6 Brands Playing Footsie with Conservatives and Paying the Price
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Once again companies seriously harmed their public image -- their brand equity -- by playing footsie with the right.
Hiding Doesn't Help
Some companies understand the potential for damage to their brand, so they try to hide their support for the right. But as the ALEC exposure demonstrated, this just increases the potential to further incite public rage. One area where companies are trying to mask their right-wing support is through the use of organizations like Karl Rove's Crossroads GPS, which runs ads supporting Republican candidates. Crossroads GPS tries to mask its election agenda by calling itself an "advocacy group," claiming they only run ads to advance social welfare. This allows them to keep their donors secret. The same is true of the US Chamber of Commerce, which spends tens, even hundreds of millions on campaign advertisements for Republicans. But in reality both are just fronts for the Republican party.
Corporations supporting organizations like Crossroads GPS and the US Chamber of Commerce do so expecting that their funding of the right will remain anonymous. But sometimes the law does catch up, and these companies also risk damaging their brand equity when a fed-up public finds out. And this may well be just about to happen. As Business Week reported in, FEC Orders Names of Donors Fueling Issue Ads Be Disclosed, "The Federal Election Commission today said that it would require groups funding issue ads, such as the U.S. Chamber of Commerce and Crossroads GPS, to disclose their donors."
Citizens Don't Like Corporations Interfering With Democracy
Is your company supporting a right-wing organization that promises to keep your identity secret while helping you get special tax breaks and government “privatization” contracts, break unions, keep wages down or gain a legislative edge over competitors? If you think this benefits you in the long run, you had best think again. This is the lesson: if you direct or manage a corporation you should not risk your brand by siding against the 99% of the population that is becoming angrier and angrier at corporate interference in our democracy. If you work at a company doing this, use your best efforts to make them aware of the potential for damage –your job could be saved if you stop them before they are exposed.
Supporting the right in an attempt to purchase shortcuts to profits will also damage your company culture. The Huffington Post reported, in Corporate Political Donations Linked To Lower Stock Value: Study, that "Corporations might want to reconsider throwing large sums of money at Washington," because there is a correlation with poor company performance:
Rajesh K. Aggarwal and Tracy Wang from the University of Minnesota and Felix Meschke from the University of Kansas examined corporate donations given to political candidates for federal offices from 1991 to 2004 and found that for every additional $10,000 a firm contributed, its stock market price dropped 7.4 basis points below expectation. Corporations that donated large sums of money were also linked to poor governance and agency problems, the study found. [emphasis added, to emphasize]
Here Is What To Do
It isn't hard to protect yourself from angry public reactions that can lead to the brand damage that Chick-fil-A and Komen for the Cure are suffering. Just be good citizens. As a corporation your mission is supposed to be to serve the public good by providing quality goods and services, supporting your products, providing good jobs that respect the humanity and intelligence of your employees, paying good wages and helping care for the communities that surround and support your business. So limit your greed, provide a good product or service to the public, do what is right, and focus on doing things that help people and the communities where you do business. That is the corporate behavior – the “success” – that the market wants to reward. That might sound old-fashioned in today's cutthroat business climate, but, really, doing the right thing is how you maximize shareholder value in the long term.