HBSWK: Op-Ed: As America Recedes from Global Leadership, Its CEOs are Stepping Up
As America recedes from global leadership under President Donald Trump’s “America First” policies, a new generation of business statesmen is stepping up to take on global issues of monumental importance: global trade, climate change, job creation, and healthy living.
At the G20 summit in Hamburg, Germany, earlier this month, President Trump was “odd man out” on both global trade and climate change. China, Russia, and India joined the European nations in fostering global trading commitments and climate change. As Trump pulled the United States back, cynics started referring to the G20 as the G19 + 1.
For business leaders, the early optimism following Trump’s election that corporate taxes would be reduced, America’s infrastructure would be improved, and an improved healthcare system would be created has faded away. Many business leaders find President Trump’s statements on trade, climate change, NATO, immigration, and energy in direct opposition to what they need to build their companies. As a result, they are stepping up to take the lead on vital global issues.
Business leaders have a history of stepping in
This is the fourth time in my lifetime that CEOs have rallied to take on important causes. The first came during World War II and its aftermath when the future of the world hung in the balance and depended heavily on the capabilities of American business. The second came in the late 1960s when riots in major cities like Los Angeles, Detroit, and Washington, DC, woke CEOs to the reality that race issues in major metropolitan cities had to be addressed. The third instance came in the 1990s when global opportunities arose for US-based companies to lead their respective industries through a sustained period of growth.
This latest awakening, characterized by the outspokenness of business leaders, marks a sharp break with the past 15 years when CEOs kept their heads down to concentrate on running their own businesses. In part, they were reacting to the challenges of the Great Recession as well as the meltdowns of Enron, Arthur Andersen, and WorldCom. Those tumultuous times forced CEOs to focus on cost-cutting and strategic reorientation. As corporate earnings recovered following the recession, CEOs have maintained very disciplined spending levels and shared their growing cash flows with investors in the form of share buybacks.
However, these leaders are wise enough to know they cannot simply cut their way to prosperity. To sustain earnings growth, global companies need US government policies that support global growth. That’s why they are focusing now on issues like job creation, favorable trade relations, economic growth, and corporate tax reform that are essential for sustaining earnings growth and shareholder returns.
Concerned about the future of their global businesses, many of them are determined to go their own way. As GE CEO Jeff Immelt wrote when the president announced the US withdrawal from the Paris Climate Agreement, “Climate change is real. Industry must now lead and not depend on government.”
Immelt is not alone. Never before in modern history has the business community so uniformly opposed an action by any president, Democrat or Republican. CEOs speaking out against Trump’s climate decision ranged from energy executives like Exxon’s Darren Woods, Dow’s Andrew Liveris, and Tesla’s Elon Musk to Disney’s Bob Iger and JP Morgan’s Jamie Dimon. Iger and Musk immediately resigned from the group of powerful CEOs making up Trump’s Strategy and Policy Forum. Goldman’s Lloyd Blankfein even created a Twitter account in order to issue his first tweet objecting to the President’s decision.
A responsibility to be heard
Immelt’s statement is a clarion call to all CEOs to engage personally in public policy issues. The climate agreement is only one of their many concerns. Many CEOs are assuming leadership for global issues essential to their business strategies. For example, PepsiCo’s Indra Nooyi is advocating for healthier foods, and Unilever’s Paul Polman continues to champion greater sustainability. Health care executives are voicing vigorous public opposition to the Republican health care bill pending in the Senate.
In late June, 17 high-tech CEOs, including Amazon’s Jeff Bezos, Microsoft’s Satya Nadella, and IBM’s Ginni Rometty, met with President Trump to talk about modernizing government technology. For these CEOs, hiring skilled workers, global trade, and H1B visas were also high on their agendas.
Technology executives such as Apple’s Tim Cook and Salesforce’s Marc Benioff have voiced their concerns about the impact Trump’s immigration policies are having on hiring skilled workers, as well as chastising former Republican governors Indiana’s Mike Pence (now vice president) and North Carolina’s Pat McCrory for enacting anti-LGBT policies in their states.
In the last four months, US hiring has dropped to a meager 150,000 new hires per month, 17% lower than the 2016 monthly average of 180,000, in spite of the president’s vocal support for hiring in America. At the end of May, the number of unfilled jobs (6.04 million) nearly equaled the number of unemployed Americans (6.45 million).
There is a “skills mismatch” between what workers can contribute and what companies need from their employees. To address this, the president recently announced his backing of job training and apprenticeship programs, although no specifics have been announced. Benioff has taken up the apprenticeship cause with the goal of creating five million training jobs. In June, a group of 82 CEOs on the Business Roundtable took out full-page advertisements in the Wall Street Journal and New York Times supporting Trump’s proposed apprenticeship programs.
Will this upsurge in CEO engagement last, or is it merely a passing thing? From talking regularly with myriad CEOs, I am convinced it is here to stay. America’s CEOs know what is at stake: nothing less than America’s leadership in the global world. America is blessed with corporate leaders whose companies dominate their global markets and who know the imperative of global industry leadership.
They also know a leadership vacuum when they see one, and they recognize how important their voices are at this vital turning point in US history. That’s why they are stepping up now to address these complex global issues.
Bill George is Senior Fellow at Harvard Business School, former Chair & CEO of Medtronic, and author of “Discover Your True North.”
This content was originally posted on HBSWK.hbs.edu on 7/19/17.