Corporate Reputations Must Navigate Twin Threats of Consumer Pessimism and Hyperpartisanship

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Pick up your smartphone and scroll through the day’s trending news items, and you’ll likely come across a story about the latest company caught in the riptide of today’s highly charged political environment. American companies are living in a new reality: politics and reputation management are inextricably linked. Protecting a company’s reputation requires its leaders to be judicious about where and how they engage and understand the threats that can draw them into contentious and politically harmful situations if they miscalculate public sentiment.

A Frustrated Public

Narrative Strategies commissioned a nationwide survey of American voters in partnership with Robert Blizzard of Public Opinion Strategies and Zac McCrary of Impact Research, two national pollsters representing both sides of the political aisle. The data showed a frustrated and pessimistic American public that is deeply concerned about rising costs, a lens through which consumers are reconsidering their expectations of businesses and business leaders. That recalibration, coupled with an electorate increasingly characterized by hyperpartisanship, creates greater risks for companies that choose to engage in political topics and cultural debates and threatens to draw them into unanticipated controversies and unwanted headlines.

The data clearly shows a shift in how consumers define a good reputation. Americans prioritize traditional attributes like trustworthiness, providing high-quality products and services, making sure those products and services are affordable, treating and paying employees well, and offering good customer service. At least 94 percent of respondents associated each of those attributes with a good reputation, but were much less favorable toward companies that pursue policies to align with consumers’ perceived values or political beliefs. Only 44 percent associate support for political causes with a good reputation; and only 17 percent rate that support as very important.

Building a Good Corporate Reputation

In today’s environment, corporate identities should be built upon doing a few things and doing them well. For years, CEOs have been pushed to use their platforms to weigh in on and even steer public policy, social issues, and political debates. This strategy has backfired in numerous high-profile instances, but even at its most effective, the impulse to become everything to everyone makes companies seem less authentic. Companies shouldn’t necessarily avoid engaging altogether, but they must better understand their customers’ likely reactions and that perceptions about the economy have shifted consumer priorities.

When perceptions of the economy are positive, Americans place more importance on social issues. During more challenging times, pocketbook issues are their top priority.

Even policies that poll well are much more complex under the topline data. For example, 75 percent of Americans believe that focusing on diversity is good for both consumers and companies themselves. However, nearly half of Americans are skeptical of corporate diversity, equity, and inclusion (DEI) goals, suggesting that much of the public believes these efforts lack sincerity.

Skepticism and Reputation

Voters’ pessimism hasn’t just made them skeptical of corporate behavior, it has driven a major shift in the way they view the role of business and labor in society. In the wake of multiple high-profile labor strikes, support for labor unions is rising—and it’s happening on both sides of the political aisle. About half of voters side with unions in labor disputes compared to just 21 percent who support their employers. Republicans are evenly split in their support for unions and employers during these disputes, a jaw-dropping result that would have seemed absurd just a few years ago.

The Public Opinion on Global Politics and Commerce

Global politics also present a significant threat to companies that fail to account for negative sentiment toward foreign rivals. Support for foreign investment diminishes from 62 percent overall to 35 percent support for doing business with China.

Americans do hold a more nuanced view of China than much of the political class, with 64 percent also saying the world’s second-largest economy is an important trading partner. However, this sentiment is still evolving and could change as tensions continue to escalate. Companies should proceed with caution in communicating around relations with China with the understanding that negative sentiment could continue to escalate.

Stop Before You Speak

In a political environment defined by pessimism, frustration, and skepticism, the most important question companies must answer is, “why?” Clearly communicating positions, end goals, concrete actions, and benefits to consumers must be done on the front end—not after the backlash has already begun. Careful reputation management also has considerable economic upside, as two-thirds of respondents said they are willing to pay more for a product or service from a company with a good reputation.

American politics will be contentious for the foreseeable future. Companies will continue to face new threats that challenge the strength of their brand and invite them to become unwitting participants in the country’s culture wars. With economic concerns thrust to the forefront amidst a hyperpartisan electorate, companies must recognize people are reprioritizing what they deem core to assessing corporate reputation. For now, the message is clear: get back to basics.

Ken Spain is a founding partner at Narrative Strategies, a strategic communications firm based in Washington, D.C.