LE AD ERS ON LEADERSHIP \ JEFFREY SONNENFELD
CEO VOICES: FACTS VS. FANTASY A YEAR AFTER THE WORST assault on the Capitol since 1812, the companies that pledged to use their political influence to defend democracy in its aftermath are under fire. ABC News, CBS and PBS have all trumpeted an Associated Press story charging that Fortune 500 CEOs’ commitment to PAC PLEDGE PROMISE-KEEPERS withholding funding from lawmakers who voted against certifying the 2020 election results were “empty promis22% es.” Yet, concern among big business NonCompliant remains very much alive. In fact, just this past December, when I gathered roughly 200 CEOs, U.S. 78% senators, governors and policy experts Compliant with Pledge to debate the matter, I didn’t hear a lack of concern. Furthermore, a closer look at the data being bandied about to support the allegation that a vast swath of companies are reneging on their post-assault pledges reveals exactly the opposite. “GOP Election Objectors Rake in Corporate Cash,” a recent high-profile piece in The Hill, is emblematic of how proliferating voting-rights advocates are creating confusion for CEOs looking for yardsticks for comparison and adding to the fingerpointing within their ranks. The article showcased the misguided conclusions of Accountable.US, a liberal watchdog group that charged Fortune 500 firms with “quietly resuming” their political giving to GOP election objectors. The reality? Even though the moratorium on corporate political donations was only temporary, a deeper analysis of the actual FEC data for Q1, Q2 and Q3 shows that consistent compliance has ranged between Jeffrey Sonnenfeld is 80 percent and 95 percent. The Q4 data is, senior associate dean, of course, not out yet. While a handful of leadership studies, companies, including Boeing, did renege, the Lester Crown professor in management practice remarkable consistency—rather than those at Yale School of exceptions—should be the headline. Management, president This most recent discussion showcases of the Yale Chief the perhaps intentional apples-and-orExecutive Leadership anges data confusion, likely due to underInstitute and author of lying suspicion of corporations on the The Hero’s Farewell. left. Skeptical media pieces pronouncing Follow him on Twitter @JeffSonnenfeld. their failure flowed immediately after the
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commitments were made in early January 2021, before any of the FEC data came out each quarter to prove them wrong. As Mark Twain advised, “the reports of my death are premature.” The money line and focal point in the article in The Hill seems to be “less than a year after Jan. 6th attacks, PACs associated with Fortune 500 companies and their trade groups have contributed $6.8 million to the 147 republicans who objected.” This is woefully misleading. At first blush, $6.8 million sounds impressive, but some Congressional members haul that much in on their own. Spread among 147 members, it’s a far less impressive sum—one that actually reflects diminished giving. In fact, $6.8 million is less than 1.5 percent of Congressional donor support and less than one-third of one percent of total donor support to both parties this year. Corporate gifts are down, overwhelmed in magnitude by individual donor support, which currently accounts for 82 percent of Democratic Congressional candidate funding and 78.7 percent of Republican funding. What’s more, many companies are finding themselves compelled to move beyond campaign contributions to weigh in on political and social issues directly. As Michael Dell recently stated, “If corporations cannot speak out on voting access and ballot security, what can they address?” At a recent National Investor Relations Institute forum, SVP JJ Davis explained that Dell considers four questions when deciding whether to engage in over 100 social issues that it tracks: 1) the impact on Dell’s brand and reputation (alignment with core values and past positions); 2) the external impact on key constituencies and the positions of peers; 3) the ramifications for public policy makers and 4) the ESG sentiment of employees. Companies must make their own calls on taking stances on national and local social issues. But whatever a firm decides regarding social issues, CEOs and boards need to answer key questions based on objective facts, not ideologically-based fantasy. CE
