CEO Activism Enters New Era

How important is the board's role?

By Eve Tahmincioglu

CEO activism has been in the news during the past few weeks, most notably with very public actions against President Trump’s travel ban.

In February, Apple CEO Tim Cook told The Wall Street Journal his company was considering taking legal action to have Trump's executive order reversed. And Lyft Inc. Co-founders John Zimmer and Logan Green denounced the ban and announced they were donating $1 million to the ACLU in a letter sent to users. 

The recent CEO activism constitutes a sea change for management, companies and boards, says Leslie Gaines-Ross, Chief Reputation Strategist at Weber Shandwick, a public relations firm that works closely with management. The firm analyzed the recent brouhaha over the temporary travel ban executive order signed by Trump in late January and how CEOs at major corporations reacted.

The firm found 153 reactions through Feb. 28, and of those:

  • 84% were issued by CEOs
  • 73% voiced a clear, definitive opinion against the ban
  • 48% took action beyond issuing a statement (e.g., donated to charity, non-profit or filed legal documents)

Such social stands started to pop up about a year ago with CEOs speaking out against anti LGBT laws and following national racial tensions, says Gaines-Ross.

Clearly top executives see a role they can play making their voices heard on political issues, especially when they see a potential impact on their businesses. But CEOs on soapboxes shouldn’t happen in a vacuum and without input from the company’s board of directors, Gaines-Ross stresses.

“It’s great to vet it with the boards,” she advises, but “I wouldn’t leave it at that. You really need to vet it by employees and customers before you take a stand on any kind of social issue just to be safe.”

One example is Starbucks’ “Race Together” snafu in 2015. The coffee giant decided to weigh in on the race debate by having their baristas write “Race Together” on coffee cups as a way to get customers and employees talking about the contentious issue. The campaign became a laughing stock on social media, driven largely by customers who saw it as ill-advised for a number of reasons, including creating awkward situations when trying to grab a quick cup of Joe and head to work.

In that scenario, Gaines-Ross points out, the board members were indeed part of the planning process.

When taking such stands, she adds, there are risks and rewards. “It’s not just ‘oh yeah, this is so great.' You have to be careful you don’t alienate your customers and employees because not everyone agrees with you.”

She offers some tips to keep in mind:

  • Make sure the board is briefed early on regarding any potential management activism.
  • Be cognizant of who your customers are so you know the chance of both backlash and buy-in.
  • Look in the mirror when it comes to diversity. For example, don’t make a statement about gender equity if you don’t have women on your board.
  • Find partners, a trade association for example, and find out what your peers are doing.

In the end, most companies and CEOs will have to make their voices heard, Gaines-Ross says, especially if keeping the best talent it your goal.

“Employees are sitting and waiting to hear something,” she explains. “There’s a lot of pressure today to speak up on certain issues that really impact human rights.”