The Next Test of CEO Leadership: Civic Engagement
The job of the modern CEO - complex in the best of times - has only gotten more challenging.
This week, Edelman released its 22nd annual Trust Barometer report. There was good news - business was rated as the most trusted institution by respondents - and specifically, "my Employer" is the most trusted institution.
There was also sobering news. Business is rated as the only trusted institution. Based on Edelman's index of 1-100, NGOs, government and media all fall into the "neutral" range of 50 - 60 (neither trusted nor distrusted). Business outstrips government in 23 of 28 countries surveyed - in the U.S., the trust gap is a full 10 points.
Scratch below the surface of the data and it gets more complicated:
CEOs as a group score low on the index, but "My CEO" is trusted
CEOs are welcomed into and expected to take part in policy debates but respondents wanted them to stay out of politics
And employee expectations are high:
60% said that when considering a job, I expect the CEO to speak publicly about controversial social and political issues that I care about
And 65% rated employee media as the most reliable source of information (over government, other media, social media)
It's worth noting the major Edelman takeaway: "societal leadership is now a core function of business." Our research and conversations with CEOs tell us that many companies face fundamental questions of whether, when and how to engage. Here's what we've learned.
There are more tradeoffs than ever for companies. Enforce a vaccine mandate and face a backlash on social media. Keep silent on restrictive voting legislation and disappoint millennial and GenZ employees. Fail to align sustainability initiatives with lobbying efforts in Washington and expect to hear from your investors. Speak out on racial equity and face accusations of "wokeness" from conservative customers.
There's no universally accepted approach to assessing the risk of action or inaction. Measuring the impact of corporate societal leadership and - as we like to call it - civic engagement - is currently very difficult to do. While there are several accepted frameworks and metrics for sustainability and emerging measurements on civic and societal dimensions, a standard model for assessing these efforts across companies has not yet been adopted. There also is no one source of data for companies to establish best practices and benchmark against competitors.
Civic engagement efforts, when they exist, are siloed in most companies. In our discussions with companies, we've found that ownership of societal and civic initiatives resides across multiple functions, except in the (very small) number of companies with a Chief Purpose or Social Impact Officer. HR, Marketing, Communications, Legal, Government Affairs all have a piece of the puzzle. This makes coordination challenging.
What is a company and CEO to do? Based on what we've learned from over three decades of advising companies and our work over the last few years around business leadership and corporate civic engagement, we believe that there is a thoughtful way to develop the answers to these questions and a robust civic engagement strategy.
Developing a civic engagement strategy takes time, effort and resources, so there must be a compelling business case to do so. In our experience, there are several reasons to launch such an effort, including:
Workforce retention and recruiting - employee activism is here to stay. Misaligned or poorly communicated actions in the civic or societal arena have real risks.
Customer or supplier risk - depending on the severity of the issue, companies might face questions or blowback from these stakeholders. As ESG increasingly becomes mainstream, companies must be consistent, truthful and timely in their ESG progress.
Unexpected disclosure risk - for public companies, unplanned disclosure of misaligned areas (for example political spending) can cause issues that rise to the board's attention.
Democracy and the civic space - data shows that most Americans and the majority of business leaders agree that a healthy democracy is good for business. Companies therefore have a strong imperative to contribute positively to the system.
There is a way forward. Several of us have created a new consulting firm - Corporate Civic Consultants - to help companies navigate these issues via a well thought-out civic engagement strategy. Our next posts will outline some best practices in developing these strategies.
Contact us at info@corpcivic.com to learn more about our work.
