Corporate activism is all the rage. Companies need to thread carefully however. Five questions need to be answered first before companies should consider turning corporate activists.
There is a lot of irony in the fact that while early on in my career I counseled clients on how to manage pressure groups, today I ponder the questions that clients who are considering becoming corporate activists need to ask themselves first.
From good corporate citizenship to corporate activism
The times are changing indeed. Millennials expect the companies they work for and buy products and services from to not only be “good corporate citizens,” which is what recently the Business Roundtable told companies they should be, but to also choose sides on often very divisive social issues. In 2017, Kantar’s U.S. monitor report showed that no less than 78 percent of American Millennials agree with the statement that “more companies should take a stand on important social issues.”
In a contribution that I wrote in the summer for the Quadriga University primer on corporate activism, I define corporate activism as follows:
Corporate activism is the advocacy by a corporation of social change through measures and/or statements whereby the intended social change might include or even necessitate political change.
Dick’s Sporting Goods curtailing the sales of fire arms at its stores and advocating more stringent background checks, Dove campaigning for the introduction of parental leave (Unilever offers a rare example of a company letting its product brands in lieu of the corporate brand do the talking), and Patagonia rallying against President Trump over the fate of national monuments in Utah, are all examples of firms practicing corporate activism.
Five important questions
In my contribution for the aforementioned primer, I listed five questions that companies should ask themselves before deciding on rallying behind a cause:
- Is the cause congruent with the company purpose or at least the corporate values?
- Is the company a credible enough advocate of the cause?
- Does advocating for the cause promote or at least not harm brand alignment between top management, employees and customers?
- Do the behavioral gains obtained with one or more stakeholder groups outweigh potential losses with one or more other stakeholder groups?
- Have SMART objectives been set?
The questions that I ask are based on the axiom that corporate activism should be considered to be first and foremost a differentiating device and that the effectiveness of corporate activism should as a natural result of that be measured by the degree to which a “net” advantage has been achieved with stakeholders.
As I take the reader through the checklist, I provide examples of scoring techniques that allow the decision making process to become data-driven. How will important stakeholder groups respond to corporate activism? Will employees retention go up or down? Will customers buy more or less? These questions deserve more than guesstimates, so any company that wants to make a thoughtful decision on becoming a corporate activist on any given issue does well to probe both internal and external stakeholders beforehand through focus groups and even surveys.
Did you enjoy this piece on questions to consider before turning corporate activist?
You might also like our article on American business discovering stakeholder capitalism. This piece followed the statement by the Business Roundtable that American corporations should take all stakeholders into account while pursuing their corporate interests.
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