How Do Politics Affect Corporate Leadership? Ryan Ayers

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We’ve often heard the term “office politics”, referring to the hierarchy that exists within an organization. Politics play an important role in both our lives inside and outside the office, but how do internal politics affect corporate leadership, and do external politics play a role at all in how businesses are run? Can the political climate of the country as a whole have an impact on how leadership within a company functions? In order for leaders to be effective, it’s important to know how much influence politics have—or don’t have—in the structure of a business.

The Effect of Internal Politics on Leadership

In theory, a company’s values should determine its leadership principles and styles. In reality, people in leadership positions are often guided by internal politics, rather than the organization’s image as a whole. Leaders cannot afford to turn a blind eye to office politics; they’re part of every single office’s culture. That doesn’t mean that all office politics are toxic, but pretending they don’t exist can spell trouble for a business. Office politics can determine who gets a promotion or raise, which ideas get support, and how decisions are made.

Despite the overall feeling that “the boss” is ultimately the one calling the shots, we need to remember that an organization is a sum of its parts. Some people have more influence over what happens in the company than others, but those in the most powerful leadership positions have to play the game as well. They can’t make unpopular decision after unpopular decision and expect to maintain harmony and productivity. This is true for both office politics and national politics—it all takes buy-in.

External Politics Affect the Marketplace

While leaders within a company might not directly take their cues from whomever happens to be in the White House, saying that politics doesn’t affect corporate leadership isn’t strictly true. Changes in the marketplace can occur with every local and national election, and one of the key markets that has been impacted has been the sharing economy. The sharing economy, which is currently thriving thanks to companies like Uber and AirBnB, has seen remarkable market growth over the past years with 72% of Americans having used a shared economy service regularly. It has been a political issue though due to its rupturing of conventional practices, and many of these companies have faced legislative problems depending who local and national officials are.

Changes in the marketplace can also affect strategic decision-making based on the policies that are put in place, or even the potential for new policies. Just look at how gun sales change with each presidential election. The stock market fluctuates normally, but can experience massive changes under a new administration. These uncertainties can make corporate leadership more cautious, or force organizations to change their strategies both proactively and reactively.

Heated elections, like the 2016 presidential election, can also have an impact on how customers perceive businesses, triggering changes in sales. Many organizations avoid getting political to prevent customers from making a political association with their businesses one way or another, but information spreads like wildfire, and many organizations are not comfortable staying silent about political behavior that goes against their core values. Even after an election politically-motivated boycotts can continue, potentially reducing revenue. Reacting to political boycotts and changes in the market from the political climate force leaders to tread carefully.

Overall Influences on Leadership

Overall, there are a large number of different factors that affect corporate leadership styles and decision-making, and no one factor is responsible for organizational in policies and leadership styles. With that said, the general public is influenced by the perception of the political climate, and policy itself can influence how a business is run. A business that operates sustainable manufacturing will behave differently under an administration that prioritizes environmental preservation than an administration looking to cut these kinds of protections and subsidies. A company’s interest is in serving its customers and finding ways to maximize profit. Learning how to do this with integrity while reacting to different market conditions and political climates can be an exercise in juggling.

Improving Political Skills

“Politics” doesn’t have to be a dirty word in the office, and in order to succeed in leading a productive and engaged team, leaders need to master the art. The art of diplomacy and politics is all about communication—and communication is the most important tool in a leader’s toolbox. Leaders with good political skills create meaningful relationships with people and are acutely aware of how their words are perceived. They choose their words carefully, but they are always sincere in what they say, and prioritize transparency in all levels of leadership. Politically-savvy leaders are always aware of how cultural and political context affect expectations for their business in the marketplace so that they can change strategies if need be.

Choosing to engage in office politics doesn’t make a leader sneaky or self-serving. On the contrary—approaching politics with the right attitude and approach can help ensure smooth communication, improved productivity, and enhanced corporate image. 9 out of 10 consumers expect companies to be socially responsible as well as try to make a profit, and leaders can’t afford to ignore what’s going on politically, both internally and externally.