CEOs are done with the indignity of standing by Trump.

CEOs Will Suffer a Lot of Indignity to Help Their Businesses. They’ll No Longer Suffer Donald Trump.

CEOs Will Suffer a Lot of Indignity to Help Their Businesses. They’ll No Longer Suffer Donald Trump.

Moneybox
Commentary about business and finance.
Aug. 16 2017 4:08 PM

What CEOs Can Suffer

A lot of indignity, as long as it helps their businesses. But not standing by Trump.

AFP_NG9ZI
President Donald Trump waits with Secretary of Transportation Elaine Chao and CEOs during a meeting at the Eisenhower Executive Office Building on April 11 in Washington.

Brendan Smialowski/AFP/Getty Images

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Slowly, and then all at once. That’s how President Trump’s CEO councils—the Strategic and Policy Forum and the American Manufacturing Council—came apart on Wednesday in the wake of Trump’s disastrous press conference.

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It wasn’t because the nation’s executive class collectively woke up at exactly the same time. Rather, it was because Trump’s behavior and the very nature of the role of a modern American CEO made their positions on any body connected to Trump untenable.

I’m generalizing here, but bear with me. Typically CEOs of large organizations are actually quite constrained considering the power they have and the very high compensation they earn. They spend a lot of time doing things they’re supposed to do, behaving the way they’re supposed to behave, and saying things they’re supposed to say. At shareholder meetings or on earnings calls, they talk about how they’re really working hard for shareholders and thinking about the long term. In China, they marvel at the remarkable progress and bright future they see. At employee all-hands meetings, they talk up diversity and inclusion. At the World Economic Forum, they nod earnestly and pledge to reduce emissions. After elections, they express their willingness to work with the new president, no matter how bitter the campaign was. And when they’re called to the White House and Washington, they discuss the need for common-sense solutions to the big issues that plague America.

Of course, many (though by no means all) of them don’t actually care much about diversity or shareholders or Washington. You get to be a CEO because you have the ability to focus like a laser on running your division or your unit or your company to make a profit. You’re passionate about winning sales, gaining market share, doing deals, competing, and getting paid. But part of the deal is that in order to do all of those things these days, you have to adhere closely to the script.

And that’s why when a CEO goes off script—like, say, when the CEO of a big private equity firm compares mild increases in marginal tax rates to Hitler invading Poland, or when the CEO

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of a giant software firm rampages on stage like a pro wrestler—it’s so noteworthy.

Typically CEOs can carry off their roles with fairly little cognitive dissonance. Having a more diverse and inclusive workforce generally leads to better results, and helps you market to an America that is increasingly diverse. To a large degree, measures that reduce emissions and promote sustainability actually save money and improve profits. When Washington does policy right and puts resources behind it, it can have huge benefits for companies and entire industries. So mouthing expected bromides about these issues is no big deal—and maybe even helps the bottom line.

But President Trump is a person who almost never says what he’s supposed to say. During the campaign, he flagrantly violated norms regarding the way you talk about women, minorities, and foreigners; he scoffed at the concepts of diversity, inclusion, and climate change; he let China have it constantly. His refusal to adhere to the script was, in fact, one of the reasons that so few CEOs of big companies publicly supported him.

Once Trump was elected, the convention called for CEOs to show up when invited. But that mismatch between Trump’s behavior and the norms and behaviors that CEOs have internalized made the meetings incredibly awkward. Look at that iconic photo of Amazon CEO Jeff Bezos sitting in Trump Tower with the president-elect and other tech CEOs—you can see the cognitive dissonance on their faces. They knew they were supposed to show up. But they recognized that the professed values and beliefs of the person they were sitting with differed from the values they publicly espoused (and, in many instances, privately held).

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In the intervening months, Trump has done little to ease that tension. All the while, CEOs continued to defend their engagement and association with Trump with the bromides typical of their position. “We have a responsibility to engage our elected officials,” JPMorgan Chase CEO Jamie Dimon said, explaining why he would remain on Trump’s business advisory council even though Trump had just announced his intention to withdraw from the Paris Climate Agreement. On Tuesday, Newell CEO Michael Polk said he would stay on Trump’s manufacturing council because he wanted to retain a “voice in the conversation.” A spokesman for Michael Dell this week said he would continue to “engage with the Trump administration and governments around the world to share our perspective on policy issues that affect our company, customers and employees.”

But the highly public actions by some CEOs to quit the councils earlier this week—and to call out Trump’s coddling of racists as they did so—and Trump’s bizarre statements on Tuesday defending white nationalists made these protestations laughable and untenable. What’s the point of engaging with someone who expresses views that would likely be cause for the dismissal of any middle manager? What sort of bipartisan policy is possible in an administration run by this president? What’s the point of serving as a prop in somebody else’s show? And how do you justify it to your shareholders, colleagues, employees, and family?

Simple: You don’t.

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