By David Bach, Professor of Strategy and Political Economy, Dean of Innovation and Programs, IMD
Against the backdrop of the Black Lives Matter and #metoo movements, and with changing consumer, employee, and investor attitudes, business leaders have come under increasing pressure to take public positions on often-contentious social, political, or environmental issues, and to explain the impact of their companies on the world.
According to insights gleaned from our interactions with CEOs ahead of the 2021 IMD CEO Roundtable, which brings together leading, international executives to confidentially compare notes on today’s complex challenges, over 90% believe that the pressure to speak out on hot social or political topics has increased significantly over the past five years. CEOs cited customers, employees, and government officials as the stakeholders putting the most pressure on business leaders to speak up, while describing conversations with investors as the most challenging.
The rise of the “political CEO” has been well documented, not just as an American phenomenon in response to the disruptive Trump presidency but also as a trend in Europe and elsewhere. More and more, CEOs are asked to explain their personal position and/or their organization’s stance in response to a pressing issue or to affirm company values under close scrutiny.
While almost 80 percent of CEOs we surveyed make such statements, about 30 percent feel uncomfortable doing so. On the one hand side, CEOs are aware that – almost inevitably – some stakeholders will feel put off by a particular stance. After all, if there were society-wide agreement, there would be less interest in knowing where business leaders stand in the first place. Secondly, CEOs may hesitate because they know that their company’s track record – say on gender equity, gay rights, or climate change – may not back up a bold public position taken in the company’s name.
For instance, when peak attention focused on the Black LivesMatter movement in the summer of 2020, some executives were criticised for jumping on the diversity and inclusion bandwagon by making lofty statements about their approach to equality, while lacking the evidence to back up those statements. Even worse, some CEOs got contradicted publicly or via social media by their own employees, current or former.
At the same time, about three-quarters of CEOs said that corporate purpose, the impact of the company on society, and the future of work have become very important topics of discussion both inside and outside the organization, thus requiring business leaders to speak about them more often. In fact, roughly nine out of ten CEOs reported they were talking more about purpose and impact than they were just two years ago.
While leaders acknowledged the need to speak authentically and from the heart, there is nevertheless abundant evidence that CEOs are deliberately bolstering their firms’ communications capabilities and seeking advice from experts to cope with a highly volatile environment. Indeed, almost 70 percent of CEOs say that the importance of corporate communications has increased in the past five years, although fewer than four in ten said that their chief communications officer is part of their executive committee. At the same time, 80 percent of CEOs told us that they are allocating significant resources to understand the concerns and views of external stakeholders and what might become relevant for their companies in the future.
When it comes to finding their voice, our outreach found that CEOs tend to consult with executive committee and board members, alongside self-reflection, indicating that internal alignment remains a prerequisite for effective engagement in societal debates.
This data was based on an informal questionnaire shared with participants of the 2021 IMD CEO Roundtable.