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How Companies Should Weigh In on a Controversy: A better approach to stakeholder management

Here is an excerpt from an article written by David M. Bersoff ,  Sandra J. Sucher, and Peter Tufano for Harvard Business Review and the HBR Blog Network. To read the complete article, check out the wealth of free resources, obtain subscription information, and receive HBR email alerts, please click here.

Illustration Credit:  Susan Barnett

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On April 1, 2023, just as the March Madness college basketball tournament was getting underway, the transgender influencer Dylan Mulvaney uploaded a sponsored post to Instagram to promote Bud Light. The backlash was immediate and cut deep. The beer brand was condemned by social conservatives across the United States, who launched a boycott.

In its first public statement, made two weeks after the uproar began, Anheuser-Busch, the brand’s parent, avoided any direct mention of the controversy or of Mulvaney, who had been the target of bitter attacks. She made clear her dismay. “For a company to hire a trans person and then not publicly stand by them is worse, in my opinion, than not hiring a trans person at all,” she said. The controversy is estimated to have cost Bud Light $395 million in U.S. sales, and the brand lost its place as America’s top-selling beer by revenue.

In contrast, consider Natura, the Brazilian cosmetics giant. In July 2020 the company made headlines after it hired the transgender actor Thammy Miranda to promote its Father’s Day campaign. Conservatives accused Natura of attacking “family values,” flooded social media with hate speech, and demanded a boycott of the company’s products.

Natura quickly stood by its decision to hire Miranda, stating, “Natura celebrates all ways of being a man, free of stereotypes and prejudices, and believes that when this masculinity meets fatherhood, relationships are transformed.” Brand experts observed that the company’s actions were consistent with its history: “Natura has been working with this purpose [inclusiveness, diversity, acceptance] for over a decade,” Adriano Sá, a professor at Saint Paul Escola de Negócios, told UOL Economia. “The campaign only reinforces the company’s positioning.”

The backlash didn’t seem to negatively affect Natura. Two days after the vitriol broke out, the company’s shares had jumped 6.7%, and Natura ended the week with more than 100,000 new social-media followers. And although the entire category suffered in this period because of the pandemic, Natura’s online sales shot up 225%.

A first lesson to be gleaned from this tale of two transgender spokespeople is that companies “speak” through their actions. People saw Mulvaney and Miranda as expressions of the companies’ values, whether intended or not. Natura’s actions were judged to be consistent with its long, visible record of support for diversity and inclusion. Bud Light, in contrast, took many of its stakeholders by surprise. The brand was not widely recognized for its decade-long support of LGBTQ+ rights, so its association with a trans spokesperson came across as a niche message that did not play well with its core consumers. Michel Doukeris, the CEO of Anheuser-Busch’s owner, AB InBev, described Bud Light drinkers this way: “One, they want to enjoy their beer without a debate. Two, they want Bud Light to focus on beer. Three, they want Bud Light to concentrate on the platforms that all consumers love, such as NFL, Folds of Honor [a scholarship program for children of fallen members of the armed forces], and music.”

Despite the rhetoric of shareholder primacy, 73% of respondents globally say that the primary duty of a company is to benefit all stakeholders.

A second lesson is that outcomes may be related less to an issue itself than to how the company responds to it, especially in the face of pushback. Natura doubled down on its principle of inclusivity, whereas Anheuser-Busch initially appeared to ignore the issue. (It may be tempting to argue that Brazil is simply more accepting of transgender people than the United States is, but a 2021 study by UCLA’s Williams Institute found that the two were virtually identical in their acceptance of LGBTQ+ individuals, ranking 23rd and 24th respectively among 175 countries.)

One point is crystal clear: Executives need guidance about managing their organizations’ engagement with societal issues, including hot-button topics such as gender, climate, and racial discrimination. We believe that companies can take a stand on such issues and successfully navigate both internal and external pushback if they acquire a more sophisticated understanding of their stakeholders’ concerns. Success does not mean avoiding public controversy or achieving unanimous support among key stakeholders. Rather, it results from adhering to processes and strategies that over the long term will lead to increased competitive advantage and an enhanced license to operate while also helping manage any short-term heat and scrutiny.

We don’t provide a simple playbook or easy solutions. We use recent survey research, along with examples from managerial best practice, to provide insights into how to prosper in a world where the private and public spheres are uneasily blending and businesses are expected to address major societal issues. We propose an approach that is both anchored in data and sensitive to values and context. It is intended to help leaders figure out which issues to address and how, ameliorate stakeholder disappointment, and manage any blowback. Data can tell you what your various stakeholders care about, but judgment is needed to carefully consider their conflicting preferences while remaining true to your company’s values.

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Our research clearly indicates that people across the globe are demanding that companies address the societal issues of the day. A prerequisite for success with that challenge, we find, is a stakeholder perspective—especially regarding customers and employees—along with a clear understanding of, and crystal clear communication about, how your actions relate to your mission, values, and strategy.

As we move from survey data to case studies, we see a pattern: In answering “Who is most affected by the decision?” respected organizations tend to prioritize stakeholders’ health and safety over financial considerations. Walmart’s gun policy and Target’s concern for the physical safety of its workers led both companies to a nuanced approach to politically fraught questions. When it comes to health and safety, threats to life and physical well-being are paramount; threats to mental health stemming from attacks on identity seem to be a close second.

In the end, defining and consistently defending your values, adopting an overarching multistakeholder orientation, practicing effective stakeholder management, and developing rigorous, thoughtful, and fair processes for weighing and balancing the potential impact of your business decisions across stakeholder groups (including future generations) are all necessary if you are to be the company your customers, employees, investors, and neighbors want and expect you to be.

A version of this article appeared in the March–April 2024 issue of Harvard Business Review.

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Here is a direct  link to the complete article.

David M. Bersoff is the head of research at the Edelman Trust Institute, a think tank dedicated to advancing the study of trust in society.
Sandra J. Sucher is a professor of management practice at Harvard Business School. She is the coauthor of The Power of Trust: How Companies Build It, Lose It, and Regain It (PublicAffairs 2021).
Peter Tufano is a Baker Foundation Professor at Harvard Business School, senior advisor to Harvard’s Salata Institue for Climate and Sustainability, and a former dean of Said Business School at the University of Oxford.



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