Americans have become accustomed to chief executives offering their views on political issues, but rarely do they witness the scenes that played out last weekend. Within hours of President Trump ordering a 90-day halt on travel to the United States from seven predominantly Muslim countries, CEOs — primarily in the tech industry — began criticizing the new president.
Netflix CEO Reed Hastings called the executive order “un-American,” and predicted it will make the country “less safe.” At San Francisco International airport, Google cofounder Sergey Brin joined in the protest, declaring: “I’m here because I’m a refugee.” (Brin was born in Russia; his family immigrated in 1979. He noted he was participating in the protest personally, not representing Google.) And Starbucks founder Howard Schultz called the move an attack on human rights and the American Dream — and pledged that Starbucks would hire 10,000 refugees over the next five years. By the end of the weekend, companies including Google and Lyft had pledged to donate millions to the American Civil Liberties Union. As the new workweek began, a second wave of companies, including JPMorgan Chase and Goldman Sachs, began issuing memos decrying the new administration’s restrictions on immigration.
For CEOs and their communications teams, deciding when, whether, and how to speak out against a policy they object to can be a challenge — and less than two weeks into the Trump administration, it appears companies will face these dilemmas more frequently.
Research into the effects of CEO activism points to a balance of risks and rewards.
A recent study by Aaron Chatterji of Duke University and Michael Toffel of Harvard Business School examined how consumers responded to Apple CEO Tim Cook’s opposition to a proposed law that would discriminate against LGBT people in Indiana, in the U.S. The results showed that purchase intent rose or fell based on whether customers agreed with Cook’s position. (In the experiments, the positive sales effect outweighed the negative impact; in the real world, it’s difficult to determine how consumers actually reacted after Cook spoke out against the Indiana law in early 2015, because Apple’s sales are driven by factors including seasonality and new product launches.) The researchers write: “When CEOs take public stands on controversial issues, they can galvanize support for their company from those who share the same viewpoint… [and risk] alienating consumers who disagree.”
Another study, an online survey conducted in 2016 by Weber Shandwick and KRC Research, found that consumers are more likely to approve of CEO activism when the issues involved are directly relevant to the company’s business; that Millennials are more supportive of activist CEOs than other generations; that a CEO’s political statements can affect purchase intent; and that many Americans believe that CEOs who take political stands are doing so primarily to get media attention. Writing about the study in HBR last year, Leslie Gaines-Ross, Weber Shandwick’s chief strategist, stated: “In order to reap the benefits and mitigate the risks, companies have to better understand the attitudes of internal and external stakeholders when it comes to controversial issues… [and] clarify how they relate to the company’s values and business.”
In the reactions to the travel ban, Toffel sees nuance in exactly how CEOs are voicing their disapproval of the policy. Some companies, such as General Electric, have issued fairly narrow statements that express “concern” and focus on how the new policy will disrupt their employees who travel globally. Other CEOs have gone much further, attacking the policy in moral terms. In one series of tweets, for instance, Marc Benioff, founder and CEO of Salesforce.com, paraphrased from the Gospel of Mark (“When we close our hearts and stop loving other people as ourselves, we forget who we truly are — a light unto the nations”); in another, he offered the simple line “I’m with her” adjacent to an image of the Statue of Liberty.
“Some CEOs are making a practical argument, some are making a moral argument, and some are combining them,” says Toffel, who’s currently working on a research-driven framework that will help CEOs think through the complexities of voicing political views. Toffel noted that beyond the statements’ content, the way they’re distributed sheds light on how out-in-front a CEO wants to be on the issue. Among CEOs who are opposing the ban, many of them (especially at nontech companies) did so with internal memos to employees that were released to the media. This is a quieter way of sending the message than directly tweeting to the public.
On the surface, speaking out against a travel ban that seems to target Muslim immigrants (and that a federal judge quickly tried to pause, due to Constitutional questions) might seem a low risk. Can you think of any other issue that Dick Cheney, Elizabeth Warren, the Koch brothers, and Dale Earnhardt Jr. all agree on?
Despite that range of support, companies still face risks in speaking out. “I don’t see this as a no-brainer — there are many CEOs who are thinking deeply about how they want to register any concerns they have about the ban,” says Gaines-Ross.
There are at least three reasons many CEOs are treading cautiously. First, the Trump administration’s views on immigration are shared by millions of Americans. In a poll conducted in early January, 48% of respondents supported halting immigration from terror-prone regions, while 42% opposed it. (In the same poll, 53% support a registry for Muslims.) So a CEO who criticizes it risks upsetting a large segment of consumers who share Trump’s views, even if that CEO feels firmly in the mainstream by decrying a policy that has been called ineffective, counterproductive, and unconstitutional.
The second risk is that there’s so much emotion around this issue that people may react rashly, punishing a company before it’s even clear why. For an example of that, consider Uber. On Saturday night, as protesters gathered at New York’s John F. Kennedy International Airport, Uber tweeted that it was turning off its surge-pricing mechanism, which raises fares during periods of peak demand. A Twitter user misinterpreted the tweet as a move against taxi drivers, who’d briefly stopped service to protest the travel ban. (Uber’s announcement about surge pricing came out after the taxi strike was set to end.) Another person tweeted to point out that Uber cofounder Travis Kalanick is one of 18 CEOs on President Trump’s Strategic and Policy Forum. Soon the hashtag #deleteuber was trending and the ride-sharing service was in a defensive crouch — even though Kalanick has said he sees his meeting with Trump on Friday as an opportunity for “principled confrontation.”
Perhaps the biggest risk of criticizing Trump’s policy is, of course, the power and reach of the president’s Twitter account. Since his election, Trump’s critical tweets have (at least temporarily) drained billions from market value of companies such as Boeing and Toyota; trading houses are even setting up special trading algorithms to instantly trade based on the president’s social media barbs. Speaking on CNBC on Monday, Andrew Ross Sorkin, the well-connected New York Times reporter, said many of his C-suite sources are “scared out of their minds” at the prospect of Trump tweeting his rage against their employers, so they’re disinclined to criticize him.
Of course, there’s also a risk in not speaking out, though it’s difficult to quantify. The most obvious one is that employees who disagree with the travel ban (or broader elements of the new administration’s agenda) will lose faith in the CEO, decreasing morale and potentially increasing attrition. Some companies have already seen attrition or lost sales that are directly connected to the political views of CEOs or directors: In November a senior content strategist at IBM quit in protest after IBM CEO Ginni Rometty released a letter in support of the president-elect, and L.L. Bean received threats of a boycott after news came out that a board member had donated money to a pro-Trump political action committee.
With more companies speaking out on the travel ban by the hour, it’s difficult to assess how important a moment this will be in the history of CEO of activism. But it may be significant. The uproar over the ban “could be a tipping point,” says Gaines-Ross. “There’s going to be a groundswell of CEOs defending their corporate values and principles.”
They may have another opportunity to do so soon: According to some reports, the Trump administration is currently preparing a new executive order that takes aim at the use of H-1B visas to recruit high-skills workers to U.S. companies.
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