To speak or not to speak? Stakeholder capitalism changes calculus for business leaders

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The rise of stakeholder capitalism has challenged the traditional role of the CEO and the corporation, and it is only getting more complicated

A recent study that surveyed more than 36,000 people, in 28 countries, found 81 per cent believe CEOs should be personally visible on public policy and societal issues. Those issues range from climate change to economic inequality to trustworthy information. Most recently in the United States, and to some degree in Canada, we have seen that scope extend to the rights of women to control their reproductive health.

In a world where distrust in institutions has grown at an alarming rate, trust in business seems to be holding up more firmly. Information from employers is now seen as more trusted than other public sources. At first blush, this seems like a cause for celebration in corporate boardrooms. The reality is that leadership in the business community has become far more complex and challenging, and it requires a broader range of skills and capabilities than it has in the past.

In the face of that remarkable challenge, one would certainly question if the better strategy were to just not speak. Staying silent on societal issues avoids some significant risks. After all, you are unlikely to find a position that pleases everyone in your stakeholder base. Secondly, you will likely have to develop or hire a broad array of people with new skill sets and talent.

The bar for business and its leadership has clearly been raised, and the complexity of achieving success will require a different skill set than what was required in the past. It would seem logical that if CEOs are expected to be personally visible on public policy and societal issues, it becomes even more critical for the pool of CEOs to reflect the demographic of the communities they serve.

 

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