Businesses have always needed politicians to understand their concerns. But excessive interference by companies in politics may threaten their neutrality, long considered key to appealing to the broadest customer base possible.
But in today’s fight for market share, businesses have more than just the dividend to think about. Indeed, the pressure on firms to act ethically and responsibly is so acute that any moral transgression, even if it is legal, can seriously dent profits.
A study by advertising agency J Walter Thompson has suggested that this expectation is only set to increase among “Generation Z” – the consumers of tomorrow. So how politically engaged should companies be?
There is a widely recognised case for businesses engaging in politics openly when policy may affect their sector. IAG chief executive Willie Walsh’s objection to paying the charges needed to build a new runway at Heathrow is a useful example. “But there is a big difference between making statements about policy-making and getting involved in party politics,” says chief executive of Corporate Reputation Consulting Chris Rumfitt.
Unlike in the US, where privately financed political campaigns invite big donations from the private sector and corporates invest heavily in lobbying Washington DC, the UK system arguably invites more transparency. Business leaders like Dido Harding, chief executive of TalkTalk and Conservative life peer in the House of Lords, are careful to distinguish between their responsibilities.
ACTING BEYOND YOUR BRIEF
The problem is that the political solutions to a business’s problems have far-reaching consequences. James Dyson’s opposition to Britain’s membership of the EU, on the grounds that the bloc’s labelling laws “mislead” by overstating the energy efficiency of “old-fashioned technology”, is problematic because a Brexit will have wide implications which extend beyond his company, or even UK businesses in general. Indeed, political interventions by business leaders can be unintentionally politicised, and consumers may not respond well.
Pronouncing on issues outside your firm’s brief is equally complicated. Treating workers fairly and participating in charity or community work is a must for any large company, but cultivating a stance on social issues like gay marriage is much trickier – not only because the public may be divided, but also because attitudes towards a company explicitly signalling what its brand represents politically are unclear.
A US study by Global Strategy Group found that, when provided with a real position taken by high-end retailer Nordstrom in support of same-sex marriage, 68 per cent thought this was appropriate. But in a more general sense, 56 per cent said it was inappropriate for companies to take a stance on political issues which do not pertain to their business. Steering clear is perhaps the safer option, but this could mean abandoning business interests.
GUILTY BY ASSOCIATION
But even if an organisation avoids making partisan statements, the use of social media by employees means that your firm could be tainted by association on social, religious and other issues.
In a court case involving Trafford Housing Trust, one employee had posted a link on his Facebook page to a news article about gay marriages in church, calling it “an equality too far”. Reported by colleagues who had seen the remark, the Trust demoted the employee, but their decision was judged unlawful because he had a “closed” profile, with posts visible only to “friends”.