Corporate Communication and the ‘Zeitenwende’
CEOs Need to Be Part of the Debate Without Encroaching on Politicians’ Prerogatives.
May 03, 2023
For years, corporate leaders have been increasingly expected to speak out on moral issues extending far beyond their business responsibilities. They are called on to stand up for the values of their companies – on such issues as diversity, migration and social justice. But any potential gains for a company’s reputation are offset by substantial risks. When the attitudes expressed by bosses clash with their companies’ actions or run counter to public opinion or the views of important groups, this may result in a loss of credibility and a public backlash – up to and including a consumer boycott.
The Zeitenwende [the ‘turning of the times’ proclaimed by German chancellor Olaf Scholz] and the escalating geopolitical conflicts have further heightened these risks. This is by no means limited to a company’s reputation. Today, everything is at stake: supply chains, sales markets and in some cases the entire business model. It will necessitate a readjustment of communications, first and foremost at the top. Because when the entire business is on the line – if not sooner – a judicious positioning becomes vital – and is thus inevitably the responsibility of the top management. Especially now, clear messaging is indispensable. But it is far from a hopeless cause. So how should top managers communicate within this trilemma: a value-driven approach, economic necessity and geopolitical constraints? Five guideposts can help to provide orientation:
First, the world of public policy has to be the starting point. Because policymakers set the rules and they alone have democratic legitimacy. And they are the only ones who can make value-based decisions outside the scope of business responsibilities. In the current situation, it has become even more important to mark the boundaries between these roles. That is because they define the limits of what companies can do and where they can assume responsibility.
Drama is off-limits
Second, this requires transparency and an open dialogue – because, by noting that policymakers take precedence, managers expose themselves to accusations of “passing the buck.” Here it helps to have the courage to openly address the resulting conflicts and consequences for companies and society. As a side effect: the value-driven debate on attitudes becomes a nuanced, fact-based discussion that highlights the decision-making options and the related costs. Third, companies should steer clear of contentious public disputes on fundamental geopolitical issues. In the midst of the most serious crisis for decades, the public, the business sector and politicians want to form a united front. Public confrontations will only put both sides under pressure and ultimately inflict damage. That does not mean that top executives should not advocate and vigorously defend positions on topics related to economic policy. But oversimplifying and dramatising the issues through narratives of fear is unacceptable.
Fourth, geopolitical complexity calls for a repositioning and rethinking of strategy management. Acknowledging the primacy of the political world has a practical impact on how companies position themselves and the approach they take. We advocate setting up a task force reporting directly to the CEO, with representation not only from public affairs, investor relations and corporate communications, but also from strategy and sustainability. Their task: ongoing, systematic and cross-functional comparison of the company’s own strategic agenda against geopolitical conditions. That is the only way to give due consideration to the prevailing dynamic – something that companies are unquestionably expected to do. Not least by the capital markets. Fifth, companies should make it clear that they see “what’s going on”. They and their bosses would be well advised to acknowledge the new realities and stop “fighting yesterday’s battles”. They can and must show that they are taking the escalating global risks seriously and are adapting their corporate planning accordingly. This is a question of entrepreneurial responsibility and strategy. But to some extent it means taking on a public position, too. It is also an expectation on the part of investors. Useful aspects to highlight in this regard include risk management, globalisation, diversification and resilience.
From that standpoint, the ‘Zeitenwende’ also presents opportunities for managers and their communication and policy teams: With arguments and facts, they can help to inject the perspective of companies’ economic and social responsibility into the debate. Some have already started. This demands an openness to dialogue, clarity and stamina. However, it broadens the public discussion and ensures that companies retain the necessary scope for communications and entrepreneurial activity.