The Pulse: Companies speak out politically and succeed in a politicized world

In 1962 the American economist Milton Friedman famously wrote, “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.” Many large companies followed his lead. If they were ever asked to stake a political stand, there was only one answer: “Our sole priority is serving our customers.”

But today – when President Trump can move a stock several percentage points with a single tweet, and when activist investors are more visible than ever – companies know that “no comment” is not an option. Just look at the reactions to Mr. Trump after the violence in Charlottesville, Virginia.

What’s more, leading executives are finding that a public position on a political or social issue may not only be necessary, it can be a positive for many reasons. But it only works if a company plans carefully, formulates a smart communications strategy and follows through.

A team of my colleagues here at Finsbury surveyed public comments by the CEOs of the Fortune 100 companies in the United States over a nine-month period in 2016-17, and found that no fewer than 70 had spoken out on the economy, the environment, healthcare, social justice, taxes, trade, or other issues of national or global importance. Moreover, the vast majority of them made it clear that they were speaking on behalf of their companies, not as individuals.

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That said, they were hardly reckless when they braved political waters. Though none of the 100 CEOs endorsed Donald Trump’s presidential candidacy (about a dozen publicly supported Hillary Clinton), many said they would work with him after he won in November and took office in January. If they took issue with Mr. Trump, they did it diplomatically. Most of those who spoke on global trade, for instance, were in favor of opening it up, but they were careful not to tangle with Mr. Trump and his American-jobs-first stance.

Dennis Muilenburg of Boeing, which imports about 30 percent of the parts for its planes, said early on that his company was “very supportive” of Mr. Trump’s plans: “I think Mr. Trump’s engagement with industry is going to help us grow manufacturing jobs in this country.”

Gregory Hayes of United Technologies: “Everybody knows that free trade is what drives growth in this country.”

But it’s instructive to look at cases – such as Mr. Trump’s response to Charlottesville, or the American withdrawal from the Paris climate accord – in which executives said they felt compelled to speak out in opposition. By going public on controversial issues, they probably did their companies some favors, even if it may not have seemed that way in the heat of the moment.

Kenneth Frazier, the chairman and CEO of the pharmaceutical company Merck & Co., was one of 28 executives on the president’s American Manufacturing Council. After Mr. Trump’s tepid first response to the white supremacist violence in Charlottesville, Mr. Frazier said he was leaving the council. “America’s leaders must honor our fundamental views by clearly rejecting expressions of hatred, bigotry and group supremacy, which run counter to the American ideal that all people are created equal,” he said in a statement.

He and Merck said nothing more. Within 16 hours, two other council members also left, and within two days, the council and another on economic policy were disbanded. A fairly representative statement came from Jamie Dimon of JP Morgan Chase: “I know times are tough for many. The lack of economic growth and opportunity has led to deep and understandable frustration among so many Americans. But fanning divisiveness is not the answer.”

There was also this from Mary Barra of General Motors: “Recent events require that we come together as a country and reinforce values and ideals that united us — tolerance, inclusion and diversity — and speak against those which divide us — racism, bigotry and any politics based on ethnicity.”

Their statements were measured, brief, easy to quote, and calming. Each company positioned itself as a voice of reason at an upsetting time. And each probably helped itself by showing that it was willing to stick to its values – something that surveys show is increasingly important to consumers.

And there’s a lesson in there: that a company that stands for something stands to gain – as long as it follows some basic guidelines.

Pick your battles: Are you speaking on an issue that is of importance to you? Are you sincere and open about it? Are you putting your money where your mouth is?

Do your issues align with your business? Tolerance and inclusiveness do for most major companies, Merck included. A statement from Mr. Frazier, posted long before Charlottesville, says employees’ “varied skills, experiences, backgrounds and cultural perspectives help us better understand the needs of diverse customers, healthcare providers and patients who ultimately use our products.” So the decision to break with the White House was not a break with anything else Merck stands for. Companies lose credibility if they take positions on issues that have nothing to do with them; they gain credibility by standing their ground.

Know your audience. Who will be affected if you take a controversial stand? Consumers? Employees? Shareholders? Regulators? Make plans for how you will explain your rationale to all of them. If it’s a struggle, maybe you’ve picked the wrong issue.

Be authentic. If a company picks an issue or a cause just because it looks good, it can look pretty bad. People will see right through it.

A public stance, properly thought through, can bring many benefits. Surveys have shown, for example, that employees are often energized when their company stands on principle. Clients and customers also respect companies that do more than simply pile up money.

So if companies are afraid to speak up, the evidence is that they needn’t be. If they are smart about their messages, they can show themselves both as profitable and principled.