This week some of the largest corporations in America took a stand against racism in the wake of the Charlottesville white supremacist rally and violence with President Trump’s subsequent comments equating extremist participants with anti-hate demonstrators. Most notable are those CEOs who severed ties with the Manufacturing Advisory Council and the Strategic and Policy Forum convened by the president and the White House.
For decades, corporate CEOs have joined working groups appointed by presidents of both major political parties, seeking access to decision makers and hoping to influence policies that affect taxation, regulation of their industries, international trade, employee benefits, and more. They serve as representatives of their shareholders and employees, and both they and their brands burnish their reputations as market leaders because of these prestigious affiliations.
According to IBM CEO Ginni Rometty, “Engagement is part of our history [at IBM]… We have worked with every U.S. president since Woodrow Wilson. We are determinedly non-partisan… And we have always believed that dialogue is critical to progress; that is why I joined the President’s Forum earlier this year.”
Brands Revolt
The corporate reaction to Charlottesville has been unprecedented, and in a matter of hours brands took a stand on the Charlottesville rally and fallout. Household names from Merck, Johnson & Johnson and 3M to IBM, GE and Campbell’s Soup let it be known that they were standing against “Alt Right” ralliers and that they found President Trump’s remarks intolerable. In a moment’s time, CEOs and their brands decried racism and aligned their brands with values that support diversity and inclusion, separated themselves the president.
These CEOs put their brands first – along with the shareholders, customers and employees they cherish – and saw exiting the president’s councils as essential to protecting their brand reputations. Many indicated they would find other ways to work with government to address their business needs, and to do so in a way that would transcend partisan considerations.
The first to step down from the manufacturing council, Merck CEO Kenneth Frazier, said that “America’s leaders must honor our fundamental values by clearly rejecting expressions of hatred, bigotry and group supremacy.” Similarly, Johnson & Johnson CEO Alex Gorsky said in a statement that ”the president’s remarks yesterday equating those who are motivated by race-based hate with those who stand up against hatred were unacceptable.”
In a message to employees, JPMorgan CEO Jamie Dimon, said “I strongly disagree with President Trump’s reaction to the events that took place in Charlottesville over the past several days. Racism, intolerance and violence are always wrong… There is no room for equivocation here: the evil on display by these perpetrators of hate should be condemned and has no place in a country that draws strength from our diversity and humanity.”
Embracing a Diverse Landscape
Consumers, especially younger generations, are increasingly holding brands accountable for their values in the area of inclusion and pluralism. To protect brand equity, corporations have had to become proactive in creating and executing diversity and inclusion practices that respond to the reality of the current and continually evolving demographic mix of the American population. This means being responsive to the needs of a diverse consumer market that has demonstrated a growing interest in supporting brands that share their values and have people like them represented in their workforce and marketing.
They also need to attract the best employees – regardless of race, religion, ethnicity, national origin, and sexual orientation.
Rometty characterized the rally as “despicable conduct” by “hate groups” and went on to say: “In the past week, we have seen and heard of public events and statements that run counter to our values as a country and a company. IBM has long said, and more importantly, demonstrated its commitment to a workplace and a society that is open, inclusive and provides opportunity to all.”
We live in a time of fluid brand loyalty. Younger consumers are the first to walk away from a brand that they feel does not represent them, particularly if they perceive that the brand endorses discrimination against any group. Those CEOs who stood up against hate understand that, and are walking away because their consumers and employees expect nothing less.