CEO Activism can have a profound effect on a company's reputation when they use their platform to amplify the values of their company.
But what happens when a CEO's comments are not aligned with a company's values, or worse, directly contradict them? What if a CEO is not an activist, but a risk to the company's reputation?
Amidst Pride Month, the stories of Barilla and Chick-fil-A come to mind. (In the United States, June is Pride month; a month commemorating the LGBTQ+ community, officially declared by former US President Bill Clinton).
While many see these companies respectively as a fast food option or a major player in the pasta aisle, both have a richer reputational story.
Chick-fil-A vs. Barilla: Two Divergent Paths
Both Chick-fil-A and Barilla have made headlines for their CEOs who made disparaging comments about the LGBTQ+ community that directly contradicted their company values. In 2013, Barilla's chairman Guido Barilla, stated that he did not want to advertise with the LGBTQ+ community and did not support the adoption of children by gay families. Similarly, Dan Cathy, Chick-fil-A's president, has repeatedly taken a stance against marriage equality.
In both cases, the public reaction and outcry was swift with many vowing to boycott the companies; however, in response, each took divergent paths.
Barilla and Guido Barilla issued several apologies, met with gay rights activists, and established an independent diversity board, which helped reshape the entire organization. The company and CEO took a step back to redefine the community they wish to serve and showed that the Barilla brand is not just limited to certain groups of people. Recently, it received praise from the Human Rights Campaign for its diversity and inclusion initiatives. While it did not make it into our US RepTrak top 100, Barilla achieved a strong reputation in 2019 and a low percentage of detractors—or members of the informed general public that hold a negative perception of certain aspects of a company. It's clear that what Barilla did to recover from its reputational mishap is helping the company move in a positive direction.
Chick-fil-A did not take the same route to recovery as Barilla. Dan Cathy never officially apologized for his comments. He admitted it was a mistake for his company to take a stance on the issue and Chick-fil-A promised to cease donations to anti-LGBTQ+ organizations. That being said, it is interesting to see that Chick-fil-A has maintained a strong reputation and made it into the top 100 most reputable companies in the US.
What's important to note, though, is that the comments made by Dan Cathy stick with the company today as it still has a high percentage of detractors. In fact, Chick-fil-A has the highest percentage of detractors in the area of Citizenship when compared to others in the top 100. Chick-fil-A also has the second highest percentage of detractors in the Governance dimension when compared to these same companies. Generally speaking, this means that a significant segment of the general public does not believe Chick-fil-A has a positive influence on society, is ethical, or supports good causes.
The Price to Pay
There are costs and risks associated with having a high amount of detractors. Firstly, Chick-fil-A's refusal to support an inclusive community means their license to operate will come under question as they expand. This has already happened in places like Boston and Toronto, and they were completely denied licenses to operate in the Buffalo and San Antonio airports. Secondly, a chicken sandwich can only be so good, and if Chick-fil-A ever experiences a crisis with its products and services, there is a greater risk of damage to their brand because there is already a strong base of people who have negative perceptions of them.
So what is the lesson in all of this? The steps a CEO takes to be an activist need to properly align with a company's social purpose and values. Barilla had a misstep but was able to realign its company's values with its CEO's messaging and swift, transparent action. Chick-fil-A has not done this and its CEO continues to contradict its companies values, welcoming a future of greater reputational risk.