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CEO activism is a dangerous game

Tue, 9th Oct 2018

Time was when trying to get CEOs to talk about anything more controversial than last year’s profits or the new marketing campaign was like drawing teeth. Even on matters that affected them directly, like tax or budget changes, they preferred to let their organisations ventriloquise for them. But that is changing – not so much in the UK (where even Brexit and Corbyn’s worker-share proposals have failed to evoke more than a few strangulated yelps from the nation’s boardrooms) as in the US, where a recent wave of ‘CEO activism’ has caused excited comment.

Several factors are driving the phenomenon. On one side, in a bitterly divided post-trust world, the demand for figures able (or at least willing) to supply answers to existential questions has never been more intense, especially among needy, brand-conscious younger employees – which puts their CEOs squarely on the spot. Who, on the supply side, are increasingly pleased to step into the spotlight – partly because they feel they have an undeniable right to strong opinions on controversial issues, and perhaps more cynically because they are confident of reaping the rewards in terms of exposure and lobbying influence available to those able and unsqueamish enough to exploit an increasingly competitive celebrity culture. Whatever the reasons, over the last two years CEOs have become ever bolder in speaking out on issues including immigration, the environment, gun law, LGBT rights, inequality and race and gender relations, to name the most prominent.

They could plausibly argue that they have little choice. In the world we live in, controversy is unavoidable. Yet it is uncomfortable, even dangerous territory. As too many have come to realise, the first law of celebrity is that it is as easy to die as to live by. In the age of social media, a reputation can be, and often is, swept away by a twitterstorm overnight. Ask Elon Musk, Travis Kalanick, Elizabeth Holmes at Theranos. United Airlines only survived the ‘unfortunate incident’ when it brutally removed a doctor on an overbooked flight from Chicago by making a grovelling apology and paying an undisclosed sum in compensation, sacking two officials and upping the offer to passengers willing to give up their seat from $400 to $10,000. To state the obvious, high-profile CEO interventions come with consequences, sometimes costly, first and foremost for direct stakeholders and rippling out for the wider society. In turn, that requires them to weigh those consequences carefully – which only gets them into even deeper moral waters. Calculating relative costs and benefits of standing up for a cause for, say, shareholders and society is not only difficult – even in the unlikely event of it being clear cut, it is a hopelessly unreliable guide to action. As John Kay (for the record, an economist) helpfully put it, ‘ethics is about what you to do when good behaviour and profitable business are not necessarily the same thing.’ Damned if you do; even more damned if you don’t.

There is an even more dangerous side to CEO activism, however – and it is playing out in front of us every day. It’s a fairly small step from activism in public affairs to wanting to shape or even control them (that’s surely the point). For where this can lead, look no further than the US White House, the antics of whose current occupant suggest that the direct import of business into government makes for explosive, possibly nuclear, results. The temptation to wish Trump out at any cost is strong; but is the prospect of the only viable opponents consisting of other businessmen (Bezos, Zuckerberg, Bloomberg, anyone?) much more enticing? Giant companies and the very rich already have much too much sway, both direct and indirect, over our lives. What we need is a straight alternative to the money- and profit-centric view of life that has got us in the current mess, not just a less voracious version.

The irony is that there is one obvious area where CEO activism would not only be welcome but that we have been awaiting in vain for years. It is an area that, unlike many other topics, business is uniquely well qualified both to speak and act on – and it would benefit everyone, not just sectional interests. Give up? It’s business itself.

Long before the Great Financial Crash in 2008, it was clear to everyone not wearing earplugs that the tocsins were ringing. Shareholder value maximisation, that simplistic and treacherous mantra, was a corrupt, busted flush, benefiting only chief executives loaded with share options and hedge funds that take no thought for the health of the overall system. In an angry review of Deborah Hargreaves’ ‘devastating’ take-down of executive pay, Are CEOs Overpaid?, Margaret Heffernan, herself an entrepreneur and business leader, charges that the real failing of the current generation of Anglosphere CEOs is not, as so often posited, greed. She writes: ‘I’m not sure chief executives are merely greedy. What I’ve seen, in the US and UK, is more disheartening than greed. These men — and they are mostly men — are not leaders but followers. They are afraid to step out of line and set a better example. Instead, accepting their huge salaries, they hide behind an old, discredited alibi: everyone’s doing it.’

Coming out for minorities is well and good, but away from the public eye many of those worst treated are toiling within the firms that CEOs speak for. From rock ‘n’ roll to grunge, commerce has always been quick to spot the possibilities in coopting rebellion – see Nike’s recent ‘Just Do It’ ad campaign featuring Colin Kaepernick, the mixed-race American footballer who first initiated the practice of black players kneeling during the national anthem as a protest against racial injustice. For Nike, causing controversy was part of the point. CEO activism could, and almost certainly will, be read as something similar: cynical virtue-signalling or personal brand advertising, unless it is first deployed to put their own damaged house in order. 

 


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