CEB Blogs


Management Trends

Populism Unleashed: 5 Steps for Business Leaders to Shape a Healthy Society and Boost Performance

A disaffected and divided society is a far greater threat to the success of business than hostile activists, weak economic growth, or technological disruption

Across the past six months, one topic has steadily dominated business executives’ conversations: the rising tide of populist sentiment that has propelled the Trump (and Sanders) campaigns in the US, and the Brexit “leave” vote in the UK. Despite leaders’ perceptions (or perhaps desire) that this new wave of emotion would be temporal, the electorate has once again demonstrated that these feelings are nothing if not deeply rooted and strongly held.

While it would be silly to characterize these three movements as the “same thing,” all three share some similar themes, most notably a suspicion of trade and immigration policies that opened borders to movement of goods and people. Moreover, this suspicion was rooted in a sense that whole chunks of the population have been left behind as the twin forces of globalization and technology have foundationally remade work and opportunity. And corporations – by moving work around, optimizing tax footprints, and attempting to influence policy — are seen as part of the problem.

The broader perception that many people have been left behind in the era of automation and globalization is unquestionably rooted in fact. Big slices of society, in big chunks of the developed world, have seen real wages stagnate even as returns rapidly escalated in small pockets. Ultimately this creates both growing inequality in wealth and income and — perhaps more troubling — a sense that gaps in opportunity have widened.

The Risks of an Unhealthy Society

Most corporate leaders I talk to sense that this growing sentiment is a far greater threat to the success of business than hostile activists, weak economic growth, or technological disruption. They know that healthy societies – and trust in institutions and corporate brands – are vital to thriving organizations. And they all admit that they have been surprised by the impact this populism is having on policy debates and decisions.

With all the analytic tools, big data assets and social media targeting at their fingertips, most CXOs simply missed the depth of these feelings and the energy with which they have been unleashed.

The good news is that business leaders are starting to get it. CEB’s latest emerging risks survey indicated that the unpredictable political landscape in the US is now recognized as a top-five emerging risk among business leaders, ahead of cyber threats such as ransomware and Fed-related policy uncertainty.

Beyond simply recognizing that there is a problem, corporations are acknowledging that they need to take action. We’ve seen high-profile CEOs like Jamie Dimon and Howard Schultz prioritize paying all employees a living wage.

Following their lead directly may not make sense (or even be economically possible) for all leaders, but all of us can find ways to make changes that contribute to a greater societal—and by extension economic—good within the constraints of our P&L.

The hard news is that executive teams and corporate boards will face some difficult choices in the years ahead as they grapple to balance the needs of society with the demands of increasingly active investors. You can imagine a pretty crowded board docket as teams weigh optimizing tax efficiency against reputational risk from moving operations, or lowering costs and prices at the expense of jobs and wage growth.

Five Steps

Not all decisions need to be tradeoffs, however. There are a series of steps that leadership teams can take that both work to shape healthier societies and boost short- and mid-term performance.

  1. Rethink how, and how often, you communicate about strategy: It’s clear from the Brexit debate that corporate leaders were late to the game in articulating how access to global markets, access to critical talent, and free movement of capital helped their businesses thrive. (And how thriving businesses are the surest form of economic growth.)

    While being an advocate for your corporate strategy helps shape public perspective, it also (importantly) drives employee engagement and productivity. But Powerpoint isn’t the right tool here. Public messaging and internal frameworks need to focus on practical implications, like how ultimately a successful and responsible strategy well executed benefits the society the company serves, its team members, and its leadership.

  2. Find ways to identify, engage, and develop nontraditional labor pools: There is a bad news/good news story unfolding in corporate life. To the bad, there are roughly 5.8 million unfilled jobs in the US that corporate recruiters can’t hire for love or money.

    To the good (for the first time) we have real clarity about what skills are in demand at the micro-geographic level and we have the development resources to help people rapidly develop them. Accessing new labor pools both makes communities stronger and fills key roles more quickly.

  3. Measure and rapidly adapt the effectiveness of your training and development efforts: No company can promise lifetime employment, but we can all promise lifetime employability by focusing training regimes on the highest-value actions and ensuring that every assignment builds new capabilities.

  4. Reexamine how you engage with, and listen to, your core markets: The CEB team that was monitoring Brexit for our members this spring often felt ignored – their data suggested that Brexit was a real possibility, but we could not interest our clients in scenario planning for the life of us.

    If Brexit in particular, or the new populism in general is a surprise, it is time to rethink how you engage and listen to consumer markets and to get inside of the mind of the business buyer. A Trump victory and a “leave” vote are reminders that intensity of commitment are as important – if not more important — than simple preference, and that social media is far more important than endorsement by perceived elites.

  5. Adapt your employee value proposition to the current needs of key communities: You can’t be all things to all people, but you can focus on the key communities that will affect your business and build strong value propositions that show how you will help them.

Once again the electorate has spoken. It’s time for business leaders to embrace and rethink their social compacts with employees and society as a whole.


A version of this post originally appeared on LinkedIn.

One Response

Leave a Reply



Recommended For You

Brexit: Where Companies Feel Most Exposed

As senior management teams digest last week's vote, most report that they weren't well prepared...