When organizations take a position on societal issues, they’re almost always putting themselves at odds with some of their own stakeholders, particularly at a time when almost every issue is politicized.
At Fortune’s CEO Initiative summit in Palm Beach last Thursday, a panel of business leaders discussed the ways companies can lead with purpose, even if they can’t make everyone happy all of the time. Citing events ranging from the death of George Floyd to the state of Georgia’s controversial 2021 election law overhaul to the more recent repeal of Roe v. Wade, the panel didn’t lack for real-world examples of situations in which companies felt compelled to take a position on an issue of societal importance.
The takeaway: No matter the circumstance, companies that have clearly defined their reason for existing and communicate that purpose across their organizations fare much better than those that attempt to walk backward into social responsibility after a crisis erupts.
“Just stating a purpose is absolutely not enough,” said Jessica Orkin, CEO of consultancy SYPartners, noting that’s just the beginning. While companies do need to establish a reason for being outside of their balance sheets, they also need to develop and implement processes for integrating that purpose into company operations and decision-making across their organizations. Doing so ensures that the company’s actions align with its words.
This is where companies often fail, said Janeen Gelbart, cofounder and CEO of Indiggo, the maker of an A.I. solution that helps companies implement strategies and purpose-driven initiatives across their businesses. “When it comes to implementation, especially at scale and across geographies, things break down because there’s a lack of strategic clarity at scale,” she said.
With different things residing in different corners of any organization, it can prove nearly impossible to imbue all employees or processes with the company’s core principles or to have them make decisions that reflect the company’s core values. That breakdown can lead to bad outcomes, in some cases the kind that make the evening news.
Companies today have more data and more insight than ever before into the places where the scaling of an organization’s culture or values is breaking down. But in an era characterized by heightened public expectations for business and a social media environment that can quickly turn on an individual or company, business leaders are often pulled into socially or politically charged debates by current events—a problem for which there is no technology solution. In those instances, Gelbart said, there’s no substitute for honesty and clear communication.
“I think that it’s really important for an organization to very, very, very clearly articulate their DNA, what their values are, what they believe in—to make sure they’re not just leaves blowing in the wind, trying to please too many people or trying to be popular,” Gelbart said. “I think if you can stick to that in the most neutral, central way, then it’s easier to defend your choices and what you believe in.”
All of the panelists agreed that companies that enter a crisis with a clearly defined purpose are in a much better place than those that try to define their positions on societal issues when things are already going sideways.
“If you’ve done work on this stuff beforehand, you get a lot more credibility and grace from your shareholders than if you get caught out on something and it’s not something that you have done anything about or cared about,” said Matt McDonald, president of Penta, a provider of data-driven solutions for stakeholder engagement. “You’ve got to do the work when no one’s looking.”
