Travel ban

From his vow to shred the current regulatory framework to championing a major cutback in corporate tax rates, President Donald Trump made a number of promises during his campaign for office that positioned him as business-friendly.

Companies didn’t have much to say, at least publicly, about another idea he floated: “a total and complete shutdown of Muslims entering the United States until our country’s representatives can figure out what’s going on.”

But in response to the new president’s Jan. 27 actions that go part of the way toward that stated intention, including his ban on inbound travel from nationals of seven countries, the corporate community is starting to push back against their presumed ally.

On Monday, 97 companies, most of them in the technology field, signed a motion in support of a lawsuit against the travel ban brought by the attorneys general of two states, Minnesota and Washington.

The companies include such heavy hitters as Apple, eBay, Facebook, Google, Intel, Microsoft, Netflix, Salesforce.com, and Uber.

As of this article’s posting, the travel ban was on hold, following rulings in favor of the plaintiffs by a federal district court and the 9th Circuit Court of Appeals. The latter merely declined to immediately issue a final ruling, pending receipt of additional evidence in the case. Most observers of constitutional law are betting, however, that the legal challenge will shortly land in the Supreme Court.

The motion signed by the 97 companies — an amicus curiae (or friend-of-the-court) brief — states that the president’s order “hinders the ability of American companies to attract great talent; increases costs imposed on business; makes it more difficult for American firms to compete in the international marketplace; and gives global enterprises a new, significant incentive to build operations — and hire new employees — outside the United States.”

2017BanAffectEmploye - i4cpMeanwhile, the Institute for Corporate Productivity (i4cp), a research organization, revealed the results of a poll showing that a large minority of companies are experiencing effects from the travel ban. The 261 participants included representatives, mostly human resources executives, of the i4cp’s member organizations (mostly Fortune 1000 and Global 1000 companies), its partner organizations, and large government agencies. More than a third of the respondents said their organizations have employees that are directly affected by the president’s executive order. (See “Impact on Employees,” above.)

Also, almost a quarter of those polled said they anticipate the order will have a negative effect on organizational productivity this year. (See “Impact on Productivity,” below.) Many more companies than that may ultimately end up experiencing a negative impact, however, as more than 40% of the participants said they were either undecided or didn’t know what impact the travel ban would have.

2017BanEffectProductivity - i4cp“These are large organizations, many of which have expatriates working in other countries and employees with green cards that they didn’t know about,” says Kevin Martin, chief research officer for i4cp.

In fact, Martin notes, in many cases companies don’t know who is affected or will be. That’s because while employees are managed in human resource information systems, contractors are often managed in vendor-management systems. “They literally have to have people self-identify that they’re affected” by the executive order, says Martin.

“Think about their ability to move talent around, which for many companies is critical to growth,” he adds. “Maybe there’s a certain project that only one person has the right knowledge for.”

Respondents didn’t necessarily indicate that large numbers of employees are affected. Despite the size of the organizations polled, 42% of those that said employees are affected put the number of affected employees at 20 or fewer. For 63%, the number was 100 or fewer. And 27% said they didn’t know how many were impacted.

Still, the issue appears to be of great concern to many companies. Martin says that in a Friday conference call with eight large companies, all said the travel ban and the potential impact on productivity has taken on a significant sense of urgency.

“The travel ban is one thing, but the bigger thing is a general uncertainty,” says Martin. “These companies don’t know what else may be coming their way. On the call, we talked about the need for companies to start doing different kinds of scenario planning, to think about and plan for scenarios that are almost unthinkable.”

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9 responses to “Companies Shaken by Travel Ban”

  1. I can’t believe media bias runs to this CFO publication. It is not a “Muslim Ban”. It is seven countries who either have no organized rule of law or are huge state sponsors of terrorism. I believe a TEMPORARY ban on these countries until we have solid methods and procedures for vetting is a great idea. People are crying before they are hurt and people with valid visas don’t have anything to worry about.

    • Thanks for your comment, Rick. For the record, the article does not call it a “Muslim ban.” Those were Trump’s own words on the campaign trail, as the article indicated. Further, there is no bias in this article. It is a news report about: (1) an amicus brief, signed by 97 companies, filed in connection with the lawsuit by the AGs of MN and WA seeking to overturn Trump’s executive order; and (2) a survey by a reputable organization revealing that the ban is having an impact on companies. It’s true that we don’t know what the ultimate result of this Trump administration policy will be, but let’s not pretend that there is not significant resistance to it within the corporate community.

      • There is heavy bias in the article, for example “Meanwhile, the Institute for Corporate Productivity (i4cp), a research organization, revealed the results of a poll showing that a large minority of companies are experiencing effects from the travel ban. ” The way that this is written insinuates that most companies (“large minority”) feel the effect of the travel ban, when in reality, most do not. Only 36% reported “yes”, whereas 42% reported “no effect” and 21% reported “don’t know.” Additionally, only 24% of companies say that this will have a negative effect on their productivity. In summary, the majority of the businesses do not appear to reap any consequences of this travel ban. I will add an additional thought that I think that some of the polling referenced in this article is highly subjective. For example, how do you define “affect your employees”? Also, how do you define “productivity”? For a manufacturing company this may be simple, but for many other organizations, this could be much more complex and difficult to poll and draw conclusions from without true scientific data.

        • Brianna, thank you for your comments, and generally I view them as valid. Again, though, I must weigh in: this article is not biased. It reported accurately that (1) 97 companies filed an amicus brief, opposing the travel ban (and dozens more did so in the few days after the article was published), and (2) the i4cp research did indeed show that “a large minority” of companies reported effects on employees. The article specifically did not say, nor did it imply, that “most” companies were feeling effects.

          I think that if more than a third of companies are feeling effects from the travel ban, that’s a big story that if anything warranted more coverage than we gave it here. Same goes for 24% saying it will have a negative impact on productivity. Why is that not a significant result? This wasn’t an election or a popularity contest; it was an effort to see how many companies were affected.

          I agree that i4cp could have defined terms like “affected” and “productivity” more precisely. But i4cp is not in the business of conducting “biased” research. This is a member-based organization whose members are more than 100 of the biggest companies in America, which pay i4cp to conduct research that’s of interest to them.

    • No bias here. This is just a straightforward reporting of how this executive order might affect the corporate bottom line.

      Far from being biased, it’s exactly what you’d expect from a publication dedicated to reporting news relevant to the corporate finance function.

      The issues you bring up are important, but they are peripheral to the concerns of most CFOs. Executives are more worried about the immediate and high probability threat of losing talent than they are about low probability of threat of being directly affected by a terrorist attack.

  2. I agree with Rick Bloomer. Those who have valid visa’s have nothing to worry about. Those who don’t should get valid visa’s.

  3. I agree totally with Rick (Bloomer). A 3 month stoppage to make sure that our vetting procedures are proper is excellent policy and extremely needed. I am very concerned about those who have a problem with it. I have no doubt that had the same been initiated by Obama, it would have been received with open arms by the ones now criticizing it.

    • I agree, Dennis. Everyone keeps forgetting that the countries that were part of the ban are those which the Obama Administration identified, not the Trump Administration. This is not about right or left sides, this is about keeping our country safe.

  4. 100% agreement with Rick Bloomer. If CFO Mag starts to become one of the Mainstream Manipulators, I’m done with it as a publication. We need information relevant to CFOs, not whining headlines and clueless reporting.

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