Navigating the Hypocrisy Trap

Worlds are colliding—on one hand, you have companies creating value statements in line with MIlennial (and later) consumers and workforces while also sensing they might be one election from the Hyman Roth dream of having “real partnership with the government.”

Unfortunately, politicians who support the tax and regulatory framework that companies seek tend to be at odds with the values many companies espoused during 2020 and since.

Meanwhile, Citizens United has been a mixed blessing. Yes, corporations have expanded their influence with treasury donations, but if they want influence they have to continue to donate, if for no reason then others are. It’s an odd kind of tax. In some ways life was easier when donations weren’t permitted.

Harvard Business Review recently wrote that “corporate political spending is bad business., concluding with:

Even the classic justification that corporate donations maximize shareholder wealth is on shaky ground: Emerging evidence suggests that they can destroy value by suppressing innovation and distracting managers from more-pressing tasks.

I’m going to take a slightly different tack. It might be bad business, but I don’t think it’s going to stop anytime soon, so what are the ramifications for the modern communicator?

Where Possible, Favor Ideas Over People

I have a client who took this approach during the George Floyd situation—agree with the principles but not necessarily whatever group might have come forward to front those principles. The same can apply to politicians. People are just messy and you can’t control them and they can be divisive and they are acting in their interests 100% of the time and only in yours when the interests happen to overlap.

The public is on board with this. The Edelman Trust Barometer shows that people expect CEOS (and by extension their brands) to inform and shape policy debates but be less involved in the actual politics.

There will be backlash. Be Ready.

If you are going to try to play in this space—where your values and your politics are in conflict, your communicators need to be prepared for backlash. It can’t be avoided. The best example is Coke and Georgia. Coke remained silent on the voter law and faced a boycott. Under pressure from the left they weighed in, and then right announced a boycott.

Simply put, this approach will continue to bruise your brand.

A Cautionary Messaging Tale

Messaging inside this situation—which is called the Hypocrisy Trap—has ushered in an era of cringeworthy communications.

For example:

When Coke didn’t come out against the Georgia Voting Law until after it passed, the CEO said it was because he hadn’t had time to read it yet.

Here’s a suggestion for how to message this:

Our vision is this: a sustainable and just society that provides opportunity for everyone, fueled by a smarter tax and regulatory framework that helps us compete around the globe and create jobs in our communities. We believe our shareholders and our stakeholders will thrive in that world. We are working toward a day when these ideas won’t be at odds with each other. We will not abandon these positions in the meantime.

A Racial Idea: Transparency

There’s a legal blog that has some really good advice on the overall governance issues that surround companies who are trying to navigate these challenges.

I’d suggest a radical idea. Be completely transparent on how you spend your money to advance the shareholder’s interests. (Forbes says this is no longer an option). Of course, dark money exists to do the opposite—to allow groups to influence elections without being held accountable. But what if you just said: here is what we want to do and here is how we spent the money.

Rigorously monitor brand damage

HBR suggests that this duality is untenable. If the costs of that duality start to outweigh the tax and regulatory benefits and impact share price, companies may need to change course. Most investors are highly diversified—in fact, many investors are in index funds and have no idea which stocks are part of it on any given day. Brand damage will show up first on areas that impact earnings—with consumer preference and difficulty recruiting for new positions and difficulty retaining quality employees.

Those channels should be monitored close and quantitatively to track whether these “brand bruises” are causing long-term damage.