When should business and politics mix? And what are the business implications when they do?
Tractor Supply Company Makes Big Announcement
Tractor Supply Company is an 85-year-old retail chain, based in Brentwood, Tenn., that employs more than 50,000 people across its 2,250 stores. The company sells products for home improvement, agriculture, lawn and garden and pet care. It is popular among farmers and ranchers, and it serves, according to its tagline, “Life Out Here.”
The company announced in late June that it would make several drastic changes to its company mission and values effective immediately. These changes meant that the company would:
- No longer submit data to the Human Rights Campaign
- Eliminate DEI roles and retire our current DEI goals while still ensuring a respectful environment
- Withdraw our carbon emission goals and focus on our land and water conservation efforts
(That last one is grammatically ambiguous, as it’s not clear whether the company is withdrawing its carbon emission goals in order to focus on its land and water conservation efforts, or whether it is withdrawing both.)
The reasoning? “We have heard from customers that we have disappointed them,” according to the announcement We have taken this feedback to heart.”
In fact, the effort to get Tractor Supply to change its policies started on social media by an activist criticizing the company. Similar protests of Target and Bud Light caused those companies to retreat from advertising campaigns as well.
While Tractor Supply may have heard from some customers, it is not clear if these decisions reflect the feedback from their entire customer base.
The Aftermath
Almost immediately, the announcement was met with backlash from the other side of the political spectrum. The National Black Farmers’ Association called for the CEO of Tractor Supply to resign. The president and founder of the NBFA said he was “appalled by the decision.”
The company’s stock (NASDAQ: TSCO) briefly climbed about 2% on the news, only to retreat and land about 2% lower than before the announcement (as of this writing).
The real question will be what impact the announcement will have on the company’s future sales. It remains to be seen how much the changes will both attract new customers and alienate existing ones (exacerbating the leaky bucket).
But will it draw enough new customers to overcome the ones that feel alienated? That’s the question that gets at the heart of mixing business and politics.
A Look At The Numbers
The United States is divided almost equally among registered Republicans and Democrats in 2024.
“The partisan identification of registered voters is now evenly split between the two major parties, according to the Pew Research Center. “49% of registered voters are Democrats or lean to the Democratic Party, and a nearly identical share — 48% — are Republicans or lean to the Republican Party.”
Aligning your business too closely with the beliefs of one political party can be a risky strategy.
(Of note, the percentages can differ remarkably when sorted by gender, race, ethnicity, sexual orientation, religion, marital status, and location. Rural voters — which likely make up a large portion of Tractor Supply’s customer base — lean more heavily Republican.)
Most companies seek sales growth, and it would seem that the best way to achieve that growth is to appeal to as wide of a swath of the public as possible.
Sure, there are companies that cater specifically to women (50.4% of the U.S. population, according to Statista) or various racial, ethnic, or religious minority groups, but those are the exception rather than the norm.
Additionally, they often don’t actively exclude non-members of those groups; rather, they target their marketing toward a specific population.
Chick-Fil-A Has Withstood Controversy
For example, Chick-Fil-A, whose founder was a devout Christian, famously shutters its doors on Sundays. The policy adheres to its corporate values, which by itself doesn’t need to be controversial. (After all, everyone is excluded from eating there on Sundays, and the company doesn’t overtly exclude people from other religions to partake in its chicken sandwiches.)
But the company got itself into hot water in 2012 when its CEO made a series of anti-gay marriage comments and its charitable arm was reported to be donating millions of dollars to anti-LGBT organizations.
The company later released a statement saying, in part, that “Going forward, our intent is to leave the policy debate over same-sex marriage to the government and political arena.”
I think that is the correct response. Leave politics to the politicians. Because with almost any political issue today, there is a risk of losing millions of non-supporters. Are political beliefs — no matter which side — worth potentially losing half of your business? I think not.
Business Implications of Mixing Business and Politics
There are many issues to consider when deciding whether to publicly commit to a divisive political stance.
- Reputation Risk: Taking a political stance can polarize public opinion, leading to potential backlash from customers who disagree. This can result in boycotts, negative publicity, and damage to the brand’s reputation.
- Customer Loyalty: Engaging in political issues may strengthen loyalty among customers who share the same views. However, it can equally drive away those who do not, affecting sales and customer base diversity.
- Employee Morale and Retention: Political involvement can impact employee morale. Employees who align with the company’s stance may feel more engaged, while those who do not may feel alienated, potentially leading to higher turnover rates.
- Financial Impact: Both positive and negative financial impacts can arise. Supporting popular or ethical causes might boost sales and attract new customers, while controversial stances can lead to lost business and declining stock prices.
Staying In The Middle
That doesn’t mean your company can’t offer “exclusive” products. After all, a Cubs baseball cap isn’t going to appeal to White Sox (or Cardinals or Brewers) fans.
And products that are marketed to and specifically designed for different groups — such as Christian families, senior retirees, or urban youth — are often successful because the exclusivity itself is a selling point. (And in a growing trend, some of these products also become mainstream popular.)
I previously wrote that “it pays to embrace the middle in politics and business,” citing statistics showing that most Americans fall somewhere in between the most extreme political views. So a good strategy is to stay away from political hot-button issues entirely.
Exceptions might include issues that directly impact a company’s industry, employees, or core operations.
For example, advocating for or against policies that support business operations, such as trade regulations or environmental standards that affect their supply chain, can be crucial.
Tractor Supply Mixes Business And Politics
Back to Tractor Supply.
Ditching its climate initiatives is a notable move, given that agriculture significantly contributes to greenhouse gas emissions globally, according to the Food and Agriculture Organization of the United Nations.
But farmers, who are a significant part of Tractor Supply’s customer base, are facing various challenges related to changing weather patterns.
“The worst effects of climate change are now bringing significant risks to farming,” according to Oxfam America, “including unpredictable changes in temperature (both averages, and extreme heat and cold), and availability of water (the volume of precipitation – too much destructive rain, and drought).”
DEI policies were likely initiated based on feedback from customers and employees. The change in these policies raises questions about the voices of those who supported them and their options moving forward. The company’s concern should be that they seek out competition.
Tractor Supply itself noted in its announcement: “We will continue to listen to our customers and Team Members. Your trust and confidence in us are of the utmost importance, and we don’t take that lightly.”
It remains to be seen how these changes will affect the company’s relationship with all of its customers and Team Members.
Why Being Inclusive Matters
When customers and employees feel like they belong to a certain company, they will spend more time there. This leads to more customers who spend more, are loyal longer, and refer others to the business.
Your potential (and actual) customer base is almost assuredly diverse in almost every way imaginable: gender, race, sexual orientation, religion, political affiliation, family structure, existence of disabilities, and more.
And the spending power of some of those groups is staggering:
- The LGBTQ+ community has $3.2 trillion in purchasing power. That’s “trillion” with a “T”.
- African American, Asian American, Native American and Hispanic consumers have a combined $4.9 trillion in purchasing power.
- One in four people in the United States have some form of disability, and the global purchasing power of people with disabilities is $8 trillion.
So regardless of political leanings, inviting more people to your company makes good business sense.
Businesses that authentically engage with different communities to gain their loyalty and hard-earned dollars create a feeling of belonging which draws more people to a business rather than just a select few.
What Companies Can Do To Avoid Mixing Business And Politics
It’s nearly impossible to always avoid politics in business, especially in a heated election year. But companies can institute internal procedures that can protect them from public relations nightmares. These include:
- Inclusive Decision-Making: Establish a committee with multiple perspectives to review major policy changes, ensuring neutrality before implementing decisions.
- Transparent Communication: Clearly communicate the rationale behind major decisions to all stakeholders. Transparency builds trust and allows for open dialogue, helping to address concerns from different segments of your customer and employee base.
- Commitment to Core Principles: Develop and adhere to a set of core principles, and ensure that these principles guide all business decisions. If the principles exclude certain populations, be clear about the reasoning in communications.
- Regular Feedback Mechanisms: Implement regular feedback mechanisms such as surveys, focus groups, and customer service call listening. Actively seek and listen to input from a diverse range of customers and employees to ensure consideration of a complete picture.
- Balance and Neutrality: Strive for balance and neutrality in public statements and policies. Avoid aligning too closely with any political ideology to maintain a broad appeal and avoid alienating segments of your customer base.
Graphic by Dan Gingiss based on original artwork by Kelly Sikkema on Unsplash.
