Q1 2020 Texas CEO Magazine

environment, still allows a company to avoid some measure
of controversy. After all, who is opposed to hurricane relief?
Further, the sustainability movement is seen favorably by most
Americans. However, since Lee Scott moved Walmart into
sustainability in 2005, CEOs have increasingly taken more
controversial positions on issues that historically have been off
limits. We have seen Target take a position on gender identity
and bathrooms, CVS on cigarettes, and more recently, Walmart
and Dick’s Sporting Goods on guns.
Though the issues may be new, American business leaders have
been engaging in social issues for well over a century. In 1914, Ford
Motor Company announced that it would pay a minimum wage of
$5 per day—more than double the industry wage at the time—and
later reduced the workday from nine-hour shifts to eight-hour
shifts. Contemporaries praised founder Henry Ford as a great
humanitarian, but Ford claimed that humanitarianism had nothing
to do with it. He was setting policies to attract and keep the best
possible workforce he could—and refused to frame his business
decisions as socially responsible. In his memoir, My Life and Work,
he explains, “The payment of high wages fortunately contributes
to the low costs because the men become steadily more efficient on
account of being relieved of outside worries. The payment of five
dollars a day for an eight-hour day was one of the finest cost-cutting
moves we ever made, and the six-dollar day wage is cheaper than
the five. How far this will go, we do not know.” In 1915, however,
Ford would start taking controversial activist stances on how to end
World War I, would run unsuccessfully for Senate in 1918, and in
the 1920s would publish anti-Semitic material in his newspaper,
The Dearborn Independent.
CEOs are not the only activists in the business community,
though. Author Jeff Gramm contends that shareholder activism
has been alive and well in the United States since Benjamin
Graham clashed with Northern Pipeline in 1927, pressuring
the company to distribute excess cash to shareholders. Gramm
chronicles that history in his recent book, Dear Chairman.
Shareholder activists can be very pro-shareholder like Benjamin
Graham or more pro-consumer like Ralph Nader, who grew
toward shareholder activism in his later years. Milton Friedman
captured some of the history between activist shareholders
and activist CEOs in his now 50-year-old essay, “The Social
Responsibility of Business Is to Increase Its Profits.” Specifically,
he noticed how corporate executives would raise wages “to be
a socially responsible business” when it was clearly in their
self-interest to raise wages to attract better talent and reduce
shrinkage or sabotage. He also observed that, more blatantly,
executives frame corporate donations as efforts to improve their
36 Texas CEO Magazine Q1 2020