CEO activism: Why it matters

To many ordinary people, CEOs have often been perceived as a privileged class — distant, faceless and out of touch with reality.

But if they were able to consistently deliver strong results and keep their company – and employees – on the path to prosperity, many were more than happy to let this single-minded focus on business performance do all the talking.

However, in these politically and socially charged times, assessing a CEO’s performance based solely on financial returns just won’t cut it any more.

A recent study by the Reputation Institute clearly shows that to be relevant as a contemporary leader today, you need to be a CEO with a conscience, one who thinks beyond profit and aligns leadership with ethical behaviour and societal contributions.

The study showed that for a company to enjoy a strong reputation, its CEO must be a publicly visible leader who is willing to take stands on issues. There is a direct correlation between a CEO’s reputation and how his or her organization is perceived, which in turn drives strong supportive behaviours across stakeholder groups — such as buying from the company, investing in it, working for it, or believing it in a crisis.

A case in point: this spring, Starbucks’ new CEO Kevin Johnson was faced with his first reputational challenge following the senseless arrest of two black men for trespassing – caught on video and widely shared on social media – at a store in Philadelphia.

He could have easily laid the blame on an overzealous employee who had an unfortunate lapse in judgment, but instead chose to use the incident as a teachable moment, which prompted the company to take the unprecedented step of shutting down its stores for an afternoon to conduct racial bias training for its front-line employees.

When events shake perceptions of a company’s values, its licence to operate can be severely compromised. It falls to the CEO to use his or her voice to rebuild the emotional connection with key publics and stakeholders

This type of CEO activism, which positively influences public perceptions for empathy, trust, social responsibility and openness, is the new scorecard by which today’s leaders will be measured.

Much like the message it sends, the voice of the CEO must ring true and be loud and clear.

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