Can Companies Ignore Politics? Not Anymore

BY Stephen Koepp | October 20, 2020

The volatile fumes were building up for months. Formerly freewheeling tech companies Facebook, Google and Pinterest had all clamped down on employee speech in response to a rise in social activism. But the match was lit late last month, when Brian Armstrong, CEO of the cryptocurrency platform Coinbase, issued a proclamation that his company would be a politics-free zone: no political debate in the office, and no social activism on the company’s part. Coinbase would focus instead on its core mission. If workers weren’t comfortable with that, they could take severance packages. At least 60 of them did, about 5% of the workforce. In a follow-up memo, Armstrong said he was fine with that: “I think it will result in us having a stronger and more united team.”

In making such a black-and-white declaration, Armstrong kicked off a pitched debate among business leaders and workers struggling to navigate an increasingly difficult grey zone in a polarized America. Some Silicon Valley investors and executives welcomed the Coinbase CEO’s  statement, which came after a season of employee activism, including a walkout at Coinbase. “Enough is enough. The pendulum swings and it swings back,” tech investor Cyan Bannister told the Washington Post. “Sometimes people just want to have a safe place to go where they don’t have to think about this stuff anymore because it’s literally everywhere.” Former Twitter CEO Dick Costolo took the opposite stance, pointing out that Silicon Valley’s culture used to “welcome lively debate about ideas and society,” he tweeted, condemning the clampdown. “This isn’t great leadership. It’s the abdication of leadership. It’s the equivalent of telling your employees to ‘shut up and dribble.’

Which position will prevail? As an indicator, the backlash against social activism probably shows which way we’re headed: forward. Corporate America can’t turn back the clock on diversity, whether that applies to people or opinions. And America’s multiple crises–pandemic, economic and social–have cast a bright light on inequities that can’t be ignored. Here are some of the different ways that’s taking hold:

Listening to Stakeholders

“Companies have stepped up on a number of issues in recent years, particularly on topics that affect their employees and customers–gun safety, marriage equality, access to reproductive healthcare and immigration policy,” corporate-responsibility expert Susan McPherson, founder and CEO of McPherson Strategies, told From Day One. Ignoring those issues doesn’t cut it anymore, especially in a time of upheaval. “While companies have historically leaned heavily out of talking politics, the fact is that politics is unavoidable this year, and impossible to separate ourselves from entirely. It would be a mistake for leaders not to prepare for and lean into the conversation,” according to Sarah Sheehan, president and founder of Bravely, an employee-coaching firm.

Focusing on Fixing Society

Only days after the Coinbase commotion, JPMorgan Chase, the largest U.S. banking company (2019 assets: $2.7 trillion), took a leap in the other direction. The bank said it would commit $30 billion over the next five years to address racial inequity though loans and other programs. Chase is not alone–giant businesses including Microsoft and Kaiser Permanente have made similar commitments to affordable housing and other issues. What prompted such a focused effort on JPMorgan’s part? “The murder of George Floyd was a sea change, I think, in the attitude of Americans and people about the injustice that has taken place here,” said CEO Jamie Dimon at the LBJ School of Public Affairs 50th Anniversary Forum.

A coalition of pro-immigration activist groups blocked the entrance to a Microsoft store in New York City in 2019, demanding that the company cancel its contracts with the U.S. Immigration and Customs Enforcement Agency (Photo by Gabriele Holtermann-Gorden/Sipa USA via AP Images)

The failure until now to address the problem, Dimon said in an interview with journalist Pattie Sellers, is symptomatic of America’s inability to come to a consensus on how to fix things, from health care to public education to infrastructure. “We have failed as a nation. We’re no longer good at public policy. Our incompetence has become a little bit of a joke around the world … We can’t keep up,” he said. “Public policy takes analysis, details, understanding. To me, this is the single most important thing that Americans have got to do in the next 20 years.”

Backing Democracy

Corporate leaders can figure out how to deal with either four more years of President Trump or a President Biden, but the prospect of a contested election and a loss of confidence in election integrity is bad for business. Michael Porter of Harvard Business School says there is “an essential role for business in addressing political dysfunction,” citing data showing that political gridlock is causing “a disastrous decline” in U.S. competitiveness, the New York Times reported.

Business leaders have responded swiftly. “What we're seeing this year is an enormous focus on protecting our democracy and promoting civic engagement, from Old Navy's decision to pay employees to be poll workers to the recent Leadership Now Project statement calling for civility and patience ahead of the election,” McPherson wrote in an email to From Day One. “Business leaders understand that the health of our economy depends on the strength of our democracy. With so much at stake this year, every company should do their part to encourage employees to vote (safely!), instill confidence in our elections, and promote patience until every vote is counted.”

Making Promises–But Keeping Them?

Responding to the Black Lives Matter movement, many companies were held accountable for commitments that didn’t reflect their earlier behavior–or seemed unlikely to be fulfilled. They need to tread carefully here. “Social-justice issues are macro illustrations of pretty standard corporate values of integrity, respect and inclusion,” Janine Yancey, founder and CEO of Emtrain, a workplace-culture platform, told From Day One. “Look at most companies' values and codes of conduct and you'll see these values reflected. And employees are watching to see if company leaders are ‘real’ about these values and they actually mean something within the organization. Or conversely, whether they're just inauthentic window dressing for PR, lawyers and regulators.”

Picking Their Battles

While the Coinbase position was at the extreme end of the spectrum, there is probably a point of peril if business leaders forget they have a business to run. “As a founder, I want to build a company that contributes to positive change in the world. And to attract top talent and to understand and serve a wide customer base, a business can’t simply ignore all the social issues employees and customers are reckoning with,” wrote Jessica Lessin, founder of the tech website The Information. “Still, I don’t think a company should be forced to be on the front lines of every major social issue. Leaders have to strike a balance, define a culture and stick with it.”

How to approach that challenge? “While it is not necessary for corporations to take a stand and invest in every social issue, employees and consumers are no longer willing to accept companies who haven’t taken a stand at all,” Melanie Newell, SVP of Rocket Social Impact, told From Day One. “Companies must dig deep to understand what is currently most important to their stakeholders and in alignment with their brand values to determine where to invest their time, resources and dollars. Determine your priorities, define how to invest in them and share that plan.”

Editor’s note: Bravely, Emtrain and Rocket Social Impact have been sponsors or partners of From Day One.

Steve Koepp is a co-founder of From Day One. Previously, he was editorial director of Time Inc. Books, executive editor of Fortune and deputy managing editor of Time

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How Companies Can Lead in an ‘Age of Outrage’

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Karthik Ramanna, professor of business and public policy at the University of Oxford, describes the moment as an “age of outrage” in his new book, The Age of Outrage: How to Lead in a Polarized World, published last week by Harvard Business Review Press.As election season in the U.S. reaches its peak, rhetoric is sharpening (not to mention quite foul) and the public is feeling nervous and emotional. While tension and even anger over political, ideological, or values differences is nothing new, for the title of his new book, Ramanna chose the word outrage. There’s just something different about the current tenor of the moment: A hotter temperature and a higher pitch. For companies, dealing with this force is no longer a PR task, but a “critical capability,” he writes.Managing in the age of outrage is not the same as managing isolated incidents of disagreement, Ramanna told From Day One. 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Now that you’ve identified what is an attainable and appropriate response, how will the leader win the support of others in influential positions as well as the support of the workforce?And finally, build resilience. “A resilient organization (or system) is characterized by the delegation of authority,” Ramanna writes. “By situating decision-making close to ground realities, the organization both improves the informativeness of its decisions and diversifies its thinking and, as a consequence, can endure and even thrive amid negative shocks.”Are Corporate Values Outmoded?Values statements and public commitments to causes or communities may be useful guideposts for how to focus corporate response in the age of outrage, but they can also make it harder to deliver. Companies have caught themselves in dreadful thickets in the name of transparency and principles. When corporate behavior, or the behavior of business leaders, doesn’t reflect publicly stated values and beliefs, companies feel the pain. Ramanna cites Disney’s entanglement with Florida’s “Don’t Say Gay” bill in 2022. Despite being a public advocate for LGBTQ+ rights, the company did not publicly oppose the bill and was at the same time writing checks worth hundreds of thousands of dollars to politicians who sponsored it in the state senate. NPR reported that “Disney employees shared their outrage on social media when the company did not denounce the proposed legislation.” (In 2024, Disney resumed political donations to Republican candidates in Florida who voted in favor of the bill.)Being publicly “good” and values-forward can indeed make you a target, according to New York University professor Alison Taylor, who, in her book Higher Ground: How Business Can Do the Right Thing in a Turbulent World, points out that those seeking a target for their outrage will look for the companies and leaders most vocal about their principles.“Some companies can legitimately argue that these are not part of their value proposition. That’s not the case with Disney,” Ramanna said. “Part of why they got into the problem in the first place was when the ‘Don’t Say Gay’ bill was initially being proposed, they said, ‘Oh, we’re neutral in this.’ No, you’re not neutral. You’ve already established that you’re not neutral, and now it looks opportunistic to claim that you’re neutral.” Where the issues are directly related to the business or its stated values and identity, then you can’t step aside. You must proactively engage.Despite shifting political winds, “there is also little doubt that many institutions today have adopted a more progressive culture,” reported the New York Times this week. “They acknowledge bias and power imbalances between people of different genders and races. Despite efforts to roll back D.E.I. programs, few businesses or schools would doubt the importance of recruiting people from different backgrounds. A range of progressive causes—climate change reduction, workplace protections and higher taxes on the wealthiest Americans—remain popular.” Even so, in an age of outrage, corporate values aren’t as simple as they used to be. As belief systems diverge so severely, it can be tough to get people to agree, even in the workplace. 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But when it comes to managing in an age of outrage, he does advocate a kind of corporate stoicism: Concern yourself only with what you can control.With the election and its aftermath upon us, Ramanna urges employers anxious about the workplace climate not to quit before they start, but make a plan to lead in an age of outrage. “Look, it’s never too late. On one hand, you might say, ‘Oh my God, I should have started this six months ago, five years ago,’ whatever it is. But on the other hand, if you don’t start it today, it’ll still be too late in six months.”Despite the outcome of the election, he said, leaders can count on two things. “No. 1, that we’re not going to have some magical healing on the day the elections are over or the results become clear. If anything, we’re going to be sharply divided. The second thing is, as a business, you have to figure out a way to work through that.”Emily McCrary-Ruiz-Esparza is a freelance journalist and From Day One contributing editor who writes about work, the job market, and women’s experiences in the workplace. Her work has appeared in the Economist, the BBC, The Washington Post, Quartz, Fast Company, and Digiday’s Worklife.(Featured photo by Solstock/iStock by Getty Images)

Emily McCrary-Ruiz-Esparza November 04, 2024

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Lawyers gather evidence, make conclusions, and present a case. “That skillset, I think, is far more valuable today in the HR function than five years ago or ten years ago,” Toussaint said. “I think that’s why people are increasingly saying, ‘These people that have a law degree and have been trained to think systemically, to take data, analyze data, reach conclusions from it, and then drive impact from those conclusions—that’s actually not a bad background for leading HR function.’”HR and the general counsel’s office have a natural relationship. Maral Kazanjian, the CHRO at the credit-rating agency Moody’s, felt she was effectively moonlighting as an HR professional while working as the firm’s attorney, applying the law to all kinds of employment matters. “I was really lucky because Moody’s is a very successful company and also has a really fast-growing information-services business within the traditional ratings agency. Because they were growing so fast, a lot of employment issues arose,” she told From Day One. “We were in different jurisdictions. We had different questions we wanted to answer about ‘How do we do hiring right? How do we handle performance management? How do we maintain a focus on being inclusive? How do we do promotions right?’ There are legal questions, then there are operational and human capital questions.” Kazanjian’s first time leading the people function was at WeWork during the dog days of the pandemic. In February 2022, she returned to Moody’s, where she occupies the chief people officer job today.Jennifer Manchester, the CHRO at Fiserv, is a relatively new arrival to the C-suite, and like Kazanjian, has jumped industries. Manchester first crossed paths with HR at her former employer, the Dow Chemical Co., where she worked in the general counsel’s office on mergers, acquisitions, and other corporate transactions. “I always loved the employment piece and the people side of things the best. That’s where I figured it out: That was really ultimately what I wanted to do.”Manchester moved over to Fiserv in 2015, working closely with HR as a labor attorney, and ascended to the CHRO seat last spring, “I’ve always gravitated toward people issues, trying to solve problems. It’s such a dynamic role.” But about this she was clear: You can’t just pluck any attorney out of the legal department and promote them to the chief position. “You have to have some substantive core expertise in HR or employment. HR is a real science, and I don’t think anyone can just do it.”Deep, Successful Experience in HR Counts TooA background in HR is hardly irrelevant. Among the 10 highest-ranked companies on the Fortune 500, most of their CHROs have spent decades as HR practitioners. Melissa Hagerman, CHRO at insurance firm Genworth, came up through the HR department, and, like many of her peers in the Fortune 500, has worked across industries, including consumer and automotive retail and healthcare. She joined the HR field when it was still known as the personnel department. Being an effective CHRO takes compassion and diplomatic agility, she said. And it can’t be done without a natural curiosity for businesses. “As a CHRO, you have to really genuinely care about what the business is doing and where we’re heading, and you have to care about the people that are on the path to get us there. That is something that I really try to embrace and live by every day.”Hagerman is also a keen scout, continually monitoring what’s going on both inside and outside the organization, “understanding what’s happening politically and socially in the markets so that I can weigh in, whether that’s with our executive team or with our board of directors, or being able to think about how those may impact eventually our workforce.”HR has far more credibility and influence than in the past, Hagerman said, reflecting on her decades in the department. “The world now understands that people resources are really fundamental to the bottom line. Succession planning, development of associates—the focus on those things is far greater now than they ever were. Of course, cybersecurity, protection of data–all of those things–are more in the limelight now than ever.”Yet Your Next CHRO May Not Be Working In HR Right NowA career in HR can win you the seat at the top now, but that may not be true for the next generation of CHROs. Today, businesses seldom want an HR executive who has spent all their time in the department, said Wilson at Heidrick & Struggles. “In the companies we work with, it’s often said that if you can find somebody with a business background who’s either been in management consulting or held either a P&L role or a functional role outside of HR, that’s more interesting to us.”The next crisis is always around the corner, Korn Ferry’s Kaplan told From Day One, and HR has to be there to meet it. He rattled off a list of recent trials, from financial and economic wobbles, political unrest, racial injustice, reproductive rights, return to office, artificial intelligence, and gun crime. “If you are not prepared to put on your dance shoes and figure it out, you can’t do this job. More than academic credentials, intellect, or experience, you have to be able to tap dance.” As a result, people aren’t exactly grappling for the seat, he said. It’s a big job and it’s tough to recruit for. Some people get too close to the sun and opt out; others don’t realize what they’re signing up for before it’s too late.Everyone is looking for agility in the role. Bremen at WTW speculated that consumer-oriented industries–like retail, fast-moving consumer goods, cosmetics, or fashion–may be developing tomorrow’s most coveted CHROs. Tech firms develop great HR talent too because they have to marry operational complexity with consumer demands. Regardless of industry, he believes the most successful future CHROs are schooling themselves in the application of new technologies, particularly artificial intelligence, and have analytical capabilities far superior to their predecessors.In case you were thinking of plucking your next CHRO from the Wharton School, however, Kaplan cast doubt on the wisdom of choosing an MBA for the job simply because they’re a whiz at business. “If someone says to me, ‘I’m not an HR person, I’m a business person,’ that is a sign that I’m wasting time. I’ve never heard a CFO say, ‘I’m not a finance person, I’m a business person.’”Disciplines like finance can be taught in school, Kaplan argued, but HR is learned through apprenticeship. Management consultants who spoke to From Day One predicted that the future chiefs who are coming up through the HR department are leading complex functions at the moment, as heads of talent or directors of compensation and benefits.As today’s CHROs consider their potential successors, what are they looking for? At Moody’s, Kazanjian wants someone who is open-minded, bold, and analytical. She imagines that person might be in law, or they might be in management consulting. Toussaint wants someone who deeply understands the company culture at Xylem as well as how the business makes money, someone who’s good at data analysis, and someone who is a “truth teller,” uncowed by hierarchy. Manchester hopes her Fiserv successor has financial acumen and an always-learning attitude. At Genworth, Hagerman wants a values-driven, business-minded leader with deep knowledge of HR and a knack for diplomacy. Someone who is willing to uphold integrity, “above all else.”“Once upon a time, it was possible to be the most senior HR leader in a company and not have a grounding in the business fundamentals,” Bremen said. “That skillset is a necessary, but not sufficient, condition.” Yet business acumen alone isn’t enough without a deep understanding of the CHRO discipline, though he’s seen it happen. “They struggle. Just as you would struggle if you put someone in a chief marketing officer role who did not have a background in marketing. Sometimes leaders take those HR skills for granted.”Emily McCrary-Ruiz-Esparza is a freelance journalist and From Day One contributing editor who writes about work, the job market, and women’s experiences in the workplace. Her work has appeared in the Economist, the BBC, The Washington Post, Quartz, Business Insider, Fast Company, and Digiday’s Worklife.

Emily McCrary-Ruiz-Esparza September 24, 2024
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