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Is Political Engagement Ever Worth It For Businesses?

In a polarized society, maybe influencing government decisions just isn't worth the bad PR

21Aug

The last 12 months has seen the general public become increasingly polarized politically, with the rise of Donald Trump to the position of ‘most powerful man on the planet’ pitting left and right against one another and entrenching views to an extent not seen for generations. This has created an incredibly complicated atmosphere for businesses to operate in, as there’s simply no way to please both groups. If you choose to make any kind of statement or take any kind of action that could be interpreted as political - and you may not even know you are making a ‘political’ act - you could wind up offending either side, causing a riot on social media, and subsequently boycotts that have the potential to be hugely detrimental to your bottom line.

We saw this last year with Kelloggs, after the cereal giant decided to remove its adverts from right-wing websites such as Breitbart, thereby pitting itself against a small but very vocal group. A boycott against Kelloggs online was organized, which saw the company’s shares fall 3.6% over three days before getting back to the original price after 12 days. At the other end of the spectrum, New Balance faced the wrath of the left after Director of Public Affairs Matt LeBretton tweeted his support for Trump, saying: ‘The Obama administration turned a deaf ear to us, and frankly, with President-elect Trump, we feel things are going to move in the right direction.’ This led white supremacist website The Daily Stormer to declare New Balance trainers as ‘the official shoes of the White race.’ This association sparked thousands on social media to post pictures of them burning and throwing away their New Balance trainers. This had a big impact on the company, with sales reportedly down by 25% following this incident.

It has, however, now become near impossible to find businesses willing to offer any kind of support, even indirect, to Trump. His statements on Charlottesville appear to have been the straw that broke the camel’s back for CEOs. The frequent use of misogynistic and racist language from Trump throughout his campaign and his presidency may not have done it, but conferring legitimacy on white supremacists by suggesting that there were ‘fine people’ marching alongside neo-Nazis - as if anyone willing to march with a neo-Nazi could be considered ‘fine’ - seems to have finally crossed the line. In fact, it was deemed so toxic by CEOs that eight members of his manufacturing jobs council resigned and his 19-member strategic and planning council decided to disband itself.

The membership of the jobs council, which Trump announced on Jan. 27, included the CEOs of some of the US’s biggest companies - Dow Chemical, Dell, Whirlpool, General Electric, Intel, Boeing and 3M. Trump said its goal was to draw on ‘private sector expertise and [cut] the government red tape that is holding back our businesses from hiring, innovating, and expanding right here in America.’ For a president whose primary selling point is his pro-business stance, how out of touch he is with his supposed allies is stunning. Ken Frazier, the CEO of Merck & Co, said in a published statement that, ‘America’s leaders must honor our fundamental values by clearly rejecting expressions of hatred, bigotry and group supremacy. As CEO of Merck and as a matter of personal conscience, I feel a responsibility to take a stand against intolerance and extremism.’ Chief executive of JPMorgan Chase, Jamie Dimon, issued a statement to employees, saying. ‘I strongly disagree with President Trump’s reaction to the events that took place in Charlottesville over the past several days. Racism, intolerance and violence are always wrong.’ Campbell Soup CEO Denise Morrison said, ‘Racism and murder are unequivocally reprehensible and are not morally equivalent to anything else that happened in Charlottesville. I believe the President should have been – and still needs to be – unambiguous on that point.’ Others were equally strongly worded.

As is the case with almost all such advisory bodies, the committees were really about little more than getting on the list, maybe a nice photo-op with the President. It never actually convened, so what began as a PR exercise ultimately ended with a PR exercise. However, it does seem to suggest businesses have come to a decision regarding the dilemma of how closely you can align with a man as bombastic and controversial as Trump, or whether cooperating with the administration is actually not as good for business as they may have believed. Is negative publicity ever worth political influence? Until now, it appeared that yes, if you believed you could frame it correctly, they believed it was. But even the PR departments at Fortune 500s have limits on their ability to turn this kind of action to gold, or even iron, and appearing to sympathize with Nazis must have been beyond their talents.

Even if the decision of its members to resign has little genuine effect, it is still a big setback for President Trump, who has worked hard to cultivate the perception that he has a cozy relationship with America's companies. He was supposed to represent an end to politics and a shift to a job-creating pro-business business regime. He’s now been abandoned by ‘his people’ and is left with only politicians for support.

Will this put businesses off ever involving themselves in political matters again? The sensible thing in such a polarized world is probably just to stay out of it. Equally, this is a unique president who doesn’t appear to listen to advice, and trying to advise such a man may be wholly pointless, but under one who listens it may be worthwhile. And for some companies, coming out in favor of something will be of benefit. For example, Nordstrom’s decision to stop stocking Ivanka Trump’s clothing line saw its share price rise 4.1%. However, to be successful, you have to be fully confident in your audience and the potential market you could gain by taking a stand. This is a level of insight that very few organizations have, and on the whole, it is unlikely to be worthwhile.

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