In this new information-saturated era, new terms such as CEO-activism are slowly being introduced into the corporate world.
Said term is a growing trend which is experimenting an increasing demand as social issues gain importance in the eyes of stakeholders.
Today, it is vital for businesses to acknowledge the importance of factors like corporate responsibility on reputation, and how the latter greatly influences overall corporate success.
What is CEO-Activism?
CEO-activism refers to the active involvement of corporate leaders in pressing social issues which are not directly related to corporate interests.
Why is CEO-Activism important?
Not only is CEO-activism an increasing corporate trend, it may also be a determining factor in all aspects regarding the success of a company.
- The increasing social awareness regarding social injustice, equality and climate change among many other issues has led stakeholders to demand a more active role from companies.
The overwhelming service offer drives the indecisive consumer to choose companies that offer a strong added value paired with a solid corporate reputation.
- Social media exposure has virtually eliminated the previously insurmountable distance between the public and the CEOs, to the point that their actions and comments can make or break corporate reputation.
- General mistrust in corporations, exacerbated by the financial crisis in the late 2000s and early 2010s makes all stakeholders wary of corporate decisions and intentions, which may only be counteracted with strong corporate values backed by tangible actions.
- Talent attraction can be closely linked to CEO-activism. This is especially true in an economy with a growing need for young talent, most so-called millennials, who claim they would seek employment in a company in which the CEO has been verbal and supportive of social issues over one whose CEO has remained neutral.
“A company cannot achieve long-term profits without embracing purpose and considering the needs of a broad range of stakeholders.”
-Larry Fink, Chairman and CEO, BlackRock
Keys to successful CEO-activism
- CEOs as a driving force for change: Audiences firmly believe that corporate leaders have a major influence on several aspects related to social issues, namely equal pay, the environment, discrimination, etc. In addition, a CEO’s speaking out may have a long-lasting positive effect on the company’s corporate reputation.
- An advocate with expertise: It is crucial that corporate leaders try to tackle issues while offering their extensive knowledge as corporate experts. This renders the message more credible and indicates a deeper involvement in the eyes of stakeholders.
- Consider all audiences: CEO-activism efforts, although they may prove beneficial for sales in the long-run, they must not be treated nor regarded as a marketing strategy. These should be devoted to better relationships with all stakeholders, from suppliers to consumers to the staff; thus aiming to better overall corporate reputation.
- Selfless yet corporate: It is essential that whatever the chosen issue is for the CEO to speak out on, it may not be directly related in any way with the company’s economic or political interests. However, these should be in line with the corporate values of the company, as stakeholders trust coherence and consistency.
- Measure, measure and measure again: According to a report by KRC Research and Weber Shandwick, how a CEO is perceived accounts for 45% of corporate reputation on average. Thus, CEO reputation must be tracked periodically through social media such as Twitter and Facebook, as well as corporate-oriented ones like Glassdoor where employees tend to be the most vocal.
In a corporate world marked by uncertainty and a relative mistrust in corporations, companies can no longer ignore the dire need for actions like CEO-activism, which pertain to corporate responsibility. This soaring trend has become especially relevant with the introduction of social media, which has led to a tighter perceived association between CEO and corporate values. Thus, in the absence of CEO-activism, a corporate leader’s failure to speak up on an important matter may imply a perceived indifference from the company concerning said issue. All in all, CEO-activism might be one of the keys to remain relevant in a corporate world where marketing strategies alone are deemed insufficient and the stakes are driven more and more by corporate reputation.
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