For years, company bosses have been increasingly confronted with moral demands beyond their narrower corporate area of responsibility. They should stand up for the values of their company – from diversity to migration to social justice. But the potential reputational gain is offset by substantial risks. If the attitude taken by bosses collides with actual corporate practice or the views of the public or important groups, there is a risk of loss of credibility and public punishment, up to and including a boycott of purchases.
The turning point and the escalating geopolitical conflicts have once again significantly increased the risk. This is by no means just about reputation – now it's all about the big picture: supply chains, sales markets and sometimes even the entire business model. This forces a readjustment of communication, first and foremost for the boardrooms. Because at the latest, when it comes to the big picture, clever positioning is a must – and a matter for the boss. Right now, the explanation of one's own position is inevitable and by no means hopeless. So how should bosses communicate in the trilemma of value orientation, economic constraints and geopolitical constraints? Five milestones can serve as orientation:
First, the primacy of politics should become the starting point. After all, politics sets the rules of the game, and it alone has the democratic legitimacy to do so. And only it can make value decisions that go beyond the corporate area of responsibility. Explicitly clarifying this distribution of roles has become considerably more important for bosses in the current situation. Because it marks the limit of what companies can achieve and take responsibility for.
Dramatization is taboo
Secondly, this requires transparency and an open dialogue, because the reference to the primacy of politics may sometimes be commented on as "evading one's own responsibility". This is where the courage to address the associated conflicts and consequences for companies and society can help. Side effect: The value-driven attitude debate becomes a more differentiated, fact-driven discussion and makes the decision-making options and their price clear. Thirdly, public disputes over fundamental geopolitical issues should be taboo for entrepreneurs. In the midst of the most serious crisis in decades, people want business and politics to pull together, especially on existential, fundamental geopolitical issues. Public confrontation overwhelms and damages both sides. This does not mean that bosses should not argue and wrestle hard in public on economic policy issues. However, simplification and dramatization through fear narratives are taboo.
Fourth, geopolitical complexity requires a new set-up and strategic management. The primacy of politics has a practical influence on the set-up and approach. We recommend setting up a task force that is directly linked to the head of the company, in which strategy and sustainability are represented in addition to public affairs, investor relations and communication. Their task: permanent, systematic and cross-departmental alignment of their own strategic agenda with the geopolitical framework conditions.
A turning point as an opportunity
This is the only way to adequately take into account the current dynamics – a definite expectation not least of the capital market. Fifth, and finally, companies should make it clear that they "heard the shot." Companies and their bosses are well advised to acknowledge the new realities and no longer fight the "battles of yesterday". They can and must show that they take the intensified global risks seriously and adapt their business planning accordingly. This is a question of corporate responsibility and strategy, but also partly of public attitude, and also a demand of investors. Helpful keywords here are risk management, globalization, diversification and resilience.
From this point of view, the turning point also offers opportunities for bosses and their communication and policy teams: They can contribute to bringing the perspective of corporate economic and social responsibility into the debate with arguments and facts. Some have already begun to do so. This requires a great deal of willingness to engage in dialogue, clarity and stamina, but it expands public discussion and ensures communicative and entrepreneurial leeway.
Michael Reinert is Chairman and Hans G. Nagl Senior Managing Director of the consulting firm FTI Consulting.