CEOs excited for midterm polarization, uncertainty to end

At a time of political divisiveness and red-hot rhetoric, Tuesday’s midterm elections are causing business executives to rethink their hiring decisions.

In a survey of more than 500 executives in October, three-quarters of respondents from a wide range of industries and business sectors across the U.S. workforce said the outcome of the elections will affect their company’s future hiring decisions. Nearly a quarter said the results will have a significant impact on hiring.

{mosads}It’s not all that surprising given the uncertainty around what the fallout might be in the current political climate if, as media polls are projecting, the Democrats gain a majority in the House of Representatives while the Republicans maintain control of the Senate.

Until the political climate settles down, some business leaders may take a wait-and-see approach. Hiring could be expanded if business leaders see economic conditions that favor continued growth. Conversely, anything that significantly changes the economic trend could make them hold off on hiring or reduce hiring plans. 

Conventional wisdom holds that, at least in the short term, there could be some ramifications from a split Congress on how business leaders judge the political climate and the impact on the economy.

Strategic leaders anticipate the need to make slight adjustments, correct course or pivot in their corporate or public affairs strategies. Changes in Congress, including the change of oversight committee chairmanships, may play a critical role for certain highly regulated industries, for example. 

But the fact is business fundamentals — not politics — drive decisions such as hiring, as evidenced by the latest jobs report, showing a stronger-than-expected increase in payrolls, adding 250,000 jobs in October.

Indeed, longer-term decisions such as whether to invest in a new plant, make significant capital expenditures or undergo significant changes involving hiring or layoffs aren’t affected by political rhetoric — even if the results of the midterm election is a split congress.

The seasoned CEOs and board members I speak to understand that you can’t make a long-term business decision based on a short-term political reality. No matter the outcome of midterm elections, another election cycle is just around the corner, and the country will go through it again — like it always does.

What has changed is both the duration of the election cycle — the new normal is an almost continuous election season — and the more extreme political polarization and high visibility in the 24/7 news cycle. The result is an uncomfortable mix of politics and business in the workplace.

The survey found politics overall is a more contentious topic, with 60 percent of executives surveyed saying political conversations have created a more divisive workplace in recent years and 50 percent saying they are not comfortable with politics being discussed while people are on the job.

But what of top executives themselves? Surely, leaders of the country’s biggest organizations have their own political opinions. Never have I heard them allow their personal political leanings to influence their business decisions, whether in a midterm election or a presidential year. Political opinion is always secondary to their business interests.

Let’s face it, top executives have witnessed plenty of political turmoil over the years, whether it be via congressional hearings, regulatory debates, fights over health-care reform, tax policy changes or, more recently, who sits on the Supreme Court. Add in stock market volatility, and it’s a challenging new normal to say the least.

But having navigated these storms before, top CEOs are well equipped to get through this period of uncertainty and proceed with business as usual. In the short-term, however, the politics have heated things up.

No matter which party wins or loses Tuesday, the certainty of the results is better than the negative campaign banter.

As one CEO told me recently, midterm election time can’t end soon enough. It’s not just about getting clarity around which way the political winds are blowing, the executive explained. The bigger benefit will come from getting a break from the polarization created by intense political campaigning.

The CEO wasn’t alone. In the survey, more than 9 out of 10 executives said they will be happy when the midterm elections are over.

Then they can focus on what matters most: running their businesses and making hiring decisions for the long term.

Nels Olson is vice chairman and co-leader of the Board & CEO Services Practice at Korn Ferry International, a global organizational consulting firm. Previously, Olson served under George H.W. Bush, identifying and recommending candidates for senior political positions in cabinet agencies.