People + Strategy Journal

Fall 2022

When to Take a Stand on Social Issues

Social issues have dominated boardroom discussions in recent years. In deciding when to take a stand, consider what your employees support, what your customers want and what's good for business.

By Linda P. Hudson, The Cardea Group

​In 2018, Larry Fink, BlackRock's CEO, created quite a stir when he stated the world's largest asset manager would not support companies that do not make a positive contribution to society. "A company's ability to manage environmental, social and governance matters demonstrates the leadership and good governance that is so essential to sustainable growth," Fink said. This decision was quite controversial because it challenged the long-held principle that delivering shareholder value was the only thing that mattered.

The Business Roundtable moved in the same direction the following year by issuing a Statement on the Purpose of a Corporation, expanding the concept of "shareholder" value to "stakeholder" value. This statement included commitments to diversity and inclusion, dignity and respect, dealing fairly and ethically with suppliers, providing a living wage, supporting communities, and protecting the environment by embracing sustainable practices.

Since then, companies increasingly are pulled into some of the most pressing social issues of the day. When a significant event happens now, including news that may divide large swaths of the population, there is a public expectation they will weigh in and share where they stand. We saw this course of action in June, when the Supreme Court overturned Roe v. Wade. In a matter of days, many companies announced that their employee insurance plans would now cover travel for abortions, demonstrating how companies are stepping into the forefront of social issues that are broadly popular with their employees.

In the last four to six years, it has become common for social issues to lead to discussions in the boardroom, with questions such as, "What is the right thing for us to do? If we do take a stand, what impact will we make? How do our employees feel about this?" 

So how should companies navigate the challenge of deciding when and whether and how to engage on social issues of the day? If you do too much, you can quickly find yourself being reactive to the headlines of the day, rather than focusing on growing your business, and perhaps alienating some employees and customers by taking on so many positions on various issues. At the other extreme, if you decide to stay silent on all the big issues of the day, then people may read your silence in ways you did not intend.

The answer is to focus on how your employees feel about a particular issue. Their feelings should be a large driver for whether you should take a stand. Granted, employees at large companies are a microcosm of society at large, and you're inevitably going to employ people with different political affiliations. However, when faced with these choices, leaders should assess if taking a position can make a real difference; determine if a significant number of employees and stakeholders are aligned; and, confirm the action aligns with your ethics and values as well as the image and reputation of the company. But companies aren't democracies. Ultimately, as a leader, it is your job to gather the necessary information and facts and decide what you think is important and what is broadly consistent with what your employees believe. 

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There will be those that disagree, but overall, if you're doing what's right for the enterprise and doing things that drive productivity and drive alignment, the net result is going to be positive. And you aren't forcing anyone in your organization to do something that they would not otherwise want to do. As someone who has run a large corporation and now sits on corporate boards, you're always looking for what is the best course of action for the organization, and nothing is ever going to be 100 percent aligned with everyone's beliefs. But in most cases, the positions you see companies taking are extremely popular with their employees, and most of the time with their communities and their customers. 

For some of the big issues that have arisen in the last decade, like LGBTQ+ rights years ago and abortion more recently, it is very difficult to sit on the sidelines, because those issues affect every constituent associated with your business, including your employees and your customers. I don't know how you stay on the sidelines and not take a position. 

But when to weigh in? There's no checklist to consult on whether an issue meets certain criteria. It's very much a gut feel. But it's been very interesting to see how most companies have the same gut feel. It's rare that you find a company going off on a tangent and taking a position that's not broadly popular with other companies in similar situations. It has been my experience as a CEO and corporate board member that it often comes down to what is right, determining if we have sufficient influence to make a difference, and making sure the position we take reflects the values and beliefs aligned with the organization's strategy and reputation.

I believe there is an absence of what I would call strong social and moral leadership from government; therefore, companies have stepped in and filled that void. I never thought I would see the time when corporations are leading the movement toward social good. This transformation is a good thing. There are some people who are trying to politicize companies' efforts to get more involved, but there are more positives than negatives to engaging. 

It always goes back to the most important question: "What's good for business?" If you can align what you stand for, what your employees support and what your customers want, then you're going to get better productivity. You're going to have lower turnover. You're going to increase your sales. You're going to make more money. To me, it's not an either/or. It really is a self-supporting proposition. 

And although there is a lot of polarization in our society right now, I generally see far more cohesion inside companies today than what is portrayed in society at large. Maybe that's because we often don't talk politics at work. I'm not seeing these volatile debates in a business dynamic the way we see it on TV with the red states versus the blue states. Perhaps the environment of working together in a corporation, and the common purpose colleagues have, may bring people with different views together in a way that they don't fight with each other, because they're geared toward something other than our differences. The work environment can drive a common set of goals and a sense of purpose despite what your personal beliefs might be. 

I never thought I would consider corporations to be the moral compass of the country, given that decades ago they were often viewed as evil empires. I am of the view that this evolution is a good thing, and that it does serve, particularly in these really divided times, a very good purpose in our social structure. It fills a void that does really need to be filled.  

Linda P. Hudson is the founder and strategic advisor of The Cardea Group. She has served on several ­corporate boards and was the CEO of BAE Systems for five years.