Given all the problems facing CEOs - low earnings, sluggish sales, tight credit, public outrage about executive pay - it's worth noting that they are spending a lot of their time these days on public policy.
After Google passed the $1 million mark in quarterly lobbying expenses over the summer, Google CEO Eric Schmidt told reporters his company has learned that it needs a strong presence in Washington "to continue to support the greatness of the Internet." Exelon CEO John Rowe, who pulled his company out of the U.S. Chamber in a dispute over climate change legislation, personally lobbied House Democrats on the bill at the behest of White House Chief of Staff Rahm Emanuel. Mike McCallister, CEO of Humana, publicly defended his company's letter to Medicare customers warning them that they could lose benefits if healthcare reform legislation is passed.
And GE's Jeffrey Immelt, one of the nation's most prominent CEOs, has led a company-wide campaign to attract stimulus dollars to support electric-grid modernization, renewable energy generation and new health-care technologies, reports The Wall Street Journal. "The government has moved in next door, and it ain't leaving," he told the International Economic Forum of the Americas in June. "You could fight it if you want, but society wants change. And government is not going away."
Has TARP, the Democratic takeover and the current slew of Big Policy Issues awakened CEOs to the importance of public affairs? Perhaps in some cases, but this is not a new trend. A 2008 Foundation for Public Affairs (FPA) study of 130 large companies, ranked "lobbying or relationship-building by CEOs and other top executives" as one of the most important corporate political involvement activities. It even scored higher than participation in coalitions or grassroots campaigns.
Another FPA publication, "Promoting CEO Engagement in Public Affairs," explained that a firm's CEO is uniquely positioned to be an effective representative before policymakers in the U.S. and abroad. That's because he or she can display the broadest perspective on the company's interests, strategies and priorities; can tell the Congress or the White House - with authority - that the company is or is not behind a policy position; has the most credibility when committing company resources to support that policy position; and commands the most respect when representing the firm before foreign governments.
Large companies "really have to have CEOs who are able to stand tall in the political world," said James Post, professor of strategy and policy at the Boston University School of Management, who was interviewed for the latter report. "The really great strategic issues for the companies involve public policy."
If CEOs need more convincing, they might study how the Obama administration is changing the way corporate America relates to government. As Politico reported last week, the president is calling out chief executives of firms who favor or oppose his policies. This approach seems to be designed to marginalize business and trade associations that have traditionally stood between many companies and federal policy-makers. But it also places corporate leaders right in the middle of the action.
"Washington is changing," a White House spokeswoman told Politico. "The role of a large business group is probably different than it was 10 or 20 years ago."
As part of this strategy, Obama has invited more than 75 chief executives to attend small-group meetings with the president or his top economic advisers, reported USA Today. Among the participants have been CEOs from Coca-Cola, Pepsi, Johnson & Johnson, Procter & Gamble, Avon, Wal-Mart, Lockheed Martin and Boeing.
While U.S. presidents have always cultivated relationships with CEOs, the number of meetings and Obama's personal involvement indicate a concerted effort to bypass powerful intermediaries such as the U.S. Chamber. White House Senior Adviser Valerie Jarrett told USA Today that the CEO outreach campaign was planned before relations between the administration and the Chamber became strained. "I think that the Chamber and other large lobbying groups in Washington have had a tradition of dominating the conversation," she said. "Our approach is to be more inclusive."
The success of that approach will depend on whether the administration can build coalitions of CEOs (and their companies) to support game-changing policies that don't create many natural alliances. Finding common ground on complex issues such as health care or climate change requires companies to negotiate their way to a consensus position. And where does that negotiation typically take place?
Most of the time, in the board room of a major trade or business association.
Send me your comments.
