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Leadership at a Crossroads: Addressing the Stakeholder Revolt

October 25, 2019

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Today's Leadership Challenge: Thriving on Stakeholder Chaos

November 26, 2018

The secret to managing is to keep the five guys who hate you away from the four guys who haven’t made up their minds. Casey Stengel, manager, NY Yankees, 1949-1960

 

There is this new thing that is sacking leaders right and left. The old thing was firing leaders for poor performance – not enough revenue, profits, donors, votes or members. This new thing is leaders getting pressured, undermined or fired because of stakeholders – employees, customers, women, minorities groups, children, regulators – who are not shareholders.  Just ask former CEOs John Stump at Wells Fargo, Travis Kalanick at Uber, Leslie Moonves at CBS, John Schnatter at Papa John’s, or Elon Musk at Tesla (who lost his chairmanship).

 

The leadership pressure is not just about being canned. Jeff Bezos, richest man in the world and CEO of Amazon, the King Kong of retail, was seemingly pressured into upping the company’s minimum wage by negative press about how they treat employees. Amazon’s headquarters sweepstakes selection of the expensive New York City and Washington D.C. areas has drawn some harsh criticism for favoring coastal elites while panning flyover country, as urban vs. rural increasingly becomes the epicenter of the country’s growing political divide.

      

Google CEO Sundar Pichai squirms as an estimated 17,000 workers walk out in protest of kid-glove treatment of key employees’ sexual misconduct. Under Armour makes the embarrassing announcement that expenses incurred at strip clubs are no longer a legit business expense. Who knew? And Pope Francis, a media darling just months ago, is in a fight for his and his church’s authority over sexual misconduct that has gone on for ages.

 

It is not just these leaders – leadership itself is under siege. Last year Edelman reported the largest world-wide drop ever in trust of corporations, government, media and NGOs while CEO credibility fell 12 percent. You can either believe leaders are being de-authorized around the world because they have collectively grown stupid overnight – or something has shifted dramatically to change the rules.

 

In none of the above examples did the initial pressure come from traditional board members and shareholders regarding results. No, it was customers, employees, women, minorities, kids, communities – who instigated pressure on the leaders. Activist groups form around myriad topics: Google employees recently protested a bid to develop a search engine for China that enabled censorship and Microsoft petitioned their bosses to cancel a contract with ICE that related to immigration concerns.

  

None of these groups would have historically been able to exert this amount of pressure. Yet this stakeholder sea change is just getting started. California Governor Jerry Brown recently signed a law requiring public companies headquartered there to have one female board member by the end of 2019 and then two on boards of five and three on boards of six by July 21, 2021. Elizabeth Warren is promoting her “Capitalism Accountability Act” requiring corporate directors to focus more on the interests of all major stakeholders that includes provisions for employees to elect 40 percent of board members. The University of Texas at Dallas Institute for Excellence in Corporate Governance is working on a governance model that prioritizes key stakeholder relationships including the local community. BlackRock ($6T assets-under-management) earlier this year announced their intention to contact about 300 companies in the Russel 1000 that have fewer than two women board members to ask about their plans for boardroom and employee diversity. Activist stakeholders are the new sheriff in town and it has profoundly changed the role, the risk and demands of leadership.

 

Dueling ‘Activist’ Stakeholders 

  

It gets even more chaotic and challenging. If satisfying activist stakeholders is not enough, how about responding to one group of activist stakeholders locked in a battle with another?

 

If you are a Senior Pastor at a church, the growing divide between progressive and conservative, millennial and baby boomers, male and female increasingly now makes the tiniest decisions – what to call traditional and contemporary worship services, music selection, phone vs. text communication with parishioners – like a bright laser pointing to who is valued and who is not. 

 

If you are the leader of a private school, the divide among conservative/progressive students and/or parents means that even the smallest of decisions – around inclusiveness, bathrooms, reading lists – can lead to torches and pitchforks with the board, the press, and the community.

 

If you are the speaker of the Democratic-led House of Representatives, herding members ranging from avowed socialists to moderates from red districts, you are bound to encounter dissatisfied and even rebellious stakeholders on legislative priorities.

 

If you are CEO at Nike, Chick-fil-A, Hobby Lobby, the NFL, Facebook or Twitter – to name a few – you have already alienated part of your customer base over political issues. 

 

 If you are headed to a Thanksgiving family meal, you will likely encounter others who have a very different world view from yours.

 

Henri Nouwen said, “Community is the place where the person you least want to be with lives.” While the conflicts of our growing tribalism have gotten much attention, the new demands it places on leaders is under-reported but not underfelt by leaders.

 

What is Behind the Stakeholder Revolt – Oppositional Activism

 

Our tribal associations have hardened and increasingly define our personal identify. In Yuval Harari’s insightful TedTalk earlier this year on fascism he contrasted what he called “nationalism” vs. “fascism.” Nationalism tells me my nation (group) is unique and obligates my support. Fascism tells me my nation (group) is supreme and obligates exclusively my support. There is no need to care about anyone else. Further, fascism takes our very complicated identities comprised of our family, political party, faith and the like and simplifies them into one thing – nation (group) – in or out, good or bad, for us or against us. Finally, in fascism we magnify our own “good.” His description: “When you look in the fascist mirror, you see yourself more beautiful than you are.” So many of our tribes these days have taken on this distorted identity. 

 

Embracing a narrow, zero-sum stakeholder identity backed by magnified self-righteousness is a lethal combination. While many stakeholder causes are noble – women’s rights, racial justice, worker treatment – they are also often less willing to compromise and unify for a common purpose. Unity is not the same as uniformity, yet if we are not careful, we deify uniformity, jettisoning diversity. Interestingly, at a time when so many organizations are promoting diverse teams to more effectively collaborate, innovate and problem-solve, these narrow-interest closed tribes represent just the opposite.  

 

The net result is “oppositional activism”: elevated stakeholder activism focused on opposing other groups. 

 

Relational Leadership: Herding the Rebellion

 

“Get the right players on the bus.” That was the wise counsel of Jim Collins in Good to Great. In today’s highly divided world, I would like to amend it slightly. “Get, develop, keep – the right relationships on the bus.” A C-Suite executive recently shared that a former CEO interpreted Collin’s statement as all about getting the right people off the bus while ignoring the part about the right people on the bus. Short-term, getting people off the bus may be important, but long-term leadership is all about right relationships on the bus.  

 

In a tight labor market amidst a raging talent war, a reminder is warranted: We acquire talent, but we develop productive relationships. Developing productive relationships in this divided world is the defining mission for today’s leaders. 

 

So how are leaders to survive and even thrive in this rugged new leadership territory? It requires Relational Leadership strategically focused on three keys:

 

1.     Tribe management: It starts with identifying your key stakeholder groups – formal, informal, internal, external – and giving priority to building relationships with them to better understand their uniqueness and importance but not their supremacy.

 

It also means showing how their uniqueness is most sustainably powerful and influential when it stays engaged in productive relationship with other, even oppositional groups – the whole. Leaders must understand the “parts” but they are not in the parts business, they are in the “whole” business. BlackLivesMatter, #MeToo, Tea Party, unions, MAGA – they arose because groups were left out and discounted. Leaders turn unique tribes into nations (the whole) – without sacrificing tribal identity.

 

2.     Constructive dissatisfaction. A key role of a leader is to dissatisfy others. When dealing with oppositional groups passionate in their beliefs and preferences, it is inevitable that your decisions, attention and actions will at times dissatisfy them. Embrace it – not because you want to but because you must. It is one of Patrick Lencioni’s five temptations of leaders – to be popular and please everyone. It is an unattainable goal and will burn you out. 

 

Former CEO Tom Monahan captures the challenge: “Look, I’ve got three groups of stakeholders — my shareholders, my customers, and my employees. If I were to fully satisfy any one of the three, we would be bankrupt. As a CEO, my job is to keep them all constructively dissatisfied in the name of making the enterprise successful so that the enterprise can deliver to them all.”

 

Constructive dissatisfaction of competing and even oppositional stakeholders is the never-ending job of relational leaders. Productive conflict serves a higher purpose than simply pleasing everyone. Jonathan Haidt and Greg Lukianoff in their excellent The Coddling of the American Mind describe a society that has parented so protectively as to create “fragile” kids. Constructive dissatisfaction helps leaders develop “anti-fragile” stakeholder groups.  Struggle and dissatisfaction are part of the deal. Own it. 

 

3.     Purpose as “petty-lube.” Purpose is the great lubricant for the pettiness/smallness of tribal stakeholder conflict. “He who has a why to live can bear almost any how,” said Friedrich Nietzsche. Big purpose trumps small pettiness. Purpose is a powerful magnet for attracting, retaining, and sustaining talented relationships. Purpose is bigger than strategy and more lasting than profit – less about success and more about something we are faithful to regardless of success. Purpose helps us get through the failure and un-success that is so fundamental to longer-term development.  

 

Most leaders I have worked with have fretted from time to time about the elusive nature of purpose. Here and vibrant one season, dim and less powerful in the next; meaningful and energizing for one group and met with cynicism by another. The marriage of leader and purpose, like most marriages – has good days and not. The key is not finding the perfect purpose or purpose tagline. The key is to live and lead purposefully every day. The Relational Leader asks this question everyday: Is my purpose big enough to get/keep the right relationships on the bus? 

 

Relational Leadership is this: get the five guys in one tribe who hate the four guys in the other tribe to productively carry out our purposeful mission.        

 

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