Applause, concern about CEO’s choice
Ken Frazier’s decision to leave Trump council sends ripples through the business world
The decision by Merck CEO Ken Frazier to quit an advisory panel in the wake of President Trump’s initial response to violence in Charlottesville was hailed by many Monday as a stance that should be emulated by other corporate leaders. But companies may worry about what weighing in on an emotionally charged issue will mean for the bottom line.
Yet some say that when a corporate leader takes a position that appears to be grounded in principle, it can actually burnish a company’s image.
“There are always concerns that business leaders have about the consequences of taking a moral stand,” says Katherine Phillips, who teaches leadership at Columbia Business School. “But oftentimes I think those leaders recognize that the moral stand they take could be good for business.”
Frazier’s decision came in the wake of a white supremacist rally in Charlottesville, Va., on Saturday that left three people dead and dozens more injured.
President Trump gave an initial statement that did not specifically denounce the KKK, neo-Nazis and other racist groups who engaged in the violence. Lawmakers from both sides of the political aisle and others condemned what they viewed as a tepid and inadequate response.
Frazier has been by Trump’s side in the past several months, during a roundtable talk with pharmaceutical company executives, as well as an event where Merck and Pfizer said they would work with Corning to produce more jobs and create sturdier glass vials.
But on Monday, Frazier said that he would be leaving Trump’s manufacturing business council, tweeting that “as CEO of Merck and as a matter of personal conscience, I feel a responsibility to take a stand against intolerance and extremism.”
“I think it could encourage other business leaders to speak out and to recognize that their reputations are influenced by who they’re affiliated with,” Phillips says.
But wading into the roiling waters of race relations and other hot-button topics can sometimes backfire.
In 2015, for instance, the first phase of an initiative by Starbucks, in which baristas were given the choice of penning the words “Race Together” on customers cups, was largely met with scorn and derision by critics who said the idea was simplistic.
But not speaking out could also hurt a company’s reputation, particularly if the issue is one that it has professed to take an interest in, such as LGBT rights, diversity or criminal justice reform, says Rashad Robinson, executive director of the civil rights group Color of Change.
“There are other CEOs that are still part of this Trump business council,” says Robinson, who called Frazier’s stance “powerful.”
Many took to Twitter to praise Frazier’s decision.
“Mr. Frazier has a conscience,” tweeted Jim Cramer, host of Mad Money on CNBC. “That’s America.”
CNBC reporter Meg Tirrell tweeted a statement from Roy Vagelos, current chairman of Regeneron, and Merck’s former chairman and CEO.
“I have known Ken for 25 years since I first recruited him to Merck,” the statement said. “I applaud his decision to step down from the council this morning.”
Lloyd Blankfein, CEO of Goldman Sachs, also tweeted a message that quoted Abraham Lincoln and encouraged unity. “Isolate those who try to separate us,” he said.
Still, some companies may believe that they can have a greater effect on policy by remaining in advisory positions with the president rather than stepping away.
For instance, Dell said in a statement Monday that it would continue engaging with the Trump administration.