Knowing when to shut up

It’s become known as the Gillette moment. It should have been a wake up call to companies and associations that there are many topics that the leaders of these entities should simply stay away from altogether. Why do entities stray from their charter, especially on controversial topics where irrespective of the virtue of the opinion, a significant portion of stakeholders will be put off?

In life, we have to accept that there are differences of opinions. There is also a saying we’ve all heard: “I disapprove of what you say, but I will defend to the death your right to say it”. If all persons thought exactly the same, the world would be a pretty dull place. In situations like that, mature individuals discuss respectfully and rationally, and can agree to disagree.

In the corporate world, different rules apply. I’ll use the term “corporate” in place of any entity whose primary function is NOT around the topic at hand (that includes companies, not-for-profits, sporting codes, associations & unions etc). All corporates have a purpose, usually around providing a product or service to meet the needs of a customer. An association/union’s purpose is to stand up for the interests of their members, and advocate about only the topics that represent those members. A Union voicing an opinion on for instance Industrial Relations is part of its remit, likewise a business having a say on legislation that directly affects its business – directly affects being the key words.

So what happens when a corporate forgets its purpose? They expose themselves to a Gillette moment, exemplified by when one of the world’s largest companies (Proctor & Gamble) thought it was a good idea to run a campaign that criticised nearly all of its customers. When you are selling razers to predominantly men, telling them that masculinity is toxic has a fair chance of upsetting most if not all of your target market. The outcome was losing 30% of its previously dominant market share and a $12 billion permanent loss in shareholder value, and even now 4 years later many customers who left the brand will never come back.

Gillette aren’t alone in using corporate clout to sprout a message that then backfires. Just this week Alinta quietly pulled it’s $20+ million per year sponsorship to Cricket Australia because of the vocal opposition of particularly Captain Cummins in relation to climate change. Hot on the heels of that mistake was Netball Australia to turn on its major sponsor (Hancock Prospecting), blaming Gina Reinhart for some comments about Indigenous Australians from her late father back in the 1980’s. Netball Australia is still reeling from the $15 million per year hole in sponsorship, despite the Victorian Government deciding to chip in to support a national team (why?). Don’t bite the hand that feeds you.

Over the past decade, there has been a growing push for corporates to take on ESG (Environmental, Social & Governance) issues, topics that are usually the domain of Government. To many corporates, it seems that the lines have become blurred, where they feel they need to take a stance on many of these topics.

They don’t. There should be sufficient maturity amongst the senior ranks of corporates to realise that these topics are a matter for individuals. Individuals can have opinions, and corporates should stay mute. Individuals who find themselves in positions of power should also refrain from abusing that privilege, and respect that the money and the image of the corporate needs to be used for the benefits of its stake holders. Sure, everyone is entitled to their opinion and can spend their own money however they like, but don’t use shareholder funds or other resources (such as internal communications) to promote any message outside of the corporate objectives.

Have these companies surveyed their stakeholders before they take a stance on a topic? Superannuation funds for instance have a “sole purpose test”, which is to maximise the financial retirement benefits of its members. There are heavy penalties for breaching this test, including disqualification and/or fining the trustees. But there isn’t a single fund that has polled its membership or gained approval to spend any funds supporting any stance on anything outside of the sole purpose test. One day, these entities and persons will be called to task to justify why they haven’t fulfilled their core duties.

It is therefore perplexing when some of the most high profile corporates in Australia (Qantas, Wesfarmers, CBA, BHP, Rio Tinto, Coles, Woolworths and many more) continue to dig themselves in a deeper hole when it comes to getting involved in ESG topics. Whichever way the referendum on the Voice goes, taking a stand for either side will alienate a significant portion of their key stakeholders, whether that is employees, customers, or shareholders. Other no-go topics include climate change, gender issues, religion and a myriad of similar divisive topics. The only reason that can explain why they are taking a stand on this is either to show their virtue (whilst using other people’s money) or to curry favour with the Government. As can be seen from the outcome of the support these same companies gave to the Industrial Relations reforms last year, the reciprocated support isn’t there. You’d think they would have learned their lesson by now.

There comes a time when the best thing to say is nothing at all. Hopefully corporate Australia will learn to stick to its knitting in the future on all these topics and know when to simply shut up.

Words from the wise

We have been given two ears and one mouth. That’s a good indication that we should use them proportionately and listen more than we speak.

“It is better to keep your mouth shut and appear stupid that open it and remove all doubt” (Mark Twain)

As always, Onwards and Upwards!

Fred Carlsson

General Manager

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