Whom to Vote For? Employees Tend to Follow Their Leader
Andrew Ross Sorkin
SEPT. 5, 2016 - The New York Times
Late
last month, Tim
Cook, Applefs
chief executive, hosted a
private fund-raiser for Hillary
Clinton in Los Altos, Calif., along with his colleague Lisa Jackson, vice
president of Applefs environmental, policy and social initiatives. The private,
off-the-record event required a donation of $2,700 to $50,000.
While
Mr. Cookfs role was as a private citizen — it was not an Apple event — the
message to employees about whom he is supporting for president is clear.
The
influence of chief executives like Mr. Cook over employeesf political leanings
and donations, intentional or not, is substantial: It may not be an
overstatement to suggest that a chief executivefs politics may be one of the
most significant factors in swaying how employees think about elections.
The
results of a new
academic study looking at the power of chief executives over the politics of
their employees is stunning and perhaps unsettling.
Three business professors set out to examine ghow the
political preferences of C.E.O.s affect their employeesf campaign contributions
and electoral choices.h The results of the study, which looked at eight federal
election cycles from 1999 to 2014 and over 2,000 companies, showed a
statistically significant correlation among campaign contributions made by the
chief and his or her employees as well as voter turnout. The study found that
gemployees direct approximately three times more of their campaign contributions
to political candidates supported by their firmfs C.E.O. than to otherwise
similar candidates.h
If youfre thinking, gWell, C.E.O.s
and employees donate along similar party lines because they share common values
and interest,h think again.
The study uncovered patterns that show a chief executivefs
influence is profound: gWhen a new C.E.O. contributes to different political
candidates from the ones supported by the prior C.E.O., employees tend to follow
his/her lead and redirect their donations as well,h wrote the professors, Ilona
Babenko of Arizona State University, Viktar Fedaseyeu of Bocconi University in
Italy and Song Zhang of the University of Lugano in Switzerland.
There is nothing inherently wrong,
in most cases, with a chief executive or employee raising money for a particular
candidate or party. Mr. Cook, it is worth noting, gives to both sides of the
aisle, having just hosted a separate fund-raiser for House Speaker Paul Ryan in
June.
But the influence of a bossfs political leanings should
not be underestimated. gOur evidence indicates that C.E.O.s are a political
force, with potentially important implications for firms they manage and for the
nature of democracy,h the authors wrote. gThe welfare implications depend both
on whether C.E.O.s promote their own political agenda or act in the interests of
their firms, and on whether the interests of the firm coincide with the
interests of its employees.h
Some C.E.O.s donft just lead by example; they actively
solicit donations from their own employees for candidates and company-sponsored
political action committees, which can create its own thicket of ethical
questions. The Federal Election Commission, for example, investigated the way
Robert Murray, chief executive of Murray Energy, had solicited political
donations from his employees through emails and internal videos. Some employees
told
The New Republic that they felt pressured to donate, fearing that not to do
so might risk their jobs.The Federal Election Commission, ultimately, found Mr.
Murray hadnft broken any laws.
Still, the risks – and complex set of election laws – make
political fund-raising a complicated endeavor for those in the corner office.
gThe potentially coercive effect of an employerfs solicitation counsels in favor
of avoiding the situation altogether,h said Harvey Pitt, a former chairman of
the Securities and Exchange Commission and the chief of Kalorama Partners, a
Washington consulting firm. gThe logical alternative — having a very strong and
clear disclaimer — doesnft really work, since many employees might not believe
the disclaimer, no matter how strongly it is worded.h
Tony Fratto, a former deputy assistant to President George
W. Bush who now operates a consulting firm, Hamilton Place, took issue with the
idea that C.E.O.s should remain outside the political campaign arena.
gI donft doubt that some employees feel pressure to align
with the C.E.O. politically, but my experience is that in most cases both
C.E.O.s and employees are overwhelmingly influenced by a candidatefs views or
voting record on industry issues,h he said. gI encourage firms to do more to
inform their employees at all levels about what political leadersf records are
on their key policies. I actually think that doesnft happen enough.h
Alexander Hertel-Fernandez, a
professor at Columbia University, found
in his own survey that ga quarter of employees reported that their bosses
have tried to engage them in politics,h but reported that gabout 7 percent of
employees reported clearly coercive kinds of political contact at work –
messages that made workers uncomfortable or included threats of plant closures,
cuts in hours or layoffs.h
This election cycle, it seems that many C.E.O.s,
especially on Wall Street, have chosen to be less public about whom they are
supporting in the presidential race. Perhaps because of the lingering negative
memories of the financial crisis or perhaps because this presidential election
has turned so decidedly nasty, many executives have stayed on the sideline. In
June, Brian Krzanich, chief executive of Intel, canceled an event at his home
for Donald
Trump after it was reported to be causing a firestorm among Intel employees
and peers in Silicon Valley that felt Mr. Trumpfs policies were damaging to the
industry. Mr. Krzanich later said he canceled the event because it had turned
into a fund-raiser without his approval. gI do not intend to endorse any
presidential candidate. We are interested in engaging both campaigns in open
dialogue on issues in technology,h he wrote on Twitter.
When it comes to presidential politics, some executives
privately say they worry they could see reprisals against their business or
industry if they were to actively campaign for one candidate or another.
gThe risk of being on the record publicly against a
politician is high, particularly if that politician may take retaliatory
action,h said Brian Richter, an assistant professor at the University of Texas
at Austin.
That didnft stop 150 technology executives from writing
an open letter in July opposing Trumpfs policies. The list of signatories
included the leaders of Silicon Valley darlings like Slack and Box but notably
was not signed by the current leaders of Google, Apple or Facebook, which
typically face the most regulatory scrutiny.
Clearly the influence of C.E.O.s and other senior
executivesf political preferences on the people working for them deserves more
scrutiny. In the meantime, while it is hard to know how individuals will
ultimately vote when they pull the lever in November, perhaps a new election
polling data point should be the preferences of their bosses.