America is divided. The divisions come in all shapes and sizes: a north/south divide, a coastal vs. mid-America divide, an urban vs. rural divide, a progressive vs. conservative divide, a rich vs. poor divide, a racial divide, and the list goes on. Because there are so many divisions, it’s difficult to find issues around which Americans can rally. These divides fill the landscape with so many issue-related and ideological landmines that business leaders simply can’t escape from stepping on a few of them. Traditional thinking is that business leaders should remain neutral when it comes to sensitive or controversial issues. After all, a customer is a customer in spite of their particular beliefs and there is no need to alienate them. Traditional thinking may be changing. Some pundits insist good leaders will (and must) deliberately support some controversial issues. Journalists Katie Deighton (@DollyDeighton), Ann-Marie Alcántara, and Nat Ives (@natives) write, “Companies have to address political and cultural issues now more than ever before.”[1] They go on to caution that business leaders should choose their fights carefully. Speaking out and stepping up “doesn’t mean they should tackle everything that appears in the headlines.”

According to Bruce Mehlman (@bpmehlman), a former Assistant Secretary of Commerce for Technology Policy — who now heads the bipartisan consulting firm Mehlman Castagnetti Rosen & Thomas, insists “woke” business leaders are not a new phenomenon. In an insightful PowerPoint presentation, he notes, “More than 1/3 of the men signing the Declaration of Independence were business leaders (merchants or planters).”[2] In the first half of the twentieth century, Mehlman notes, “Business leaders’ advocacy helped power the U.S. high school movement.” In the 1980s, he notes, “Over 200 U.S. companies cut all ties with South Africa, hastening the end of apartheid.” And in 2018, Mehlman insists, “Leaders from both parties valued [Business Round Table] CEO support for the FIRST STEP Act (criminal justice reform).” More recently, business reporter Grace Dean (@graceldean) reminds us, “After the January 6 Capitol siege, dozens of companies said they’d cut ties with some Trump groups.”[3] She adds, “The vast majority of corporations who pledged to stop funding these GOP lawmakers have stayed true to their word — but some companies who made vaguer promises about assessing PAC criteria have restarted donations, while others gave money instead to various Republican committees that, in turn, fund these lawmakers.”

Supporting political parties or other causes is not a decision business leaders should take lightly. Such decisions can have significant consequences for their companies. Mehlman notes that taking sides on controversial issues can put a company on a slippery slope. Nevertheless, great leaders often take stands. According to Mehlman, “68% of Americans think CEOs should take a stand on social issues. 54% of employees globally think CEOs should speak publicly on controversial political and social issues. 43% of U.S. consumers will favor the company that takes a stand on like-minded social, environmental, or political values.” In his presentation, Mehlman published a chart created last year by Morning Consult showing there is a wide divergence of support depending on the issue or goal.

With the possible exception of addressing environmental issues, the chart demonstrates why corporate activism can be risky. As Mehlman notes, activist companies may face criticism, boycotts, or retaliation. Although I have focused on American businesses and their leaders, Mehlman notes, “Businesses face pressure from activists and politicians around the world … it will only get harder.”

Leadership Recommendations

Executive coach Angie Morgan writes, “We need courageous leaders during these times who can bravely and confidently go into the unknown. While these leaders may never experience the need for physical courage, [there] are four types of courage they can leverage.”[4] Those types of courage are: managerial courage, intellectual courage, moral courage, and social courage. When it comes to taking corporate stands on controversial issues, all four types of courage are often required. Morgan briefly describes what each type of courage entails:

Managerial Courage: “Managerial courage is having hard, uncomfortable conversations when it comes to people challenges.”

Intellectual Courage: “Demonstrating intellectual courage is a challenging feat for many because it means suspending your thoughts and opinions and being open to the viewpoints of others — regardless of who or where they come from — to get to the best solution.”

Moral Courage: “You’ve likely heard integrity described as doing the right thing, even when no one is looking. This is often easier said than done. There are many times when doing the right thing can be uncomfortable and unpopular; it can even put you in a disadvantage. … We need morally courageous leaders in our business. They set a high, powerful standard for others to follow.”

Social Courage: “What makes us leaders are our personal qualities, characteristics, and attributes. Those should never be muted. We need to lean into them to share our important point of view.”

Some people combine all these types of courage under the title of ethical leadership. Freelance writer Andrew Blackman (@BlackmanAndrew) explains, “Ethical leadership means acting according to your moral principles in your day-to-day business life and decision-making. To put it simply, it means doing the right thing.”[5] He goes on to note that “doing the right thing” is not as straight forward as it may sound. He explains, “The complexity, of course, comes about because many moral principles aren’t universally held. We can all agree, I think, that it’s morally wrong to kill and steal and suchlike, but on other issues, such as the ethics of animal testing, opinions differ based on religion, culture, and personal beliefs. On top of that, sometimes one moral principle comes into conflict with another. You may prize freedom of speech, for example, but what if one of your employees uses that freedom to abuse another? So ethical leadership means staying true to your moral principles, while also being aware of the complexity of some ethical issues and being sensitive to the differing views of your employees [and other stakeholders] and managing the conflicts that may arise.”

Exercising courage and ethical leadership are essential when taking an activist stand on a controversial issue. Mehlman suggests you ask and answer a series of questions in four areas before taking a stand. The areas you should consider are: business & brand impact; stakeholder impact; community status; and effectiveness/credibility. The questions are:

Business & Brand Impact: Does engagement align with our strategy, values & vision? Does silence misalign? Does the issue impact our business or have a clear nexus two our sector? Are our customers overwhelmingly on one side & likely to support our action?

Stakeholder Impact: Are our employees mostly on the same side & urging action/leadership? Has our employee family been directly impacted by the issue? Is there a clear nexus to the local community with our headquarters?

Community Status: Would our absence stand out among peers & competitors? Are we at greater risk of reputational harm from doing too much or not doing enough? Who are the groups on each side of the issue & how does “punching power” compare?

Effectiveness/Credibility: Can we make a difference by engaging alone? With others? Are we doing more to solve the problem than mere statements? Do actions here highlight hypocrisy elsewhere, forcing additional actions (e.g., Cuba, China)?

In the end, Mehlman observes, the old adage is true: Actions speak louder than words. He suggests half a dozen best practices to ensure your actions demonstrate true leadership. They are:

1. Be True to Your Word & Values. “Speak truthfully, follow through on promises & uphold professed values. Trust is the most important attribute for brands and leaders.”

2. Resist reflexively rushing-in. “Understand the policies you’re being asked to support/oppose, taking the time to hear both sides, and when in doubt … pause to consider.”

3. Build a diverse team & consistent process. “Establish a replicable process with the same group of diverse senior advisers (identity & ideology) who scenario plan in-advance. Social media & boycott pressures force thinking ‘fast,’ but these calls are best made by thinking ‘slow,’ informed by prior planning.

4. Find safety in numbers & wisdom in crowds. “Coordinate with other business leaders to increase odds of success & decrease risk of backlash.”

5. Inoculate in advance through meaningful stakeholder engagement. “Build trusting relationships with liberal, conservative & civil rights stakeholders via sustained Environmental, Social, and Governance (ESG), Corporate Social Responsibility (CSR) & other efforts. Your every-day actions speak louder than words.”

6. Ensure employees are heard. “Maintain internal groups to solicit feedback, explain decisions & ensure workers know you care about their opinions, even if you won’t always do what they want.”

Concluding Thoughts

Blackman concludes, “There will be times when the ethical dilemmas are tricky and it’s not always clear what the right thing to do is. In those cases, it’s good to remember that ethical leadership isn’t an individual pursuit. Talking to plenty of your employees and involving them in the decision-making process will not only lead to a better outcome, but will also make them feel included and valued. People may not all agree with every decision you make, but the more transparent and honest you are and the more closely you stick to the values you’ve set out, the more they’ll understand and respect those decisions. That’s the essence of ethical leadership.” Sports journalist Don Yaeger adds, “Great leaders take tough stands when they feel it’s the right thing to do. In sports and in business, the greatest leaders are those who make the best decisions in the most crucial of situations. They are the ones who focus their energy on turning tough decisions into winning decisions.”

Footnotes
[1] Katie Deighton, Ann-Marie Alcántara and Nat Ives, “How the Rules of Political Engagement Have Changed for Brands,” The Wall Street Journal, 15 June 2021.
[2] Bruce Mehlman, “‘Woke Capitalism’ & Its Discontents,” Mehlman Castagnetti Rosen & Thomas, 22 April 2021.
[3] Grace Dean, “These are the companies still giving money to the lawmakers who voted to overturn the election results,” Business Insider, 9 May 2021.
[4] Angie Morgan, “Leadership Courage: The Four Types Needed in the Workplace,” Real Leaders, 10 May 2021.
[5] Andrew Blackman, “What Is Ethical Leadership? How to Be a More Ethical Leader,” Envato Tuts+, 13 September 2018.
[6] Don Yaeger, “Tough Decisions Quotes,” BrainyQuote.