Activist CEOs Walk a Reputation Management Tight Rope

More CEOs are speaking out on political and social issues, and the public is paying attention, new research reveals. Americans believe CEO activism will increase and more corporations will take stands on controversial issues. While many Americans have changed their purchase decisions due to activist CEOs, the public remains divided over whether corporations should take stands on important issues.

More Americans believe that corporations and activist CEOs can influence government policy, according to new research from Weber Shandwick and KRC Research.

“While most CEOs are not accustomed to participating in the political arena, they and their companies need to be prepared to navigate these uncharted waters, whether they remain silent or not,” states Weber Shandwick CEO Andy Polansky.

In the past year, CEOs have spoken up on issues such as climate change, gender pay equity, same-sex marriage, immigration, gun control and discrimination.

Highlights from the report CEO Activism in 2018: The Purposeful CEO include:

• 42% of Americans are aware of CEO activism, a significantly higher level of awareness than past years.
• 38% of Americans have a favorable opinion on CEO activism, up from 31% in 2017. A quarter say they have a less favorable opinion, and 37% don’t take a firm position.
• 48% think CEO activism has an influence on the government, up from 38% last year. Only 18% say it has no influence.
• 46% of consumers predict an increase in CEO activists in the next few years; just 13% expect there will be fewer.
• 39% of Americans believe CEOs have a responsibility to speak up on important issues; 42% disagree.
• 42% of consumers aware of CEO activism have taken action through purchasing behavior, usually boycotting (35%).
• Democrats are significantly more likely than Republicans and Independents to say companies should take positions.

Advice for CEO Activists

Weber Shandwick recommends that corporations and their CEOs:

Accept the expectation that CEOs have a role to play in influencing government policy.
Make company values crystal clear, both internally and externally, and be prepared to defend them.

Make sure your own house is in order before taking a stand.

Recognize that some issues are safer than others.

Make sure the organization clearly understands views of its employees. Taking a stand on a controversial issue may improve or harm employee loyalty.

The Double-Edged Sword of CEO Activism

The idea of taking a stand on controversial issues is itself a controversial issue. Some argue that brands can win loyal customers and increase sales. Millennials in particular are more likely to buy products from – as well as work for – companies if their CEOs take public stands on controversial issues impacting the company, according to previous Weber Shandwick research.

While not connected to its CEO, the recent Nike advertisement featuring Colin Kaepernick is an example of a company seeking to appeal to millennials through public advocacy on a controversial issue – in this case social justice. The ad resulted in a firestorm of both positive and negative responses on social media, including the burning of Nike products.

There’s no doubt that wading into social or political issues poses substantial risks. Companies may alienate half of their potential customers, warns J. Walker Smith, executive chairman of The Futures Co., part of the Kantar Group of WPP, in Marketing News. Some think brands’ political stands can increase sales by strengthening loyalty of core audiences. However, loyalty does not increase a brand’s sales since loyal customers already regularly purchase its products. Instead, brands grow by gaining new customers.

Although public relations and marketing departments may believe they understand their audiences, predicting how large numbers of people will react to sensitive issues is extremely difficult, Smith warns. Extensive research, including social media analytics, can help predict consumers’ reactions.

Bottom Line: CEO activism is clearly on the upswing, new research confirms. Consumers expect more companies to take stands on controversial issues and believe that corporations hold increasing influence over government policy. However, a corporation that takes a stand may walk through a minefield and alienate many customers.