Editor's Note: Keep Politics Out of the Boardroom
By Charles Elson

We were traditionally taught that there were two things never discussed in polite company — religion and politics. These were guaranteed to ruin any family Thanksgiving dinner. Why? Because they were naturally divisive — subjects about which every member of any gathering would have widely differing and emotionally charged views. That is why they are best discussed elsewhere.

Today we are in the midst of a period of tremendous political controversy and upheaval.

Politics permeates almost every aspect of our lives, including whom we are asked to vote for, the entertainment we watch and listen to, and even the simple products we purchase for everyday needs. Quite naturally, it has begun to affect the functioning of the modern corporation.

Recently, some have argued that in the absence of a clear and coherent direction from our political leadership, corporations and their leaders must now take principled stances on the varied controversial social issues of the day. CEOs and the companies that they lead have begun to take well-publicized positions on such issues as sexual and racial equality, immigration reform and environmental quality. Whether on the right or on the left, our corporate leadership has begun to speak out continually on issues they believe must be addressed.

While on one level appealing, basically this is wrong. I express no opinion on their viewpoints, but question whether they, and the companies they lead, should be active participants in the debate at all. Traditionally companies avoided politics. Why? Because it was divisive and that was what the governmental sector was supposed to do. To be successful, a business must operate as a team. Corporate teams thrive only if they work together for the commonly shared goal of corporate success. Politics destroys that unity of purpose just as it does Thanksgiving meals.

Companies, as well as their customers, suppliers, employees and even directors, are made up of a group as diverse as our society itself. Any time that a company leader takes a position on a political issue and acts in the name of the corporation itself, that important unity is shattered. Though many will support the position, an equal number will probably oppose it and will take deep offense, harming the common mission of the organization. My question to such a CEO is quite simple: Who elected you? That is why we have a legislature and elections — to resolve such controversy in a fair and democratic manner at the ballot box.

A corporation is obligated to act legally and ethically. But crossing the line into the political sphere to resolve political controversy is highly problematic. I am not suggesting that corporate leadership should not have political views. Of course they will, as every citizen does. But I think that when politically motivated, they should act clearly outside of the corporate sphere. They can contribute to and support any cause they wish. And, if really that committed, ultimately they can resign and run for public office. But to bind their company and its varied constituencies to a particular stance is inappropriate.

There is another even more compelling argument against corporate political involvement — the First Amendment to our Constitution, which protects everyone’s right to freedom of speech. Historically, corporations were forbidden to make political contributions not to prevent bribery, but because of the shareholders. Shareholders, who include almost all of us today, are as diverse politically as any other group, and to take corporate funds, their funds, to support a cause with which they might disagree violates their First Amendment rights. That argument is a valid today as when it was made in a noted federal court ruling, Miller vs. AT&T, almost 50 years ago.  You shouldn’t further your own agenda with other people’s money.

Companies prosper when they sell great products or services at competitive prices. When they step out of this role, no one will be served well. Politics and Thanksgiving never mix. Neither should corporations and political agendas.

Other related articles

  • Five Ways to Combat Board Groupthink
    Published May 18, 2022
    By Sharda Cherwoo and Shiva Rajgopal
    Effective boards need contrarians and forward thinkersGroup think is one of the greatest challenges facing corporate boards The tendency among decision makers to go along with the seeming consensus vi ...
  • One Wild Month for Elon Musk, Twitter and Tesla
    Published May 02, 2022
    By Bill Hayes
    Share purchases board seats poison pillsoh mynbspIf the saga of Elon Musks quest for Twitter was a rollercoaster it would rank among Six Flags finestnbspIn less than 30 days time Musk went from buying ...
  • More Gender Diversity Needed on Corporate Boards
    Published April 26, 2022
    By Bill Hayes
    Lack of women is especially apparent at the Csuite levelIn February 2022 Jennifer Reynolds officially became the CEO of Women Corporate Directors an organization touted as the worlds largest membershi ...
  • CEO Pay Records a Major Increase in 2021
    Published April 25, 2022
    By Bill Hayes
    Report finds bonus payouts bolstering CEO financial performancenbspAccording to early proxy filers 2021 was a bounceback year for CEOs with total pay recording an uptick of 19 and bonus payouts up nea ...