Best practices for companies with Activist CEOs
Recently, an article in Harvard Business Review by Professor Mike Toffel (Harvard Business School) and Associate Professor Aaron K. Chatterji (Duke University) called Divided We Lead came to my attention. In the conversation about the article that ensued during its HBR Webinar, people were clamoring for best practices for companies dealing with activist CEOs. This topic comes up frequently with my clients with Story Engage, so I thought I’d share what works for me across a variety of industries.
I think “best practices” are emerging now, and are 1. company by company: what works for Target won’t work for JPMC, for example. 2. ever-changing, the activist landscape is fast-moving and fluid #HBRWebinar
— Leslie Poston (@leslie) April 5, 2018
I’ve found it helps if companies build playbooks for possible outcomes fm CEO activism, anticipating a variety of things that could happen (boycotts, hacks, etc) and then anticipating the level of risk the company feels they can withstand, and how they might respond. #HBRWebinar
— Leslie Poston (@leslie) April 5, 2018
How do you know if your CEO is an “Activist CEO?”
For some companies, it’s easy to tell if you’ve got an Activist CEO because you are already dealing with the fallout from a stand they may have chosen to take on an issue. Recent examples like Target’s CEO taking a positive and inclusive stance on non-gendered restrooms come to mind. For others, your CEO may not be as prominent, but in this age of connectivity their views could still travel beyond your usual bubble. If your CEO (or a member of your Board, or another member of the C-Suite) decides to codify or enforce their stance on an issue as part of company rules or culture, you might have a budding Activist CEO on your hands. One example of this might be asking HR to add a policy of non-gendered bathrooms (like Target) to the employee handbook, or codifying a better environment for working parents to offer better feeding rooms, family leave, or daycare. Often, these are first steps towards being more vocal outside of the company (in interviews, on social media, etc.) regarding issues that the CEO feels are important. This is not (usually) a bad thing, as long as you are prepared.
Best Practices for Companies with Activist CEOs
- Hold a preliminary meeting about the company culture. Make sure the company is largely aligned with the CEO and Board’s viewpoints and values.
- Determine your acceptable risk level and use that to lay out a playbook of responses to various possible outcomes.
- Create a cross-functional team that will be empowered and prepared to act quickly in a time when an Activist CEO’s statements could go viral on and off line.
- Meet quarterly to continually revise the playbook and assess new areas of risk and new potential outcomes you may need to handle.
Too often, companies approach the inherent risk of a connected world where people communicate fluidly online from a place of controlling or silencing the employee (or in this case, the CEO). A better approach is to gather together people from your legal, HR, communications, marketing, sales, and finance departments and plan for how the reaction to a policy or statement could impact the company. This would be the preliminary meeting in item 1 above. Determine what risk your CEO and Board are willing to absorb to uphold the values of the company as espoused by the CEO, and how much pushback your bottom line can handle if your CEO wants the company to be a driver of change. For this conversation, it’s important to understand how consumer activism interacts with CEO activism as it pertains to your company.
Consumer activism is on the rise. Often triggered by an event in the news, consumers are more and more willing to use their wallets to make their views heard. You can see examples of this in recent campaigns to get major companies to stop giving discounts to NRA members from supporters of gun control, in various boycotts of companies who advertise on hate sites (often, the company isn’t even aware their ad is appearing on these sites!) or who place their ads on shows that espouse intolerant world views. As consumers become more and more savvy about banding together to put their wallets where their values are, your Activist CEO could get some pushback. Using marketing analytics and buyer data to understand how your customers interact with your brand (alternative uses for that loyalty card information goldmine you are sitting on) as well as surveying your customers about what’s important to them can give you a roadmap for how much risk to anticipate from various Activist CEO scenarios.
Once you understand how to align your values in your communications and have a fluid, easy to understand risk playbook in place, it’s time to activate a team empowered to respond to the outcomes of CEO activism. I can’t stress enough the importance of empowerment for this team. We’ve all had an interaction with a company that was so close to being resolved but was thwarted because the person who was charged with handling the situation did not have any authority to actually take any action to resolve it. This team should be comprised of people who meet certain criteria: in a place where they will see public activity around the company quickly, are high enough in the company food chain to make decisions, are embedded with enough cross-departmental connections to understand the impact of their decisions on others within the company, and savvy about the ways people use media (on and off line).
Once you have your playbook, your values, and your response team in place, run a few test scenarios. Treat this like disaster preparedness drills for your business. Have the CEO give a mock interview where they talk about their most deeply held values. Do a thought exercise and imagine every potential response to this from the public, positive and negative. Take each scenario and cross reference it with data you have on your customers. For example, if you know that 80% of your customers have behavior that indicates progressive views, then a CEO statement on gender neutral bathrooms will likely have less fallout for you than a CEO statement about not offering certain reproductive services in your company health plan anymore for religious reasons. Plan accordingly. Use the results of these drills to refine your playbook. Define guardrails for the team empowered to act on the company’s behalf, such as: at what point do they need to fall back and get the Board involved, what’s the baseline for a first response, what is the budget for monetary responses like refunds or recalls, what is the plan for social media response, where is the threshold of panic for loss of revenue.
Once you’ve had your meetings and gotten your ducks in a row, schedule quarterly meetings to keep everything on point and everyone in sync. Two things will help you through any crisis: constant open internal communication and keeping things simple. As long as you are staying agile and staying in touch, you’re ready for your Activist CEO’s next move.