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How Embracing Employee and Corporate Activism is Beneficial for Business Leaders

For a long time, Milton Friedman’s theory of business ethics – that a company has only a responsibility to its shareholders – was the most widely accepted theory of conducting business throughout the United States. As a result, employee activism that pushed for businesses to more seriously consider the employees, environment, and community has been quite controversial among most corporate leaders throughout much of modern history (Briscoe & Gupta, 2021). However, this did not stop employees from working toward social goals in the workplace. Pioneering employee activist groups from the 1970s, often led by women and minorities, sought to establish communities within their corporate organizations and champion equal rights and antidiscriminatory policies (Briscoe & Gupta, 2021). In the 1990s, these groups transitioned from being perceived as agitators to becoming champions of progress within their organizations, gaining newfound legitimacy and corporate sponsorship and ultimately being rebranded as employee resource groups (Briscoe & Gupta, 2021). Now, in the 21st century, consumers have begun to call on corporations themselves to use their power to benefit the stakeholders by working to combat social and political injustices. These decades of change have culminated in a shift in the business world; some companies and leaders are starting to adjust to accommodate and embrace both employee and corporate activism, while others hold firm on Friedman’s stance. This article will address the growing prominence of employee and corporate activism, the ways in which leaders can adjust to this new reality and the benefits that companies can gain by engaging in social activism.

A 2019 Weber Shandwick survey revealed that 75 percent of U.S. employees believed that employees have the right to speak up against their employers, reflecting a growing acceptance of employee activism (Briscoe & Gupta, 2021). In the past decade, two in five employees in medium to large firms began advocating for social activism within the workplace, including critiquing employer practices. (Briscoe & Gupta, 2021). Consumer sentiment has also evolved in favor of companies taking a stand on social and political issues. More than two-thirds of consumers desire companies to become more involved in these matters (Deloitte, 2020). This aligns with a broader global trend, as seen at the 2020 World Economic Forum, where purpose and ethics took center stage, reflecting the sentiment of nearly 50 percent of business and HR leaders who believe their organizations should broaden their purpose to include all stakeholders and society at large.

Societal expectations, coupled with increased worker empowerment due to low unemployment rates in many countries, have placed human concerns at the forefront for both organizations and society (Schwartz, Denny & Mallon, 2020). A 2019 Gartner study found that an overwhelming 87 percent of employees worldwide believe that businesses should take positions on social issues relevant to their operations (Stig & Konrad, 2020). In this era of heightened awareness and activism, the workplace and corporate world are witnessing a transformative shift towards greater social responsibility and engagement, driven by the voices of employees and the expectations of consumers. Public perception and pressure, both internal and external, are some of the many reasons that social enterprises have begun to emerge.

Employee activism can be defined as the concerted efforts of employees to address societal issues connected to their employing company (Briscoe & Gupta, 2021). This activism encompasses a range of activities, including advocating for change within the organization, countering certain practices, or using the company as a platform to draw attention to broader societal issues, specifically concerning Corporate Social responsibility (CSR). In the context of a social enterprise, employee activism takes on a distinct significance. A social enterprise is an organization that operates with a dual mission of pursuing both profit and positive social or environmental impacts. Employee activism is not only supported but often encouraged within such enterprises. These organizations prioritize integrating societal concerns into their core business strategies, aligning with the attributes that characterize a social enterprise: purpose, potential, and perspective (Schwartz, Denny & Mallon, 2020).

The macro societal trends contributing to the growth of employee activism, including rising workforce expectations, empowerment as a management principle, urgent societal challenges, and new technologies, are intrinsically tied to the values and objectives of social enterprises (Briscoe & Gupta, 2021). As such, employee activism becomes a powerful tool for social enterprises to fulfill their mission and create a positive impact on society. Employees in social enterprises are more likely to engage in activism that aligns with the organization's purpose, harnessing their potential to affect meaningful change and fostering a perspective that prioritizes societal well-being. In this way, employee activism becomes an integral part of what it means to truly embody the spirit of a social enterprise, driving both social and business value.

Engaging in social activism can yield a multitude of benefits for companies. Managers who actively cultivate relationships with both internal and external stakeholders, such as nonprofits, industry associations, and experts in pertinent social issues, are not only better equipped to navigate the landscape of employee activism but also build credibility with activist employees (Briscoe & Gupta, 2021). These relationships can serve as bridges between activists and senior leadership, fostering a productive dialogue. Business leaders who speak up for causes like women's rights or fight against violence targeting minority groups lay a firm foundation for diversity, equity, and inclusion strategies to thrive, ultimately enhancing their influence in the marketplace (Briscoe & Gupta, 2021). Moreover, embracing social activism can improve stakeholder relations and foster innovation. Activists and their efforts can become a wellspring for the identification of new products, services, customer segments, and business opportunities (Thompson & McDonald, 2023). Firms that align their political stances with the values of their core customer base, as exemplified by companies like Patagonia, can enhance their favorability among customers and strengthen brand loyalty (Stig & Konrad, 2020). This commitment to inclusion and innovation demonstrates a panoramic perspective on important matters and strengthens trust and social impact through transparent and empathetic dialogues with stakeholders. The intrinsic value of meaningful engagement with social activism can drive positive change and solidify a company's position as a responsible and forward-thinking organization (Thompson & McDonald, 2023).

In light of the growing significance of employee activism in organizational operations, managers are advised to proactively engage with this trend, recognizing that it is here to stay and will likely continue to expand across all sectors in the coming years (Briscoe & Gupta, 2021). Kabrina Chang, a clinical associate professor of markets, public policy, and law at Boston University, says that she does not “think the question is should a business speak up on a social or political issue anymore, the demand will come from one or more stakeholders. And when they do, they’ll most likely disappoint one of the many groups of stakeholders—it’s an unavoidable drawback” (Stig & Konrad, 2020). Adapting to this new reality is essential, not only to avoid unnecessary costs and disruptions but also to unlock the shared value that employee activism can bring to the enterprise. Effective managers should hone their understanding of how current social issues align with their organization's purpose, mission, and values (Briscoe & Gupta, 2021). Furthermore, they should create a supportive environment that encourages employee activists to voice their ideas and concerns.

Experts from Deloitte advise companies to thoroughly consider their history, values, and the specific audience they intend to target before taking a stance on highly charged social issues. Authenticity is key, as consumers can discern insincerity (Deloitte, 2020). To prioritize the most important issues to their audiences, companies can utilize listening tools like user surveys and social media platforms (Deloitte, 2020). The shift from a traditional business enterprise to a social enterprise requires a fundamental change in thinking, with a focus on human-centric values. Company leaders may need to act as champions for their organization's positions and may require additional media and communications training (Deloitte, 2020). HR functions play a crucial role in building and reinforcing a culture of respect to prevent internal conflicts stemming from the organization's position (Deloitte, 2020). Ultimately, as consumer expectations rise and individuals gain more power to voice their opinions, embracing a human-focused approach becomes imperative for companies. Rochelle M Thompson, SHRM-CP, a contributor for the Society of Human Resource Management, writes that taking a proactive stance on socio-political and environmental issues is no longer just a safe choice; it's increasingly necessary for organizations to fulfill their responsibilities to society and meet evolving consumer demands (Thompson & McDonald, 2023).

In a future where the personal, social, political, and business worlds intertwine, the sustainable option for companies is to consider and incorporate stakeholder values into their business models and decisions

As companies look to the future, they need to take into consideration the changing world and workforce. In universities and business schools nationwide, future employees, managers, CEOs, and consumers are learning about Corporate Social Responsibility as a standard. With mass information intake from social media, consumers and employees are more informed than ever. In a future where the personal, social, political, and business worlds intertwine, the sustainable option for companies is to consider and incorporate stakeholder values into their business models and decisions.

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