CEOs should stop worrying and learn to love employee activism

Maybe all this energy is worth capitalizing on?
Maybe all this energy is worth capitalizing on?
Image: REUTERS/Mike Segar
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Since May, I’ve been teaching professional responsibility to MBA students at the NYU Stern School of Business against a backdrop of thunderous debate over furloughs, layoffs, compensation, remote work, racism, sexism, and wider questions of social justice. I can tell you firsthand, it is a pleasure to participate in discussions with students so attuned to the complex ethical dilemmas their employers face.

As our course proceeded, some of my students engaged in activism to improve their employers’ approach to inclusion and organizational culture. They evinced a pervasive desire to be involved in shaping solutions in the long-term interests of the organizations. The disconnect between the “woke” and angry rhetoric of activist mobs keeping CEOs up at night, and these constructive, nuanced discussions could not have been more striking.

At the same time, our business leaders—whether they admit it publicly or not—feel besieged. Turnover among US chief executives hit record levels back in January, months before American companies found themselves engulfed in the Covid-19 pandemic and a national reckoning over racial justice in the wake of George Floyd’s death in May.

Threatened by mounting calls for dramatic change, leadership teams are focusing on performative responses to deflect reputational pressure. Anti-bias training initiatives proceed on limited evidence that they can be effective, and are widely dismissed as pointless. Aggressive attempts by senior leaders to address staff concerns over values and inclusion are backfiring in a paranoid, litigious atmosphere where sensitive issues—particularly those involving personnel—cannot be openly acknowledged and discussed.

Leaders understandably feel paralyzed. But the oppositional dynamic that has been developing between corporate leaders and employees is unhelpful, and even counterproductive. Instead, the time has come for CEOs to stop worrying and learn to love employee activism.

Who is best equipped to address issues like racism and climate change?

For many companies, the most pressing challenge is to find a way forward on diversity, equity, and inclusion. Empty statements of solidarity with #BlackLivesMatter protestors have predictably been derided as mere rhetoric. Even earnest reflections on white fragility and unconscious bias do little to address the structural and economic dimensions of systemic racism.

Companies must learn to address challenges and solutions without seeming so deaf and defensive. Bias training cannot move the needle without changes in the hiring practices and criteria for promotions, or in the design of products and services; or in the corporate lobbying and political financing practices that poison the system.

Even companies that design productive approaches to resolving racial justice issues in the US will face challenges. Some are struggling to justify their support for American protestors in the context of their more muted response to pro-democracy protests in Hong Kong or to the Chinese government’s treatment of its Uighur population. Questions about the interactions between ethical conduct and commercial imperatives are growing in scale and prominence, with limited precedent on how to solve them.

Indeed, there is no simple path toward addressing such systemic risks as the novel coronavirus, climate change, societal inequality, and political polarization. Addressing these issues, while coaxing fresh investment to address broad educational and economic disparities, will take more time and require greater effort than the greatest HR unit could muster. But younger employees already show strong, bipartisan alignment on diversity and inclusion (as well as environmental responsibility) and are arguably better disposed to grapple with these big-picture challenges than their leadership teams.

It’s always tempting to think that the challenges we face today in organizational culture will be solved once monolithic, conformist leadership teams dominated by white, middle aged men are replaced. Indeed, diverse teams make smarter, more ethical decisions. But we will all need to get better at negotiation, conflict management, and recognizing our own biases and limitations. The business environment demands it. You cannot run a large company today without having to navigate extraordinarily complex trade-offs involving values, perceptions, and commercial imperatives. And business leaders of the future will have to accommodate employees who embody ever more disparate values, political views, and opinions.

Ethical leadership is especially needed now

It should surprise no one that anxiety is rife in American workplaces. Pathogens generate distrust, conformism, authoritarianism, and xenophobia. They heighten sensitivity to both moral disgust and moral elevation—meaning that the ethical tone set by leaders has never been more impactful.

Amid a chaotic election cycle, a dramatic exploration of systemic racism, and wild economic swings, questions about political and social identity inevitably pervade the workplace (even remotely), firing up tensions over power, money, and strategic direction. Already it is clear that decisions made solely by secretive, senior committees will continue to invite hierarchical conflict and intergenerational hostility.

As companies try to navigate an unprecedented set of “externalities” complicated by existential questions over the role of capitalism in society, they might better answer those questions by harnessing the energy of those very workers who are already pushing for more ethical and responsible business models. For example, Omidyar Network has just relaunched its Ethical Explorer toolkit, which aims to help engineers, designers, and product managers understand how their products and services impact society and then to negotiate internally for change. This toolkit could serve as a model for how we might better consider the financial, social, and environmental impact of business decisions and innovations in many other sectors and contexts.

Companies cannot solve all their ethical challenges simply by encouraging more open debate and democratic decision-making. In the short term, tensions that otherwise would have remained hidden may surface. But slamming the lid down on these tensions will not work. By involving today’s employee activists, companies can move decisively to reduce simplistic, oppositional thinking and encourage broader ownership of difficult decisions. They might even help us forge a better future for capitalism.