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In the 1980s, much of the world had shifted their opinion of apartheid in South Africa. Whether they were fully comfortable, or merely tolerant, in the decades prior, by the late 20th century, people around the world were publicly speaking out. That included heads of state, to student activists. What it did not include, however, were corporations. With a few notable exceptions, most boards and C-suites remained largely silent on the issue. For one, it simply wasn’t normal business practice to get involved in politics, especially where the issue at hand was located in a country far from a company’s headquarters (even if it had local operations in South Africa). Second, the movement occurred before the internet had the dominating presence of today, let alone the influence of social media. While there were some efforts through sanctions to reduce corporate business dealings with South Africa towards the end of its apartheid, those were government-directed prohibitions.
Companies must take a stand on political issues, quickly and decisively. They’re still learning.
It is unlikely, therefore, that most Gen X leaders–just entering the workforce at that time, dominating the C-suite now—had any experience watching their mentors deal with the politicization of business decisions. At least, nothing on the scale of today’s expectations that corporate leaders make highly visible, and unequivocal, statements on political and social justice issues today. The reality—and it’s not necessarily bad—is that the public holds organisations much more accountable for the impact their corporate operations have within a complex context of political shifts, social justice issues and more traditional ‘bottom line’ business priorities.
There are many upsides to this pressure: organisations have always been able to act more swiftly, and sometimes more impactfully, than nation-states. They can invest millions of pounds into a local economy. . .or not, having an immediate impact on the politics and legislation in the immediate area. Delta Airlines and Coca-Cola, both based in Atlanta, Georgia, made public statements supporting Black Lives Matter activism and other anti-racism dialogue in the wake of George Floyd. Whatever the personal views of their leadership team, or the state-level political actors they negotiate with traditionally, both companies hire from a local workforce with a sizeable African American population. And they both market to a national audience that was (according to polls at the time) also largely sympathetic to that community. Unlike South African apartheid, today’s leaders’ statements are closely tracked on social media and the impact on public reputation is swift and strong: and that attention doesn’t go away. The communities who are impacted keep focus not only on initial messages but ongoing commitment to the cause. That ranges from BLM supporters tracking organisations’ support a year after the George Floyd murder, or LGBTQIA+ people reminding organisations that ‘rainbow capitalism’ can be perceived as merely opportunistic.
Politics are local. But big business is global. While it might seem obvious that American companies reacting to American issues is a small adjustment, the reality is that the pressure is the same even if the company is a foreign presence. Adding to the complexity of the politicization of business is the globalization of operations, marketing and communications. As companies’ global footprint expanded far beyond their original headquarters, they both impacted and were impacted by local events. An invasion by Russia of Ukraine today impacts companies like McDonald’s, Apple and Google far more today than it would have forty years ago (recognising of course that Ukraine was part of the Soviet Union at that time—you get my point). None of those organisations had a presence in either country. Now they have employees and customers throughout the region, and what they say or don’t say (and what they do, and don’t do, more importantly) is closely watched and quickly reported. There is almost no ability to stay silent, and today’s leaders are essentially flying the plane while writing the manual.
Which matters more to an organisation today: public perception by customers or working relationships with local authorities? The answer: both. And yet, you cannot stay silent and so each decision has a benefit and a consequence. Tough decisions are hardly new to today’s leadership teams: making tough decisions in the public limelight that are zero-sum and have little precedent, is fairly novel. Volvo leadership faced a similar yet different problem: the company had come out very publicly in support of the LGBTQIA+ community on a corporate, enterprise-level. But in their Poland operations they discovered it clashed a great deal with the values of local workers. This isn’t to suggest that companies should (or can) reflect the political mood of every local operation. This is simply to articulate the complexity of running a globalized business where locals hold a company accountable for their statements on political and social issues, in part because their presence makes them a local player.
Change seems to be the only constant. How do leadership teams plan for the unforeseen?
When issues arise that have millions of people on either side with equal passion, and both hold companies accountable if they don’t weigh in, it’s easy to see how this becomes a much more complex issue for leadership teams. The only thing predictable in this environment is ongoing unpredictability: the Russian invasion of Ukraine and the conflict between Israel and Hamas both arose overnight (as wartime often does). Even peaceful political shifts can be incredibly powerful: consider the political and social change from former President Obama to former President Trump. This year, 49% of the global population will be going through an election cycle. That includes an election for the United States presidency, where the presumptive nominees for each party exemplify the extreme future scenarios leaders must prepare for. Add that to the instability in regions around the world, and leadership teams may find that at least for the foreseeable future, only change itself is predictable. At this time, their key goals may be less about growth and more to simply stay on course. The most important strengths may be rapid responsiveness and clear, early communication. At the moment, it might not be about the products, but the perception. And leaders who learn fastest will go farthest. Until the next thing.
In terms of my background and expertise, I have spent my entire career working as a trusted advisor to senior leaders wanting to improve the effectiveness of themselves, their teams and their companies. Prior to starting my own consulting firm, I led the global executive assessment and development team for Cisco. Earlier in my career I held leadership roles with RHR International, PepsiCo, Ashridge Executive Education, Hult International Business School and the Central European University, Budapest, Hungary.
Dr Robert Kovach
PSYCHOLOGY. LEADERS & TEAMS.
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