Why CEOs today must be change leaders for social issues

The Wayfair walkout, in which hundreds of employees and customers protested the online retailer’s sale of $200,000 in furniture to a government contractor managing a migrant detention camp at the U.S. Southern border, represents just the latest high-profile example of how social and policy issues continue to spill into the corporate ethics and compliance realm.

Wayfair employees staged the June 26 walkout after senior leaders, in response to a letter signed by 547 employees, refused requests to back out of the contract. At the heart of the letter was this message: “The United States government and its contractors are responsible for the detention and the mistreatment of hundreds of thousands of migrants seeking asylum in our country—we want that to end. We also want to be sure that Wayfair has no part in enabling, supporting, or profiting from this practice.”

In addition to requesting that senior leaders cease current and future business with contractors participating in the operation of migrant detention camps, employees also requested that the company “establish a code of ethics for B2B sales that empowers Wayfair and its employees in accordance with our core values.”

Wayfair’s leadership defended its position by arguing that it must respect the diversity of beliefs and values among its employees and customer base, and that it is standard practice to fulfill orders for all customers. “We exist to be a profit-generating entity. We’re not a political entity. We’re not trying to take a side in this,” Wayfair Co-Founder Steve Conine said during an internal staff meeting, the leaked audio of which was obtained by The Atlantic. “It’s pretty black and white to me that it’s a legal issue.”

But this is where Wayfair’s senior leaders are wrong.

Recent research has found that employees today demand senior leaders take a stance on social and policy issues. According to the 2019 Edelman Trust Barometer, 76 percent of the more than 33,000 respondents surveyed across 26 markets said they want CEOs to take the lead on change instead of waiting for government to impose it. That same report also found that employees who feel valued, empowered, and heard are more likely to be more engaged, loyal, and committed as employees.

Conine does make a fair point, however. As a business, it’s not as easy as saying, “I believe in this cause. I don’t believe in this one.” It’s far more difficult than that: How do you ethically decide as a global company which orders to fulfill and which not to without stepping on the toes of a globally diverse employee and customer base?

During Wayfair’s internal staff meeting, one employee argued an equally valuable point when she said that creating friction among some employees and customers is “unavoidable,” but “everything that we do … will define our political values as a company.”

It’s not that unlike deciding whether to do business with a third party that poses a high risk of corruption or doing business with a third party that engages in human rights abuses. It’s a risk-based decision all the same.

Yes, it requires complex, uncomfortable—maybe even heated—conversations about corporate culture, ethics, values, and brand reputation and the myriad risks it could provoke. But in the end, the reward will be far greater than the risk, because you’ll start to attract a different employee, customer base, and business partners—those whose values better align with the “soul” of the company.