Guidelines for Taking a Stand on Social Issues

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Before speaking out on an issue, make sure it has an impact on company business.

From time to time, companies are called upon to take positions on contentious matters that do not reside within the scope of their principal business affairs. Such issues might include support for a particular political candidate, gun control, a military conflict, the role of the states as opposed to the federal government and Roe v. Wade. Engaging in such debates will almost assuredly generate criticism and possibly economic retribution by at least some combination of the firm’s shareholders, customers, suppliers, employees or even regulators. Unfortunately, not engaging may also produce problematic effects. In general, the best practice under these circumstances is not to engage in debate on noncore business issues. Regrettably, this may not always be possible, particularly in matters of an ethical or moral character.

It is useful for a company to have an established policy for engaging in such issues before — not after — they arise. One possible set of guidelines that can serve as a foundation for that policy is as follows:

  1. The matter at hand should have at least some direct, significant impact on the company’s business.
  2. The company, based on its expertise, should be able to add value to the debate.
  3. It should be clear on whose behalf any expressed opinion is, or is not, being offered (e.g., the company via its board).
  4. The position should be solidly grounded in fact.
  5. A substantial majority of the board should support whatever position is taken.
  6. If a moral or ethical issue is involved that is of such magnitude that remaining silent is simply not an option, irrespective of compliance or noncompliance with the abovementioned criteria, the company should be prepared to accept the consequences that may result.  
  7. By taking a position and reversing it under pressure and absent new facts, a board can ensure that no constituency is left unalienated.

Seldom will there be a laser-like line against which to judge each of the above criteria. Shades of gray will be more common. Consider the case where a company is the sole supplier of a medicine essential to sustaining the lives of a number of children in a country with which the company suddenly finds its own nation at war. Should the firm continue to provide such medicine? If the government of the company’s nation passes blanket legislation making it illegal to provide goods or services to the adversary, what should be the company’s position after having sought and being denied an exemption from that law?
 
As difficult as such questions may be, the globalization of business further complicates matters in that shareholders, customers and employees may well reside in countries that embrace positions, or even laws, that conflict with those of the company’s “host” nation.

Norman Augustine is retired chairman and CEO of Lockheed Martin and a former member of the board of directors of ConocoPhillips, Black & Decker and Procter & Gamble. The views expressed in this article are those of Mr. Augustine in his personal capacity.
 

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