CEO activism – a new generation of leader
The role of a CEO, the highest-ranking executive in a company, has traditionally been defined as having the primary responsibility for major corporate decisions, managing the overall operations and resources of a company and acting as the main point of communication between the board of directors and corporate operations.
Over the past few years, the role has evolved to encompass so much more than this. The modern-day CEO is a leadership figure who not only navigates an organisation though strategic, operational and financial challenges but also plays an increasingly important part in proactively managing a brand’s reputation and protecting a brand during a crisis.
A recent report by Weber Shandwick and KRC Research, titled “CEO Activism in 2017: High Noon in the C-Suite” measured people’s attitudes towards the trend of CEOs speaking out on hot-button social issues. According to this research, 47% of millennials (ages 18-36) believe CEOs have a responsibility to speak up about issues that are important to society. Only 28% of Gen Xers (ages 37-52) and Boomers (ages 53-71) agree. Millennials also see this as a growing responsibility —56% say CEOs have a greater responsibility today to take a stance on key issues than they used to. Considering the current and future buying power of this generation, it would be wise for organisations to heed their views.
Some CEOs still choose not to speak out proactively on key issues, or decline to be interviewed in the aftermath of a crisis. And there is now evidence that with silence comes risk. Enter CEO activism. Nearly 50% of Americans say that CEOs who do not speak out risk criticism, whether from the media, customers, employees or government. And 21% say silent CEOs risk declining sales.
But it’s not just about saying something; it’s about saying the right things at the right time. In March 2017 United Airlines CEO Oscar Munoz was named US communicator of the year by the magazine PR Week. Just one month later, his company’s poor response to a customer incident turned into a PR disaster and caused its stock to drop a dramatic US$1bn in value. It even placed the entire airline industry under the microscope. Social media demonstrated its power to turn an isolated incident into a global PR catastrophe overnight. There was a definite expectation that the CEO would play the role of chief communicator. And so, in an ironic twist, a man recently named communicator of the year fell from grace, at first for saying the wrong things and later for changing his story.
Interestingly, 51% of millennials would be more likely to buy from a company whose CEO spoke out on an issue they agreed with, which is an 11% increase from 2016. In the financially cutthroat environment where so many companies operate today, a credible and visible CEO who is seen to be proactively engaging stakeholders on key issues can contribute to share price movement. And during a crisis, a CEO who is not afraid to address the burning issues – whether his company is at fault or not – can mitigate negative publicity, maintain stakeholder confidence, protect investor interests and potentially even contribute to share price resilience.
Consider the Ford Kuga scenario of cars catching fire. Stakeholders expect CEOs to be visible and approachable during a crisis. They are expected to (1) acknowledge the situation; (2) set the record straight and clarify any facts, and (3) disclose what is being done about what took place and how it will be prevented from happening again. There is an expectation in such situations that the CEO will be the face of the issue. In the Ford Kuga case, the communication was largely aloof and unsympathetic; information was shared only when the company was pushed to do so; there was a disconnect between the brand and its customers; and there appeared to be almost no ongoing brand risk assessment to address real issues in real time.
CEO Activism also has many staff benefits, and should be regarded as a critical element of any robust internal communication strategy – 44% of full-time millennial employees say they would be more loyal to their company if their CEO took a public position on a hotly debated current issue. When you consider the cost of staff recruitment and the loss of intellectual property due to staff turnover, this has some tangible financial implications.
On the staff engagement front, CEO activism must include elements of the employees’ voice. It’s not just about getting the CEO on a road show to tell staff about the big-picture strategy. It’s about proactive dialogue and mutual engagement.
Some may argue that CEOs already have too much on their plate. They may be right. But the reality is simple – driving reputation is no longer an optional portfolio for a CEO, as a business’s number one, in 2018.
• Daniel Munslow is a director of MCC Consulting.