The Price of Being Outspoken
While retail execs appear to periodically draw the ire of activists for funding certain political or religious causes, few have been as outspoken recently as Jim Sinegal, Costco’s co-founder and former CEO, and Dan Cathy, Chick-fil-A’s president and COO.
On the political front, Mr. Sinegal, who retired as Costco’s longtime CEO in January 2012 but remains a director and a significant shareholder, spoke Wednesday night in a prime-time coverage spot (10:00 p.m.) at the Democratic National Convention, just three speakers away from the headliner, former President Bill Clinton. In an interview with CNBC, Mr. Sinegal said he planned to directly address whether Americans are better off today than when President Obama took office, citing economic and private sector job growth and emphasizing the conditions at the time Mr. Obama’s administration took office.
Retail Today’s coverage of the expected speech noted that Mr. Sinegal’s support of President Obama very likely conflicts with views of a majority of Costco members, who tend to be small business owners or higher-income households.
Asked whether he would be speaking if he was still CEO, Mr. Sinegal admitted he wasn’t sure. He said, "I think as a business person I don’t have to abdicate my citizenship. So that’s an interesting question. I don’t have to make that decision from that vantage point. But I think perhaps I might."
Mr. Sinegal’s comments came after Tom Stemberg, co-founder of Staples Inc. (SPLS), spoke at last week at the Republican National Convention.
Meanwhile, Mr. Cathy, the son of the fast food chain’s founder and a devout Southern Baptist, stirred up a firestorm in July after he told a religious magazine that he opposed gay marriage.
The Atlanta-based chain is known in its core markets in the South for its strong religious beliefs, even staying closed on Sundays. But after the comments went viral, political leaders in Boston, San Francisco and New York City stated that the restaurants were not welcome in their cities and calls for a boycott rang out. On the other side, religious leaders and social conservatives stuck up for Mr. Cathy’s First Amendment rights. Protests as well as calls for support continued through early August.
The controversy was not expected to impact Chick-fil-A’s business in its core markets where many customers back the chain’s religious beliefs, but it may impact expansion plans.
"Most brands really stay out of a lot of the big issues that polarize people. So when you see companies take a stand on certain things, they usually do so for causes that are broadly acceptable, such as Starbucks and job creation or Patagonia and the environment," Tim Calkins, a marketing professor at the Kellogg School of Management at Northwestern University, told The Christian Science Monitor. "So what’s really unique about this situation is that Chick-fil-A has gotten itself right in the middle of one of the controversial issues of the country."
- Is the US Better Off? Costco Co-Founder Says Yes – CNBC
- Costco founder’s politics at odds with members’ – Retailing Today
- Costco’s Sinegal in spotlight at Democratic convention tonight – Seattle Times
- Costco Founder Says Obama Better for Business Than Romney – Bloomberg News
- Costco co-founder Jim Sinegal praises Obama’s business side – Seattle Times
- Staples founder Tom Stemberg starred at GOP convention – Boston Globe
- Chick-fil-A: Will the controversy hurt chain’s expansion plans? – Christian Science Monitor
- Chick-fil-A Thrust Back Into Spotlight on Gay Rights – The New York Times
Discussion Questions
Do consumers care about retail executive’s political or religious views? How outspoken should retail executives be?
The CEO’s responsibility is to their shareholders first and foremost. Given our current highly polarized political climate, I would assume the PR/Communications and Investor Relations arm of most public companies would recommend against their CEO taking a highly public endorsement stance.
However, I do agree with Mr. Sinegal that as a private citizen it is his inalienable right to speak his opinion/share his views. Naturally, for the benefit of the political party, it is to their advantage to waltz in credible sources from business/industry to share their compelling story of success and along the way endorse the standard bearer of the party.
My estimate is that a majority of today’s consumers do not care if a retail executive is left, right, or middle — unless the press is lifting the noise around it and creating worthless news. Shoppers have their habits, their favorite stores or websites. They will keep these as long as their shopping/retailer relationship is supported via right price and right product available when they want it.
If Chick-fil-A had a buy-one-get-2-free coupon, would the political views of their founder matter?
Retail executives need to consider the strength of their relationships with their shoppers and align their level of “outspoken-ness” accordingly.
IMHO, and I suspect I’m in the minority, if a retail exec wants to speak and has weighed the potential consequences, he or she should speak. I’m not happy that many people today seem bullied into being afraid to speak their minds. To me, this lets the bullies win. You could argue that speaking out can hurt investors, but investors also have a choice of where they put their money. All this brings to mind that quotation I cited here once before…
First they came for the socialists,
and I didn’t speak out because I wasn’t a socialist.
Then they came for the trade unionists,
and I didn’t speak out because I wasn’t a trade unionist.
Then they came for the Jews,
and I didn’t speak out because I wasn’t a Jew.
Then they came for me,
and there was no one left to speak for me.
Retail executives should keep their personal views private. Remember the hot water Whole Foods’ CEO John Mackey’s anti-ObamaCare stance got him into? It all started with Mackey’s August 11, 2009 op-ed in the Wall Street Journal. In it, Mackey argued that “the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system.” He presented, instead, The Whole Foods Alternative to ObamaCare. What a firestorm that turned out to be.
Too many chefs in the kitchen spoil the soup and too many bobbing headed vocal CEOs spoil what should be neutral corporate policy on political issues.
For the most part, consumers don’t care so long as their needs are being met. What difference does it make? And what one person says is minor compared to what the company does as a whole. Look at Walmart with all their controversy with bribes, labor issues, and such. The result is Walmart’s sales just keep growing.
What’s nice is when you have more money than God, are privately held, and can say anything you want and not be affected. A lot of my clients tell me they approve of my controversial comments because I’m saying what they are afraid to say. Do I tick some people off? But in the long run it pays off. You get more free press with controversial comments compared to lame, stereotypical glad-handing comments. And all press is good press.
Consumers definitely care about retail executives’ political or religious views — that is when those views conflict with something they’re passionate about. Otherwise, they may not pay much attention.
Clearly, all citizens (even execs) have a right to speak their mind as long as they don’t violate certain civil rights. However, C-level execs have fiduciary responsibilities to shareholders and employees. Common sense dictates that creating a controversy will alienate a segment of clientele while bolstering another segment. Not knowing if that will produce a net gain or loss on any given subject, caution is always the appropriate path, assuming the potential harm will be bad for business.
There is a key (IMHO) distinction missing here — Mr. Cathy spoke on behalf of Chick-fil-A, not himself or his family (read the NY Times article above). Everyone (down here in his hometown of Atlanta) knows he’s a Southern Baptist, and we’re reminded every Sunday when we drive by his closed restaurants. Closing on Sunday — not controversial. Telling us his restaurant opposes gay marriage — different from telling us he opposes gay marriage. Latter is fine, former not so much.
This is still America and we are guaranteed the right to voice our opinion as long as it is not slander. The problem has been when retail executives voice their opinion or fund campaigns or issues the opposing side calls for boycotting the retailer. Remember Target, one of the most charitable retailers in the country, being threatened by boycotts?
Boycotts are just a form of blackmail and intimidation and should not be tolerated in this country. While boycott threats are generally short lived, many executives decide it’s not worth the trouble and keep silent, which is what the opposition wants. Many executives are so consumed with running their company they simply don’t have time to worry about politics. Yes retailers should speak out if they feel the issue is important, but as with many Hollywood stars’ opinions, most people give it little thought.
This is just not right. “…Mr. Sinegal’s support of President Obama very likely conflicts with views of a majority of Costco members, who tend to be small business owners or higher-income households.”
Based on what data?
Whether opinions are voiced directly by retail executives or through trade associations, we are absolutely attempting to exert our will on political activities in the US. I may not agree with all those voices all the time, but I sure as heck believe they should be heard.
The direct voice of retail executives will definitely help consumers decide where to shop, and I just don’t see a problem with that. We get to decide whose values we want to support with our wallets. That’s a good thing.
There will always be some consumers who do care about the political or religious views of company executives, retail or other industries. The executives certainly have a right to express their opinions and consumers have the right to be concerned and object.
Some customers care, others do not. It depends on the topic and the controversy surrounding it. Regardless, it’s a not a winning situation for the retailer. Why would a retailer choose to alienate a portion of its customer base? Politics in America is too polarizing these days. Retailers should stick to business and let others wave the political flags.
Consumers don’t care about retail executives political or religious views if they don’t hear them spoken. But when retailers speak out about their beliefs it’s like striking a match and that creates a fire.
We are an increasingly diverse and politicized society obsessed with speaking our minds. That has created many tinderboxes. One strong spoken viewpoint automatically irritates someone with another viewpoint and the battle for supremacy begins. These questions arise: For what reason? And for what cost?
So unless you believe that it is absolutely necessary to speak out your views to everyone — believers and non-believers alike — silence can be a virtue.
I think “weo” hasn’t seen Whole Food’s stock price and balance sheet. Mackey shooting off his mouth was one of his smartest moves and it’s paid huge dividends for Whole Foods and its shareholders.
My heart tells me to — once again — agree with Warren. Just because you lead a company doesn’t mean you lose your First Amendment rights. If the leaders of a society are not free to speak, who are we going to hear from?
That said, my head tells me that actions have consequences. Jim Sinegal in all likelihood probably would not have spoken at the Democratic convention had he not retired this January.
As for Dan Cathy, I’d say his remarks strengthened his brand’s market position among its partisans — that is if you assume that all self-professed evangelical Christians are also against gay marriage.
The right answer to the question is that some consumers care very much about everyone’s political and/or religious positions — it’s so hard to separate them in today’s political climate — but that pure ideologues represent a minority — albeit often a vocal minority — of any consumer cohort.
Today, when it comes to public opinion, it is the seller rather than the buyer who ought to beware.
If senior executives are retiring or own the company, they obviously could be as outspoken as they want to be. The sad reality is that the vast majority of consumers/voters won’t even hear about it because they are more focused on sports, American Idol and video games than they are about the great issues affecting our country.
Having said that, keeping politics and religion out of business is probably the smart thing to do.
Executives have the right to speak out on issues as long as they are given permission by the board of directors and are cognizant of the ramifications. I was unaware of that Mr. Sinegal spoke at the DNC or that Mr. Stemberg spoke at the RNC. However, I now know where I’m going to buy a new computer later today, and also where I will no longer be shopping.
When it comes to politics you should assume any comment is going to disengage about half of your customers.
Chick-fil-A has always positioned itself as a company that supported Christian values. There were no surprises with his comments.
Either way, an executive using credibility built up through association with a business, is politically compromising the mission of the business when they publicly take a political position. This has cost some businesses dearly, had no discernible effect on others and been business beneficial to others. The four cases (3 here and a fourth I’ll introduce,) show something of the complexity of the issue.
First, Chick-fil-A apparently had no intention of making a particular political statement, and seemingly was simply going about business as usual when political activists came screaming out of the woodwork, in opposition. Regardless of the merits of the issue, it would seem to make most business sense to stay the course. I believe the whole dust-up was a massive plus for Chick-fil-A.
Second, Staples is one of the major successful businesses where Romney’s Bain Capital played a major role, and for which Romney has been roundly attacked by his political opposition. Again, the opposition first politicized the issue, and very likely the response will again be a win for Staples, regardless of the electoral outcome.
Third, Costco as a business seems somewhat irrelevant to the political issues, even if its retired founder has strong political views. Certainly Costco caters to small business owners, but their general market is so much broader than a Staples that it hardly seems a definitive factor. I would judge the overall impact business-wise here to be likely negligible.
The fourth, related case, was the strong BUSINESS response of Carbonite in canceling their sponsorship of the Limbaugh radio show. By all accounts the impact of this was more costly to Carbonite than to Limbaugh.
Then there is the whole issue of the underlying political turbulence that these businesses either waded into, or were thrust into. In a sense, both Chick-fil-A and Staples were thrust into the political spotlight without their own initiative, whereas the owners/management of Costco and Carbonite thrust themselves into the political spotlight.
Regardless of their political orientation, I believe shoppers will be more tolerant of businesses who are not actively attacking the shoppers own views, even if they may incidentally oppose the shoppers in another arena, than those who go on the attack against their own shoppers/customers.
To ask the question is blaming the victim. When American citizens are not allowed to talk about their religious convictions or speak their minds on politics and issues because they are afraid of being demonized, perhaps we should look at the media doing so.
As I read through the responses, I was struck by what David Livingston said about “any press is good press.” While his point about being compelling differentiates one from being part of the chorus of the many; he raises a point much larger than “just” the political discussions.
Does one who takes a point of view that is extreme (in the eyes of the majority) risk being marginalized or seen as a “wingnut”? Or, is it the wellspring of innovation and should be applauded? How do we tell the difference?
It sort of feels to me like the way the Supreme Court Judge, Potter Stewart answered when he commented when asked to define pornography — “I’ll know it when I see it.” Not sure that I can tell you when it “pays” to be outspoken and when it is not appropriate by a rule or guideline — but have opinions about it nonetheless.
Free country we live in. Retailers can be as outspoken as they choose to be. However, they need to understand the possible causes and effects, and the ramifications on their businesses, their employees, and their market shares. As a consultant to retailers, and also CPGs, I always advise the CEOs to stay out of politics.
The truth is, we talk as if it matters, then behave like it doesn’t matter.
Has it hurt Apple because Steve Jobs was a far left liberal? You decide. Did it hurt Ford or its reputation as a result of his pre-World War II views and actions? You decide. Did it really hurt Chick-fil-A? You decide. Has Wal-Mart’s strong non-union positions hurt them? You decide? Do Mr. Sinegal’s views bother the Romneys? They are avowed Costco lovers and Mitt buys his Kirkland shirts by the three pack. They’ll have to decide as will his supporters. My guess is that it matters not.
The reality is that the talk and the wallet are two different things. Our spending dictates what really matters. The conversation is just what it is — conversation.
It may matter to some, but those are few. The overwhelming majority talk with their wallet. Costco will likely continue its 6-8% same store sales gains without skipping a beat.
Full disclosure: I am writing this while wearing a Kirkland dress shirt. They were my choice before knowing Mitt liked them or Mr. Sinegal’s comments. They are a great shirt! The only difference is that I buy them one at a time.
Great products like iPads and iPhones, just like dress shirts, sell because of what they are, not because of the acceptable political views of one executive.
Acceptable political discourse is a good thing. It is not one that should be silenced or reacted to by boycotting. When it becomes unacceptable discourse, that is a different story. We as a society need much more acceptable disagreement rather than the opposite.
Have to disagree with Retailing Today’s analysis of “Mr. Sinegal’s support of Mr. Obama conflicts with the views of a MAJORITY of Costco customers. In the August, 2012 BIGinsight Monthly Survey of 9,426 Adults, we asked respondents if they were a member of a Warehouse Club. A total of 748 said they were Costco members, 194 are BJ’s members, and 545 are Sam’s Club members.
58.2% of total respondents said that they voted for Barack Obama in 2008. 57.9% of Costco respondents took that path, 66.3% of BJ’s, and 50.5% of Sam’s Club members voted for the current incumbent. Further, when asked of Political affiliation, 39.3% of respondents said that their political party was Democrat. 35.9% of Costco members call themselves Democrats (32.8% said they were Republican), while 41.0% of BJ’s customers and 33.7% of Sam’s customers say they are part of the Democrat party (39.4% of Sam’s Club members volunteer they are Republicans).
Sinegal is right. He didn’t give up his rights to citizenship. If he feels compelled to make this endorsement, his constituents who may disagree should be able to say, “I disagree with what you say, but I will defend to the death, your right to say it.”
By the way, Jim, Costco members, when asked “If the election were held today, who would you vote for?, 43.2% said Obama, 38.8% said Romney, and 18.1% said they are undecided.
The shoppers from both sides will likely continue to shop Costco.
The great thing about this country is that people are allowed to speak their opinion. Others are allowed to agree or disagree. You may not agree, but if you don’t hear other opinion you live in a vacuum. If people only talk and listen to people who think like they do, research shows that your thoughts become more polarized and extreme.
If you don’t stand for something you stand for nothing.
The idea that “nobody cares what is said or done” by leadership within the general population in the United States has been proven wrong many times. Standing in front of a population that is homeless, out of work/underemployed, or in the process of home foreclosure and telling them they are in fact better off than they were 4 years ago is gutsy to say the least. But the messenger is not in jeopardy here. The employees of the company he represents are. It is the company’s employees that will face layoffs for consumer retribution in the form of boycott.
Support for or against volatile arguments in present day lackluster economies is a clear demonstration of how poorly equipped and practiced at professional public conduct some of our corporate executives are. This not only flies in the face of the consumer, but it will offend a portion of the company’s employees. It is a part of corporate management’s responsibility to engage the employee and the consumer with every intention of creating and maintaining a positive energetic rapport. Anything less is professional misconduct, placing the company in jeopardy of losing consumer enthusiasm.
Differentiation has been discussed in many articles within this forum. It is perhaps the most effective ingredient in the mix of necessities that first and lasting impressions that turn into sales. It is also the reason that most consumers change suppliers.
I think the answer to this is simple: silence is golden. Occasionally — for example desegregation in the 1950/60s — the political realm may intrude into retail and force some kind of “statement” (either literally or figuratively), but for the most part, customers are either uninterested in a CFOs views or believe them to be the same as their own (rightly or wrongly); little is gained — though probably little is lost either — by exercising you First Amendment rights at the expense of your Fifth.
I find Mr. Sinegal’s and Mr. Cathy’s situations very different.
Mr. Cathy spoke of an issue that has absolutely nothing to do with his QSR business.
Mr. Sinegal is a retired CEO addressing his perspective on an issue germane to his business. As a consumer, as a businessman, I want to hear what he has to say. Of course, the backstory is very important since it can decrease the impact of the message — as in Mr. Stemberg’s endorsement of Romney.
I believe that avoiding extremist views, in any category, is prudent business behavior.
Sometimes bad luck has benefits. Through a series of morning mishaps, I came to this column only after 25 comments were already posted. I read the entire body of work, and came to this glaring and (not so) shocking conclusion — Whether or not you think speaking out is a good idea is largely driven by whether or not you agree with what was said. Well! How about that.
The values and beliefs of a business and brand should be clear. I would expect senior executives of a business to share these and be outspoken about them.
Should these be political or religious? In principle, I have no problem with this. In reality, and just like all consumers (and employees), I will feel strongly about some and not others, so I make my choices.