CEO Activism Will Only Get More Ubiquitous

Michael Toffel, CEO activismWhat do CEOs have to know before speaking up on a controversial issue because it seems like it’s going to affect a lot of them, maybe not on the larger scale, if they’re not a Fortune 500 company, but maybe regionally?

Chatterji: First, they have to understand the issue, and that’s asking a lot of because these issues are coming at us so quickly. Issues, for example, the center of the North Carolina HB2 bill regarding transgender bathroom access. Many Americans forget CEOs these are new issues to learn about and grapple with. And so for CEOs, this isn’t their full-time job. They’re trying to run a company, not learn about all the different contentious, political social issues. But because they manage people and because they are seen as leaders, they’ve got to get up to speed on these issues.

The second thing is, you know, understanding the political context behind the issues and who’s going to be, thrilled and upset when they take a position. I think those are really important pieces of information. I think it’s harder and harder, as Mike said earlier on, to duck these issues. I think a lot of employees and customers are, you know, are basically now seem to be interpreting that silence as assent to the status quo or lack of authenticity. And so I think the choice of CEOs to get to speed on the issues is probably the only one. Now, speaking out on them or not, it kind of depends on the situation.

I also think we can’t hold CEOs too much to blame for not being prepared for these issues. I mean, imagine if every new issue that came about, I [put] a microphone in front of you and [asked] you to have an opinion on it, right away, to be broadcast to hundreds of thousands of people. That’d be a tall order.

How do you see the CEO activism issue changing over time?

Toffel: Two things. One is, I think that the ubiquity of this is going to rise as CEOs and employees see other CEOs engaging in CEO activism and not suffering the worst consequences that might be imagined or a huge backlash.

The other is I think there’s going be continued surprise backlashes emerge. And I’ll just give two examples. My sense is when Delta decided to discontinue its discount program for NRA members to get to the NRA conference, I believed its intention was to take a neutral stance and not be seen as favoring one side or the other in the debate.

It was an interpreted in a very different way. It was interpreted as Delta is moving away from NRA and taking sides. And I don’t know if Delta anticipated that. Maybe they saw that as a risk, but it seemed like the response was not commensurate with what they had intended. And I think there are going to be more examples like that. There’s another example during one of the early Trump immigration pronouncements where there were protests at JFK airport [in New York].  Uber said, “We’re not going to do surcharges because we don’t want to be seen as exploiting the situation.” Others interpreted it as an attempt to take away customers from taxis, who weren’t willing to cross the picket line. So their intent was received and then rebroadcast in a way that was quite different.

Because CEO activism is sometimes going to be misinterpreted, companies can do some groundwork ahead of time to prepare for that, to help their CEO maintain credibility that they are taking the issue seriously. This could pay dividends later. This is to say, it’s hard to know where these things are going to go, and I think we’re going learn a lot as we see more of these unfold.