In principle, everyone in a family business, from shareholders and board members to executives and employees, has a right to their own politics. In practice, this is rarely the case. Companies are often politically active and routinely wade into the political arena with their resources and influence. Politicians and political parties also play a significant role — typically soliciting donations and support from companies in a confusing choreography that blurs the lines between commerce and activism. In short, when it comes to politics in business, or the business of politics, neutrality is rarely achievable.
Family enterprises must take steps to address the inevitable distribution of political views among their shareholders, and there’s no better way to start than with an open dialogue.
In the construct of a family business, stakeholders, shareholders, and especially family members should have thoughtful and constructive conversations about their values and the public activities with which they want to be associated. An agreed-upon code of conduct by all shareholders about how to address and respond to both external and internal political climates is an ideal outcome to that conversation. But when it comes to family, business, and politics, achieving that alignment is often harder said than done.
In this episode of LGA Lighthouse, Venezuelan journalist and former Executive Director of the World Bank, Moises Naim, joins LGA’s founding partner, Ivan Lansberg to talk about what family firms can do to mitigate the impact of political polarization and how positioning on social issues can affect an organization’s success. Other topics discussed in this episode:
- The drivers that can influence a family firm’s political affiliations. In many parts of the world, strong political influence and relationships can lead to advantages such as greater governmental access and preferential treatment in matters that benefit commerce and trade. Taking a stance on politically charged social issues like climate change can also reap customer-side rewards as consumer attitudes and priorities evolve, though not without risk.
- How it is becoming more difficult for companies to simply ignore growing social movements. Investors are increasingly looking for the business community to choose sides and take action on the issues that matter.
- The importance of using family values to steer through whatever political waters lay ahead and how these decisions can impact legacy.
- Using political or social activities to support company growth. Whether attracting new talent or establishing aggressive social targets, family firms can often gain traction through their politics.
- How the intergenerational gap between political ideologies can grow wider as time goes on, and techniques to overcome it.
- How families can lean on their advisors to address issues of polarization in their enterprises and the strategies that these professionals use.
- What family firms can do if faced with an extremely hostile political climate that threatens their operations.
The impact of politics on the family and the business is inescapable. As the challenges of remaining neutral on critical social issues continue to grow, families should be fully aware of the consequences of their actions. Even more importantly, where and with whom a family and its enterprise choose to align on the political spectrum should be motivated by values, beliefs, and heterogeneous points of view that have the whole family’s buy-in wherever possible.
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