Board Political Balance
By April Hall

Do you need directors from across the political spectrum? 

Salesforce CEO Marc Benioff, a liberal, and former secretary of state Gen. Colin Powell, a conservative, have been working together for years on community projects including installing computers in public schools. In 2014, Powell joined the Salesforce board, and while they don’t agree on a number of topics, Benioff refers to Powell as a mentor.

When Benioff advocated for corporate activism in politics, Powell told the Wall Street Journal that he told the CEO, “Be careful how far you climb up the tree — it will expose your backside.”

That diversity of thought can keep political management or ownership grounded, says Daniel Korschun, a fellow at the Institute for Strategic Leadership and the Center for Corporate Governance at LeBow College of Business at Drexel University.

“For the last four or five years, politics have come up more and more with the CEO and the company — [they are] being thrust into political controversy more than ever before. Companies are also jumping into political waters voluntarily,” Korschun says.

The relationship between Powell and Benioff, he explains, is an example of how “differences in perspective can help a company navigate tricky [political] issues. Having multiple perspectives gives a company more of a chance,” to receive positive public reaction to political stands.

For years, stakeholders have looked for diversity in the boardroom including gender and race, and board search interviews include questions about skill sets and experience, but it’s unclear if there should be a push for a diversity of politics in these polarizing times.

Some directors say there is no place for politics at the board table; that it makes no difference in fiduciary duty. But others admit that politics are coming up more and more as the 2020 election approaches, even if the current president’s name is often not mentioned.

Can directors leave their political views at the boardroom door, and should they?

“We need diversity on the board in general,” Korschun maintains. “I don’t subscribe to the idea that we need perfect demographic diversity all of the time, but there are other diversities boards need and one of those is political.” Diversity of politics, he adds, means diversity of opinion, for which every successful board strives.

Questions about a potential board member’s political affiliation should be part of the vetting process, he advises. Building a politically diverse board not only builds diversity of thought, but also prepares the company to handle outside perception of decisions the board makes.

“We see that consumers, employees and other stakeholders don’t make a very stark distinction between the company and executives and directors,” he says.

He points to the recent boycott against fitness company SoulCycle. When it was published that the company’s chair, Stephen Ross, was hosting a fundraiser lunch for Trump’s reelection, membership numbers dropped across the country as company spokespeople clamored to say Ross’ political affiliation was not indicative of the company’s politics.

As far as party affiliation, boards have skewed more Republican because of the party’s perceived pro-business bent. A 2016 study from Harvard Business School found that among U.S. boards, Republicans held 50% of board seats, 24% were Democrats, and 26% self-identified as Independents.

A director for Fulton Bank, Ivy Silver, says she has been a part of discussions in the boardroom around both inward- and outward-facing politics of the company.

For example, what causes the company supports. The current position of the bank’s board is to stay aligned with the mission of the company. “The only conclusion we came to on this one, support appropriate banking laws and rules,” she says, but personally they can support issues through elections.

“It also depends on how you term ‘politics,’” she adds. “We believe in economic development, financial literacy, we support opportunities for that.”

The board has also decided that elections are how communities grow and develop. To that end, the bank supports Get Out the Vote, a bipartisan nonprofit that advocates voter registration.

The diversity of politics is shifting in the boardroom as stakeholders are looking beyond the bottom line, Silver explains. “It’s not just because you are affiliated to a party, it’s about whether you vote on a single issue or not,” she says. “You have to be clear about what and who you are supporting rather than what does somebody stand for.”

Ultimately a deciding factor in who’s selected for the board, notes Silver, is based on “their approaches to society and business development, ecology and the environment. For example, finally, the environment has become a both-party subject.”

It’s the issue that can unite a board and management, even if they’re on opposite sides of the aisle. Korschun pointed to Salesforce as an example.

Just adding a director with an extreme political approach that’s in contrast with a company’s mission, however, isn’t the answer. “What I can say with confidence is when a new director comes on a board with different political views than the rest of the company, it arouses skepticism. It may be seen as a departure from mission values.”

Trying to find the balance of political affiliations could get complicated, as the country continues to move away from a two-party system, Silver says.

“Will we have to be inclusive of not only Democrats versus Republicans versus Libertarian versus Green Party?” she notes about adding different political voices to the boardroom.

And even within political groups there can be varying ideologies, she says, adding, “are you a Joe Biden democrat or an Elizabeth Warren democrat?”

Norman Augustine, retired CEO and chairman of Lockheed Martin who sat on the boards of Lockheed Martin, Conoco Philips, and Procter & Gamble, says he never asked colleagues their political affiliation, nor should he have.

“I haven’t the slightest idea — 95% of the people I served on boards with,” says Augustine, who is a member of Directors & Boards’ editorial advisory board, “I couldn’t tell you what party they belong to.”

 


Issue: 
2019 Fourth Quarter

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