For America's social media savvy politicians, CEOs summoned for hearings are just perfect for grandstanding

Former Starbucks Corp CEO Howard Schultz appears before Vermont Senator Bernie Sanders’ committee on labor in Washington DC. (Source: Bloomberg)

Last week former Starbucks Corp CEO Howard Schultz made the trek to Washington DC to appear before Vermont Senator Bernie Sanders’ committee on labor. The week prior, TikTok CEO Shou Zi Chew got thoroughly grilled by the House on data privacy and national security. Expect that it will soon be finance industry bigwigs who get their turn on the Hill answering for the banking crisis.

Hauling executives before Congress has long been a grand Washington tradition, going back to the early 1900s — think Andrew Carnegie testifying on anti-trust issues or John D Rockefeller Jr on labor conditions. For executives, if done right, it’s a delicate dance of lobbying, diplomacy and public relations.

But in the current political climate, playing the role of patsy for both the left and the right is now an even bigger part of the mix. Heightened partisanship and big business’s shifting relationship with Republicans has fostered an environment that is both hostile to industry as well as more likely to get CEOs caught in the crossfire of political aggrandizing. With politicians getting bigger payoff for creating TikTok and Twitter moments rather than actual laws, we’re missing out on a rare chance to extract anything useful or revealing from some of the world’s most influential businesspeople.

It’s an equation that rightly has corporate America on edge. Companies are hiring lawyers and consultants to not only prep their executives for testimony, but also to guide them on how best to respond to an influx of informal inquiries from legislators so that their CEOs don’t end up in hearing rooms to begin with.

Hearings always take on more significance in a divided Congress. With little chance of much legislation getting passed, there are just not that many alternative forums where politicians can push forward their agendas and messaging. For the right, that agenda is increasingly centered on its war on “wokeness” and corporations perceived as left-leaning. CEOs can no longer assume they have a pro-business ally in the hearing room who will lob softball questions their way. But it also means that they may very well have an enemy: Republicans, previously hesitant to do oversight of the private sector, are now making corporations their targets.

Especially vulnerable to attacks from the right are companies vocal about their environmental, social and governance (ESG) efforts. Meanwhile, Big Tech is getting it from both sides — from Democrats with accusations of misinformation and from Republicans with cries of censorship of conservative speech. Companies doing business with China are also in the spotlight, with the newly formed House committee on “Strategic Competition between the United States and the Chinese Communist Party” that launched under Republican leadership.

Rather than act as a fact-finding tool for creating legislation, hearings are now more often what Lewallen calls “positional” — meaning all of the witnesses hold the same position or point of view. And fewer witnesses are being called overall so less information is getting shared. His research also shows that hearings are no longer oriented toward problem solving: 71 percent of hearings in the early 1970s focused on solutions; 35 years later, that had dropped to around 30 percent.

What politicians, especially those who lack legislative power, seem to be doing instead of fact finding is grandstanding. And they’re rewarded for it. Professor Ju Yeon Park at the University of Essex used a dataset of 12,820 House committee hearing transcripts from the 105th to 114th Congress to find that when politicians increase their grandstanding, they also increase their votes. (Not surprisingly — but depressingly — involvement in passing actual legislation doesn’t seem to have an impact on reelection.)

Park also discovered that the more voters are exposed to the grandstanding, the stronger the effect. That incentivises members of Congress to say or do something that will garner mainstream or social media attention, no matter how unmoored it might be from reality or the facts.

Another way to grab eyeballs, of course, is to call in that high-profile CEO, who has been advised to take the opposite approach: make bad TV by providing testimony that’s as short or as boring as possible, or, better yet, both. That’s hard to achieve for even the most practiced executive when politicians now have the ability to slice and dice hours of testimony to focus on the fragments that play best to their audiences. Chasing that viral moment means less substantiative information on — or, for that matter, oversight of — some of America’s most powerful corporations.

Beth Kowitt is a Bloomberg Opinion columnist covering corporate America. Views are personal and do not represent the stand of this publication.

Credit: Bloomberg