Forbes Column: Are You Prepared for a Communications or Reputational Crisis?

/in

It may not always seem it on the surface, but political and reputational risks exist in every organization. In his second column as a member of the Forbes Business Council, Delve CEO Jeff Berkowitz explains why organizations need to be prepared to anticipate and mitigate a communications or reputations crisis before it happens, because once the viral moment hits, it will be too late. Read on to learn more.

It’s the day you have long feared. You wake up to frenzied phone notifications and emails from colleagues and questions from reporters. Your viral moment has arrived. Someone said or did something — now or years ago — and your organization is under siege from the press, public, shareholders and policymakers.

Today, it’s no longer a matter of if your viral moment will happen, but when. That’s because companies are made up of people, and people make mistakes — both in their work and personal lives. Sometimes, no one does anything wrong at all, and the blowback is seemingly unjustified. No matter the circumstances, your viral moment is inevitable.

So, as the old adage goes, “by failing to prepare, you are preparing to fail.” That’s why organizations must invest time and resources before something bad happens. Smart companies are doing so by applying the same kind of competitive intelligence they leverage elsewhere in their business to build a public affairs toolbox that ensures they can respond quickly and effectively to any viral moment.

Continue reading at Forbes.com and find out the three steps executives should take to protect their brand from an unexpected uproar.

Delve’s New E-Book: Everything Public Affairs Professionals Need To Know About the Infrastructure Bill

/in

Download the Infrastructure E-book

A Message from Delve’s CEO, Jeff Berkowitz

After years of “Infrastructure Weeks” and months of legislative jockeying, Congress is poised to send a bipartisan infrastructure package to President Biden’s desk. Like many such bills, its passage represents countless hours by Members of Congress and their staff, along with pressures and encouragement from a wide range of outside interests. Last fall during the presidential transition, we outlined the bipartisan opportunities offered by an infrastructure bill like this one, and each of those is represented in the final package.

Yet, even as champagne gets chilled at both ends of Pennsylvania Avenue and up and down K Street, smart government affairs professionals realize passage is just the end of the beginning, not the beginning of the end. Particularly with legislation so historic in both size and scope, signing the bill merely passes the baton from Congress to federal agencies, and in many cases, state and local governments and private sector partners.

That reality means government affairs professionals must work with public officials to ensure favorable regulatory conditions for their projects, priorities, and industries, because their opponents are already engaging in these fights, and a variety of stakeholders will likely need to buy in before the project proceeds.

To understand the fights spawned or compounded by this bill, our analyst team dug deep into what comes next, as we always do for our clients. This report provides a brief overview of ten public affairs challenges and opportunities across a range of industries that will unfold as this bill goes from legislative language to real world implementation.

While passage is a great success for government affairs professionals, Congress, and The White House, for both the winners and losers in this bill, the fight will go on. It is our hope that this report helps prepare you and your organization to stay ahead of the curve. As you do, please reach out – we’re here to help.

Thank you for reading,

Jeff Berkowitz
CEO
Delve

From Europe, With Disappointment

/in

Here’s What You Need To Know

Contrasting himself with then-President Trump’s “America First” diplomacy, Joe Biden pledged during the campaign to strengthen America’s alliances to “address the most urgent global challenges.” Then-campaign advisor and now Secretary of State Antony Blinken said Biden’s foreign policy “means engaging the European Union instead … treating it like it’s an enemy,” promising Biden would “bring to an end [Trump’s] artificial trade war,” and “rebuild strong ties with the European Union.” As President-elect, Biden underscored these commitments in a call with European leaders, vowing to “deepen and revitalize the US-EU relationship.”

These overtures from the Biden campaign was met with resounding anticipation, with the former French Ambassador Gerard Araud calling the prospect of a Biden victory as “orgasmic” for Brussels. London-based Business Insider reporter Thomas Colson boldly prognosticated that a Biden win in 2020 would, “repair most of the damage Trump has done to America’s historic alliance with Europe.” There were high hopes for an end to so-called trade wars with Europe, as well as greater financial investments in Europe’s security.

Yet eight months into the Biden Administration, some analysts may be wondering if Biden is actually the most Eurosceptic president in recent American history. From reinstituting a travel ban on European visitors to a bungled Afghan departure and beyond, transatlantic tensions have intensified, reaching a crescendo with the controversial AUKUS submarine deal earlier this month. For organizations counting on stronger transatlantic ties, the unexpected turmoil poses unique challenges for both day-to-day operations and long-term growth. Indeed, even where the two sides of the Atlantic appear to be cooperating, the policy direction may hurt rather than help. Here’s what public affairs professionals need to know to help their organizations navigate the turmoil.

The Biden Administration’s Action Have Not Matched Campaign Promises – Or European Expectations – For a Strengthened Alliance

BAD BAN: When President Joe Biden took office, he reinstituted a travel ban on visitors from most European nations, regardless of an individual’s vaccination status and with very few diplomatic or commercial exceptions, even though individuals from nearly 170 other nations could visit America, regardless of their country’s COVID-19 situation or vaccine campaign efficacy. After Europe lifted its restrictions on vaccinated or negative-testing American travelers, they expected the U.S. to reciprocate. In the several months that followed, President Biden wouldn’t budge, leaving European leaders furious and triggering a deluge of public statements from ambassadors, national leaders, and EU chiefs emphasizing how damaging the Biden Administration’s decision was to U.S.-Europe relations, international commerce, and the millions of families kept apart for nearly two years. While Biden finally ended the ban last week, the damage had already been done.

AFGHANISTAN FALLOUT: Despite broad international criticism, President Biden has remained defiant about his decision to end a U.S. presence in Afghanistan. The chaotic departure has infuriated European allies – in particular, France, Germany, and the United Kingdom – who have made long-term troop and financial commitments to support U.S. efforts in the region and expected Biden to strengthen, not surprise, the NATO alliance. In mid-August, the British Parliament held President Biden in contempt over the messy withdrawal, while Europeans openly discussed whether they can still rely upon the United States as a partner in global security. “There was a time when the U.S. talked about upholding the global order,” Sweden’s former Prime Minister Carl Bildt told the BBC. “But that is not the language now coming out of the White House. Expectations for a revival of the transatlantic relationship have been deflated. And one is resigned to an America that does it its own way.”

LAFAYETTE, NOUS NE SOMMES PAS DÉSOLÉS: The U.S.-EU relationship deteriorated further after the Biden Administration “torpedoed a multibillion-dollar French submarine deal with Canberra,” with the French insisting they were left in the dark about the incoming hit to one of its most prized industrial products until it became public. The French were so angry, in fact, that they recalled their ambassador from Washington to Paris – one of the deepest cuts in America’s longest alliance dating back to the American Revolution. Even as President Biden attempted to smooth things over by lifting the travel ban, Europe isn’t forgetting the slight anytime soon. The EU delayed the first session of the U.S.-European Trade and Tech Council planned for September 29th, and EU Internal Market Commissioner Thierry Breton suggested, “It is probably time to pause and reset our EU-U.S. relationship.”

WAIVER-ING RELATIONSHIP: These missteps in the U.S.-EU relationship are not recent. Back in February, the Biden Administration caught European officials by surprise when it endorsed efforts at the World Trade Organization to provide waivers on COVID-19 related intellectual property protections. Meanwhile, Speaker Nancy Pelosi (D-Calif.) is sending signals to London that, should Prime Minister Boris Johnson interfere with a Northern Irish peace process, it would hinder his ability to secure a post-Brexit trade deal. And allies in Central and Eastern Europe were disturbed by the Biden Administration’s abrupt decision to withhold sanctions against Russia’s controversial Nord Stream 2 pipeline project. With so many developments in a short eight months in office, it is no surprise European Council President Charles Michel expressed disappointment, noting Biden had declared, “America is back. … What does it mean … Is America back in America or somewhere else? We don’t know … We are observing a clear lack of transparency and loyalty.”

Transatlantic Tensions Add Challenges for Companies in This “New Era” of U.S. Diplomacy, but So Does Cooperation

NAVIGATING A NEW ERA OF UNEXPECTED TENSION: Last week, President Biden gave a speech at the United Nations where he outlined his vision for a “new era” in U.S. diplomacy. Yet while the Council on Foreign Relations once lauded the President Biden and Secretary Blinken as “confirmed Atlanticists” eager to re-engage with Europe on initiatives like the Paris Agreement and World Health Organization, the economic picture remains unclear. The state of trade wars, once portrayed as relics of the Trump Era, are no longer the exclusive sign of the health of America’s economic relationship with Europe. For public affairs professionals, the Biden Administration has not turned out to be as predictable on transatlantic affairs as experts once hoped.

COOPERATION BRINGS COMPLICATIONS OF ITS OWN: Even areas where there is cooperation between the U.S. and Europeans do not bode well for companies. From anti-trust crackdowns to global minimum taxes to carbon reduction initiatives, this collaboration can be just as much a source of angst among companies that expected Biden to get the U.S.-Europe relationship “back on track.” Now, corporate public affairs professionals must juggle what’s happening with Washington, Brussels, and London – and Paris, Vienna, and Berlin, too. With this expansion in what developments in which jurisdictions can impact their interests, companies will need sharp competitive intelligence efforts to make sense of it all.

Under Pressure

/in

Here’s What You Need To Know

Texas’ recent law restricting abortion is not just the latest flashpoint in the long running culture war. It is also the latest example of the growing pressures and expectations facing corporations in an increasingly divided America. Until recently, companies and coalitions avoided public policy fights outside of those that affected their “bottom line.” Now, apolitical organizations are expected to become political, even when it seems to make little sense to get involved. For activists, inaction on any particular policy is essentially an endorsement of it, so they demand companies of all shapes and sizes take stands on hotly contested issues ranging from abortion access to election law, and vaccine mandates to gender identity issues.

As more companies decamp for more business-friendly policy environments in Republican-led “red” states, they are realizing that conservative policy isn’t limited to economics. That’s leading to added pressure from highly motivated, well-organized, and well-funded activists unwilling to accept anything less than complete and enthusiastic alignment with their point of view. For public affairs professionals helping companies navigate these competing pressures, this new reality means trying to get along with the leaders who enact policies that are good for business while placating the activists whose agitation isn’t, or finding ways to speak up for important values without blowback from elected officials.

To understand how we got here and why such challenges are unlikely to go away anytime soon, here’s what you need to know.

Organizations Are Emigrating To “Red States” for Pro-Business Policies

RED STATES RISING: Many Republican-led states have enacted business-friendly policies to recruit top companies. These organizations are enticed by low tax rates, minimal regulations, and favorable labor laws, while their employees appreciate the quality of life and low cost of living. States like Texas, Tennessee, and Florida – all with no state income tax, affordable housing, and agreeable weather – have seen population booms and robust economic growth in recent years. Even tech organizations like Tesla, Oracle, and HP aren’t shying away from reaping the benefits of a conservative state like Texas, happy to intensify the blue dots in red states as they flock to cities like Austin. They’re also moving to communities like Atlanta and Salt Lake City, eager to take advantage of those states’ overall business climate while adding their own urban flair.

BLUE STATES BLEEDING: As America’s largest state and one of the world’s largest economies, California had lots to offer businesses. Yet its high tax rates, labor policies, abundant regulations, and other positions on a variety of issues are driving companies out. According to the Hoover Institution, CEOs rank California as having the country’s worst business environment. Years of these policies have led businesses to head to friendlier climes, including Florida, which “welcomed a net inflow of 4,811 ex-Californians between 2018 and 2019” alone, according to Patrick Gleason of Americans for Tax Reform. California is not alone, either. Like the snowbirds before them, New Yorkers are migrating south – this time for work. Big names like Goldman Sachs and Jet Blue are heading there, according to the Partnership for New York City, while financial firms like Elliott Management, Citadel Group, and Blackstone are moving tens, if not hundreds, of billions of dollars to the Sunshine State. Next door in New Jersey, 70 percent of CPAs have advised their clients to relocate elsewhere due to the region’s high cost of doing business, especially its tax rates.

Businesses Are Caught Between Competing Political Agendas

THE FACTS OF (POLITICAL) LIFE: While corporations appreciate the benefits of operating in Republican-led states, conservative policy isn’t limited to economics. For some companies, they must take “the good” (an attractive business climate) with what they see as “the bad” (socially conservative laws). For some industries, the delicate balancing act is worth it. But, as state governments take an increasingly active role in addressing causes of social concern for their constituents, that’s becoming more difficult.

ACTIVISTS EXPECT A RESPONSE: In a hyper-politicized, highly digitized world, companies have to worry more and more about activist pressures from both within their own organizations and outside of them. Every issue, no matter how ungermane to their day-to-day activities, could be a lightning rod for activists’ fury. And now more than ever, these activists have plenty of time, resources, and motivation to keep the pressure on. Unlike C-suites, activists aren’t concerned with how a state’s economic policies are creating jobs or profit. Instead, their goal is to make life as difficult as possible for organizations with the wrong political opinions or who choose not to speak out. It doesn’t matter if you’re Jeff Bezos, running one of the world’s largest companies that employs millions and adds trillions to the economy or a small business owner trying to make ends meet. You’re still expected to speak out on immigration policy or whatever politically charged debate has crossed activists’ radar at a given moment.

BUT ACTIONS CAN CAUSE BACKLASH: Even with mounting activist pressure, organizations can’t simply advocate against GOP policies in states where they operate without facing blowback. When companies like Delta took a public stand against a new voting reform law passed by Georgia Republicans, lawmakers retaliated against the Atlanta-based airline by voting to strip them of tax breaks worth tens of millions of dollars annually. Peach State GOPers responded similarly in 2018 when they pushed back on Delta dropping its National Rifle Association discount by killing its jet-fuel tax cut that had previously saved the company about $40 million. And as a populism-tinged skepticism of corporations takes hold of many Republicans, a growing number are unwilling to sit quiet when companies, pushed by activists, take antagonistic positions against them.

Public Affairs Professionals Need To Keep Two Very Different Sides Happy

BEND UNTIL THEY BREAK: From apologies to executive shakeups, companies will keep bending to activist demands to protect their standing with consumers or employees. The question is how much. CEOs feel they have a responsibility to their stakeholders to speak out on controversial issues, and their voices matter, since they’re still among the most trusted leaders to impact social change. In some cases, activist-driven corporate pressure has changed laws or thwarted enactment of new ones. When North Carolina moved to enact a transgender bathroom bill, Deutsche Bank and PayPal announced they would no longer expand in the state, while the NBA threatened to cancel its All Star Game plans. The state ultimately relented.

THREADING THE NEEDLE: For many corporate leaders, the goal is to do just enough to show they have the right social opinions without upsetting elected officials they need to maintain a positive economic environment. As Texas implements its new abortion law, even typically vocal companies, like SalesForce, are carefully balancing their response, offering employees relocation bonuses to work from California but avoiding broader comments on the law. Meanwhile, rideshare companies are providing legal coverage for contractors, and one, Lyft, is contributing a sizeable donation to Planned Parenthood. And some tech companies are even starting abortion funds for their employees. Yet few, if any, have any plans to push back against the law, and none of them have decided to leave Texas. Meanwhile, some of the state’s biggest corporations – Apple, AT&T, Dell – are staying quiet.

PUBLIC AFFAIRS JENGA: Getting caught amidst the culture wars poses unique and growing challenges for public affairs teams. They must protect their firms’ economic interests while placating an increasingly-activated consumer and employee base who are sometimes not aligned with Republican values on social issues – not to mention a narrative-driven national media that has little sympathy for conservative policy initiatives. To stay out of the fray – or engage in a thoughtful way – public affairs professionals need the right insights to understand who all their stakeholders are and how to anticipate their expectations when issue debates get heated.

Forbes Column: Is Your Company Culture a Political Risk or Opportunity?

/in

In his inaugural column as a member of the Forbes Business Council, Delve CEO Jeff Berkowitz notes that while we often think of political and reputational risks as coming from external forces, that is not always the case. The culture you build in your company can have a real impact on your company’s brand, reputation, and policy interests. Read on to learn more.

When Basecamp CEO Jason Fried shared a memo that prohibited political discussions at work, the headlines to follow caught the attention of many and were, arguably, every business leader’s nightmare. The news quickly spread across the internet, and even a member of Congress tweeted a response critiquing the company’s new policy. The uproar might not have been the intention, but in the weeks that followed, roughly one-third of the staffers at the tech firm accepted buyouts if they did not support the new restrictions. Among those exiting the company were the heads of customer support, marketing and design.

As someone who specializes in assessing political and reputational risks, this news immediately caught my attention. But, as a skeptical news consumer, I dug deeper to understand what was really happening beyond the flashy headlines and social media chatter. According to The Verge, the directive came in response to employee discussions that “centered on what is happening at Basecamp.”

So, what was causing such an employee uprising that the founders felt the need to shut down the discussion? Some employees sought a reckoning over a practice by the company’s customer service representatives to keep a list of users with names “they found funny,” some of which were Asian or African in origin. Employees pushed for more and broader discussions on diversity, inclusion and equity, and “after months of fraught conversations, Fried and his co-founder, David Heinemeier Hansson, moved to shut those conversations down,” the Verge reported. Outside the company, many piled on what they believed was the insensitivity with which the company treated important social issue discussions.

With the workplace — at Basecamp and beyond — caught in the middle of this fraught debate, there is an important lesson.

Continue reading at Forbes.com and find out the three fundamental practices business leaders should focus on to ensure their corporate culture that can withstand the headlines and scrutiny when crisis strikes.

The Great Compromise May Be Dead

/in

Twenty years ago, a newly inaugurated President George W. Bush faced an evenly split Senate, a slim House majority, and volatile public sentiment after a hotly contested, divisive election result. Securing legislative victories would require bipartisanship and compromise, American traditions dating as far back as The Great Compromise – negotiated over the 4th of July weekend of 1787 – that shaped the U.S. Constitution.

Today, President Joe Biden faces a very similar political landscape. Yet the media, who once exalted compromise as a virtue, now treats it as a deterrent to progressive aims. This new narrative has emboldened the most leftward partisans of the Democratic Party, who are convinced they enjoy a mandate that is not evident in the makeup of this Congress or the voting coalition that elected Joe Biden.

For companies and industries seeking compromises borne out of bipartisanship to advance their policy priorities, this landscape is fraught with challenges. Central to those challenges is the question of whether bipartisan compromise can survive in the age of polarized 24-hour news and social media punditry. If it cannot, what does that mean for public affairs professionals trying to navigate Washington’s morass for their organizations and clients? Here’s what you need to know.

The Media, Who Once Celebrated Moderates as Mavericks, Now Portray Them as Roadblocks to Progress

Throughout most of political history, the public and the press have expected elected officials to set aside ideological differences to deliver real results for their constituents and the country. When government is closely divided, this bipartisanship often takes the form of opposition to the majority’s policy proposals and seeking to temper its more partisan impulses.

President George W. Bush discovered this reality firsthand as he tried to advance his agenda. At that time, the media cast his attempts to score legislative victories as extreme while pushback from his own party was sensible, civic-minded, and even brave. When Vermont Senator Jim Jeffords switched his political affiliation from GOP to Independent, he earned glowing media coverage that warned Republicans their pursuit of GOP priorities was alienating moderates. Meanwhile, Sen. John McCain (R-Ariz.) garnered media favor for his independent streak that imposed political obstacles on the new Republican president.

For the past two decades, the media have openly pined for a “radical center” built by the “moderate middle” of “politically homeless” who they say simply seek solutions to the problems facing our country. They heaped praise on the various bipartisan “gangs” who crossed party lines to solve big problems facing the country, and in 2020 argued disaffected Americans eschewed the divisive tone of the Trump Administration for then-candidate Biden’s message of unity and a return to normalcy.

Then Democrats’ narrow 2020 electoral victories left the fate of President Biden’s agenda in a 50-50-split Senate with two moderate Democrats: Sen. Krysten Sinema (D-Ariz.) and Sen. Joe Manchin (D-West Virginia). Once revered as honorable and constructive, moderation, standing athwart the Democrats’ agenda, is now reviled as obstinate and regressive. When Sen. Manchin indicated he would not support progressives’ proposed overhaul of federal voting laws, one liberal commentator accused him of upholding “white supremacy” as a “cowardly, power-hungry white dude,” while The Washington Post’s Eugene Robinson called him a “villain” for refusing to eliminate the filibuster. Sen. Sinema has endured similar derision, with The New York Times lambasting her for standing in the way of “major legislation,” arguing that while her predecessors took courageous stands in the tradition of compromise, Sinema merely “delights in trolling” her fellow Democrats, void of any discernible principles.

The Media Keeps Advancing the Narrative of a Progressive Mandate, but Congressional Math and Biden’s Electoral Coalition Suggest Otherwise

This new media depiction of bipartisanship as a bug, rather than a feature, of democracy is built on the premise that progressives have a governing mandate from voters. Yet that is simply not the case. The U.S. Senate is split evenly, while Democrats have the slimmest House majority in two decades – just nine seats. While Biden won the presidency, many Democrats considered the 2020 elections a “failure,” with voters who rejected President Trump also rebuffing candidates who promoted the Democrats’ most leftward policies.

Critics say the media live in a progressive social media bubble that inoculates them from genuine voter sentiment, even within the Democratic Party itself, with election analysts noting platforms like Twitter are largely unrepresentative of mainline Democrats. That bubble gives “Very Online” reporters and commentators a poor understanding of what actually moves voters and those who represent them. This warped view of electoral reality makes it harder for the agenda-setters of the political media to accurately assess the landscape in front of them. Indeed, the moderates they decry, like Sens. Sinema and Manchin, actually better mirror the overall electorate (as well as a significant swath of Democrats) than the progressive voices the media regularly insists Biden must appease.

Industries Hoped Democrats’ Slim Majorities Would Foster Productive Bipartisanship, but They Got Big Demands From Progressives Instead

The media narrative of a progressive mandate may not match up to governing reality, but it has not stopped liberal Democrats from pushing their party ever leftward. Their policy wish list is long and it is, by most accounts, far outside the political mainstream. These days, they are advocating for major legislative overhauls like the Green New Deal and student loan cancellations. While the Congressional Progressive Caucus promises “sweeping, transformative change,” it seems that neither their Democratic colleagues nor the voters are seeking such extremes.

Neither is the business community. When a governing majority is incredibly slim, as it is now, industries desire the productivity and reliability that bipartisanship and moderation provide. In contrast, intense political polarization often creates instability that industries try to avoid. No matter who is in power, there are still major policy problems and big legislative priorities that businesses need addressed.

Look no further than the full court press from public affairs professionals across a variety of industries on the infrastructure spending package. As we noted during the transition, this issue could “be Groundhog Day for obstruction or Ground Zero for compromise,” depending on how the parties approached it. While industry representatives are pushing moderates on both sides of the aisle to find a compromise, they more overcome an increasingly antagonistic media tone toward the very lawmakers whose support is crucial for success. With significant policy challenges on topics ranging from health care to energy, businesses are hoping that Democratic leadership and The White House will ignore calls from progressives to abandon bipartisanship in exchange for advancing an activist-oriented agenda. To convince them to do so will require challenging the accepted wisdom in the media and overcoming widely-reported (mis)perceptions of reality.

Breaking Up Is Hard To Do

/in

Here’s What You Need To Know

As the Biden Administration adds a “global minimum corporate tax rate of 15 percent” or higher to its plans to raise taxes and increase regulations, the business community should be able to turn to its traditional allies among Republicans to fight back. However, while Biden is unlikely to win Republican votes for higher taxes, in today’s political environment, the GOP may not mount the full-throated defense upon which the corporate community has depended in the past.

As Senator Rick Scott (R-FL), who chairs Senate Republicans’ campaign committee, warned companies last month, “There is a massive backlash coming. You will rue the day when … Republicans will take back the Senate and the House.” Indeed, Scott’s “day of reckoning” may not wait until the 118th Congress. Already, companies must contend with Senator Marco Rubio’s (R-FL) “Common Good Capitalism,” Senator Josh Hawley’s (R-MO) anti-trust initiatives, and other populist shifts among Republicans on core business policy interests like trade and tariffs and drug prices.

So, how did we get here, and what does it mean for companies and their business and policy objectives? Here’s what public affairs professionals need to know to help their organizations navigate this political realignment.

Under Pressure From Progressives in and Out of Their Firms, Companies Have Gone Too “Woke” for Republicans

“For decades,” The New York Times recently reported, “business leaders have been able to count on Republicans … to support core policy priorities such as low taxes, reduced regulation and free trade. … But in recent years, that compact has begun to fracture.” Pressure from social activists and activism-oriented employees has led businesses that once avoided the political fray to take controversial stands on matters far beyond their typical purview, alienating conservative Americans and drawing ire from the lawmakers who represent them. For companies, the principles in question seem straightforward – every vote should count, the lives of African Americans matter, and so on – but behind these shared principles are expectations that firms will endorse divisive, partisan solutions as a result.

Every acquiescence, even if made in earnest agreement, may at least temporarily redirect activists’ attention elsewhere, but it also sparks objections from conservatives. These days, Republican lawmakers feel antagonized by what they view as “Big Business” needlessly provoking their voters by engaging on social issues. From Nike pulling its Betsy Ross shoes at the behest of NFL-star-turned-social-activist Colin Kaepernick to social media companies “de-platforming” former President Donald Trump to an open letter from major corporations opposing Republican-led election reform laws, Republicans increasingly see Corporate America as fundamentally at odds with the GOP. Nor does it help that as corporations cut off donations to many Republicans, key business groups get little help from Democrats they backed in the last election.

From Tarp to Trump, the GOP Base Has Been Increasingly Questioning Its Elected Officials’ Accommodation of Corporations With Divided Loyalties

For generations, Republican lawmakers have been reliable partners for business interests as together, they advanced the ideals of limited government, lower taxes and regulatory restraint. These had long been core tenets of conservatism, and these policies served the business community well. However, the taxpayer-funded bailouts of “Big Business” during the 2008 financial crisis led an increasing number of conservatives to question whether or not the interests of Corporate America aligned with their own. This skepticism built on years of automation and outsourcing erasing certain types of American jobs.

These trends have led to an intensifying flirtation with populism, an ideology that up until recently had gained more traction among Democrats than Republicans. While industry analysts may have hoped populism would be on its way out with the Trump Administration, eager GOP would-be successors are lining up for their turn at the anti-corporate bully pulpit. Some, such as Sen. Rubio, argue for a policy approach that “recognizes that what the market determines is most efficient may not be best for America.” These would-be successors’ proposals include protectionist measures intended to help American workers but that could make it more difficult for U.S. companies trying to compete globally, such as trade barriers like Buy American and tariffs, industrial policy for strategic industries, and greater antitrust measures. Such proposals are becoming more accepted among GOP voters, especially “traditional conservatives” nostalgic for Main Street America of yesteryear and increasingly skeptical of large corporations.

This Ongoing Realignment Puts Companies’ Business and Policy Objectives at Serious Risk Across the Political Spectrum

In 2021, Americans seem to find little room for agreement in politics, but they do share concern over the sweeping influence of “Big Business.” For politicians in both parties, this angst is all the permission they need to push for radical transformations in economic policy. In addition to the shifts on trade and tariffs seen under the Trump Administration, this realignment even has some conservatives musing about the virtues of private sector unions, especially when they’re pitted against activism-minded executives at companies like Amazon.

The most noticed shift in policy, however, may be Republican interest in antitrust measures once a tool generally preferred by Democratic lawmakers who oppose big corporate profits. In addition to toying with the idea of using anti-trust rules against Major League Baseball following their decision to relocate the 2021 All Star Game after Georgia passed new election reforms, some prominent Republicans, including Sen. Hawley, are joining with Democrats eager to break up Big Tech. This major philosophical shift for Republicans could create greater obstacles to mergers and acquisitions, an important consideration as the Biden Administration nominates – and a bipartisan panel supports – antitrust crusader Lina Khan, to serve as a commissioner of the Federal Trade Commission (FTC). While she has previously focused her aim on Big Tech, her activist résumé is ringing the alarm bells across all industries.

From taxes and tariffs to tech and trust, the ground is shifting in Washington for public affairs professionals representing companies and industries, which now face greater headwinds from both political directions in Washington. At the very least, it means that the business community can no longer rely upon a unified GOP to stand strong for their interests in all cases. At worst, it means that Democrats and Republicans could find some room for bipartisan agreement at the expense of “Big Business.” Either way, companies will need to dig deeper to understand the new landscape.

The Employee Activism Revolution

/in

Here’s what you need to know…

As the recent public debate over Georgia’s new voting law makes clear, American CEOs and corporations have been increasingly willing to make their voices heard on hot button social and political issues. While corporate activism is not a new phenomenon, the forces driving that activism have shifted to inside many firms, with employees demanding their bosses speak out and take actions, even if it hurts the bottom line.

With corporate giants such as Delta and Coca Cola issuing public statements disavowing Georgia’s new voting laws and Major League Baseball relocating this year’s All-Star Game from Atlanta, it is worth considering how we got here and what it means for public affairs professionals advising companies and industries. Especially in this hyperpolarized political environment, it is important for CEOs and companies to remember that while they may believe they are signaling the right thing, they very well may be widening the divide instead of closing it. Here’s what you need to know to navigate these debates effectively.

We’ve been in a new age of activism for a while. Companies are just catching up.

We’ve previously written about how activism “has become increasingly professionalized, digitized, and globalized.” While these efforts are not new — see the Keystone XL pipeline opponents who ringed The White House perimeter in 2011 — they increased significantly during the Trump years, with heightened expectations that companies and their leaders would weigh in on issues of the day. Companies today are meeting these expectations more than in the past. As the workforce continues to grow younger, companies must align their actions with a set of shared values and clear purpose if they hope to attract top talent. According to one survey, over three quarters of millennials strongly consider “a company’s social and environmental commitments when deciding where to work.” This rise in employee scrutiny is pushing employers to take stances on political issues they once avoided, creating new political and reputational risks even as they are intended to do societal good. Employee expectations have joined media and advocacy group pressures in thrusting companies into the political spotlight on issues ranging from social justice to the environment and, most recently, voting rights in Georgia. Not surprisingly, public affairs professionals are feeling the pressure, seeing an increase in senior executives’ interest in political and policy issues farther afield from core business needs than ever before.

CEOs are the most trusted leaders in public life. That comes with expectations.

Private businesses have become the most trusted institutions in the United States as Americans have become increasingly divided by politics. That means businesses and their CEOs can play a pivotal role in bridging this partisan divide and rebuilding the public’s trust in societal institutions. A recent study by Edelman found that 54 percent of Americans trust business more than politicians and the media. 86 percent of the respondents expect CEOs to speak out on societal challenges and 68 percent of respondents believe “CEOs should step in when government does not fix societal problems.” In fact, a Morning Consult survey found that despite growing concerns over censorship in the digital public square, Americans even trust big tech companies, such as Amazon and Google, to “do what is right” more than they trust government officials, the news media, and police officers and teachers.

However, CEOs must be aware of the risk associated with their activism. In 2018, we warned that “taking a stand inherently attracts and alienates customers depending on their view of that stance, meaning that companies need to fully understand their customers and audience before starting any corporate advocacy.” The NBA learned this reality first hand last year as it saw its television ratings plummet amidst a league wide social justice movement that weaved politics with the sport. Commissioner Adam Silver said this year “there will be somewhat of a return to normalcy,” in hopes of re-attracting fans who very well may agree with the messaging but want to keep politics out of sports. More recently, in response to Delta’s statements regarding Georgia’s new voting bill, Republicans in the Georgia House of Representatives voted to strip the airline of a tax break worth tens of millions of dollars, while Congressional Republicans have called to revoke Major League Baseball’s antitrust protections over MLB’s actions on the same issue. Whether either of these actions come to fruition, it signals to companies that weighing in on issues that divide Americans might come with a cost to the company.

Employees are engaging in their own advocacy — in and out of the office.

A recent survey found that nearly 40% of employees consider themselves “social activists” who are willing to speak out against their employers on controversial political and societal issues, even if these issues are totally unrelated from their employer’s business or industry. In January, we got a glimpse of how this willingness may evolve. Employees at Google successfully formed a minority union aimed at giving “structure and longevity to activism at Google.” This union intends to be more focused on wielding political influence than traditional union work regarding conditions of employment. The union formalizes employee pressures that have been mounting for some time. In 2018, for example, thousands of Google employees banded together in opposition to a drone-related contract the tech giant had with the Pentagon. Under this pressure, Google allowed the contract to expire the following year. Similarly, in early 2019, hundreds of Microsoft employees signed an open letter protesting the company’s $500 million contract to supply the U.S. military with augmented reality headsets.

Internal employee activism is not unique to the tech industry. In 2019, hundreds of Wayfair employees staged a walkout in opposition to the company’s decision to sell furniture to a migrant detention center and later that year, Nike employees walked out of the company’s headquarters demanding the company offer more support to female employees and athletes. When Georgia was considering a “heartbeat” abortion law, then CEO of Disney, Bob Iger, said that the company would have to reconsider future filming in the state, saying, “I think many people who work for us will not want to work there, and we will have to heed their wishes.” Iger’s sentiment is increasingly shared by corporate executives, with Judith Samuelson, director of the Aspen Institute’s Business and Society Program, predicting more “companies will begin to embrace employees as an early warning system on risk and reputation.”

CEOs need to weigh all sides before taking a stance

While showcasing purpose can strengthen a brand, companies must tread cautiously. Every action has a reaction, and in today’s highly polarized, highly attuned political environment, engaging without fully understanding the facts and the landscape can cause as much or more of a backlash than not speaking out. To stay ahead of this, public affairs professionals and their organizations must first be prepared for today’s fast moving environment by knowing their vulnerabilities and understanding the context of the issue before weighing in. While this trend of corporate activism does not appear to be slowing down, companies must be mindful that the best way forward is to remain consistent with their values and close to their stakeholders in order to avoid a full-blown public affairs crisis.

Is There a Sure Bet in This Policy Debate?

/in

Here’s What You Need To Know

For many Americans, this weekend’s big game is all about the commercials. This year, depending on which state you reside in, you may have noticed more of these ads before the weekend even arrived touting online sports betting apps. That’s not surprising, given the American Gaming Association estimates 23.2 million people will wager approximately $4.3 billion on this year’s Super Bowl matchup between the Kansas City Chiefs and the Tampa Bay Buccaneers, with 7.6 million people placing bets using an online sportsbook—a 63% increase over last year.

Why the sudden uptick in (legal) sports betting? Since the 2018 Supreme Court decision overturning the Professional and Amateur Sports Protection Act of 1992, which prohibited sports betting in every state other than Nevada, the sports betting industry has boomed into a market that grossed roughly $1.4 billion in gaming revenue in 2020. With so much revenue at stake, states and localities across the United States are being forced to at least consider the implications of legalizing sports betting and what kind of regulations make the most sense for those communities and their constituents. However, despite the sharp growth in legal sports betting across the country, public affairs professionals and lobbyists who are suiting up to help sportsbooks score face a formidable defense looking to prevent them from reaching the end zone. Here’s what you need to know about the debate that’s taking the field.

The Current Playing Field

In less than two years since the Supreme Court decision that allowed state legislatures to decide whether to permit legal sports betting, twenty-two states and the District of Columbia have made such betting legal. This past election day, voters in three other states – Maryland, South Dakota, and Louisiana – approved ballot measures to legalize sports betting, but residents of those states are still waiting on their state legislatures to set up regulatory measures before those bets can be placed.

While sports betting has become widely adopted across the nation, the regulatory landscape surrounding sports betting varies immensely. Public affairs professionals working with industry leaders must also be aware of the way in which state legislatures permit wagers to be placed. Most states allow a combination of private mobile app based and brick and mortar betting while others only allow betting to take place at designated “retail” locations. One state – Tennessee – authorizes bets to be placed solely on web apps. Another consideration is whether states will open sports betting to the free market or if they will use a limited or single-operator model, such as the one currently being proposed by New York Governor Andrew Cuomo.

Not Giving It the Old College Try

Of the twenty-two states that currently license sports betting, fourteen of them have restrictions on placing bets on in-state college athletic events. Now as the Massachusetts legislature continues to mull over whether it will become one of the next states to legalize the booming industry, a group of local colleges and universities are standing in opposition to the current version of the bill, which includes language permitting wagers to be placed on college athletic competitions. The group, led by Harvard University, fears “such legislation will create unnecessary and unacceptable risks to student athletes, their campus peers, and the integrity and culture of colleges and universities in the Commonwealth.” In addition to Massachusetts, several other states are expected to introduce legislation in the next year, while many others have failed to move the ball across the goal line in years past.

No Home Field Advantage

California, Texas, and Florida—home of more than a quarter of the teams playing in the four major professional sports leagues—have yet to legalize sports gambling, creating room for continued growth for an industry that has already boomed over the last two years. After facing immense pressure from the Tribal community in California, however, the states’ legislature withdrew consideration of a bill that would have legalized online and in person sports betting. Tribal leaders took exception to the online component and argued that the legislation would have broken an agreement between the tribes and the state.

Tribal opposition also stalled legislative efforts to legalize sports gambling in Minnesota, Arizona, Connecticut, and Florida. Despite the opposition, each of these states are continuing to push forward in hopes of reaching an agreement. The Arizona House of Representatives is considering an updated compact that will allow tribal casinos to offer both retail and mobile sports betting while also enabling professional sports teams in the state to offer sportsbooks at their stadiums.

Everybody’s Moving to Texas

In Texas, a fight is shaping up between competing out of state interests. While casino operators in neighboring Oklahoma and Louisiana have fought to keep gambling out of the Lone Star state, Bill Pascrell III, a lobbyist with Princeton Public Affairs Group, has said that “something is going to happen in Texas.” Indeed, Las Vegas Sands has seen its Texas lobbying team balloon recently as it continues its ambitious plans to expand into Texas, and Texas Governor Greg Abbott’s office has reportedly reached out to regulators in states such as New Jersey that have successfully implemented sports gambling for advice. Meanwhile, the state legislature is considering a bill supported by the owners of three of the state’s biggest professional sports teams that would issue licenses to the state’s professional sports teams allowing them to sell betting access to sportsbook partners, similar to what is being considered in Arizona.

What Comes Next?

With an estimated $150 billion illegally wagered on sports in United States, market intelligence company H2 Gambling Capital projects that as legal sports wagering in the US continues to expand, the industry will be worth roughly $2.75 billion in 2023 and has the potential to grow to $81 billion in 2030.  However, just as the great coaches seek a competitive advantage through film study, practice, and innovation, public affairs professionals will need a competitive intelligence advantage to shape the debate over sports betting.

What Are You Missing?

/in

2020 was a year full of uncertainties and the COVID-19 pandemic forced almost 70 percent of public affairs professionals to dramatically shift the way they do their jobs. That is according to a new survey of over 300 public affairs professionals representing every industry of the global economy conducted by FiscalNote and CQ Roll Call.

Despite all the uncertainties of this past year, the trends impacting public affairs professionals seem all too familiar. The survey found:

  • Teams are staying small, with nearly half of public affairs teams comprising three or fewer people, and nearly 70% comprising six or fewer;
  • Regulatory uncertainty is increasing, with more than 50% of respondents identifying regulatory activity as the biggest shift (besides COVID) impacting their industry;
  • And there is not enough time in the day to cover the expanding volume of issues you need to monitor and understand.

It is this last trend that gets at the crux of the challenges facing public affairs professionals. The four biggest challenges facing respondents to the survey were, “Team size too small” (50%), “Volume of issues you need to monitor” (46%), “lack of budget” (45%), and “not enough time” (41%). So if you feel stretched thin and overwhelmed, at least you know you are not alone. In fact, FiscalNote noted in its report on the survey results, “Over 77 percent of respondents said that the number of public policy issues their organization is tracking has increased [in the past year], with almost 40 percent saying that the number has increased significantly. Contrast that with the earlier responses that teams are staying small, and you’re left with a staggering amount of information that organizations need to discover, monitor, and report on to internal and external stakeholders.”

It is no wonder, then, that the top stressor (59.4%) among the public affairs pros surveyed was “Fear of missing something related to legislation/regulation,” closely followed by “political environment” (58.3%) and “time constraints” (55%). Nearly eight out of ten public affairs professionals believe they sometimes or often miss key updates, and one out of ten is too overwhelmed to even know if they missed something. That means just one out of ten public affairs pros thinks they never miss a thing.

That fear is exactly why we launched Delve five years ago. Since then, effectively leveraging competitive intelligence for public affairs has quickly become a best practice.

Given the small size of many public affairs teams, they may not have the capacity to track and analyze crucial developments – especially when their time is best spent translating that analysis into action to advance the objectives and interests of their organization or clients.

That’s where Delve comes in – our team of rigorously trained analysts leverages innovative techniques and cutting edge technology to ensure we don’t miss a thing that matters to your interests, while distilling those insights into an actionable, easily digestible format. This approach is how our insights change your outcomes.