Politically Sensitive Contracts Can Affect Company Reputation

By Sascha Matuszak
Reporter, SCCE|HCCA

Companies contracted to implement President Trump’s “zero tolerance” immigration policy face tremendous reputational risk, the Wall Street Journal reported on Friday, June 22nd. Images circulating of children and parents being separated hardened negative opinion on the topic of immigration policy. Several companies linked to the policy have had to address PR challenges, and several other companies have outright refused to provide their services in support of a policy that is unpopular with many Americans. James Walker, a vice president at the public-relations firm Ruder Finn, told the WSJ that, “Companies tend to steer clear of political issues that are not material to their business, but there comes a point in time when businesses need to take a stand with their communication and action.”

Salesforce.com employees wrote a letter to the CEO, Mark Benioff, calling for the company to cease working the U.S. Customs and Border Protection agency in support of a policy that separates families. Part of the letter was quoted in a Bloomberg story:

“Given the inhuman separation from their parents currently taking place at the border, we believe that our core value of Equality is at stake and that Salesforce should re-examine our contractual relationship with CBP and speak out against its practices.”

Managing reputational risk

It is impossible to underestimate the ability of social media to transform perception in the blink of an eye. Now more than ever, companies must be able to accurately assess their own reputation, identify risks, and establish continual processes to be able to manage events before and after they transpire. “A company’s reputation should be managed like a priceless asset and protected as if it’s a matter of life and death,” wrote the authors of a 2014 report from leading consulting and advisory firm Deloitte. “Because from a business and career perspective, that’s exactly what it is.” For companies who engage in politically sensitive business, the ability to assess the risks to reputation quickly and have a framework in place to not only manage reputational risk, but also make quick decision regarding the companies ability to enter into risky business, is critically important.

According to Bloomberg, the letter sent to CEO Mark Menioff represents the “growing ranks of tech giants with employees objecting to the way their products are used by the U.S. government. Staff at Google compelled the company to back away from a Pentagon contract using Google’s artificial intelligence software. Employees at Microsoft Corp. have complained about a contract with U.S. Immigration and Customs Enforcement. More than 100 Amazon.com Inc. workers wrote to CEO Jeff Bezos asking the company to stop selling facial-recognition software to police forces, according to The Hill.”

For these companies and CEOs, the risk of losing their reputation trumps any short-term gain, and that’s what an effective risk management and compliance program should be able to communicate to leadership at all times.