As Marc Benioff, founder and CEO of Salesforce, puts it:

Today CEOs need to stand up not just for their shareholders, but their employees, their customers, their partners, the community, the environment, schools, everybody… CEO activism is not a leadership choice, but a modern – and an evolving – expectation. CEOs have to realize that Millennials are coming into the organization and expecting the CEO to publicly represent the values of that organization.

According to a paper published by strategic advisory firm Brunswick, social issues are also business performance issues: 

Social issues today affect the bottom line in ways that would not have been visible even 10 years ago. Certainly leaders are becoming more aware of how social concerns may be affecting their business. But also, awareness among employees, customers and other stakeholders is creating more direct impacts. Hiring and employee retention, productivity, remaining competitive, relationships with partners, customers and clients – a downturn in any one of these, brought on by a lack of response or poorly considered response to a social problem, can result in reputational harm.

When corporate leaders engage successfully with issues beyond the scope of business, a number of benefits kick in. Thoughtful advocacy can move the needle on policy and legislation, and shift the nature of public discourse. It can also motivate like-minded consumers to buy more of the company’s products, increase loyalty among employees, and attract new talent. Plus, leaders receive the satisfaction of voicing their convictions – which is no small reward for those who wish to lead an authentic and purpose-driven professional life.

A double-edged sword

While there are upsides to speaking up, some findings suggest that the potential gain is less than the potential harm. In one survey, 40% of respondents stated they’d be more likely to buy from a company if they agreed with the CEO’s position – but 45% said they’d be less likely to buy if they disagreed. In a different survey, however, as many as 93% of buyers said they were more likely to buy from the company when they agree with the CEO’s stand.

Leaders should be aware of whose opinions they’re likely to shift – and by how much. However, it’s also important to understand that the public response can be unpredictable and deeply divided. As one research team puts it: 

Figuring out whether opponents or proponents will have a bigger impact on the issue at hand – and on your company’s reputation – is typically more art than science today.

The stakes are certainly high. Over the past few years, several outspoken leaders (and the companies they helm) have faced significant repercussions – from social media storms, to consumer boycotts, to declines in stock price.

Another view is that business leaders shouldn’t venture into the domain of society and politics; rather they should confine their advocacy to corporate matters such as tax rates, economic policy and regulation. CEOs may also prefer not to speak out because they want to focus on other priorities, or because they don’t want to become a target. These are understandable reasons, but leaders should be aware that silence could be viewed as tacit approval, especially in the age of social media. A blanket refusal to take a stand on any issues may draw questions from team members, consumers and the media.

When to take a stand

In this polarized and sensitive environment, leaders must identify the right time and right way to use their voice to shape public discourse.  It is important to be selective and not wade into every issue. Engage on issues where you are viewed as credible. Think about what difference you will be able to make and how. Where possible, back your voice with some concrete actions so that it doesn’t come across as mere, hollow words. Remember that this cannot be just your personal opinion – after all, you are representing your organization and your employees.

In their Wall Street Journal article, Professors Aaron Chatterji and Michael Toffel highlight three situations where business leaders should consider speaking up:

1. When it’s authentic.

Ensure that the issue reflects the company’s values or the CEO’s personal convictions, otherwise it might be perceived as a publicity stunt. A good example is Nike’s endorsement of Colin Kaepernick, the American football player who knelt during the national anthem in protest of police brutality. Being an athlete-centric company, Nike’s actions rang true. Yes, the ad did spark a backlash: there were calls for a boycott, people destroyed Nike gear on social media, and even the stock price plunged. The decline, however, was short-lived. A year down the line, the company recorded a US$ 6 billion increase in brand value and a 31% jump in sales.

Without an alignment between the cause and brand values, there is a risk of being accused of hypocrisy. The authors elaborate:

Speaking out calls attention to a CEO activist’s own company, and critics will point out if your company has the same problems you are railing against-say, racial and gender inequality-so be sure to practice what you preach.

2. When employees ask for it.

Research shows a growing correlation between CEO activism and workforce engagement. Corporate employees, especially millennials, are making themselves heard like never before. In 2018, employees at McKinsey raised concerns about the firm’s work with the US Immigration and Customs Enforcement agency, ultimately resulting in the contract being dropped. 

If there is an issue that a majority of company workers feel strongly about, the leadership should explore lending their support. Conversely, if a CEO takes a stand that doesn’t resonate with the workforce, they run the risk of alienating employees and undermining the culture of the organisation.

3. When it’s timely.

For those who like to play it safe, it’s tempting to wait until the storm has died down before weighing in. However, be aware that silence may be viewed as an endorsement and speaking up later might be a case of ‘too little, too late’. As the authors point out: 

If you are going to speak out, do so when the issue is at the top of your audience’s mind, when speaking out with moral clarity can actually make a difference. After all, no one remembers the 43rd company to sign a letter or the 15th CEO to speak out on a controversial topic.

The playbook for speaking out

For leaders who decide to take a stand, make sure that you understand the issue fully and why it matters to your organization. Here are five recommendations to do it better:

1. Map the impact.

Issues with wider public approval, like climate change, parental leave and education, are relatively easier to negotiate. By contrast, stepping into the political space or touching other contentious issues is tricky, which means leaders must weigh the potential benefits and repercussions. In their HBR article, the researchers mentioned above elaborate: 

As part of this assessment, CEOs should explicitly consider how their statements and actions will be received in a politically polarized atmosphere. A 2016 Global Strategy Group report shows that when companies are associated with political issues, customers view this connection through the lens of their party affiliation.

2. War-game the scenarios.

Predicting the potential impact allows leaders to take an informed decision on how to voice their views. The CEO can assemble a team (including corporate communications professionals) to war-game various scenarios and develop strategies to deal any potential backlash. This is the time to prepare thoughtful responses to those who will disagree. A solid plan is even more important when easy alternatives are available to a company’s products and services, which could result in an effective boycott.

3. Align with internal stakeholders.

A senior leader’s statement will inevitably be associated with their company – even if they insist that it is based on personal conviction. The reality is that you cannot separate yourself from the organisation you have chosen to lead and serve. Given this, it would be ideal for a CEO to consult with their board members, senior management and employee representatives before entering the fray. When there is broad consensus within the ranks, the path ahead is likely to be smoother.

Remember, though, that you will never achieve unanimous agreement – especially these days. Which is why it’s important for outspoken leaders to simultaneously create a culture of respectful disagreement. As LinkedIn co-founder Reid Hoffman says:

One of the challenges that a business leader in this environment faces is that not everyone in the organization holds the same political positions. To address this, leaders need to create the cultural norm that compassionate, smart, ethical people can disagree with each other.

4. Consider collective action.

There is strength in numbers. Working as a coalition mitigates the risk of backlash and makes it difficult for critics to target individual leaders. For example, more than 100 CEOs came together to sign an amicus brief against President Trump’s executive order on immigration.

5. Make a commitment.

Business leaders who are genuinely passionate about a cause should explore going beyond statements and symbolic gestures. Is this vision reflected in your own organisation? Are you willing to put real resources and effort behind it? Whether it’s gender quality, sustainability or social equality, corporate leadership should consider making a commitment to drive real impact, both within and outside their company.

As business leaders increasingly weigh in on the hotly-debated issues of the day, they are entering uncharted territory. Speaking out at the right time, and in the right way can ensure that you can achieve the desired impact and manage any fallouts.