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Taking a Stand

Does it pay for companies to take positions on politically charged issues?

​When more than 50 corporations, private companies and not-for-profits urged Texas state lawmakers earlier this year to reject potential voting restrictions, Carol Dochen's Austin-based real estate company was among them.

It was the first time her business got behind a political cause, she says, but it won't necessarily be the last.

"I have to be somewhat careful as a business owner, but I believe in personal freedom," Dochen says. "This is the United States. We should have the most robust voting activities in the world."

Other signatories of the nonpartisan Fair Elections Texas campaign included corporate heavyweight American Airlines and midsize company Gearbox Entertainment. The video game developer—recently acquired by a Swedish holding corporation—also previously opposed state legislation targeting transgender individuals.

"We don't like the idea of laws that are really singling out people for no reason other than to bully them," says David Najjab, director of institutional partnerships for Gearbox, which is based near Dallas. "It makes it difficult for us to recruit and get people down here."

Wading into controversial topics is not new for U.S. businesses, certainly not in the wake of last year's protests against police brutality and systemic racism. In one prominent example, activist ice cream maker Ben & Jerry's urged the dismantling of what it calls a domestic culture of white supremacy. Still, it's rare for a group of companies to collectively push back on a single issue.

Yet that's exactly what happened in 2021 when lawmakers in Texas as well as several other states sought to tighten access to voting amid persistent but discredited claims of voter fraud in the Nov. 3, 2020, presidential election. Notably, Georgia legislators imposed stricter ID requirements, reduced the time residents have to request an absentee ballot, and established criminal penalties for people who provide food and water to those waiting in line to vote.

Facing internal and external pressures, numerous corporations and business leaders responded. In April, for example, hundreds signed a letter titled "We Stand for Democracy" that was published in The New York Times and The Washington Post. Backers of this campaign, including Facebook, Starbucks and United Airlines, said they oppose "any discriminatory legislation or measures that restrict or prevent any eligible voter from having an equal and fair opportunity to cast a ballot." Celebrities and law firms also lent their names to the effort.

Jeffrey Sonnenfeld, a professor at the Yale School of Management and president of the university's Chief Executive Leadership Institute, considers it a "watershed moment" for American companies—one fraught with political and financial dangers. He has advised CEOs during the recent turmoil and endorses the idea of corporations championing civic causes.

"The CEOs do get bombarded by a kaleidoscope of special interests, petitions, agendas, pledges [and] statements," Sonnenfeld says, "and they're not politicians, so they do have to figure out which are the ones that matter most. They could invest in endless markets, and they could produce all kinds of products. They make choices, and this is part of the strategic context of business."

A Calculated Risk

Companies were not universally heralded for weighing in on elections. Some Republicans chided "woke" CEOs for trying to score points, and others suggested punishing the businesses for meddling. Sen. Tim Scott, R-S.C., said opponents of the voting measures were just plain wrong.

"I'm an African-American who has voted in the South my entire life," Scott said April 28. "I take voting rights personally. Republicans support making it easier to vote and harder to cheat. And so do the voters." His comments were made in response to a joint address to Congress by President Joe Biden, who has likened the recent voter-restriction packages to Jim Crow-era laws.

Skeptics, meanwhile, have a difficult time separating corporations that now espouse social convictions from a sector long known for pursuing short-term interests and aggressive lobbying in Washington, D.C.

"I've been in corporate America for 35 years. It's all about making money," says Di Ann Sanchez, SHRM-SCP, an HR consultant in Hurst, Texas. "I don't know that they're doing it out of benevolence."

Michael L. Barnett, a professor of management and global business at Rutgers University, calls some of the carefully worded vocalizations by businesses "a calculated risk."

"It's far from a legal contract with any binding provisions," he says. "It's a pressure-release valve for immediate problems."

Trust in Business Is Up

Still, there appears to be a growing expectation from the general public that corporate America should help solve an array of problems. In the newly updated Trust Barometer from global communications company Edelman, 57 percent of the survey's U.S. respondents said they have "trust" in business. This number has ticked up slightly from January 2021, when it was at 54 percent.  Trust in Business

The increase could be attributed to the way some businesses visibly stepped up during the COVID-19 pandemic to assist in the manufacturing and distribution of medical supplies and vaccines, says Cydney Roach, Edelman's global chair of employee engagement.

By comparison, the public's opinions about government and the media were in the "distrust" zone, according to the latest survey. Trust in government was at 48 percent, up 6 points since January 2021, while trust in the media remained flat at 45 percent.

On average, 78 percent of U.S. employees said they expect their company to "act on societal issues" that range from vaccine hesitancy to racism to climate change.

"With very high trust from employees comes very high expectations," Roach says.

Some companies are feeling pushed to engage, says Elizabeth Doty, director of the recently formed Corporate Political Responsibility Taskforce at the University of Michigan. Their own employees may be demanding action in these politically turbulent times, she notes.

There's another reason employers might want to get involved, she adds. "Business has an interest in stable systems. How do you plan or invest in an environment with the kind of instability we saw on Jan. 6?" asks Doty, referring to the insurrection at the U.S. Capitol. "On the other hand, there are real problems when companies overstep, potentially undermining public trust, increasing polarization, crowding out citizen voices or advancing narrow interests at the expense of society."

She says the task force, part of The Erb Institute, will create a forum for business leaders to have open discussions with their peers and hopefully identify "clearly articulated principles of corporate political responsibility," as well as  "bright lines" to help decisionmaking.

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A Moral Base Line

The prospect of more businesses taking stances on social issues is problematic to some.

"It's really important for us to have spaces in life that are as free of politics and in-your-face moral values as possible," says Justin Tosi, an assistant professor of philosophy at Texas Tech University. "When you go to a store or a small business or whatever and you buy something from someone, you don't need to like that person. It's a beautiful thing because you make each other better off without caring about each other." 

In his recent book Grandstanding: The Use and Abuse of Moral Talk (Oxford University Press, 2020), Tosi and his colleague Brandon Warmke argue that discussions become more divisive and toxic when people try to one-up each other, particularly on social media platforms, by supporting certain values and rejecting others.

Certainly, Tosi says, companies and businesses should operate legally and with a moral base line.

"The comeback—and it's totally fair—is 'Well, what exactly is that base line?' " Tosi says. "I just think in general it's not a good development to try and inflate our relationships more than they need to be inflated."

Sonnenfeld, the Yale management expert, disagrees capitalism was ever as simple as some may think.

"We've been living in hybridized economies throughout eternity," he says. "Even the exploration of new continents to the early settlement developments were often the result of complex collective action. That's not to disparage the importance of private enterprise and risk."

Some consumers may indeed be getting agitated as companies publicize where they stand on certain topics, says Rachel Ruttan, an assistant professor of organizational behavior and human resources at the Rotman School of Management at the University of Toronto.

In examining replies on Twitter to large corporations that have taken anti-hate stances, for example, Ruttan notes many people are critical.

"So many of the tweet replies are basically like, 'I don't care what you think. I'm just trying to buy a computer' " or other product, she says.

Her research suggests important societal issues, or "sacred values," can themselves lose traction if companies appear to be glomming onto them for the wrong reasons, including public relations or profit.

Businesses that are seen as taking on a legitimate risk or expense may be a different matter. Ruttan uses the example of retailer Patagonia, which encourages customers to have the company repair their existing garments rather than buy new ones as a way to conserve resources.

"I think what people want to see is that you're taking on some sort of cost," she says.

Corporate leaders don't always have a choice about which directions they take. In some cases, boards or shareholders push activist goals. In May, for example, shareholders of oil giant ExxonMobil voted to install at least two independent directors, an indication that investors are concerned the company needs to do more to reduce carbon emissions.

It's not clear where U.S. businesses will go from here after many of them cleared their throats on voting rights recently. An onslaught of positioning is not expected. Instead, observers say, events and individual dynamics will determine whether individual companies or groups of them will get more involved or creep closer to third-rail issues such as gun control, abortion and the Israeli-Palestinian conflict.

"Most companies really don't want to mess with this stuff because it can just backfire quickly and suck all the oxygen out of the room," says Barnett, the Rutgers professor. "You've got lots of other things to worry about."

Dochen, whose real estate firm took a stand on voting rights in Texas, says she's gratified large companies have come even this far. "I've seen big corporations speaking out on certain legislative issues lately, and I'm really pleased that they have," she says.

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Members of Generation Z—those born between 1997 and 2012—have only just begun to join the workforce, but they may eventually wield outsize influence on the ways business and politics intersect.

Generation Z makes up 20 percent of the U.S. population and claims the title of the most diverse generation, with 48 percent of its members identifying as other than white.

Not surprisingly, inclusion is a top priority for these young people, says Mark Beal, an assistant professor of professional practice and communication at Rutgers University.

"They look for and want to be part of companies and corporations and employers that have a culture of diversity, inclusion and belonging," Beal says.

As consumers, he notes, 86 percent of those from Generation Z say they will conduct research on a company or brand to ensure the businesses are being "purposeful" in their actions.

"Their BS detector is pretty high," says Rachel Ruttan, an assistant professor of organizational behavior and human resources at the University of Toronto. "They've all grown up with things like greenwashing, pinkwashing, what have you."

The terms, respectively, are used to describe corporate marketing deceptively used to persuade the public that the organization's polices are environmentally friendly or supportive of gay rights or womens' issues.

Researchers say these digital natives lean a little to the left, even the nascent Republicans among them, and tend to espouse progressive views, such as the need for racial equity.

As potential employees, members of Generation Z are expected to be more attuned to the way companies take stands—or don't—on a variety of issues. Businesses will need to be aware of these discerning standards as they try to recruit and retain young talent.

"A lot of the workforce is becoming more Black and brown and Asian," says Di Ann Sanchez, SHRM-SCP, an HR consultant in Hurst, Texas. "They are going to demand the companies they work for support social responsibility. It's going to be very interesting to see what's going to happen." —M.R.

Mike Ramsey is a freelance writer in Chicago.

Illustrations by Woody Harrington.

Explore Further

SHRM provides advice and resources to help business leaders understand and manage workplace issues related to racism and politics.

Blue Ribbon Commission Report on Racial Equity
The commission's report grew out of SHRM's Together Forward @Work initiative, launched in 2020 to increase learning and collaboration on diversity, equity and inclusion (DE&I) and social justice.

DE&I Action-to-Change Toolkit
This toolkit helps employers initiate open dialogue about racial inequity in the workplace. It includes tools to construct equitable hiring practices and empathetic cultures.

How to Ensure Pay Equity for People of Color
Employers are scrutinizing their pay policies to eliminate racial disparities. 

Barriers for Black Professionals
Corporate America's current efforts to increase diversity are failing, according to a recent study by Coqual. Some corporate executives have publicly condemned racism and promised to do better.

Companies Try a New Approach to DE&I: Honest Conversations
For years, organizations have spent billions of dollars on DE&I programs that have largely failed. But there's something different going on now.

How Should HR Handle Political Discussions at Work?
As the country's political polarization seeps into the workplace, HR often ends up in the middle.

Viewpoint: How to Talk Politics at Work
Companies that, on the one hand, say they value having a diverse workforce but, on the other, ask employees to leave their politically diverse views at the door risk being seen as disingenuous—and may garner negative attention on social media.

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