ALISON BEARD: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Alison Beard.
Over the past few years, there seems to have been a big shift in the way organizations are expected to respond to current events and controversies. Increasingly, employees want and expect their organizations to speak out and take action on a host of social, political, and environmental issues, from Black Lives Matter to transgender rights, abortion to immigration, climate change to the wars in Ukraine, and Israel and Palestine.
These topics are in the headlines every day, and many workers feel passionately about one or more of them. But in an increasingly polarized world, it’s hard for organizations to take a stance on every issue.
Today’s guest has ideas on how leaders can find a better balance, addressing contentious topics without it backfiring or distracting people from the real work of the business. Alison Taylor is a clinical associate professor at New York University. She wrote the HBR book Higher Ground: How Business Can Do the Right Thing in a Turbulent World, and the HBR article “Corporate Advocacy in a Time of Social Outrage.” Alison, welcome.
ALISON TAYLOR: Thanks so much for having me.
ALISON BEARD: Let’s first dig into how we got here. People have been outraged about sociopolitical issues in the past. We’ve seen civil rights, anti-war, climate protests in previous eras. Why are businesses now being drawn into these debates much more often? Why do people expect the companies that they work for and buy from to weigh in?
ALISON TAYLOR: It’s such a good question and I think there are a few stories we can tell, and I would personally tell three. One is a pretty obvious one, but doesn’t mean it’s not important, which is the rise of social media.
Back in the 20th century, a business could to a very great extent, control its narrative in the public domain. There were only a few TV stations, there were only a few newspapers. Those publications needed the advertising. With the rise of social media, companies, I think, have been forced into a much more interactive and fraught relationship with their stakeholders. And if we just think about this for ourselves, we are far more likely to look at other people’s reviews or Glassdoor if we’re trying to figure out what to buy, where to go on holiday, where to work. And so I think this, to a great extent, explains the rise of what we call stakeholder capitalism.
I think a second trend relates to really political dysfunction, polarization. Something I often hear in the classroom is we no longer trust politicians to solve our problems and we’ve turned to business because it has the global scale and reach and heft to tackle things like climate change and inequality. So I think, to a very great extent, we are putting problems that we used to leave to public policy, onto business to solve.
ALISON BEARD: Because they’re seen as the most powerful actors on a global stage now?
ALISON TAYLOR: Yeah, that’s right. They seem to be the most powerful actors in society. And to a very great extent, they seem to be more responsive to our demands than many governments and many politicians. So I think that’s a very, very big issue. Something I hear in the classroom from students is that they feel somewhat powerless. They feel like they have a lack of agency. They feel like voting is pointless in a gerrymandered system, but if they go and pressure a brand or pressure their employer, then they’re likely to get a quicker result.
And then I think the final trend is really very powerful value shifts that I would summarize as saying I think young people to a much greater extent than I did when I was young, expect organizations to adapt to them, their needs, their desires, their desire for meaning and impact rather than the other way around. So these three things I think have come together into a very, very fraught cocktail.
ALISON BEARD: And so what range of responses are you seeing to this increasing pressure? Are most organizations, as you said, now trying to speak out more? So yes, we will release a statement about George Floyd. Yes, we will release a statement on Ukraine. Yes, we will on Israel and Palestine. Or a lot still trying to choose silence?
ALISON TAYLOR: I think obviously this depends a bit on the culture and the approach and the leadership of the organization, but I also think there’s been a change over time. You start to see these conversations shifting. There’s a lot of controversy about North Carolina and the transgender bathroom bill in 2015, and a lot of companies then started to stand up.
And then you have the Trump administration. And so the first thing Trump does on getting into power is to pull out of the Paris Climate Agreement. Companies have already made a big noise about climate change. So then there’s a very big corporate movement to say we are still in. Trump also takes relatively strong anti-immigration stances.
And again, I think it seems like a no-brainer for corporate leaders, not least because business has very good reason to be pro-immigration to stand up for programs like DACA. And so then you start to see all this rhetoric about how CEOs are the new societal leaders, CEOs are the new politicians, you start to see all this stakeholder capitalism rhetoric. You see Larry Fink saying that business needs to have social responsibility.
ALISON BEARD: Larry Fink, the CEO of BlackRock.
ALISON TAYLOR: That’s right. Arguably the most powerful investor in the world. So I think if you go back to 2018, 2019, this all looks like a great idea. This looks like a good idea to take a stance and get stakeholders to support you and think that you have meaningful values.
Of course, what’s happened more recently is that these conversations have got much more fraught and much less black and white. So now I think a lot of corporate leaders are regretting all this speaking up. They’re regretting that they’ve given the impression that they should be taking stances on any social and political issue, even if it has nothing to do with their business. So more recently, I think there’s now a very powerful urge to be much more restrained, to stop over promising. And this is all, of course, being fueled by the anti-ESG backlash.
ALISON BEARD: You mentioned a few U.S. specific issues, but this isn’t just a U.S. issue, right? It’s a global one?
ALISON TAYLOR: It’s absolutely a global one, and that makes life even more challenging because something that might resonate in the U.S. may not resonate globally. So a very good example would be HSBC, who, in common with many corporations, took a stance on George Floyd and on the Black Lives Matter protests, and then faced a lot of questions and challenges from employees in Hong Kong saying, “Why are you not supporting the Hong Kong protests?” Similarly, if you take a stance on Putin’s invasion of Ukraine, you may then face uncomfortable questions about what you’re doing in authoritarian countries like Saudi Arabia or China.
So I think the question of global consistency has become extremely fraught. And even if you can pull off a stance in the U.S. market, which is itself very polarized, so that’s pretty difficult, then you may find that you face questions in terms of what you’re doing globally. And there is this real focus, almost obsession, I think, from the general public now on corporate hypocrisy, greenwashing, woke washing, whether corporations really mean what they say. And so this focus on consistency, this focus on the say-do gap is really, really challenging because there are a lot of issues where it’s somewhere between difficult and impossible to have the same approach in every country in the world.
ALISON BEARD: Yeah. So for organizations that have found themselves weighing in on many contentious issues around the world, what impact have you seen both good and bad?
ALISON TAYLOR: So I think there is a very positive impact in that consulting your stakeholders and employees, understanding the impact that you have on them, understanding that leadership is no longer about barking orders from the top, but is really about winning over stakeholders in an era of intangible value, I think that’s broadly positive. It’s just very, very complicated.
One of the really ironic consequences is that it is now much, much more difficult to have a gap between what you’re saying you care about in your sustainability report, in your corporate disclosures in general, in the interviews that your leaders give to the media, and then what you are signaling you care about often via your campaign finance and lobbying and so on. So I think one of the unintended consequences of this rise of corporate leaders speaking up is it has encouraged employees and the general public to look under the hood at whether companies really mean what they say. And so this very status quo approach, which is that you have your sustainability team saying one thing in its glossy reports, and then your government relations team may be doing something completely different on Capitol Hill, that’s becoming increasingly untenable.
ALISON BEARD: But it seems like silence isn’t an option. The previous era of we’re going to operate our business in the way that works for our business and we’re not going to engage in these issues, that ship has sailed. We can’t go back to that?
ALISON TAYLOR: 100%. I mean, it’s very, very interesting when I tell my students, we used to all accept that business should be politically neutral. I talk about the Michael Jordan joke from the 90s: republicans buy sneakers too. There are also a lot of stories where we can see that a corporation has tried not to get involved in these questions, it’s tried to carry on prioritizing shareholder value, and that has been seen as political in itself.
A good example would be Uber. After Trump’s various moves on immigration, immediately after he got elected, there was a taxi driver strike at New York airports, and I think Uber decided to carry on operating, decided to carry on operating its cabs, thinking it shouldn’t get involved in these very contentious immigration conversations. That’s what started the delete Uber hashtag because Uber’s refusal to take a position was seen as taking a position in itself.
So I think you are right that silence is very often seen as complicity and that leaders feel pressed to speak up and weigh in on almost everything, not least because they’re getting so much flack on social media. And I think it’s quite difficult not to respond to that when it feels like everybody’s yelling at you.
ALISON BEARD: So how does a company recognize that they’re not doing corporate advocacy in the right way because they’re stretching themselves thin with too many statements or they’re getting backlash from employees or consumers and then start to make a change? How do you begin to develop a strategy around this?
ALISON TAYLOR: I think the first thing that is really needed and the first reaction that many corporations have taken is to put together some kind of task force, some sort of a group of senior leaders just so that you can have a coordinated response. So it’s become a very, very bad idea to leave these questions just to your communications or PR team. You can’t go out there and make a statement on racism or diversity without first making sure that you’ve got your internal ducks in a row in terms of what you are actually doing with human resources and your diversity program.
So there is a need to have a cross-functional team that maybe has a risk, communications, human resources, government relations, sustainability, and senior leaders to react and respond and to make sure that if an issue is coming up, you’re making a coordinated decision about what you are and aren’t going to say.
This is very often called a social issues task force. Some of the companies I’ve worked with have had those kind of task forces. But the bigger question of course is what commitments have you actually made? The bigger and longer term challenge is to make sure that in terms of both your environmental and social commitments and then also your code of conduct, how you approach ethics, that you have been clear about which issues you have a position on and which issues are outside the scope of your business. So there I would recommend involving the whole workforce in crafting those statements, crafting those commitments, making sure that they’re clear and they’re consistent. And then the benefit is if you’ve got those commitments in place and you’ve been very clear, then when a new issue arises, when you face new pressures, you’ve got something to anchor to. And you’ve also got a way to explain to your workforce why you are or aren’t saying something on this particular topic.
ALISON BEARD: Talk to me a little bit more about how you involve an entire workforce in this process. Some employees are going to want to be involved much more than others, they’re going to have loud emotional voices. But you want to hear from the people who aren’t speaking as loudly too. So how do you logistically practically do that?
ALISON TAYLOR: It’s such a great question, and as implied in your question, something I think that has also happened in a lot of corporations is that there has been a tendency to overreact to whoever is yelling loudest. This also happens on social media. And to maybe not consider the people that aren’t speaking up and who may be quietly disagreeing but may not feel as safe to share their views.
I think there are a few ways to approach this. One is as you set your environmental and social priorities, this is usually called a materiality assessment, that has historically been approached just via interviews and surveys with senior leaders, approach like any other top-down strategic organizational change initiative. I think in many companies there is a strong argument to have focus groups or at least surveys and consult the wider employee base.
You can also make it clear through that process that there may be some issues where you have more leeway and more leverage than others. So you may be able to do something, for example, about cutting your own carbon emissions. You won’t though necessarily be able to go all the way you want to in the absence of supportive public policy.
So I think it’s very, very important as you go through this process to get employees very clear on the trade-offs, very clear that if you’re going to prioritize a lot of things that may come at the expense of other things and to just try to focus everybody on the problems that you can actually solve and that are directly relevant to your business model.
And then I think the other thing, the way to think about this is reframing ethics, which has traditionally been approached as a set of rules and prohibitions to being a much more dynamic deliberative process. So Paula Goldman at Salesforce is a really good example of someone that gets employees and other stakeholders involved in thinking about the social impact of new products Salesforce is putting out on the market. I also spoke to Rabobank and ABN AMRO, both Dutch banks who have a very dynamic approach to ethics, including having young employees on their ethics teams and making it very, very clear that anyone in the workforce can raise a dilemma and that will be responded to, and that will be considered seriously.
I think one area that is particularly difficult is issues around social identity, diversity, inclusion, sexuality, race, anything that relates to the identity of employees. Obviously companies can’t say that has nothing to do with them. That’s a material issue for every business out there. And so I think that’s one of the biggest areas companies are struggling to get things right and where nobody can really say, this has got nothing to do with me.
ALISON BEARD: That’s what I was going to ask you about, this issue of materiality, because you could argue in our interconnected global world everything every company does matters. So you could say, “Well, we don’t have business interests in Ukraine or Russia, so we don’t need to comment on that,” but your employees could come back to you and say, “But this is an issue of political sovereignty and human rights, and we do need to comment because we have business interests in Europe.”
ALISON TAYLOR: I mean, I think that’s absolutely right, but I think we have almost got to the stage with the stakeholder capitalism conversation where we’re saying employees are like the electorate, and leaders are like governments and leaders need to somehow gather the opinions of their workforce and then represent them in the public domain to compensate for a lack of political agency. So I think that gets dangerous, partly because corporate leaders don’t have the mechanisms to represent employee views in a fair and democratic way, and are very, very often creating, again, this silent group of resentful workers, or maybe not even silent, who do not agree with the company’s stance. And this is having a very, very negative effect on corporate culture.
So I think it’s important to have a conversation about the systemic factors here and the possible second order consequences of what happens when a corporation speaks up, especially if a corporation is speaking up without any meaningful leverage, without any meaningful exposure, and so on. And I think we need to get a lot smarter about that because many corporations are really implying that they can solve issues far beyond their remit.
I recently had a conversation in the classroom about McDonald’s, who – its Israel franchise donated to the IDF, its franchises in Aman and Egypt donated to humanitarian organizations in Gaza, putting McDonald’s corporation in a very, very difficult position. And so I asked my students why it might be important that McDonald’s should stand up on this issue when arguably it ought to be focused on the climate impact of beef. And then I think there was a very useful reflection that maybe this is not the best role for McDonald’s in society, and maybe McDonald’s should focus on the actual problems its business can solve.
ALISON BEARD: That’s an interesting lens to take. Can we make an impact here? A lot of times though, large companies, big brands can make an impact just with their words. So I just want to push you a little bit on the idea that large brands, respected companies can’t make an impact on things that aren’t material to their business.
ALISON TAYLOR: I mean, certainly corporations taking stands will have an impact. I think though we need to ask ourselves tough questions about the second order consequences of that impact. And then I think the bigger question is, how are we undermining the political process with these statements? And are we suggesting to people that are not super focused on this, that corporations can solve problems? They cannot in fact solve, a corporation cannot solve reproductive rights for the many, many women in the U.S. that don’t have healthcare, for example.
So if a corporation isn’t going to do anything and it’s going to take a very controversial stance that might involve backlash, implying that it’s solving a problem and isn’t actually solving, then are we actually making anything better or are we just raising expectations and suggesting business can solve problems it can’t actually solve? And do we rather need to reengage with the health of the democratic process and civil engagement and understand that there are limits to what any for-profit business will be able to do to change the situation on very, very controversial high stakes problems.
ALISON BEARD: Your article focuses on employee voice rather than consumer or investor pressure, for example. Why do you think the workers’ voice is so important to prioritize in these conversations, in these decisions?
ALISON TAYLOR: I think workers have a disproportionate amount of power in this information landscape. So I think we tend to overestimate the degree to which consumers can hold brands accountable. You, like me, probably find yourself in the supermarket struggling to figure out what kind of coffee to buy and what kind of vegetables to buy. And there are labels all over the packets. And so I think we overestimate the degree to which consumers can hold companies accountable. I also think it’s very, very difficult, even if you are a well-informed investor, to look at all these ESG disclosures and do a real apples-to-apples comparison and figure out how a corporation is performing.
But employees, I mean, one, they vote with their feet and they’re very, very powerful and there are very dramatic value shifts. And so I think very often, young workers will be more in tune with societal shifts than the senior leadership team. I think even more importantly, they’ve got access to all this internal confidential information, and they’re very, very much more inclined than in the past to take that information and weaponize it in the public domain if they don’t get what they want. So I think regardless of labor force dynamics, their employees have a very, very powerful position today. And then I think Gen Z in particular, who’ve grown up on the internet, who are very attuned to these questions of authenticity and hypocrisy, are actually more skilled at holding companies reputationally accountable than many previous generations.
ALISON BEARD: Yeah. So it sounds like you’re saying that companies should allow, even encourage social and political conversation in the workplace to do this challenging task of figuring out what is important to the company, what it should be commenting on, what it shouldn’t. How do you do that in a way where people feel safe and where work can still happen productively if you have people who vehemently disagree on a lot of these issues?
ALISON TAYLOR: Well, I think that’s the challenge, is that you need to consult and understand what your workforce thinks without implying that you’re running some kind of democracy and that you’re going to go with the majority view. So certainly important to gather information confidentially, certainly important to not try to control what employees say and do in their personal lives within limits. Certainly important to ask questions anonymously and not encourage employees to grand stand and generate conflict in a way that has happened in a lot of organizations. Certainly important to go through this process once and then set commitments and then anchor to those commitments.
Just making it very clear that we’re in a very polarized, contentious environment. People have different values. We need to respect people’s human rights and values and freedom. And so I think we need to go back to questions of individual agency to the degree to which that is possible. And then I think we also need to manage with all this in mind.
So one idea would be to say, if you want to be a senior leader in this organization, you need to be able to work successfully with people who have very different values and backgrounds and ideas than you and who you even personally dislike. I do think corporate America needs to work a lot harder to try and weigh against these very polarized dynamics that we’re seeing, not least because a lot of evidence that we are starting to sort politically as corporations into red and blue mattress companies, red and blue banks. There’s evidence that C-suites have become 9% more polarized in the past decade from the University of Chicago.
ALISON BEARD: So once all of these conversations have happened, who should be the final decision makers on what the company is doing? That task force team, the CEO, the board?
ALISON TAYLOR: I mean, I think that no leader should make judgment in isolation. So I certainly think across functional team, I certainly think board oversight of political spending, of controversial statements is a very, very good idea.
I think I would go through a fair, inclusive, anonymous process. I would make decisions, I would explain the decisions very clearly to everyone in the organization. And then hopefully you’ve got some guidance going forward because I certainly think this is not the end of the line. There will be more and more of these controversial issues and business needs to have some process and approach to decide what they’re going to do going forward. And I think, in general, there is much more of a mood of restraint and not overpromising. And so very good moment to get your ducks in a row.
ALISON BEARD: How do you communicate decisions in a way that will leave people on both sides of an issue satisfied? Is it that ethics versus politics frame?
ALISON TAYLOR: I’m not sure that it’s going to be possible to leave everybody satisfied, but psychology shows that if you can show the decision was made fairly, if you can show procedural and interactional justice, then even if the stance taken is one employees don’t agree with, they can understand the process, they can understand it’s fair, they can understand they’ve been asked, then I think that is as good as you’ll be able to do on these very, very difficult topics.
The reason I like human rights principles as an anchor for ethics today is, one, they very clearly consider the respective roles of business, government, and civil society. They don’t suggest businesses should take problems on where the government has ownership of those problems.
They do not agree with imposing your values, imposing your views on people that may not share them. So I think going back to individual rights and freedoms is a very, very good idea. Human rights frameworks have done a good job, for example, considering things like the trade-off between free speech and privacy. And so there’s a body of law and a body of thinking here. And so I tend to argue that in these very, very fraught and disruptive times, human rights is a better anchor. It’s maybe not perfect, but it’s a better anchor than many of the places that corporations have ended up.
ALISON BEARD: We have two wars raging in different parts of the world. We’re in an election year in the United States, extremely strong feelings on many of these issues. What final piece of advice do you have for organizational leaders who want to get this right?
ALISON TAYLOR: I think focus on problems that you can actually address. Stop ticking the box on 40 things. Focus on one to three things. Make those things a strategic priority and then understand that speaking up is not the same as taking action. Understand that if you speak up, it is only a matter of time before people will be looking to see if you mean what you say. So don’t speak up unless you’ve already done the internal work first and done your very best to make sure you are not making the problem worse.
ALISON BEARD: Terrific. Well, thank you so much.
ALISON TAYLOR: Thanks so much for having me.
ALISON BEARD: That’s Alison Taylor, associate professor at NYU, Executive Director of Ethical Systems and author of the HBR book, Higher Ground, and the HBR article, Corporate Advocacy in a Time of Social Outrage.
And we have more episodes and more podcasts to help you manage your team, your organization, and your career. Find them at hbr.org/podcasts or search HBR in Apple Podcast, Spotify, or wherever you listen.
Thanks to our team: Senior Producer Mary Dooe, associate producer Hannah Bates, audio product manager Ian Fox, and senior production specialist Rob Eckhardt. And thanks to you for listening to the HBR IdeaCast. We’ll be back with a new episode on Tuesday. I’m Alison Beard.