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MAY 23, 2005
Culture Wars Hit Corporate America Increasingly, business must weigh in on hot social issues -- and suffer interest groups' slings and arrows Like many long-term Microsoft (MSFT ) employees, Jeff Koertzen toyed with the idea of leaving the company. But the event that prompted the human-resources manager to bolt for good was not a get-rich opportunity at a promising tech startup. Rather, it was the software giant's withdrawal of support for gay rights legislation in the state of Washington in mid-April after criticism from a local evangelical preacher. "This stupid move affected my decision," says Koertzen, a gay, six-year Microsoft employee who submitted his resignation on May 4. "I decided that now was time to go." Plenty of co-workers shared his outrage. Idealistic techies who believed that Microsoft was more than just an ordinary profit-driven company, that it stood for a set of progressive values, were crestfallen. "One of the reasons I came to Microsoft is because of its very strong stance on human rights," complained Robert Scoble, on his popular employee blog, Scobleizer, a few days after the company's position became public. By May 10 an internal petition urging the company to support the anti-discrimination bill had 1,741 signatures -- compared with 197 for a petition asking it to remain neutral. All the pressure forced Chairman Bill Gates and CEO Steven Ballmer to do something quite rare: backtrack. On May 6, the company announced that it would support the legislation when it comes up in the next session (it failed by one vote). The decision followed a dramatic period of soul-searching at Microsoft. COMPLEX EQUATION. Employees up and down the corporate hierarchy explored profound -- and rarely examined -- questions about the role of companies in contemporary America. "When should a public company take a position on a broader social issue, and when should it not?" Ballmer asked in a companywide e-mail sent out on Apr. 22. That's a question a lot more CEOs will likely be asking themselves. As the culture wars escalate, activists across the political spectrum are increasingly targeting Corporate America. Gay rights groups pressured Home Depot (HD ) to add domestic partner benefits in September. But most of the outcry has been coming from the other camp. For instance, the American Family Assn. (AFA) in Tupelo, Miss., launched a letter-writing campaign against Kraft Foods (KFT ) on May 9 for supporting the Gay Olympics and is planning a boycott later this month against a yet-to-be identified larger company for courting gay customers. "Eventually corporations are going to learn -- some the hard way -- that these kinds of issues are divisive [and] that they'd be better served by just getting back to running the business," says AFA Chairman Donald Wildmon, the religious leader who has taken the most aggressive stance against companies that offend conservative values. "CORPORATE CITIZENSHIP." How to respond to pressure groups such as AFA is a vexing problem for managers. Some governance experts agree with Reverend Wildmon, an ordained United Methodist minister. While business obviously has to weigh in on economic issues such as trade, environmental regulation, and tort reform, the case for engagement decreases as you move into gay marriage, abortion, the death penalty, and other purely social controversies, says University of Delaware corporate governance expert Charles Elson. "The company is in business to compound the investment of shareholders," says Elson. "When somebody buys a share in a company, they are not buying a share in a social position." But the equation may be more complex. Some companies, argues Bradley Googins, director of the Center for Corporate Community Relations at Boston College, have customers, employees, and other stakeholders who share strongly felt views on social issues. Microsoft has liberal attitudes toward issues such as domestic partner benefits. ServiceMaster (SVM ), parent of Terminix and TruGreen ChemLawn, by contrast, declares that a "core objective" is that employees of the Downers Grove (Ill.) company "honor God in all they do." It may make sense for these types of companies, Googins says, to take sides on divisive cultural issues. "This is corporate citizenship in the 21st century," says Googins. "The only way companies can respond to this climate is to return to the core values of who they are and what they stand for." FLOOD OF E-MAIL. While the experts debate these imponderables, CEOs are being caught by surprise in the cultural cross fire. Certainly, Microsoft did not anticipate a brouhaha when it withdrew its support from the Washington legislation, which would have prohibited discrimination on the basis of sexual orientation. "They told me they thought it wouldn't be a big deal," says state representative Ed Murray, who authored the bill. That turned out to be a major miscalculation. After a local alternative newspaper revealed the company's decision, employees inundated Ballmer with hundreds of e-mails. Members of GLEAM, the gay, lesbian, bisexual, and transgender employees' group at Microsoft, sent its own letter to Ballmer on Apr. 29, saying the decision "shook our trust in executive management, and has left us feeling abandoned, depressed, and embarrassed for Microsoft." Ballmer, who was in Brussels trying to negotiate a settlement of the company's antitrust dispute with new European Union competition commissioner Neelie Kroes at the height of the controversy, had to devote hours to managing the crisis. He declined to speak to BusinessWeek. But company sources say he responded the way he always does when faced with thorny problems: by "wallowing," as he likes to put it, in the issue.
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