Under Pressure

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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?

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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

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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

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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

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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?

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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?

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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.

The Platform Revolution

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Here’s What You Need To Know

Driven by the emergence of new technology and online connectivity, the world is in the midst of the next economic revolution. As of 2018, 7 of the 10 most valuable companies in the world were a part of the platform economy. This rapid ascent has put private sector entities, primarily in the technology sector, in a position to make societal decisions that were once decided by communities themselves, often through elected representatives. This shift has significant implications for the business community as economic success  is no longer driven by access to and ability to leverage information, but control over the platform through which that information flows.

This new reality was made clear by the swift reaction by various platforms to the January 6th attack on the U.S. Capitol. It began with Twitter’s announcement that President Trump would be permanently banned from its platform, and in the hours and days that followed, major tech companies seemingly acted in unison to de-platform and blacklist the President of the United States and many of his supporters. Beyond the obvious tech platforms, some in the media are calling for a more expansive de-platforming. A Forbes executive warned companies against hiring former Trump spokespeople, and CNN’s Senior Media Reporter, Oliver Darcy, suggested telecommunications service providers be pressured to deny access to media networks whose content does not meet his approval.

As public affairs professionals and industry leaders watch these developments unfold, it has brought into clearer view the political and reputational risks stemming from the emergence of the platform economy. Reaction to the recent de-platforming’s was swift. While many of Trump’s most staunch opponents celebrated the moves, world leaders such as German Chancellor Angela Merkel called the unprecedented actions “problematic,” and Russian opposition leader Alexei Navalny slammed the moves as an “unacceptable act of censorship.” From being forced to adjudicate de-platforming demands to the threat of being de-platformed yourself, here’s what you need to know to navigate the challenges ahead.

What Is the Platform Economy and Why Is It Important?

Most of us utilize the platform economy daily for commerce and connection. Companies such as Facebook, Google, Amazon, Uber, Airbnb, and PayPal, all belong to this emerging economic system that utilizes online networks to facilitate digital interactions as a means to sell products, provide services, facilitate payments, and bring about an ever-widening array of connections between users.  These platforms represent a major shift in the way industries and companies conducted business – creating digital space for groups to conduct commerce and build communities of interest.

However, as these platforms continue to grow in size and influence, they have simultaneously assumed a larger role as the arbiters of what is right and wrong. Several years ago, we warned, “the tech industry is increasingly vulnerable to activist pressure and government intervention on a range of issues.” Among those issues, we highlighted the growing divide between the individuals calling for big tech to do more to remove offensive speech and others attacking these attempts as censorship. Since then, the divide has widened, and the pressure has grown even as technology platforms have taken over more areas of our lives and commerce.

The vast troves of user data collected by these tech giants, coupled with the algorithms they deploy allow them to act as the “gatekeepers to the economy” in which they can determine what products and services can be provided to whom. Participants in this new platform economy must also worry that their livelihoods can be taken away from them at any moment if big tech are the ones deciding what is right or wrong. We saw this play out recently with Parler, the “free speech alternative” to Twitter and Facebook, in which Amazon Web Services stopped hosting the app while Google and Apple removed it from their app stores. Regardless of the particulars in Parler’s case, it highlights the power of these platforms to decide who wins and who loses in the platform economy.

What’s at Risk for Platform Companies?

Much of the recent debate has been about Section 230, which protects Internet service providers and tech platforms from being held liable from what their users say online. While Democrats and Republicans agree Section 230 needs reform and President Trump made repealing the rule a rallying cry for his campaign, doing so would likely make platforms more restrictive, as they would no longer be shielded from liability. Regardless of the outcome of this debate, platform companies will face increased public scrutiny and pressure to act on the commerce and conversations that happen on their platforms at the risk of alienating segments of their users. If this alienation leads to reduction in active users, the value of the platforms and their business models could be disrupted.

Platforms that have, even when begrudgingly, inserted themselves as the arbiter of what is and is not deemed acceptable participation in society are already beginning to recognize the peril such a role brings. Jack Dorsey, CEO of Twitter, even acknowledged that his decision to ban President Trump could have major ramifications, stating the ban “sets a precedent I feel is dangerous: the power an individual or corporation has over a part of the global public conversation.” In 2017, the Supreme Court ruled in unanimous fashion against a North Carolina law that would have banned convicted sex offenders from using social media. In the ruling, Justice Kagan argued social media has “become a crucially important channel of political communication,” lending credence to the argument that these platforms could face regulation similar to  public utilities that are required to be open and accessible to all.

What’s at Stake for Those Who Rely on These Platforms?

As we have seen, the emergence of the platform economy has major implications for businesses and private citizens. These platforms have provided an opportunity for businesses to expand and connect in ways never before seen and have given a voice to private citizens that may have previously been unheard. Yet, as these platforms have continued to grow in size and popularity, they can create reputational and political risk for business and individuals who rely on these platforms. Companies that have spent years, or even decades building their reputation can now be destroyed in one viral moment, and if the court of public opinion rules that your brand is not “woke” enough, then you run the risk of being canceled or de-platformed. As the debate surrounding the platform economy continues to unfold, it will be crucial for public affairs professionals to stay ahead of the knowledge curve to best prepare their clients for what comes next.

 

The Gig Is Not Up…Yet

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Here’s What You Need To Know

In the 2020 general election, voters considered 120 statewide ballot initiatives on matters ranging from legalizing heroin in Oregon to taxing oil companies in Alaska. But perhaps the biggest changes came in measures governing labor practices. From Florida’s passage of a $15/hour minimum wage to California voters’ overwhelmingly passing Proposition 22, which overturned legislation that strongly curtails the state’s booming “gig economy.” Business advocates warn that such overhauls are not only disastrous for jobs and the economy at-large but also could fundamentally disrupt the way people interact in the labor marketplace. Despite the win at the California ballot box a few weeks ago, these desired policy changes should have public affairs professionals on high alert, as any major overhaul of independent contracting parameters could affect a wide array of industries and interests.

Here’s what you need to know about the fight over the gig economy in California and what it could mean nationally.

California Legislators Set Fire to the Gig Economy. On Election Day, Voters Extinguished Some of the Flames.

Easy as ABC?: Earlier this year, Governor Gavin Newsom (D-Calif.) signed California Assembly Bill 5 (AB5) into law with the gig economy in mind. The bill codified the ABC Test, first outlined in the California Supreme Court’s ruling in the controversial 2018 court case Dynamex Operations West, Inc. vs. Superior Court. The court’s ruling provided a possible three-prong assessment to determine if a worker classified as a contractor should instead be designated an employee. Once AB5 cemented the ABC Test as law, gig economy workers in California could no longer be considered independent contractors unless their employers met exacting exceptions – though its implications reached well beyond those technology platforms. The final version of the bill did provide industry-specific carveouts successfully negotiated by certain opponents to the measures, including professionals in more than a dozen industries ranging from doctors to travel agents. However, notably excluded from these carve outs were app-based ridesharing and delivery services.

Your Ballot Measure Has Arrived: In response to AB5’s passage, DoorDash, Uber, and Lyft each committed $30 million to pass a ballot initiative that would exempt rideshare and delivery drivers, while others like Instacart activated their team members to help win public support. The coalition argued that it had already made good faith efforts to guarantee better benefits for contractors, like a minimum $21 per hour wage while on a trip, sick leave, and even endorsed a drivers’ labor union. However, lawmakers’ insistence on classifying these contractors as employees, these companies said, could limit the flexibility their drivers enjoyed and greatly curtail their ability to earn a living. Activist groups set up demonstrations to express their displeasure at the companies’ response, even attempting to stage protests at the homes of Uber executives. After months of passionate campaigning from both sides, rideshare and delivery companies were victorious, and Proposition 22, which created exemptions for their shared industry, passed with a more than 17-point margin.

20th Century Labor Laws Won’t Work in Modern Times. So, What’s Next for the Gig Economy?

Proposition with Conditions: Proposition 22 provided narrow exemptions for workers at large rideshare or delivery companies, like Uber and DoorDash. They have already committed to employing a similar strategy if faced with similar state-based or national legislation. But, for millions of other contract workers in California who don’t meet current exemptions, AB5 remains a major obstacle to finding and keeping work. Some are using social media to strategize about ways to get around the law. Meanwhile, professional coalitions, like the International Franchise Association and a hotel owners association, are gearing up for well-funded battles against the law in court. These organizations view union efforts to dismantle the gig economy as part of a larger strategy to significantly reshape labor practices in the U.S. by passing long-hoped-for policy initiatives, like compulsory membership, card check, higher payroll taxes, and more employer-sponsored benefits.

Future Fights Ahead: Groups mounting challenges to AB5 understand that this policy debate will not only impact the millions of workers in the nation’s largest state, but that California can be a leading indicator of policy initiatives across the country. Prominent Democratic lawmakers, including President-elect Joe Biden, have already vocalized support for the law and indicated they would like to see it adopted nationwide. Biden has also endorsed the federal PRO Act, which would make it more difficult for workers to be classified as independent contractors. Estimates project that these changes could cost already struggling businesses up to an additional $12.1 billion annually. However, with the chances for a divided government seeming likely, the PRO Act is unlikely to pass in the Senate. Still, California Attorney General, Democrat Xavier Becerra, who is responsible for defending AB5, is widely regarded as a top tier pick in a Biden Administration. If he were picked to be U.S. Attorney General, Becerra could muster the might of the U.S. Department of Justice to beat back any attempts to prevent measures similar to AB5 from passing in other states while encouraging stronger federal enforcement on the use of contractors. A Biden Administration is also likely to reverse the direction of a Trump Administration proposed rule that would make it harder to win employment rights for independent contractors. However, Uber CEO Dara Khosrowshahi has already vowed to fight to  make the Prop 22 model a national standard and told investors that Uber will  “loudly advocate” for similar measures in states across the country.

How Public Affairs Professionals Can Prepare: While an industry may not at first seem to be caught in the crossfire, new rules on contractors could affect more than 13 million workers who create $1.6 trillion in annual economic output, amounting to about They come from every industry, from aestheticians to farmers to maintenance workers to medical professionals. It would also undermine the significant shift in how people and companies interact in the labor marketplace that has been under way thanks to the rise of online, mobile platforms that connect willing workers with companies and individuals willing to pay them for work on demand. Public affairs professionals must monitor not only the ongoing organizing of activists in key states, but also deliberations over how the incoming president may shape this debate. Competitive intelligence is the key to anticipating these challenges, rising to the occasion, and winning when it really counts.

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Five Ways To Stay Ahead During the Transition

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It may be some time until we know for sure who will be sworn in as president on January 20, 2021, but behind the scenes both candidates’ teams are preparing for the transition in earnest. Even when the election outcome is clear, “The Swamp” is never murkier than in the heat of a presidential transition. That poses a challenge for public affairs professionals helping their organizations anticipate the impact of the next administration.

In 2016, Delve launched “The Administration Project,” a unique policy and personnel analysis service that gave our clients the expert insights they needed to thrive in a new and often surprising administration. We learned a lot from this venture, and we’re passing that knowledge to you. Here’s what you need to know to successfully navigate the transition and big policy debates ahead:

Read Beyond the Headlines

In the days and weeks ahead, ballot counting and ongoing litigation will dominate the headlines, but both Trump and Biden are already deep into planning their transitions. Even once the counting ends, what you read in Twitter punditry and bite-sized newsletter updates may signal a common theme, but they don’t often tell the full or real story. So, beware of following the media’s focus, framing, and editorializing. Often, political reporters begin with a narrative, write a story around it, and then seek sources who, no matter how “in the know” they really are, confirm the reporter’s assumptions. Add in editors seeking headlines that get people clicking and sharing, even if those headlines overstate or misconstrue the supposed news in the story, and it can be hard to discern what news matters to you. With younger and more inexperienced journalists now dictating a lot of public discourse thanks to a range of trends in the media industry, much of modern media coverage lacks the institutional knowledge to provide an accurate depiction of perennial events like a transition. So, while others may focus on the sensational headlines, public affairs professionals will need to pay attention to what’s practical to them – even if it is buried deep in the story or actually in a primary source rather than the news.

Filter Out the Noise

The transition presents a classic Washington silly season, and any silly season is going to be, well, silly. Because we know this likelihood, it shouldn’t surprise us when the next few weeks and months are filled with tabloid-style political melodramas, complete with breathless quotes from anonymous sources, wild speculation from those who should know better, and supposed clashes that may only exist on Twitter. To better discern what’s real and what’s a distraction, stick close to reliable sources beyond the media while ensuring you understand the relevant institutions and their histories. What do presidential transition teams look for when determining key posts? With a near-certain GOP majority in the Senate, how will that shape what kinds of appointments the next president can make? What policy changes can an administration actually achieve within the parameters of their executive authority? By considering these questions, you will have an advantage in forecasting who might fill key administration spots or what policies really are on the docket. If you’re overwhelmed with trivial things that we’ll all forget in a few days’ time, you’ll miss the critical opportunity to get ahead. Commit to using your time for the things that matter.

But Make Sure You Don’t Miss a Thing!

While it may seem counterintuitive to filtering out the noise, these two tips go hand-in-hand. With a better grip on what’s important, you’ll have more time and brainpower to dedicate to the things you really don’t want to miss. After all, fear of missing a critical development is a major concern for public affairs professionals. To overcome that fear, be sure to look beyond news clips and TV hits. See what different industry coalitions and activist groups are saying. Tap into the social media accounts of reliable, plugged-in sources of influence. Is there a pattern or trend? Are there places you should be looking often and others you can ignore? You should also develop a plan to organize your work and stick to what you know you’ll need to know. News that matters does not come fully formed until it is too late to act on it. Organizing the drips and drabs of news as they come out from disparate sources lets you connect the dots faster. This will help you avoid the race to catch up to breaking news that fades or reacting to things that really don’t matter. Following a wide variety of sources while filtering out the noise can be overwhelming, so you might consider leveraging a competitive intelligence partner to keep you ahead of the curve.

Understand Motives and Agendas

Once you know what you should care about and how you’ll analyze information as you receive it, it’s important to factor in what motives and agendas could be at play throughout the transition. We know the media and their sources all have their own objectives, and they’re eager for a variety of audiences to be persuaded by their efforts. Common agenda-setting in press coverage may mean that a source’s quote is misrepresented or missing key context. There’s also a possibility that a quoted source, named or anonymous, isn’t actually an informed one, but instead, just someone eager to talk to a reporter. Don’t forget: anyone in Washington can feign expertise or connectivity to people in power. So, when you learn of a new name floated for a particular post, read beyond the headlines and ask yourself: is this a trial balloon for a legitimate candidate, or is this just a dutiful staffer anonymously stroking the ego of his or her boss? A trial balloon may indicate real interest on the side of either the administration or the prospective job candidate. Or, it might the administration testing the public or industries’ tolerance for another pick altogether. To avoid getting swept up in the craze, analyze whether or not a candidate is a good fit on paper, has the right personality for the administration, and if he or she could survive a Senate confirmation fight.

Map the Influencers

It’s not always the marquee names who shape public policy. Much of the media speculation and industry and activist groups’ attention may focus on Cabinet picks, but sub-cabinet and staff-level appointees are far more likely to make a meaningful impact on the rules and regulations that affect key industries, particularly those tapped for “beachhead” or “jump” teams parachuting into agencies to figure out what’s what and shepherd in the new administration’s agenda. To figure out who these people might be, watch the bundlers, buddies, and backers – political friends and allies who an administration trusts to give them direction in filling the thousands of posts that are open, as well as campaign staffers and volunteers who earned spots by getting the boss elected. Understand not just who these allies are, but who stands in the wings behind them. Knowing a president’s kitchen cabinet may be obvious, but all of those kitchen cabinet members have their own kitchen cabinets as well. Consider how Sen. Jim Inhofe (R-Okla.) helped guide the Trump Administration’s environmental appointments, recommending fellow Oklahoman Scott Pruitt to run the Environmental Protection Agency (EPA) and then helping Pruitt staff the agency with his own trusted staffers – including Pruitt’s successor Andrew Wheeler.