Article written by Andrew KAKABADSE
Andrew Kakabadse, professor of Governance and Leadership at Henley Business School and an expert in boardroom effectiveness and governance.
US President Joe Biden’s Inauguration and former President Donald Trump’s departure from Washington, after shocking scenes of the mob he incited storming the heart of American Democracy, leaves a question for corporations. Should business leaders become involved in political issues?
The attempted insurrection at Capitol Hill resulted in leading social media platforms – including Facebook, Twitter, Reddit, Snapchat and Pinterest – banning or suspending Trump and select groups of his supporters from using their services.
Over the past four years many businesses have felt forced to publically declare their position on politically-related matters. But should CEOs and Chairs be involved in such debates? Similarly, what are the pitfalls of remaining silent on matters of such national and global significance?
Oil, pharma, finance, digital and communication companies evolve relationships with politicians and government over time to effectively deliver their strategy. For firms more dependent on government in the long-term, political engagement is a critical process that defines who they are, what they do, and the clientele they serve.
It should also be remembered that there are significant differences between US and UK companies. Lobbying and making donations to political parties is a distinct characteristic of US corporations while much less the purview of UK business.
During times of crisis US companies draw on political stakeholder relations to better guarantee stability for the company. This is a central point of focus for the Board Chair, whose focus on managing stakeholder relations is a key part of the Boards’ governance responsibilities.
Depending on the nature of the business, there will always be a variable breath and spread of stakeholders needing to be engaged. However, Chairs must maintain effective stakeholder relations at all costs.
Chairs, and CEOs, who take a position on controversial political matters face three distinct challenges:
- All political matters are controversial – there is a tough choice to make in entering the political arena, but if the values of the organisation are in danger of being compromised or endangered by national or global events, then action must be taken
- There is just as much danger involved in not speaking out on issues of grave importance in a timely and prominent manner
- There is a danger the Chair and Board may overstep by being seen to act as an unelected voice of authority.
The US political crisis has highlighted a desperate need for regulating digital platform companies in terms of their selective approach to making information publicly available or otherwise blocking it.
It has also put a spotlight on how declining trust in information provided to the public by politicians through traditional media is often forcing organisations to adopt a political position regardless of whether they want to.
Ultimately, it is the Chair who has to take decisions that provide stability for the enterprise through any political crisis.
They must additionally ensure that the resources the company needs continue to be in place, while being cautious not to attract severe rebuke from social media platforms and their users, or the media establishment by, for example, imposing selective censorship on matters of political discourse.
Boards are open to accusations of interfering in political issues and attempting to become some form of shadow government.
However, as the public increasingly places its trust in the judgment of business leaders, staying out of politics and national policy in the present environment is becoming all but impossible. Making sure the right choices are made at the right time and for the right reasons will pay dividends for all.
Andrew Kakabadse consults and lectures in the UK, Europe, United States, Asia, China, Japan, Russia, Georgia, the Gulf States and Australia. He is currently embarked on a £2 million global study of boardroom effectiveness and governance practice, with the participation of a number of governments including British Ministers of State. His top team database covers 17 nations and thousands of private and public sector organisations.
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