Outspoken CEOs Impact Company Fortunes
The Agenda article, “Outspoken CEOs Impact Company Fortunes,” quoted Russell Reynolds Associates Consultant Seema Kathuria about the consequences for CEOs and Boards that are not prepared to respond to social issues. The article is excerpted below.
Chief executive officers have been outspoken on a number of social issues lately, and it’s having an impact. Earlier this month, the White House pulled the plug on its council on manufacturing and its strategic and policy forum after several prominent CEOs decided to leave in the wake of President Donald Trump ’s controversial statements surrounding a white nationalist protest in Charlottesville, Va. The White House announced days later that it would also cancel plans for the formation of another business advisory council on infrastructure.
Regardless, companies need to keep in mind the consequences of not being prepared to respond to a social issue, says Seema Kathuria, consultant at Russell Reynolds Associates’s corporate affairs, consumer and leisure and hospitality practices. Although CEOs should feel empowered to make the right decisions regarding statements on their own, they should have a well-defined framework and response plan ahead of time.
“There have been missteps [in communication] which can tear away the fabric of what the brand stands for and the company reputation,” Kathuria says. “You can have employees that disengage or begin to mistrust the brand or partners that can cancel deals. There are both cultural and financial impacts.”
Kathuria says she’s seen some boards summon heads of corporate affairs, sustainability officers, chief reputation officers and chief communications officers into the boardroom.
In terms of communication, Kathuria says many companies do not have strong crisis communications plans, which is the backbone of responding to a social issue that appears overnight. But, as companies realize the dramatic effects of social issues, they are beginning to prepare, anticipate scenarios and come up with statements ahead of time.
“Historically, communications reputation management and crisis plans were never on a board’s agenda,” Kathuria says. “But I would challenge [the board] to go back and look at issues that should have been discussed and determine how it ended up relating to operations and strategy.”
“Boards are getting more directly involved in corporate reputation, crisis management and public relations, but it’s not at a state where it needs to be,” Kathuria says. “A lot of society is getting excited that business leaders are finally taking a stance, but the stance should not be based on reacting to something, and instead CEOs and boards should start guarding the direction of their point of view so they can more directly control the conversation.”
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