John Blomster: Welcome to 红桃视频, a 红桃视频 podcast where we discuss today's biggest legal topics with the law schools, distinguished guests and experts from around the world. My name is John Blomster. And today we're speaking with Jeff Sonnenfeld, Senior Associate Dean for Leadership Studies and Lester Crown Professor in the Practice of Management at the Yale School of Management. He is also founder and president of the Chief Executive Leadership Institute, a nonprofit educational and research institute focused on CEO leadership and corporate governance. He recently joined the law school for the first in a series of discussions focused on business, human rights and the rule of law, where he discussed corporate social responsibility in the wake of the 2020 presidential election and the January 6 capital insurrection, which is what we'll be getting into today. So, we've been looking forward to this conversation. And Jeff, thank you very much for taking the time.
Jeffrey Sonnenfeld: Oh, thank you. It's an honor to join you. Thanks for the invitation, John.
JB: So, generally, if we were talking about threats to human rights and democracy a year ago, we'd really be talking about these issues more globally. However, in the light of the events of the past year, we're dealing with these issues right here at home right now. And that's really led to dramatic actions taken by the American business community. And so taking us back before the election, when were some of the early concerns raised around, hey, this election feels like it's shaping up to be something like we haven't experienced before?
JS: That's a really good question. And I think you're right to point out, kind of, the sort of surprising arc of history where we have seen where the business community's focus, and a lot of public interest pressure on the business community in the past, would have been identifying challenges that needed to be addressed, in the Middle East, in Africa, in Asia, on issues having to do with transparency and fairness and justice, human rights. To have to look back at our own country, is really something that was an embarrassment and a source of great alarm. But it does have some history to it, like you suggest, in that the major company CEOs, slightly lean republican, 65% or so, maybe a little bit more republicans around 65% republican and independents and democrats making up the rest. But they overwhelmingly did not support Trump in 2016, is all the surveys were 70% or so whether or not enthusiastic or reluctantly supporting Hillary Clinton, and similarly in 2020, even greater numbers supporting a Joe Biden either enthusiastically or reluctantly.
However, in January 2017, much of the press picked up on the enthusiasm of White House invitations to these different advisory councils. The business community, however skeptical they were, thought, well, this is a chance to address issues where they felt they had priorities around tax and trade and regulatory rollbacks. And, I think, that maybe some of them had some merit to them. A lot of them didn't, but they're getting where they thought they're going to get what they wanted, and some worried about it being a Faustian deal.
That dissolved a lot faster than the general public appreciates, because Trump began with what he had always done with these one offs, that it was playing one party against the other in a divide and conquer scheme, as we've seen with China versus Russia that he tried or UK versus France and Germany or Canada versus Mexico, doing the same thing with Pfizer versus Merck, Lockheed versus Boeing, General Motors versus Ford, and then starting to attack U.S. companies, they start to become more and more anxious. And at the time of the Charlottesville in August of that summer of 2017, with the assaults on peaceful demonstrators by the skinheads and Nazis, where Trump equivocated and tried to come up with a statement of you know, both sides being good people. And that's where we saw the first time in American history, this is not a human rights issue, of course, we saw鈥攁nd Ken Frazier happens to be at that time one of four black CEOs of major corporations鈥攖hat Trump attacked him personally attracted character of the company. And with a slight pause, the U.S. business committee came to his side, they joined Ken Frazier. There's a great line, and the last line in 鈥淎n Enemy of the People鈥 by Ibsen, where he's talked about in that play the strongest person in the world is the person who can stand alone. Frazier stood alone and the business community then rallied and from then on, we've seen them taking increasingly forceful positions, because they all left the business advisory councils. Disney and Unilever were the first to join and then PepsiCo and IBM and General Motors and others joined and the whole thing fell apart. But we saw this same thing happened, what are we going to do with the attacks on immigrants and the difficulty of the visa requirements or taking a look at attacks on the free and fairness of the elections. We've seen this happen in the course of three and three and a half years, the business community has really stepped up to the plate.
JB: Is that unusual for so many leaders to be so, to so universally reject a particular elected leader, so much so as to withdraw and not participate in those kinds of business advisory roles?
JS: It's unparalleled in American history, that Eisenhower had a comfortable some thought cozy relationship with the business community, a guy named Charles Wilson who was the CEO of General Motors. There's also Charles Wilson, ironically, who was the CEO of General Electric at the same time, they both had joined the Eisenhower cabinet, that was confusing, with the watchword that had come out by engine Charlie as he was called of General Motors is the statement that what's good for General Motors is good for the American public. What he actually said was the opposite. So, he meant it in a much more benign statement of alignment of interests. However, there was a concern that there was such a business friendly environment was the public interest being lost?
Well, when Kennedy took over, Kennedy had an uneasy relationship with the business community. And in fact, the business community, especially steel industry reneged on some major commitments where Arthur Goldberg, who was then his secretary of labor and later joined United Nations as in Supreme Court, of the United Nations, is that Goldberg negotiated a truce with big labor to not go on strike, as long as they were wage restraints, as long as there were some price constraints. And then as soon as they got the labor contract in steel reneged on a commitment, and JFK said, 鈥淢y dad warned me about you guys, you are a bunch of SOBs,鈥 and the relationship never got better.
It wasn't better with Johnson either. And in fact, the Business Roundtable, which was founded around 1970, around 50 years ago, was founded as a reaction to the hostility between the business community and government. The National Association of Manufacturers and U.S. Chamber of Commerce were very hostile. Business Roundtable was trying to be much more positive minded and we would have used the term progressive at the time, in its original use of the term progressive was usually it was always a very centrist roll out, but it's the first time in American history then that we saw the U.S. business community say no in the summer 2017, to a call to national service by the commander in chief, and they for the most part, they didn't go back. There were small events where they went back, literally a year ago now, there had been the biggest drop in the stock market in history, and the business community came out to the White House lawn, and then we saw a surge in stock price the next day. This was March 13, March 12 and 13 where we saw this incredible V shape in the stock market. Trump held a press conference on the COVID crisis and faith in the economy plummeted. The business leaders came out and it was restored, but they never joined forces with the Trump administration again. And that was remarkable.
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There were other things they done on gun control, where political forces were unable to get something effectively done post-Parkland, where we saw several 100 business leaders severe ties with the NRA, and in fact those who were selling guns, anywhere from Dick's Sporting Goods to Walmart, taking these AK-47s and AR-17s or whatever, these semi-automatics off the shelves and destroying it. These were remarkable moves, this proverbial euphemistically called the Bathroom Bill is usually called the Religious Freedom Acts. It was the business community, no legislators succeeded in having those things appealed as effectively as when pillars of the American traditional industry titans like UPS and Home Depot, UPS in this case, and AT&T, and Walmart, especially. Doug McMillon of Walmart is a very quiet guy, he鈥檚 been a huge leader in social change issues. They managed to have that roll back in Indiana, Arkansas, Texas, and North Carolina. It was very powerful move.
So, when the business community gets religion behind it they've been quite effective and going into the elections this fall they did something unparalleled, is that they gave millions of people paid time off, and literally more than a million people were encouraged and paid for their time to work in the polls, supporting at-risk seniors and many octogenarians, literally octogenarians and septuagenarians, that were volunteering at polling places around the country, were in danger of COVID, but also under threat of MAGA mobs or others, raiding them, or just the volume of ballots, and they were in fear. So, these younger employees that were dispatched, and these were, you know, great companies, from law firms and automakers and you know, all across America in the face of American industry.
They also I should point out, didn't want to politicize science, that the pharmaceutical companies this fall, the seven of them bonded together to say that they're not going to have their schedule rushed to come up with some trumped up, pun intended, deadline to come out with so some vaccines that they didn't think were ready and proven yet for emergency use authorization. That was remarkable that they stood together at Pfizer and Merck and Johnson & Johnson and Moderna and all, that was a great sign of strength. So, it's quite an inspiration. The data, whether or not you look at the Harris Poll, especially Every Day鈥檚 Morning Consult, which does these things overnight, and the Edelman Trust Barometer keeps showing us that while public officials have lost credibility in the American public, sadly, journalists, to some extent, academics sadly and surely the clergy, who has this towering strength right now of trust, is the business community, right now has been a beacon of confidence.
JB: Absolutely, unprecedented, like you say, and much like the election season, ramping up to the 2020 election, President Trump's continued refusal to commit to a peaceful transfer of power, some of the restrictions or attempted restrictions to access to the ballot box. And then I know that you were asked to facilitate a major gathering of CEOs the night before the election, was when you were asked for that. What were the sentiments of top executives leading into the Election Day? And what were the preparations that went into it looking beyond?
JS: Coming into Election Day, and thanks for asking about that, because it was stunning, is the anxiety level was really building and the business community could see that. And they started, both individually and spontaneously, in small groups going on the major mass media around the around the nation saying, 鈥淐ount all the ballots, take your time, the write-in ballots are going to be counted later, because certain states by legislative decree couldn't count the ballots, the early ballots as they came in, they had to wait until the polls closed. And the hand counting of those ballots is going to take a while, this was all anticipated no surprise.鈥 And of course, they were talking about what would be considered a blue shift that they anticipated, that many of those write-ins were people who were more COVID conscious who tended to breakout along party lines. People more fearful of in-person voting, tended to be somewhat more Democrats. So, that was going to affect the pattern of the votes when they came in. This was all anticipated. And they were trying to preemptively warn people about that. And they felt such confidence as the election security officials have said that these are the largest and most secure elections in American history, they were very proud of having to pull that off.
So, they went from a high on that on December 3, November 3 to November 5, which was Thursday night, November 5. Because the polls, you know, the elections were on the third. On the fifth is when President Trump went on national television through the three major networks and the cable channels and announced powers that he didn't have and made assertions that were untrue, that led political scientists such as Tim Snyder here at Yale and others to call that a coup d'etat attempt. Some of the business leaders thought that that language at that time was overstated. They don't feel that way now, they think it was appropriate. But they thought that that was overstated, but they thought that it was alarming that he tried that. So, that Thursday night, when all the major news networks on the broadcast channels spontaneously cut his mic. That's never happened in American history either. So, the cable channels with the ironic exception of Fox and CNN, they kept him on, they cut him and then I started getting emails and texts and phone calls saying could we set up some sort of a call and I tried to lash a few of them together. And they said, no, maybe we need more. And I said let's get the Business Roundtable or somebody to help host that they said no, why don't you convene it? And I thought, oh yeah, me? And they said, 鈥淲ell, you don't have the bureaucracy and the complex agendas.鈥 I think what they really meant is, I don't have the reputation at stake. They all do, I have nothing to lose if it fails.
So, we pulled it together on 10, 12-hours notice, can you imagine that? They have like 50 major CEOs of the largest titans of technology and transportation, pharma to finance, all coming together, with only a night, at most, a night's sleep and the West Coast people that didn't get a night's sleep, we did it at seven in the morning. They were all on the call speaking incredibly candidly, and I told them that these were off the record, but you never know in the days of Zoom that anybody could be photographing, or, you know, or taping something without us knowing it. And it was extremely candid. And they right away had said that they thought that Trump was trying to overturn a free and fair election. The vote was overwhelming like 80% about that. And they also felt that Biden and Harris had won and said that the representatives of the major trade groups that were there, the Business Roundtable in particular, as well as the National Association of Manufacturers and U.S. Chamber of Commerce that were there with us, telling them we need a crisp clear statement, because this is how democracies fail. Democracies are very fragile things and that you will often will have a tyrannical force that will suggest that these are exceptional times. And the laws don't fit. Well the laws are always loose in a democratic society. Constitutional laws are intended to be adaptive to different circumstances. For somebody to say that, 鈥淥h, these are different circumstances, the laws must be suspended and I take control,鈥 that's the downward path, the slippery slope to tyranny.
So, that was really worrisome to the business leaders, they saw that it was incumbent upon them not to sit back and see how others responded, but to act preemptively. So, the very next day, before even Senator Chuck Schumer and Speaker Nancy Pelosi could congratulate the winners, the business community did, that Thursday, this was a on the Friday morning, we had our meeting Friday morning, the sixth, it was on Saturday, November 7, midday, that the Pennsylvania election was certified, and then immediately, the network's called it and the Business Roundtable came out with a clearest, crispest statement they'll ever issue. I don't think any trade association will ever be able to rival this again. And it's because, frankly, because I think it was not staff written, it was heavily driven by the CEOs themselves. And the first point was that the winners were President-Elect, at that point, Biden and Vice-President-Elect Harris. Number two, that this was a fair and free election, and we're proud of our role in helping make that happen. Three, if President Trump has any grievance, he should take it to the appeals channels and the courts, and use legitimate channels. And four, if he does so, he should present the sworn evidence of legitimate systematic fraud, and we see none, which is amazing statement. And fifth and last, there should be a smooth transfer of power immediately. You know, the transition process began.
Well, then everybody used that storyboard. President Bush, in his congratulations note, which was, happily, was very soon. The Saudis, the Israelis, everybody else, they use this, some of them the exact phrases of what the Business Roundtable and the other trade associations did. That put a flag in the sand that created a path in the snow for others to follow. Then, we thought we'd never need to reconvene. Sure enough, after the word came out in early January of President Trump trying to, even then, get the Georgia election officials to revise and cheat on their accounts, that they wanted to get together again, because they saw this was trying to undermine the elections. And this was this was just before the Congress is supposed to meet on the sixth, we met on Tuesday the fifth for a very critical statement that 100% of the CEOs said that their lobbyists should cut off support for the seditious congressmen if they refuse to go ahead and vote their congressional duty to certify what was in the ballots to certify the count. That was remarkable because, you know, I've been doing this, we created the first school for CEOs 33 years ago before the World Economic Forum, before Forbes, Fortune, Businessweek, New York Times, Wall Street Journal or anybody had these things going. And I do these in Shanghai and Mumbai and Delhi and Beijing and Mexico City, Los Angeles, Atlanta, even New Haven, New York, and we've never had a unanimous vote on anything. Here we have a series of unanimous votes. To cut off the funding was one and in the high 80s, 80% range, to say that they would reconsider funding, sending investments into the states of these seditious political leaders. And that was pretty remarkable. And then, but they did not vote for impeachment. However, one week later, we reconvened a shocking third time, and there it was a near unanimous vote for impeachment because of they saw President Trump as responsible, complicit and responsible for the assault on the Capitol.
JB: That really is incredible. That is such an incredible series of events. Do you think that this kind of action, especially something as big as cutting off funding to states of sedition-supporting lawmakers, these kinds of actions, do you think that they'll persist as we get further from the insurrection and further into the Biden administration?
JS: John, it's a really good question, because it was so salient and so alarming at the time. These business leaders acted without, for the most part, conferring with their boards, without running, you know, shareholder referenda. They did this out of conscience. And you might say, 鈥淲ell, you know, who were they as custodians of other people's resources to have their personal politics rule their public stance?鈥 Well, their view is that through all these issues, whether or not it was on the immigration and gun control issues, or the religious freedom stuff, is that a fractious society is bad for all, that we don't want to see angry workhorses. And in militant communities and the finger pointing, pulling apart the seams of American society. That they see as a harmonious society is in alignment with business interest in the national interest, and there's not a gap there. They also strongly feel that this is not an issue of partisan politics, that patriotism versus treason was not an issue of partisan politics, but they still are uncomfortable playing the role of public officials. So, they are going through some degree of retreat now in that they're uncomfortable taking those roles. However, the challenge for them, as we see before our eyes is in Texas and Arkansas and Pennsylvania and Georgia. We have hundreds of voter suppression bills being drafted. And people are saying, 鈥淲ell, where's the business community?鈥 So, before our eyes, your excellent question is about to be answered. We have seen, just since we've set up this interview today, we've seen a few major companies in in Georgia come together: Coca Cola, and Home Depot. UPS and Delta haven't spoken, I'm pretty sure and I hope, that I suspect, that they will follow. That will be a very important marker for other companies to follow. Because these are great global, not to mention national companies that will set a pattern for other great companies to take a stand for not dividing up access to balloting and undermine democracy. That's important. I think that they will follow suit there as well. But we do have the test case before us.
JB: And then my last question, and you alluded to it in your previous answer, what do you see as the public's expectation of corporate America's roles in these types of broader important social issues going forward?
JS: Well, you're talking about the public. Obviously, it's not a monolith. And there are angry segments, I hear from them and the CEOs hear from them that will threatened boycotts, or worse, with hostile calls and emails and death threats, for taking positions that are hostile to their political point of view. That's a sad fact. It used to be that this anti-intellectual angry movement was on the fringe of society and the book burners were the sort of things that the historian Richard Hofstadter used to write about, in his studies on the paranoid style in American politics, that this was largely fringe. For this now that become mainstream is a little troubling, but the CEOs still see it as fewer in number than the sound and fury would suggest. So, they've been holding their ground. So, if you talk about the American public, their view is we're seeing the numbers the American public keep telling us 70, 80% want to see their employer speak out on these issues still. And that they are proud that their employer is doing so. We still see that the CEO is considered a pillar of integrity and trust in American society. And they do need to use it. They just don't want to be seen as primarily political players because they have other financial and market and technology issues to wrestle with. You know, Tocqueville is famed for his touring American society in the 18th century, and remarking on the volunteer spirit and community life, and people usually think that's the only takeaway, but something even bigger that that was a part of. There's a term that he coined called social capital that's been used much recently, and people don't realize that it goes back as far as that, and this social capital is what the CEOs want to want to fortify and that's a sense of public spiritedness and public mindedness. And I'm glad that they have that imbued within them in that spirit of capitalism.
JB: Jeff Sonnenfeld is Senior Associate Dean for Leadership Studies and Lester Crown Professor in the Practice of Management at the Yale School of Management. He recently joined the law school for the first in a series of discussions focused on business, human rights and the rule of law. You can learn more about his work, upcoming events in this series and more on what we spoke about Today on our podcast page at law.uw.edu.
Jeff, thank you so much for being here with us today.
JS: Thank you. It was an honor to join you.
