Crisis management: Think long-term before going out on a limb

Sir Peter Jackson (right) gave his support to Wellington mayoral contender Andy Foster. Photo / File

COMMENT:

During the recent New Zealand mayoral elections, the media reported that Weta Digital encouraged its employees to support the candidacy of Andy Foster for mayor of Wellington, a candidate backed by Sir Peter Jackson. The media based this reporting on leaked emails obtained from the company.

Weta Digital's political activism raises an important question: can taking a political stance hurt a company and generate a crisis?

Companies need to consider the risks of expressing views on contentious issues, and encouraging employees to support political candidates. The risks to companies include alienating key stakeholders such as customers, employees and government officials. In the case of Weta Digital, several employees expressed concern over the company's actions in company emails obtained by the media.

Political activism by companies also occurs outside New Zealand. Chick-fil-A is good example of a company that has taken a stance on a controversial issue in recent years. Chick-fil-A is the third-largest fast food restaurant chain in the United States, with more than US$10 billion ($15b) in annual sales.

In addition to being known for its chicken sandwiches, Chick-fil-A is also known for its views on same-sex marriage. The company has donated millions of dollars to organisations opposing same-sex marriage, and chief executive Dan Cathy has stated that he believes marriage should only be between a man and a woman.

Chic-fil-A's stance on same-sex marriage generated a strong reaction from several key stakeholders, including government officials and customers.

For example, in both Chicago and Boston the cities' mayors expressed their opposition to Chick-fil-A plans for expansion into their cities. Back in 2012, Chicago mayor Rahm Emanuel told the Chicago Sun-Times: "Chick-fil-A's values are not Chicago values.

They're not respectful of our residents, our neighbours and our family members. And if you're gonna be part of the Chicago community, you should reflect Chicago values, Chick-fil-A's values are not Chicago values".

In addition, Boston mayor Thomas Menino wrote to the company's president: "There is no place for discrimination on Boston's Freedom Trail and no place for your company alongside it."

The reaction among customers was more mixed. In liberal areas of the US, the response was negative, however in the more conservative south, loyal customers rallied to support Chick-fil-A. In 2012 former Arkansas Governor Mike Huckabee helped organise a "Chick-fil-A Appreciation Day", and thousands of people across the country bought chicken sandwiches in support of the company.

Chick-fil-A's stance on same-sex marriage, a controversial issue in 2012, clearly alienated key stakeholders.

During this time Chick-fil-A was expanding its operations to more liberal cities in the US where support for same-sex marriage was much stronger than in the south. It is worth noting that Chick-fil-A's corporate headquarters are in Atlanta, in the southern state of Georgia, and a large percentage of Chick-fil-A's revenue is generated in the south.

Chick-fil-A learned from the crisis about risks associated with taking a stance on a controversial issue. As a result, Chick-fil-A decided last year to change its donation policy. The company announced that in the future it will focus on giving money to "smaller organisations working in the areas of education, homelessness and hunger". This change in corporate policy resulted in Chick-fil-A cutting donations to organisations that oppose same-sex marriage.

A company may believe that expressing a view on a policy popular with their target market will help them. However, Chick-fil-A learned that this strategy could be short-sighted. A company's target market today may be very different in the future.

When Chick-fil-A was operating predominantly in conservative areas of the US, its views on same-sex marriage were supported by many in its target market. However, when Chick-fil-A entered more liberal markets such as Chicago and New York, the company's views on same-sex marriage turned into a liability. Also, views on same-sex marriage in the US have changed over the years, and more people support same-sex marriage.

Weta Digital's involvement in the Wellington mayoral elections also has risks. On the one hand, the new mayor may be more receptive to issues of concern to the company.
However, by supporting a political candidate Weta Digital also runs the risk of alienating employees who may have supported other candidates in the election. For example, how would Weta Digital employees feel about the company's activities in support of Andy Foster if they supported Justin Lester for mayor?

Before deciding whether to support a political candidate, or take a position on a controversial political issue, companies need to assess the risk. And in assessing that risk, they need to take a long-term perspective. Companies can target different markets in the future, and the public's views on issues can also change over time. Companies will suffer the consequences if they do not conduct a risk assessment before engaging in political activism.

• Daniel Laufer, PhD, MBA is an associate professor of marketing at Victoria University of Wellington and an expert in crisis management. He has previously provided commentary on best practices in crisis management for the Wall Street Journal in the US. In this monthly column, Laufer gives his perspective on important topics related to crisis management.