President Disbands CEO Advisory Boards in Wake of Resignations

For CEOs the question was to speak or not to speak. For business, the question is what happens next?
Trump holding a policy forum with business leaders in February

While President Donald Trump said that the move to disband his American Manufacturing Council and Strategic and Policy Forum CEO advisory boards was intended to relieve CEOs of political pressure, it also stopped the rash of resignations from the boards from further fueling the headlines.

In addition, finding top executives willing to insert themselves and their companies onto the councils to replace the seven who stepped down in the days following the president’s equivocal response to violent protests in Charlottesville, VA., could have been a tall order for Trump given the current political climate, despite Trump’s claim that it would have been an easy task.

“I think major CEOs do not want to court controversy. [Trump] could always fill them with some folks seeking grandiosity, but major players who before were fighting to join these councils are much more reluctant to jump into it now,” Jeffrey Sonnenfeld, Yale School of Management senior associate dean for Leadership Studies, told Chief Executive.

Merck CEO Kenneth Frazier was the first CEO to remove himself from the manufacturing council this week, citing Trump’s reluctance to denounce the actions of white nationalist hate groups in Charlottesville. Frazier was joined in the following days by Under Armour CEO Kevin Plank, Intel CEO Brian Krzanich, Alliance for American Manufacturing president Scott Paul, AFL-CIO president Richard Trumka, 3M president and CEO Inge Thulin and Campbell’s CEO Denise Morrison. Tesla CEO Elon Musk had stepped away from his seat on the council earlier this year after Trump announced the U.S. would withdraw from the Paris Climate Agreement.

“major players who before were fighting to join these councils are much more reluctant to jump into it now.”

Sonnenfeld said that there could be a number of factors behind the decisions of CEOs who publicly distanced themselves from Trump by resigning from the council.

“Lots of their constituents, whether that’s employees, customers or shareholders, are offended and alarmed, and for the CEO of a company that they are a part of or have relationship to, they think this is endorsing a failure to call out white nationalism,” Sonnenfeld said.

Other CEOs themselves found Trump’s actions (or inactions) to be a gross offense and unacceptable, given their responsibilities as a CEO.

“They think they are a pillar of integrity,” Sonnenfeld said. “The Edelman Trust Barometer for 2017 tells us that corporate CEOs are one of the most trusted information sources, and they take that platform seriously.”

For some of the CEOs who remained on the president’s advisory councils before they were disbanded, the situation presented a double-edged sword. Some of those who may have wished to voice their opposition to white nationalism and Trump’s words, feared the potential Twitter backlash from the president for resigning, as Frazier was called out on Monday. The president labeled CEOs who resigned from the council in the wake of the Charlottesville protests as “grandstanders” on the social media platform.

“[CEOs] are afraid of the tweet-storm, as this is the first president in American history who thinks he builds his power base by name-calling and divide-and-conquer. They’re afraid of being caught up in that battleground,” Sonnenfeld says. “You never want to get into a mud fight with someone who enjoys the mud.”

“CEOs are afraid of the tweet-storm, as this is the first president in American history who thinks he builds his power base by name-calling and divide-and-conquer. They’re afraid of being caught up in that battleground.”

Some CEOs with significant government contracts may also have feared that leaving the council could have resulted in the selective loss of government business. Others may have been looking to avoid customer boycotts, worried that by taking a political position they may offend Trump supporters.

“They are worried about not so much Trump’s tweet-storm alone, as much as they’re afraid of the larger blogosphere turning against them,” Sonnenfeld said.

Recent studies from PR firm Weber Shadwick and consulting group BSG, however, indicate that both employees and consumers now expect business leaders to be willing to speak out on social issues. BSG found that 90% of American consumers believe it is important for CEOs to take a stance on social and political issues, with 53% believing that it’s highly important. Weber Shandwick found that almost half of millennials polled believe CEOs have a responsibility to speak out on issues that are important to society, while 56% of those under 35 years old believe that business leaders have a greater responsibility now to speak out than in the past.

The CEO advisory councils were a focal point of Trump’s first few months in office, intended to show that the president was listening to the business community for ideas on how best to move forward, though the councils hadn’t met regularly in recent months.

“Trump has such enormous respect for the business community that he wants their ideas, and his positions will shift if you can talk it through with him,” Sonnenfeld says. “When he does listen, he can get a pretty good dialog going, as opposed to talking at them.”

Now, CEOs who support Trump’s economic policies but not the outbursts that are offending many are left hoping that the controversies surrounding the administration will eventually die down.

“What they’re hoping is that [new Chief of Staff] Gen. John Kelly will be more effective in muzzling the president and these morning tweet-storms, but as we see, it just continues,” Sonnefeld says.


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