Should a business suffer from the sins of the founder?

I’m not a biblical scholar but there are certain iconic phrases that most of us have heard even if we are not able to cite Chapter and Verse.  One of those familiar phrases is: The sins of the fathers shall be visited upon the sons.

Clergy and academicians have discussed and debated the meaning of those words.  Not being either one I will not attempt to place my own meaning on that passage.  But I would like to pose a question as a variation on the theme for the purpose of this discussion: Should a business suffer from the sins of the founder?

I ask this question because in our hyper partisan political environment at the actions of at least one enormously successful nonagenarian has been criticized for his political contributions.  While that may be fair, is it also fair to criticize and even boycott the company he and his partner were responsible for building into an industry leader?

Bernie Marcus, the 91-year-old self-made billionaire is a co-founder of Home Depot, the nation’s largest home improvement retailer.  Marcus has been vilified by progressives for having donated more than $7 million to the Trump campaign.  While that is certainly his prerogative it seems as though Marcus’ political contributions have led many Home Depot customers to make their purchases at its leading competitor, Lowes and other hardware and home improvement stores.  And that shift in consumer loyalty is certainly the prerogative of Home Depot’s customers.

Is it fair to punish Home Depot for the political donations of one of its founders who retired from the company in 2002 and who no longer has any operational control over the firm?  Is it fair to conclude that Bernie Marcus’ political preferences and the way he uses his huge fortune is necessarily a reflection of the way Home Depot uses its resources to support candidates?

More about that in a moment but first let’s consider how the behaviors, attitudes and philosophies of some business founders have affected consumer loyalty.

  • John Schnatter the founder and public face of pizza chain Papa John’s used the N-word on a conference call. Schnatter is no longer associated with the company.
  • Carl Karcher the founder of the Carl’s Jr. hamburger chain was a supporter of the John Birch Society and he supported banning LGBT people from serving in California public schools. Karcher died in 2008.
  • Chick-fil-A, founded by S. Truett Cathy, has a long history of donating to charities with anti-LGBTQ stances. Cathy died in 2014 but his family continues to control the company.
  • David Green the founder of the arts and crafts chain Hobby Lobby is strongly anti-abortion, anti-LGBTQ and his company faced controversy for its one-time practice of excluding Jewish holiday items from its stores, a problem made even worse when a Hobby Lobby clerk notoriously told a Jewish customer “we don’t cater to your people”.

When we look at Papa John’s and Carl’s Jr. and compare attitudes of those companies with that of Hobby Lobby we need to recognize that the founders of those fast food chains are no longer a part of the companies they founded.  Hobby Lobby and Chick-fil-A continue to be led by its founder of the founder’s family.  So the question should be asked did the controversies associated with John Schlatter and Carl Karcher end once they no longer in charge?  And does Hobby Lobby’s founder who still controls his arts and crafts empire and Chick-fil-A’s Cathy family continue to hold to long-standing divisive attitudes?  And the provocative question facing their consumers is this – is it is fair to punish any business with damning social media calls for boycotts without having answers to those questions?

Let’s return to the question of Home Depot and its co-founder Bernie Marcus, one of the largest contributors to Donald Trump’s presidential campaign.  That support has created considerable chatter on social media with calls for Home Depot customers to find other places to shop for home improvement products.  Is Home Depot suffering from the (alleged) sins of its founder?  And if so is it fair?  And what is the responsibility of consumers to look at the way a company behaves today 18 years after the retirement of a founder whose political contributions have become such a divisive issue?

There are many ways to pull the curtain back and peek into the political contributions of public corporations like Home Depot.  One of the most authoritative sources is www.OpenSecrets.org The Center for Responsive Politics  https://tinyurl.com/y8f7vnbyClick on that link for an inside view into the support Home Depot has provided for political parties and their candidates.  As you look at this data it is important to note that the company itself did not donate, rather the money came from the organization’s PACs, their individual members or employees or owners, and those individuals’ immediate family members. Organizations themselves cannot contribute to candidates and party committees. Totals include subsidiaries and affiliates.

So what does the report tell us?  Like so many large corporations Home Depot has spread its political contributions to BOTH parties, to Republican AND Democratic candidates up and down the ticket.  The data invoked the image of a casino gambler who stands by the roulette table and places chips on BOTH black and red – the ultimate definition of hedging one’s bets.  No matter where the little white ball lands the gambler will win something even though he may have also lost some chips in his quest to become a victor.

Let’s look at some of the details.  Thus far in 2020 Home Depot’s political contributions for Congressional candidates shows that 52.66% went to Republicans; 40.66% went to Democrats; and 6.68% to others.  Among all Federal candidates the company contributed to Republicans 54.11% of the time and 45.89% of the time their support went to Democrats.

Thus far this year Home Depot donated $39,873 to Joe Biden and $37,657 to Donald Trump.  They’ve given $219,237 to the Republican Senatorial and Congressional Committees while contributing $54, 608 to the Democratic Senatorial and Congressional Campaign Committees.

The moral of the story, such that you can use the word moral when discussing political contributions, is this.  Taking one isolated fact and trying to logically extend it to create a pattern of behavior may not always be prudent.  Yes, Home Depot’s track record does indicate a tilt toward Republican candidates.  But first, it is hardly breaking news that big business tilts right.  Second, nearly half of its political contributions went to Democratic candidates.  So this is by definition not a company with such a distaste for progressive campaigns that it has given exclusively to conservatives.

Contrast this with the strictly ideological donations of some of the other companies I described which definitely have no balance in their support for issues and candidates that do not agree with their philosophy.  The fact that certain companies have held hard lined views about abortion, LGBTQ rights and other divisive social issues when the reins of control are either still held by the founder or have been transferred to other family members who vow to honor the founder’s legacy makes them inviting targets for consumer backlash.  But when a founder is no longer in control and the new generation of leaders choose to take the company in another direction should those new leaders bear the burden of carrying the stigma or shouldering the blame for the decisions of those who came before them?

What is one to do then?  Make thoughtful, insightful and data driven decisions about where to spend your money.  Don’t assume that what was a distasteful practice by a company at one point in its history is necessarily the way that business continues to behave and believe.  Ask questions.  Do your research.  Use your own process for vetting.  Don’t believe everything you read or hear.  Facts are facts.  Use more time deciding on the merits of your consumer choices.  Be careful about spreading false or distorted information which can harm the reputation of otherwise good and decent businesses whose employees pay the ultimate sacrifice for a boycotted business.

Be a responsible consumer and take time to find out where the true north is on the ethical and moral compass of businesses in sectors such as agriculture, food, cosmetics; clothing products whose production is cruel to animals; companies that employ slave labor, child labor or unfair labor practices; companies whose production involves environmental or health degradation; products involved with oppression; companies that discriminate based on age, gender, sexual preference or race.

We are living in a time where technology that is at our fingertips can reveal information about businesses and politicians that enable us to make wise choices.  Use that technology and those resources to choose wisely.

For more commentaries by Stu Turgel go to: https://thephoenixfile.net/commentaries/


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s