Over the course of three days, five US business leaders, including the CEOs of Merck, Under Armour, Intel, and 3M, plus the president of the Alliance for American Manufacturing, have resigned from President Donald Trump’s American Manufacturing Council, amid backlash over the president’s response to the violence that took place at a gathering of white supremacists in Charlottesville, Virginia over the weekend. Two AFL-CIO officials have also left the council, and the CEOs of PepsiCo and Campbell Soup Co. are also under pressure from activists to do so. [Update: On Wednesday afternoon, the CEOs on both the American Manufacturing Council and the Strategic and Policy Forum decided to disband the groups.]
Trump has faced extensive criticism for declining to specifically denounce white supremacism in his initial remarks on the violence and waiting until Monday to do so. On Monday, Merck CEO Kenneth Frazier appeared to echo that criticism in his statement announcing his resignation from the council, writing: “America’s leaders must honor our fundamental values by clearly rejecting expressions of hatred, bigotry and group supremacy.” From an HR and management perspective, these high-profile resignations illustrate how high the stakes have become for American CEOs at a time when millennial employees and customers increasingly expect them to take on an activist role in the social and political issues of the day.
Over the past 18 months or so, a growing number of companies have started to push their HR strategies into their broader consumer brands in a bid to attract and retain customers as well as talent. In this “HR as PR” strategy, businesses adopt progressive benefits, for example, or take strong positions on diversity and inclusion as a way to show that they care about their employees and thereby to encourage consumers to patronize them. We’ve seen quite a few examples of this recently, from Lyft advertisements suggesting it treats its drivers better than Uber does, to Chobani CEO Hamdi Ulukaya’s high-profile efforts to hire refugees from Syria and other troubled countries, and the evidence, while limited so far, suggests that this strategy is effective at generating revenue.
Since Trump’s election last November, HR as PR has taken on a new dimension as the CEOs of corporate America find themselves increasingly called upon to take stances on a variety of social issues ranging from immigrants to LGBTQ rights, from racial tensions to women’s rights. While these decisions have been bold and courted criticism, they have not been fraught with potentially massive blowback—until now.
The very public decisions that CEOs of major companies have had to make in the last two weeks have been at entirely different level. The decision by Google CEO Sundar Pichai last week to terminate an employee for the memo he wrote criticizing the company’s diversity and inclusion practices, as well as these CEOs’ resignations, show just how big a factor “HR as PR” has become in the decisions CEOs need to make. The resignations put the entire manufacturing council in the spotlight, and other members have issued statements strongly condemning the events in Virginia and stressing their rejection of racism and their commitment to diversity and inclusion.
HR as PR started as a way to drive revenue, but it is now evolving into a much bigger issue, putting CEOs in the middle of debates as never before. CEOs must now realize that while they may not face a moment as publicly visible as Google’s diversity-memo controversy, they are more likely than ever to face tough questions from employees, customers, and investors about their beliefs and approaches regarding the most contentious political issues of the day—and will be judged by their actions, not only their words. If the head of HR has not worked with the CEO to decide on the stances they want their company to take (or not take), they are setting themselves up for a negative PR hit when their own moment occurs.
The divisions and tensions in American society today mean that CEOs are continually encountering incidents and issues to which they are expected to respond, especially in an increasingly diverse work environment. So how do organizations and individuals decide when to react and how to engage?
Essentially, a leader at one organization told us, it comes down to firm values. “What values do you have in place, and how serious are you about living those out? It underscores the importance of getting the values right up front, because you can’t go back and tweak them when something unexpected happens.”
Another leader facing a controversial situation shared that responding required them to act on behalf of their own values as well as those of the organization: “This is absolutely about my organization and my employees, but it’s also about personal lines I won’t cross. What am I willing to risk my career on and draw that line? That’s on me.”
This intersection of leadership, communications and D&I is increasingly difficult to navigate, and we’re hearing from many organizations that the calculus of how to handle reactions to surprising political and societal events is more challenging than ever. In the meantime, CEB Diversity and Inclusion Leadership Council members can learn from Ameren’s experience encouraging dialogue in St. Louis, Missouri, following the 2014 shooting death of Michael Brown, and work with employee-led D&I groups to create dialogue and let employees share their thoughts and feelings about these events productively via a sample “real talk” agenda.