CEOs and Politics

Fast approaching one of the most contentious presidential races in recent history, it is interesting to consider how the involvement of corporate CEOs in politics has grown.

CEO, politics While the American public in general has not hesitated to post personal views on election issues and politics across social media and other outlets, it is a different dynamic when business mixes with politics, a combination now seen even at the very top ranks, as increasing numbers of political contenders have come from business backgrounds, including presidential hopeful Donald Trump.

Historically, in the interest of their businesses, CEOs have tended to avoid issues that would appear polarizing – careful not to offend groups that might be part of their employee, shareholder, or customer bases.  However, it is precisely for these reasons that many CEOs say they are now speaking out about the issues they previously avoided.  The CEO of Starbucks, Howard Schultz, stated that he spoke out about race relations and gun control after the 2014 shooting of Michael Brown in Ferguson, Missouri because African-Americans represented a large part of the company’s employee base and because the social fallout of the shooting was negatively impacting the company’s customer base in reduced sales.

Marc Benioff, the CEO of Salesforce, and Tim Cook, the CEO of Apple, lobbied in Georgia and Indiana, respectively, on the issue of discrimination against same-sex couples; a study done by professors from Duke and Harvard subsequently found that Cook’s position on gay marriage affected both public opinion on the issue itself, as well as positively impacting the company’s sales.

As a caveat, however, a survey published in Harvard Business Review found that, while 38% of those surveyed considered CEOs to “have an obligation to speak up on controversial issues,” the figure dropped to 20% when those issues had no direct link to the companies’ primary businesses.  The survey also found that the Millennial generation (ages 18 to 35) was the most supportive of CEOs being involved in political issues, with 40% stating that they would be “more likely to buy from a company with a CEO that takes a position on a risky topic like race or guns or gay marriage that they agree with.”  (Another caveat – 45% said that they would actually be less likely to buy from the company if they disagreed with the stance.)

The increased political involvement of corporate leaders may be an offshoot of the fact that companies’ focus on their culture has become so much greater.  Benioff stated that he was urged by his employees to wield the company’s power to tackle the issue of same-sex marriage.  He saw it as a business matter, both advocating for and partnering with his employees, and attempting to create an environment that would be more business-friendly to both employees and customers.

Benioff also stated that he believed “government leaders tend to be a little weaker than they were, [so] CEOs have to step up and be a little stronger and have a bigger voice,” with accountability to a number of groups, including boards, shareholders, customers, and employees for “doing the right thing.”

This motivation, however, is not necessarily being transmitted to the public.  The Harvard survey revealed that only 14% of respondents believed that the increase in CEOs’ political activism was because of wanting to “do what is right for society,” while 21% saw the motivation as building a reputation or selling more products, and a similar percentage saw it as simply speaking out about personal feelings on an issue.  The greatest percentage, 36%, believed that CEOs were trying to “get media attention.”

According to Scott Laband of Fox Business, the character of a successful CEO perhaps naturally lends itself to political activism; CEOs know how to think strategically, persuade, network, exert influence, and direct conversations.  Of concern to some is the potential these highly influential leaders, who were not elected to represent the American people, have to impact the social issues of our society.  In the end, is the decision of a CEO to speak out politically just another business decision, or is it really a matter of higher moral ground that supersedes potential effects on the company’s bottom line?  As politics and business both become more complex, this is, indeed, an intriguing topic to consider.

Contributed by Holly Valovick -QLK