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Briefing Notes December 5, 2019

Riding the Wave of Political Instability

by Montieth Illingworth

Harald Krüger, the CEO of car manufacturer BMW recently said that a no-deal Brexit would be a “lose-lose” scenario. Business leaders like Mr. Krüger rarely voice public opinions about political events in the U.K. Taking a political stance has always been seen as a risky move with little upside in CEO communications.

And while other industry leaders, including Sainsbury’s, Airbus, KPMG, and John Lewis Partnership, among others, have warned that the lack of proper planning for Brexit would be extremely harmful to the U.K., BMW’s stance resonated with the public.

The U.K.’s exit from the EU is now delayed once again to January 31st, further contributing to the ongoing uncertainty. In the meantime, U.K. companies are assessing the impact of Prime Minister Boris Johnson’s Withdrawal Agreement, which was approved by the EU and gained majority support from the U.K. parliament. A general election has been scheduled for December 12th, which could divert the course of U.K. politics, but the expectation for now is that a deal will be made.

What BMW Got Right, and Dyson Got Wrong

Before a deal was on the table, it was clear that BMW was doing everything in its power to mitigate risk and ensure production of their Minis in Oxford in the event of a hard Brexit. The car manufacturer consistently communicated to the U.K. government, customers, investors, employees, and the Oxford community that, although a no-deal Brexit presented a high risk to the national economy, it would work hard to ensure no jobs are lost and the factory could go ahead.

The car manufacturer was pressuring the government to avoid a no-deal Brexit at all costs, warning of the disastrous impact this would have. Its public statements were clear and set out good reasons for the business’ opinion. Quotes were confident and convincing and did not mention the wider question of Brexit. Impact from these comments has been minimal with no notable negative coverage on the statements.

At the other end of the spectrum, James Dyson, founder and owner of Dyson has been a strong supporter of Brexit and urged the U.K. government to leave the EU without a deal. Then in January, Dyson announced that he was “moving the headquarters of his vacuum cleaner and hair dryer technology company to Singapore.”

Dyson claimed the move was to support manufacturing of its electric vehicles and not related to Brexit, but it sparked outrage in the U.K. regardless. According to the Financial Times, the vast majority of the public thinks that “he is a hypocrite: a billionaire Brexit supporter who has extolled the U.K.’s potential after leaving the EU, only to turn his back on Britain and move his company’s headquarters to the other side of the world—even though he employs more people in his homeland than ever before.”

CEO Communications Around Brexit

In the case of Brexit, the ongoing uncertainty in the business environment and potential risks to the U.K. economy meant that CEOs were pressured to take a political stance publicly to protect their business interests. Communicating the negative impact to your business and, namely, its employees in the media can influence public opinion and also put pressure on political leaders to adopt a more accommodating stance. It tells your shareholders who is to blame for any loss in revenues.

Businesses taking a public stance on political issues is becoming more common, not less. However, as Mr. Dyson and Mr. Krüger show, there are different approaches to doing this—and neither comes without a risk.

Core CEO Communications Learnings

  • Few issues that any organization faces create as much of a burden for taking an integrated approach to CEO communications as those that involved big political debates. Stepping into the political theatre can mean hitting a PR landmine. Strategic planning must involve the entire C-suite in weighing the risks and rewards of taking a position and the impact that position will have on all stakeholder relationships, including government.
  • Effective integration shouldn’t just be seen as a corporate communications/public affairs task. The CEO carries and embodies the message, but every externally facing function needs to be aligned. This is a classic “communications cascading” exercise. The CEO might be saying the company is adapting to tackle climate change, but if your sales team can’t explain to customers what those adaptations are, your communications strategy breaks down.
  • Regulatory and legal risks multiply when organizations engage on these issues. Just witness what some multinational organizations faced when speaking out on the Hong Kong protests or on the U.S./China dispute. This puts an even higher premium on complete communications alignment within the organization. Getting an outside perspective on strategy and execution will also help to ensure that any blindspots in the organization are detected long before they result in reputational damage.

Additional Resources

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