Politicking Business Out the Door

Inflection Point

Companies that publicly advocate for candidates or divisive social causes often experience a damaging backlash from customers, investors, and employees. Just ask Nike, CrossFit, Patagonia, Marvel Entertainment, Goya Foods, Ben & Jerry’s, and innumerable others.

It is tempting to leverage your company’s name recognition and goodwill to make a political statement or to advocate for a candidate that your leadership believes in. But in this polarized political environment, (but then, when have things not been polarized?), taking a side makes as many enemies as allies. Which means that customers who currently love your product will suddenly decide that they no longer want to buy it because they now hate your publicly professed politics. Meanwhile, other customers who also love your product but who do agree with your views are unlikely to suddenly need twice as much of your product now that they know the company’s stand. Alienating customers is a negative sum game.

Investors can be influenced by the political posturing of a company as well. When customers respond to a company’s politicking by changing their willingness to purchase from the company or through outright boycotts, stock performance can suffer, leading investors to worry about potential long-term financial impacts that can spawn a downward cycle. Then too, investors have their own political views as well, motivating some to move investments out of companies that oppose their positions. Why invest in a company that uses your resources to work against you politically?

Employees too are put in a difficult position when their company publicly expresses a political viewpoint. Those who disagree come to the stark realization that their work now supports causes and candidates that they oppose. Meanwhile, their friends and family will question them about these matters, putting them in the difficult position of having to justify working for your company against their own convictions. The politically outspoken company puts itself at odds with its own employees.

This is not to say that companies shouldn’t engage in advocacy for specific company-friendly or industry-friendly legislation and regulation. Such advocacy is different in kind from the endorsement of candidates or parties because it focuses only on the business concerns of the business. Customers, investors, employees, and the public in general accept this as a reasonable and necessary part of doing business.

But at base, candidate, party, and issue advocacy is a self-righteous, self-indulgent, and often self-destructive exercise for a company. Leaders would be well served to remember that their customers, investors, and employees live on both sides of the aisle. You want all of them pulling for you, not pushing away from you. Let your business focus on business and leave the partisanship to the partisans who thrive on making enemies.

You shouldn’t.

Bill Haines, Partner