Bill George Go To
discoveryour
truenorth.org

Bill George

Harvard Business School Professor, former Medtronic CEO

WA Post: In Trump’s White House, a Plum Appointment for CEOs Has Become a Reputation Risk

By Jena McGregor

Read on for Bill’s contribution to McGregor’s piece.

President Trump had a message Tuesday for any chief executive who may be deliberating whether to stay on his advisory councils in the wake of a public outcry about his response to the violence in Charlottesville: If you leave, there are others who can replace you.

“For every CEO that drops out of the Manufacturing Council,” Trump tweeted. “I have many to take their place. Grandstanders should not have gone on. JOBS!

The tweet highlights the conundrum CEOs who are members of Trump’s advisory councils have found themselves facing in recent days as they balance the rewards — and growing risks — of being associated with an unpredictable president. Should they remain, keeping their seat at a table that could help them influence policy decisions, rather than possibly passing it up to a competitor? Or should they leave, responding to the online furor of customers, the distraction of political debates or their own feelings about Trump’s response to Charlottesville?

“A lot of them went onto them thinking this is a pro-business president and we have an opportunity to influence what’s going on,” said Bill George, the former CEO of Medtronic and a professor at Harvard Business School. “Now, for many of them, the actions Trump is taking violate core principles that not only their companies, but they themselves, have.”

In other words, CEOs find themselves in the unusual situation of deciding whether remaining on a White House advisory panel — a plum appointment that offers a direct line to the president — is worth what has also become a reputation risk. “For a Republican president to be in dispute with the news media is one thing,” said Bruce Haynes, a founder of the bipartisan corporate reputation firm Purple Strategies who has a background in GOP consulting. “For a Republican president to be in dispute with the business community is not a happy place to be.”

The furor over the CEOs’ decisions began after Merck CEO Kenneth C. Frazier said in a tweet that he would be resigning from Trump’s manufacturing council. “America’s leaders must honor our fundamental values by clearly rejecting expressions of hatred, bigotry and group supremacy, which run counter to the American ideal that all people are created equal,” he said.

Frazier’s announcement followed a weekend when Trump came under fire for not explicitly calling out white supremacy groups for the violent protests in Charlottesville. Trump later made specific mention of the groups Monday, then Tuesday doubled down on his earlier remarks, telling reporters at Trump Tower in New York “there is blame on both sides.”

During the news conference, he was also asked why he thought CEOs were leaving his manufacturing council. “Because they’re not taking their job seriously as it pertains to this country,” he said. He added that “some of the folks that will leave, they’re leaving out of embarrassment because they make their products outside [the U.S.]. And I’ve been lecturing them, including the gentleman that you’re referring to, about you have to bring it back to this country.”

Frazier’s move prompted a flurry of questions about whether other CEOs, too, would depart Trump’s manufacturing council, which included 27 members when it was announced in January. Many did not, condemning violence and racism in carefully crafted statements but saying they would stay on to advocate for their workers or represent their industries.

“I have concluded that Johnson & Johnson has a responsibility to remain engaged, not as a way to support any specific political agenda, but as a way to represent the values of Our Credo as crucial public policy is discussed and developed,” wrote Johnson & Johnson chief executive Alex Gorsky.

Others went further, critiquing Trump’s response even as their companies said they would remain engaged on a council. Walmart CEO Doug McMillon said in an email to employees Monday that Trump “missed a critical opportunity to help bring our country together by unequivocally rejecting the appalling actions of white supremacists.”

McMillon, though, plans to remain part of the White House’s Strategy and Policy Forum. Others joined Frazier: Under Armour CEO Kevin Plank, Intel CEO Brian Krzanich and Scott Paul, president of the nonprofit group Alliance for American Manufacturing, each resigned from a manufacturing council, citing different reasons. Intel’s Krzanich, for instance, wrote that “I resigned to call attention to the serious harm our divided political climate is causing to critical issues,” while Paul simply said he was resigning “because it is the right thing for me to do.”

Soon after that press conference on Tuesday, the AFL-CIO released a statement saying its representatives on the council, Richard Trumka and Thea Lee, had also resigned. “We cannot sit on a council for a president who tolerates bigotry and domestic terrorism,” the statement read. “President Trump’s remarks today repudiate his forced remarks yesterday about the KKK and neo-Nazis.” (In a statement, Reed Cornish, assistant to the president, said “under this president, we’ve seen 70,000 new manufacturing jobs, record optimism among manufacturers and unemployment hit a 16-year low.”)

One former presidential adviser asked Tuesday why more didn’t go along with them. Lawrence H. Summers, who served as treasury secretary to President Bill Clinton and an economic adviser to President Barack Obama, wrote in an op-ed Tuesday that “every member of Mr. Trump’s advisory councils should wrestle with his or her conscience” and that “after this weekend, I am not sure what it would take to get the CEOs to resign. Demonizing ethnic groups? That has happened. Renouncing international agreements that have supported business interests? That has happened.”

Some management experts thought more could still resign, but they may go more quietly, whether to avoid being accused as “grandstanding” by the president or to keep from drawing attention. “For a lot of CEOs, it’s got to seem inevitable that this is going to keep happening,” said Aaron Chatterji, a professor at Duke’s Fuqua School of Business who worked with CEOs as part of President Obama’s Council of Economic Advisers.

Those who decide to remain could be weighing how much of their business is exposed to regulatory changes or government contracting decisions. With a president who likes to pride himself on personal dealmaking and appears to operate under “the theory of whoever’s the last person to speak with him influences the decision,” said George, staying on may be worth it, particularly with key agenda items like tax revision and infrastructure still on the horizon.

But those potential benefits must be balanced by a growing expectation of companies to take a stand on social issues. The debate about CEOs and Trump’s councils flared online in recent days as some tweeted lists of which CEOs had departed, directly appealed to corporate Twitter accounts for their CEOs to leave, or shared the hashtag #QuittheCouncil, a campaign by the online civil rights organization Color for Change. That hashtag accrued more than 28 million impressions over the past two days, according to data from the analytics firm Brandwatch.

Julie Hootkin, a partner at the communications firm Global Strategy Group, said their surveys have found that 84 percent of Americans say businesses have a responsibility to work for change on societal issues. Millennial employees have also been shown to value “activist” CEOs. “What many companies are grappling with is there are things that are important to their employees that may be different than what’s important to the bottom line,” she said.

In the end, the CEOs — and their boards — will have to believe Trump’s councils are worth their time. Jeffrey Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management, said “too many of them are sitting there like potted plants, being used for P.R. photo opps and insisting afterward their presence is not an implied endorsement.”

CEOs complain a lot about the distractions that activist investors bring, he said, “but that pales in comparison to the time that’s going into Washington these days. If they don’t feel they get much in return, then is it worth it?”

This content was originally posted a WashingtonPost.com on 8/16/17.