CEO Activists Reap Rewards; But Not Without Incurring Risks

Thursday 23 June, 2016

NEW YORK – Nearly 40 per cent of American adults believe that CEOs have a responsibility to speak out on hot-button issues, according to a new survey, “The Dawn of CEO Activism,” released today and commissioned by global communications and engagement firm Weber Shandwick in partnership with KRC Research.

However, the survey also showed that chief executives need to show caution with the topics about which they choose to speak out on, as three in 10 (32 per cent) of those adults have a less favourable opinion of CEOs who speak out on issues that are not tied to their companies’ respective line of business. With CEO activism in its early stages, companies and their leaders need to proceed with a healthy dose of caution if they engage deeply on issues that are squarely and controversially in the public realm.

“As more CEOs begin to take public stands on current hot-button issues, we wanted to take the pulse on where Americans stand on this revolutionary shift,” said Micho Spring, chair of Weber Shandwick’s Global Corporate practice. “We gathered data to better counsel companies on how to engage and protect their brand health and reputations.”

CEO activism has at times been very effective. In the past year or so, a number of CEOs have spoken out about social and environmental issues such as climate change, income fairness, same-sex marriage, immigration, gun control and discrimination – all issues that are not necessarily tied to the bottom line.

This onrush of public announcements has been so evident that one CEO declared a “third [political] party emerging in this country, which is the party of CEOs.”[1] Such activism by America’s business leaders has the potential to shape not only the reputation of CEOs but also that of their companies and the likelihood that consumers will buy or not buy their brands.

Activism Encouraged But Not Always a Plus 

As noted above, a sizeable segment of Americans (38 per cent) believe CEOs have a responsibility to speak out on hotly debated issues.

The belief that CEOs carry such a responsibility is most likely to translate to favourable opinion toward CEOs who do speak out. When respondents are asked their opinion of CEOs who take public positions on hot button issues, the scales tip in favour of the CEO (31 per cent more favourable vs. 22 per cent less favourable). Yet, when the issues are not directly linked to a company’s bottom line, the reverse is true and Americans feel less favourable (32 per cent less favourable vs. 20 per cent more favourable). Favourability is thus dependent on how strongly an issue’s link is to the bottom line, the data showed.

Favourability toward CEOs Taking Public Positions on Hotly Debated Current Issues

(% Total Americans)

Opinion of CEOs who take a public position In general When issue is NOT tied to company business
More favourable 31% 20%
Makes no difference 34% 32%
Less favourable 22% 32%
Don’t know 13% 16%

CEO Activism Influences Purchase Intent

A CEO’s stance on controversial issues can also work for or against the company when it comes to sales. While four in 10 Americans (40 per cent) say they are more likely to buy from a company when they agree with the CEO on an issue, a comparable segment (45 per cent) say they are less likely to buy if they disagree with the CEO’s position. Since a CEO’s external stance may affect behaviour as basic as buying a product, companies need to have a firm understanding of the attitudes of key customers and other stakeholders before CEO activism goes public.

Americans Unsure of Motivation

The public does not fully credit CEOs’ motives for taking public positions on hotly debated issues. Americans believe the top reason for CEO activism is “to get media attention” (36 per cent). Four other reasons tie for second place with 21 per cent of respondents saying each of the following: “to build a CEO’s reputation”, “to sell more products or services,” “to be open and honest about how the issue aligns with company values” and “to be open and honest about how they personally feel about an issue.” Among these top five cited reasons, only the last two demonstrate trust in CEO activism motives. Adding to the skepticism, only 14 per cent cite “to do what is right for society” and fewer (11 per cent) cite “to speak up on behalf of the company’s employees and customers.” At the bottom of the list is “to attract and retain the best employees” (7 per cent). Clearly, if CEOs want to signal that the well-being of employees is at the heart of their activism, their message is not resonating loud enough.

(Note: Respondents were permitted to select multiple reasons and therefore the results add to more than 100%.)

Media attention, of course, may not necessarily be a total negative since activist CEOs are attempting to bring attention to an issue that they wish to influence and about which they feel passionately. Still, many Americans think that CEOs speak up out of self-interest, whether it be seeking media coverage or building personal reputations. CEOs need to make their rationale for participation in this type of public dialogue crystal clear in an attempt to alleviate such doubts about CEO motives.

According to Weber Shandwick’s chief reputation strategist Leslie Gaines-Ross, “As the world grows more complex, polarised and politically-charged, our research provides an early roadmap for CEO activists to consider when speaking up on pressing societal issues. It is understood that CEOs have to carefully balance many constituencies but they will find themselves increasingly in the spotlight as they try to make a difference in a world that requires them to stand up and be counted. This new strain of CEO activism requires leaders to articulate their positions in a straightforward, unambiguous and meaningful way in order to be fully understood.”

Millennials Are On Board More

Millennials (18-35 year olds) are the generation more inclined to favor CEO activism. They are more likely than other Americans to be aware of CEOs having taken public positions on controversial issues, to feel favourably toward CEOs who speak out, and to say that they will buy from companies whose CEOs take a public position they agree with.

For companies looking to appeal to the next generation, CEO activism might just be the right course of action.

Generational Attitudes toward CEO Activism

(% Total Americans)

Millennials (18-35) Gen Xers (36-51) Boomers (52-70)
Have heard/read about CEOs taking public positions on hotly debated current issues 39% 33% 29%
Are more favourable toward CEOs taking public positions on hotly debated current issues 35% 29% 27%
Would be much more likely to buy from company whose CEO takes public position on issue you AGREE with 46% 40% 35%

Guiding Principles for CEO Activists

Without a doubt, companies and their leaders need to deliberate whether to speak out on controversial issues of the day and to decide which issues should be addressed. Weber Shandwick’s report provides 12 guidelines for leaders and their companies to consider. Following are several rules of the road:

  • Recognise that CEO activism is an emerging dynamic that is only going to increase as CEOs become more deeply engaged in the new world order.
  • Carefully evaluate the impact of the CEO’s stance among key stakeholders.
  • Establish a link between the issue and the company’s values and business.
  • Consider employees. Assess how it will impact them and gauge their support. If some employees disagree with the CEO’s stance, will they feel excluded, less productive, less loyal?
  • Look in the mirror. Make sure there are no skeletons in the closet related to the issue. This is a good time to put one’s house in order.
  • Consider the channels, messages and tone of voice used. Ensure that the reasons behind the public stance are clearly and transparently articulated and voiced over time, not just one time when the issue first appears in the news.
  • Have a crisis preparedness plan ready for a media, stakeholder or social media backlash.

Click here to access The Dawn of CEO Activism report.

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About the Research

The Dawn of CEO Activism was an online survey commissioned by Weber Shandwick and conducted by KRC Research. The survey sampled 1,027 U.S. adults 18 years of age and older and interviewed them in May 2016.

[1] Salesforce CEO Marc Benioff, CNN, June 12, 2015