(Un)Necessary? Corporate Stances on Social and Political Issues

Should businesses take public stances on social and political issues? The simplest answer to such a complex question is, it depends. But more and more, the answer is yes. Below are three reasons that help explain why this expectation exists for organizations to take a public stand on controversial issues and how organizations can effectively fulfill this expectation.

1. Trust in the U.S. government is at a record low.

Public trust in government to do the right thing has plummeted to historic lows, due in part to the unprecedentedly unpredictable current administration (e.g. the turnover rate of White House staffers, the latest antagonistic economic strategy). This has left many Americans in search of a different, more reliable entity or entities to be the steward(s) of our nation’s integrity and wellbeing. Cue big business.

Like government, big business has responsibility to many people (e.g. employees, shareholders, customers) with different needs and interests. Also like government, big business is tasked with finding ways to responsibly meet these needs. Unlike government (the U.S. government that is), big business is not as burdened with bureaucratic bloat, infighting, and resultant stagnation. This is not to say big business is completely free of these roadblocks. Rather it is freer, and therefore more capable than the U.S. government currently is to enact some of the changes society is demanding. This helps explain why there is an increasing amount of pressure on American businesses from the American public to fill some of the voids being left by the government.

Case in point: public outrage over U.S. gun legislation has reached a fever pitch in the wake of another mass shooting, this time in Parkland, Florida at Marjory Stoneman Douglas High School that left 17 people dead, 14 of whom were students. Considering no major legislative changes were made at the federal level in the wake of the 2012 Sandy Hook elementary school massacre that left 28 people dead (20 of whom were children under the age of 8), many Americans are frustrated the government has still not made substantial changes to federal gun laws.

Image source: Lorie Shaull, Flickr

While this has not deterred many Americans from continuing to demand change at the federal level, some U.S. businesses have taken steps within relevant domains to meet this demand. Car rental company Hertz, as well as Delta and United airlines, and insurer MetLife are just a few of the large corporations that have removed discounts out of protest for National Rifle Association (NRA) members. The NRA has contributed millions of dollars to political campaigns to cement their beneficiaries’ support of keeping gun legislation as-is, and for this reason the NRA is the biggest target of the public’s outrage on this issue.

2. More and more Americans expect organizations to take a stand.

Why are businesses doing this? Because more and more stakeholders expect them to. And for American businesses, American citizens make up a majority of these stakeholder groups. Below are three key findings from the latest annual Business and Politics study, now in its fifth year from Global Strategy Group, a U.S. based public relations firm:

• 81% of Americans believe corporations should take action to address important societal issues.
• 76% believe CEOs specifically have the responsibility to implement positive change on societal issues.
• Intensity in these beliefs has grown; there was a 6% increase from last year’s study in the number of people who “strongly agree” with the statement “corporations should take action to address important issues facing society.”

Fulfillment of stakeholder expectations is the cornerstone of effective reputation management. This is because trust, according to the Ethics and Compliance Initiative‘s definition, is the natural consequence of expectations being met. Without the trust of its stakeholders, an organization cannot survive. This means that with increasing numbers of Americans expecting organizations to take public stances on sociopolitical issues, that organizations’ failure to do so means running the risk of damaging key relationships and their reputation. Which begs the question, how can organizations go about effectively meeting these expectations?

3. Taking a stand on a controversial issue can boost an organization’s reputation, but it depends on two key factors. Taking a public stand on a sociopolitical issue does not automatically lead to a reputational boost for organizations, as national retailer Target learned firsthand in 2016 when it changed its bathroom policy to allow transgender people to use the bathroom of their gender identity. Whether the consequences of taking a public stance on a controversial topic are positive or negative are heavily dependent on the following:

• There is a clear connection between the issue and the organization’s business. Business leaders have fiduciary responsibility to their stakeholders; therefore, in order to minimize risks and maximize opportunities when taking a public stand, leaders need to always align these stand(s) with the needs or interests of the company or industry. Positive financial impact can happen only when stakeholders clearly perceive that connection and negative impact can happen when the organization is seen to be “jumping on the band wagon” or inserting itself in an issue (and exposing itself to risk) unnecessarily.
• The organization’s actions align with its position. Recall the definition of trust, as being the natural consequence of expectations met; when an organization takes a public stand on an issue, it then sets the expectation among its stakeholders that its actions will align with those beliefs. When there is dissonance between the two, trust falls as doubt and anger rise. With the advent of social media, stakeholders are more capable than ever to take action against companies they view as insincere and untrustworthy. Take for example the #DeleteUber fiasco from last January. Not only was the ride-hailing giant criticized for seemingly taking advantage of a vulnerable moment to make an extra buck, Uber’s decision to continue operating during a protest at JFK airport against President Trump’s travel ban contradicted the company’s stated values. On Uber’s “Our Story” webpage it says “Across borders, cultures, and languages, we’re proud to connect people who need a reliable ride with people looking to earn money driving their car. Your journeys inspire us. Thank you.”  Uber customers saw its decision to continue operating during the travel ban protest as a contradiction of its stated value of inclusivity, and resulted in nearly a quarter million customers deleting their Uber accounts.

What should businesses do?

Organizations and their leaders find themselves increasingly called upon by their stakeholders to take stances on issues that may (seemingly) have no connection to their business. It is up to the organizations and their leaders to make the connection between their stance and the business, and to follow through with actions that align with the stance if they choose to take one. Only then can the organization maintain or earn stakeholder trust.