Navigating profit, purpose and the political divide

Karen Vahouny is the business fluency coach for Ragan’s Communications Leadership Council.  As a former corpcomm VP, PR firm partner, and now owner of her own consultancy, Vahouny’s executive and investor relations experience has complemented her role in teaching at George Washington University’s Strategic PR Master’s program.

When I started my career in the corporate world in the ’80s, most of the management team came from an era where employees had a job for life. It wasn’t long after that when I noticed a distinct change. Companies that tried to balance the needs of all constituents – employees, customers, partners, the community, banks and lending institutions, and investors – seemed to (practically overnight) prioritize one above all others: investors.  There was a rapid shift to the “profit rules” mentality and an intense focus on hitting those quarterly earnings targets.

An emphasis on cost-cutting and job-cutting came next.  The result: a growing chasm between the top executives and the rank and file (in pecking order and in compensation).  Executive compensation data has only gotten worse; according to the Economic Policy Institute, the ratio of CEO-to-typical-worker compensation was 399-to-1 in 2021, compared to 59-to-1 in 1989 and 20-to-1 in 1965.

During this time, communication was largely top down.  A promotion meant access to more information – and therefore more control, power and influence.

The result of all these changes was reflected in reputation surveys highlighting growing worker distrust and dissatisfaction with management.

More recently, I’ve seen a positive shift: encouragement and reinforcement that companies should and can balance the interests of multiple constituents.  The Business Roundtable’s position statement about the purpose of a corporation was a visible and widely recognized step forward when it was issued in 2019.  In the statement, one of its members, Tricia Griffith, president and CEO of Progressive Corporation, said: “CEOs work to generate profits and return value to shareholders, but the best-run companies do more. They put the customer first and invest in their employees and communities. In the end, it’s the most promising way to build long-term value.”

While I cheered this statement then, I’m now very concerned about the pressures that organizations are facing – pressures that could chip away at this very worthy premise.

The Nov. ’23 DealBook Summit, hosted by the New York Times’ Andrew Ross Sorkin, featured a who’s who of speakers from government and business. This included Vice President Kamala Harris, Tsai Ing-wen, president of Taiwan, and Federal Trade Commission Chair Lina Khan, along with the CEOs of Disney, Nvidia and Warner Brothers Discovery.

Yet it was Elon Musk’s interview and comments that seemed to generate the most publicity in business and mainstream press. According to the Dec. 3 DealBook, “Musk used an expletive to address brands that pulled their advertising from X after he endorsed an antisemitic conspiracy theory on the social media platform, which he apologized for at the Summit,” noting that “the brands were trying to ‘blackmail’ him.”

One week after the summit, the leaders of three universities spoke on Capitol Hill. The prompt for their testimony before the House Education Committee was the fact that campuses have been the site of protests and emotional dialogue about the Israel-Hamas war. They sought some consensus on how school administrators should address this.

Although many would probably characterize this as public affairs, it generated a lot of interest from the business community.  It took a front seat in interviews and coverage including Andrew Ross Sorkin and his colleagues during their CNBC “Squawkbox” show in the following days.

This discourse offered a reminder that there are no clear dividing lines to identify the areas that may require “early warning systems” for communicators on how audiences may respond to a given issue.  Today’s communication channels are expansive with an expectation and demand for immediate timing.  With this, stakeholders have an even greater ability than ever to influence other stakeholders – whether through facts and well-reasoned ideas or through “alternative facts.”

As a result, our crisis management strategies and sentiment monitoring efforts require a widening stakeholder set.

DE&I: A new battleground

Diversity, equity and inclusion (DE&I) efforts are the latest driver of polarizing conflict.

Returning to the university professors’ testimony and the issue of DEI: The American Jewish Committee issued a statement on December 6 that began this way:

“After nearly six hours of testimony in which the university presidents from Harvard, MIT, and Penn made clear their schools’ commitments to free speech and academic excellence, they could not bring themselves to affirm that calling for the genocide of the Jewish people constitutes a violation of their institutions’ codes of conduct.

DE&I is an area that should benefit from the perspectives of human resources, legal, operations, and communications (given the audiences they represent and the associated laws and policies).  As communicators, we need to be at that “head table” with the group that’s reviewing, developing and updating the DEI policies.  We need to poke holes in the parts that just don’t make sense.  We need to keep asking questions and shine the light on the issues, examples and verbiage that we know will raise more questions than they answer.

Communicators will (very likely) continue to play an important and influential role in the continued development of our organizations’ DE&I position – in a very challenging environment. And DE&I is just one example of the landscape (or minefield, depending on one’s perspective) that we are and need to be helping our organizations navigate.

What next?

Sometimes, these events have little or no impact on results or are covered in a relatively short news cycle.  Other times, an event – and how leadership decisions are made and communicated – can be a lot more visible, affect employee, customer and investor relations, and have a meaningful impact on sales.   Case in point: the Anheuser Busch/Budweiser fiasco.

Finally, given all of this, what conclusions can we draw?  How should we prepare ourselves and prepare our leaders in what’s likely to become an even more turbulent environment, generating even more scrutiny and a widening set of potential audiences who can have an influence on the organization’s reputation and its future?

1. Follow business news.  It will raise your credibility and value within your organization. It also can help you spot emerging trends or areas of potential conflict.
2. Build your arsenal of “bests and worsts.” Have your ammo nuggets handy for advocating for or against a strategy or position your leaders are considering. A worst: The Boeing CEO’s four-day delay in sharing his next steps after the 737 jet exit door “blowout” last A best: Hilton. Enlightened leadership and consistent messages have, no doubt, resulted in the top spot in Fortune’s best places to work, as well as best large-company investor relations recognition and four other awards/nominations from IR Magazine’s prestigious annual competition last year.
3. Advocate straight talk. There may be times in which we can’t disclose it all, but we need to be truthful, candid and clear. Looking for a strong example of straight talk? JPMorgan CEO Jamie Dimon is a widely respected business leader with a following that extends far beyond banking. A go-to source on a range of geopolitical issues affecting business, he’s known (and appreciated) for his direct and sometimes blunt perspectives. His letter to shareholders in the most recent annual report is excellent.
4. Sweat the details. And this starts with sweating the words. The late Maya Angelou’s interviews and videos on the power of words are inspiring. We need to set a super-high bar for ourselves, especially when it comes to writing. It’s the center of what we do, from developing key messages to talking points to communication plans and from creating stories to scripts to social media posts (among many other roles).
5. Take a position. Stakeholders need their leaders to take a stand, so they know whether to stand with them. Equivocation is the enemy.

Companies can be good to workers, customers and society, while still making money.  There are still a lot of issues that need to be addressed (executive compensation being one), but I believe that conscience and capitalism can coexist.  (Full disclosure: I’m an optimist.)

Former Washington Post Reporter and a Pulitzer-Prize-winning Columnist Steve Pearlstein has written extensively on business and economic issues, including the role of companies in society.  He writes in his book, “Moral Capitalism,” “We need a new framework and a new vocabulary for talking about economic justice.”

I believe that we, as communicators, can help shape that new vocabulary.

One Response to “Navigating profit, purpose and the political divide”

Tom Mondloch says: February 20, 2024 at 10:19 am

Very insightful, Karen. Interestingly, I suspect we may see gender differences in leadership capacity to address these complex issues. What I mean is that I think women, on average, who have higher emotional intelligence, multi task more effectively, and are better able to tolerate the tension in balancing the range of corporate constituents. As this emerges, I think it will be incumbent on male leaders to be mentored to improve their leadership style for the 21st century and beyond. I think this bodes well for women in leadership.