Jul 22, 2019

Should Small Businesses Weigh in on Politics?

When a company’s leaders speak out on political and social issues, they sometimes tread into dangerous waters. The act is known as CEO activism, and a survey reveals that nearly half of consumers would be more likely to purchase from a company with a CEO who speaks out on issues they agree with. Before you get too excited about that statistic, however, pay attention to the final 3 words of the previous sentence. The positive impacts only occur if the issues are in line with any given customer. And because sensitive topics are sure to run the gamut, it’s hardly a safe bet that a bold CEO will win more fans than detractors.

Underscoring this point, a study from Morning Consult found that when CEOs mention President Trump, it can be toxic. The fascinating finding was that the position taken was somewhat irrelevant. You could be his biggest fan or a hardened critic, but you’d probably see substantial negative results from speaking out.

Despite the dangers associated with expressing controversial stances, the New York Times calls CEO activism the “new normal.” So the question should be how to approach the most important topics, not if. For starters, any issue addressed by a business leader should be in line with the values of the company, not just that leader.

“Most companies prefer to prioritize their business interests in line with both fiduciary duty and the shared value approach to corporate responsibility, which connects business success with social good,” according to the Harvard Business Review. “This would suggest that companies should act only when there is a clear business case and an opportunity for direct action. For example, most would assume that it’s easier and more effective for the CEO to cut a company’s climate emissions than to take a stand on immigration. A CEO could be forgiven for thinking it’s safest to only weigh in on political issues that affect operational and strategic goals, industry dynamics, or a company’s regulatory and policy landscape.”

What about when the values of a company and its leader present the option of taking sensitive positions that aren’t relevant to their industry and may adversely affect their business interests? Recent history has demonstrated that values usually take priority. Examples include both Google and Microsoft taking public stances on the family separation controversy at the border, although they had little to gain from a strategic perspective.

Both the Google and Microsoft examples highlight a growing force in CEO activism: a company’s rank-and-file workers. As the Harvard Business Review puts it, “Employees are now a company’s most powerful interest group.” When employees use leverage such as email leaks, social media, and petitions to drive for change, leaders are incentivized to take positions they probably wouldn’t on their own.

Recent examples of employee-driven CEO activism include Delta discontinuing its flight discounts for the National Rifle Association and Keurig canceling its ads on Sean Hannity’s show. Consumer (and even legislative) backlash occurred in both these cases, but the companies stood firm.

It’s important to note that even when a company’s position kicks a proverbial hornets’ nest, the impact may be more bark than bite. When Target announced its transgender bathroom policy, the outrage was swift and loud. However, the company says there was no real impact on their finances.

Target’s results certainly don’t mean a company should always stand their ground when facing criticism. Take the Pepsi debacle of 2017, for example. When the company released a Millennial-targeting video featuring Kendall Jenner, nearly unanimous complaints arose around the world.

“Millennials are extremely good at sniffing out rubbish and they understand when they are being abused,” observed Forbes.com. “This sums up the Pepsi ad—it was an example of a brand that clearly does not know what is going on. The list of offenses is long; overt brand coloring, focus-pulls to the product, overly multi-cultural references, street dancing, nods to minority or sexual identity group and of course the clincher: a white person saves the day using the product.”

Pepsi had opted to enter a sensitive realm, whether due to employee advocacy or marketing efforts, then realized their error. They quickly pulled the video. Then they took things further, issuing an apology:

“Pepsi was trying to project a global message of unity, peace and understanding. Clearly we missed the mark, and we apologize. We did not intend to make light of any serious issue. We are removing the content and halting any further rollout.”

With the burning rubble of Pepsi’s reputation not far-distant in the rearview mirror, it would’ve been understandable for other companies to actively avoid any political stands. But Nike took things to another level with their campaign that partners with controversial football player Colin Kaepernick and declares: “Believe in something. Even if it means sacrificing everything.”

By aligning with one of the most controversial individuals in modern America, Nike certainly knew they’d draw fire. Their decision seemed equal parts value and business. First of all, they launched the ads roughly 2 years after the initial controversy surrounding Kaepernick’s silent protests during the national anthem at NFL games. This delay provided ample time to craft a thoughtful message.

The results were impressive, with Nike’s stock hitting an all-time high and sales revenue getting a massive bump. Sure, there were those who burned their Nike shoes and demanded the company retreat from its stance, but Nike stood strong and has largely been praised for it.

“Cultures authentically grounded in strong values and focused on the personal care and support of others are inspiring, enlightening, and transformational,” explains Forbes.com. “They also produce extraordinary business results.”

In the case of businesses like Nike, this is absolutely true. But the lessons learned from the Kaepernick campaign should be as much about strategy as they are about value. If you’re going to plant a stake in the ground, make sure it’s one you can stand behind when the winds start whipping and the crowds start screaming.

Applying is free and it won't impact your credit

About the author

Grant Olsen
Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on FitSmallBusiness.com and ModernHealthcare.com. Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

Quickly Compare Loan Offers from Multiple Lenders

Compare Offers
from 75+ Lenders

Applying is free and won’t impact your credit
Talk to a rep at (855) 853-6346

Mon–Fri | 7:30am–5pm MST