Trump team resignations show CEOs adhering to core principles

After the president’s initial response to protests in Charlottesville failed to condemn the hatred and violence of white nationalists, Merck CEO Kenneth Frazier quit the American Manufacturing Council, a group of CEOs that advised the White House. Frazier said his decision was “a matter of personal conscience” and “a stand against intolerance and extremism.” 

But the real lesson that other CEOs and leaders should take from Frazier’s actions isn’t when and how to condemn certain actions or speech, or whether any specific comment is good or bad. What Frazier and Merck underscore today is the advantage held by businesses and leaders that have already done the hard work of defining their worldview and grounding their organizations in a commitment to a core set of values.

{mosads}Whatever the issue, for the CEO of a public company to challenge the president is never an easy decision, and no CEO makes it lightly. But when CEOs hold a core set of beliefs and principles and have articulated a corresponding set of commitments around how they intend to conduct themselves and lead their companies, the imperative — no matter how difficult or bold — is clear.

Equally important, their stakeholders — employees, customers, investors and partners — not only support them but expect them to do what must be done. Instead of straddling the line and offending no one, these organizations are building brand equity by standing for something in a world desperate for leadership.

In the case of Merck and Frazier, many other leaders immediately recognized the decision as a true reflection of his long-standing beliefs and values, not just a short-term play for publicity.

Other CEOs have taken stands similar to Frazier’s over the last few months. After the Trump administration’s executive order banning immigration from seven predominantly Muslim countries in February, Starbucks CEO Howard Schultz reiterated the company’s longstanding commitment to hiring from hard-pressed groups, such as refugees and veterans.

He also announced plans to hire 10,000 refugees around the world over the next five years. This was no frantic, one-off reaction intended to satisfy a fickle public, but a sincere expression of values Starbucks has long stood for.

It’s not just compassion for refugees. Faced with the prospect of repeal of the Affordable Care Act, Starbucks had little trouble formulating its position. A staunch supporter of expanding healthcare access, Schultz told all his employees that they would be guaranteed health insurance through Starbucks if they were to lose their coverage after a repeal of the law. 

Similarly, after the White House’s decision to withdraw the United States from the international Paris Agreement, which had the the goal of limiting global greenhouse gas emissions, Elon Musk of Tesla and Bob Iger of Disney quit a separate group of American business leaders that had been working with the White House.

Both Musk and Iger have demonstrated long-standing support for measures that would reduce the negative effects of climate change, and their decisions followed clearly from their beliefs and their companies’ values. There was no late-night, cost-benefit analysis of the perils and opportunities of taking a stand. It was expected. 

Leading a company while being animated by values takes much more than just saying the right things publicly. What businesses and their customers need are leaders and CEOs who make strategies and decisions based on their beliefs and a clear corporate ethos, rather than politics or business as usual. 

The lesson for CEOs: Spend less time evaluating the risks and rewards of speaking out on certain issues, and start spending more energy on aligning your organization around what it believes and stands for. This means three things in particular for business leaders:

1. Establish a clear and coherent set of values and make sure they’re understood throughout the company.
2. Develop a framework for employees and managers to translate those values into real behaviors and principles.
3. Create a business environment that not only allows people to experiment with living by those values every day, but also promotes and celebrates those who do so best.

In a moment always consumed by the next headline (or tweet), taking the long view on values can be a lot to ask of a company’s leadership team. But even those executives most focused on performance need to recognize that customers are expecting more from the brands they love. Increasingly, the brands that know what they stand for are the ones that win. 

Michael Eichenwald leads the advisory practice at ethics and compliance firm LRN and advises companies on leadership and how to build ethical cultures.

The views expressed by contributors are their own and not the views of The Hill.