The communications challenge when leaders become liabilities

First published in PRmoment on the 7th of May.

Though not its founder, for over 20 years Elon Musk has been at the helm of Tesla; the visionary – if unpredictable - figurehead of the company whose name has been synonymous with its rise to the most valuable car company in the world. 

But more recently he has been characterised as a reputational liability. The reasons for this are largely linked to his politics. His involvement with the US Government has seen his popularity wane. He used what many saw as a fascist salute at an inauguration rally. He publicly backed Germany’s far-right opposition.

These activities have sparked protests and boycotts against Tesla outside showrooms in several countries. Extinction Rebellion activists occupied a Tesla store in central Milan. 

But Musk has more than climate activists to worry about. In its Q1 2025 results, Tesla announced a 20% fall in revenue year on year, its share price down 41% for the year.

Of course, other factors are at play, but there is no doubt that Musk’s extra-curricular activities have played a detrimental role on perception of the brand, with US market research showing a sharp decline in those who would consider buying a Tesla since Musk acquired Twitter (now X) in 2022.

Founders and CEOs that embody the brand

Tesla’s situation highlights the profound impact a founder or leader's actions can have on their company's brand, particularly when the leader in question has become the embodiment of it, like Musk at Tesla, Steve Jobs at Apple or Richard Branson at Virgin Group.

This can be of huge benefit to company reputation. Branson has been central to Virgin’s brand identity for a very long time, as has James Dyson to Dyson’s brand.

But when a founder starts behaving badly, their importance to the company identity can become a weight around the brand’s neck.

Examples include Mike Ashley at Frasers Group, whose aggressive business tactics and controversial decisions, including overseeing poor working conditions and a deeply unpopular tenure as owner of Newcastle United, tainted the company’s reputation. 

Philip Green's involvement in the BHS pension scandal and accusations of bullying severely tarnished Arcadia Group's image.

Odey Asset Management had to shut down after the fallout from allegations of sexual harassment and misconduct from its founder, Crispin Odey, despite efforts to save it by divorcing itself from its founder.

A balancing act

Leaders who have become liabilities pose a difficult challenge for communications professionals. Powerful, often charismatic and at times intimidating, suggesting to the driving force behind a company’s success that they might be dragging down its reputation requires a great deal of skill and diplomacy.

Of course, there is a broad spectrum of “liability”, from leaders who are merely polarising or mildly controversial, to those who have committed illegal or ethically abhorrent acts. A company should evaluate how closely the founder's reputation is tied to the company's brand, and to what extent the founder's actions are causing significant harm.

Staff must form a key part of this analysis. Controversial and polarising actions from founders and CEOs can alienate a large number of staff very quickly, resulting in difficulties retaining and hiring talent. 

If a strategic change is deemed necessary, delicate conversations will be required, using diplomacy and engagement with other influential parties in the organisation. This is where senior comms leaders who have built up a relationship of trust and respect over a long period of time with a company leader and other influential colleagues can cash in their chips.

Comms strategies might include showcasing other positive attributes of the business and other individuals, reminding audiences that the company is made up of much more than just a super-rich founder with controversial views and behaviours.

If the founder has done something more serious, the response will need to be more urgent and drastic. In these instances, issues need to be addressed head-on with transparency and clear, practical actions and communication.

The reputation of company founders or leaders can have a profound impact on the overall perception of their companies.

For Tesla, the challenge of getting car buyers to consider elements such as its innovation and design rather than the Musk’s politics is far from simple, given his profile, dominance and penchant for the controversial.