BulletProofBlog the blog on crisis communications

Each week, Bulletproof Blog™ features exclusive interviews with thought leaders on issues of critical importance to companies and countries. This week, in the wake of the landmark U.S. Supreme Court decision on campaign spending by companies and other organizations, we interview Nadine B. Hack, the President and CEO of beCause Global Consulting, an international consulting firm that specializes in creating complex, multi-sector strategic alliances in a globalized world; reputation management in a socially-conscious society; and developing strong presences in new regions or market segments.

Ms. Hack is internationally recognized for her expertise in strategic planning, creative problem solving, insightful policy analysis, and politically sensitive negotiations – and has just been invited to be an Executive-in-Residence on Responsible Leadership and Corporate Social Responsibility at IMD. A savvy political insider who understands the myriad reputational implications of corporate campaign spending, Ms. Hack shared her insights on the recent Supreme Court decision with Bulletproof™:

How do you see the U.S. Supreme Court’s ruling in Citizens United v. FEC impacting the tone of political advertising during the 2010 election cycle?

Nadine Hack: I see the Supreme Court’s ruling in this case having the greatest impact on the independent expenditure groups – which also are known as 527s – that tend to be extremely partisan: most famously, MoveOn.org, on the left and the Swift Boat Veterans for Truth on the right. As such, the vitriolic messaging we’ve heard in past campaigns is likely to become even more caustic in coming election cycles.

Corporations likely won’t directly support specific candidate and issues – but they will support the 527s. A strong indication of that hypothesis can found by checking the U.S. Chamber of Commerce website. While the chamber was a major supporter of the decision for Citizens United in its case against the FEC, you won’t find a single word written about that at www.uschamber.com. You have to go to the Citizens United website to find quotes from the Chamber’s leadership extolling the virtues of the decision.

Individual companies will keep their distance from political campaigns in much the same way. They’ll channel their dollars through intermediaries with similar political goals – and do so for very good reason. While polls show that Americans say they despise negative advertising, they also demonstrate that negative advertising has a tremendous impact on electoral attitudes.

What are the most significant reputational liabilities that companies must consider before jumping headlong into political debates?

Nadine Hack: I think there are two key answers to this question. First, companies need to be very careful about supporting or opposing a specific candidate or issue because their consumer base is comprised of people who hail from all sides of the political spectrum. Michael Jordan was once asked why he never came out in support of Democratic candidates. His answer was simple.  He had made a lot of money through Nike endorsements and said, “Republicans buy sneakers too.” To me, his response crystallizes the idea that the political diversity of a company’s consumer base – whether for its goods or services – makes it not wise for private sector organizations to get involved in politics.

Second, with so many Americans feeling an economic pinch right now, lavish spending on political campaigns has the potential to alienate audiences across the board. When Michael Bloomberg ran for his third term as Mayor of New York City, he was predicted to win by a landslide because, with $90 million, he outspent his opponent by 14 to 1. The election turned out to be closer than anyone imagined – and when looking at the exit polls, a major reason why was the anger voters felt over the amount of money spent on the campaign.

With such public anger over the disproportionate resources that wealthy individuals and corporations have at their fingertips – which is manifested in calls to curb executive compensation and impose strict financial regulation – big corporate spending on political campaigns has the potential to draw attention to a company for all the wrong reasons.

How can companies best mitigate the risks that accompany political activism?

Nadine Hack: The best way to mitigate those risks is to avoid entering the political fray for now. Unless the corporate messaging is incredibly thoughtful, well-modulated, and so strongly-balanced that it doesn’t alienate anyone, I just don’t see it working in this polarized political environment.

There’s been an evolution in how America views corporations that has been underway for 200 years. With this ruling, companies have now come closer than ever before to being awarded the same rights as individual citizens. With legislation seeking to reverse the Supreme Court’s decision already making its way through Congress, Corporate America doesn’t want to make it easier for legislators to strip these newly-created and highly-controversial rights to political free speech. Given the market and societal risks at play, companies are best advised to tread lightly in 2010.

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Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.