With Wall Street and Washington essentially frozen, companies that refuse to follow suit will be poised for success into the new year

By Liz Sidoti and Mike Hotra

If there’s any question that business and politics are intertwined, look no further than what’s essentially a freeze both on Wall Street and in Washington.

After a strong start to the year, companies have paused on big decisions, with CEOs who crave certainty hemmed in by higher-than-comfortable inflation and mixed signals about the economy. Mergers and acquisitions have slowed, and many leaders are treading carefully, if at treading at all, on IPOs. The threat of government scrutiny of deals and stricter regulations on industry has chilled the market. Meanwhile, the Fed continues to punt on cutting interest rates. If it’s going to act, it must soon. The later it gets in the year, the more the Fed will open itself up to criticism that it’s trying to influence the election outcome by boosting the economy.  The strength of the economy is a big factor in the outcome of White House races, especially close ones, and a strong economy usually benefits the incumbent president.

In the nation’s capital, as usual during an election year, legislating is grinding to a halt. Now that the bipartisan aid package for overseas conflicts has been passed, the closely contested race for the White House and for control of Congress has stopped any real action on anything else. And while the Biden administration is rushing out a range of proposed regulations reining in companies across nearly every sector, finalizing them is a very long, unpredictable process that is subject to both legal challenges and reversal should Trump be elected. On Capitol Hill, neither Republicans nor Democrats are shy about introducing dead-on-arrival bills or highlighting policy positions. Both sides are trying to curry favor with different voting groups, but neither is actually not doing much.

Uncertainty over the outcome of the elections – in an unprecedented year – is hovering over everything. And while the paralysis in both spheres is temporary, a wait-and-see approach is inadvisable, and companies that sit idly by miss an opportunity to take advantage of the election outcomes in the White House and on Capitol Hill.

Instead, here are five things companies need to do now.

1) Separate Rhetoric from Reality. Sort through the noise to understand what’s simply election-year posturing, and what is a real threat to the business – and rely on experts who can help.

2) Zero In on Top Priorities. Determine the top five policy issues that affect the business and plan for a range of scenarios – one-party rule of the White House and Congress or divided government – and what that means.

3) Start Mapping Key Stakeholders. Personnel in the White House and on Capitol Hill will drive policy, and it’s important to figure out now who will have the ears of the next elected, as part of a broader effort to understand the strength of key stakeholder relationships in general.

4) Identify Third-Party Allies. Create and fortify relationships with interest groups and others aligned on those priority policy issues, even if some allies would be considered “strange bedfellows” in normal times, because often there is strength in numbers.

5) Brace for an Unusual Election Outcome. It could be litigated for months after November. The result also may feel illegitimate to a certain part of the workforce, so determine now the role the company should play in supporting employees who feel disaffected and are passionate about their views.

Above all, executives should focus on executing their business plans as much as possible, without letting the drama playing out on the campaign trail, on Capitol Hill, in the White House, or, astonishingly, in a New York City courtroom, distract from key objectives. In the end, companies that act prudently now – over the ones that freeze along with Wall Street and Washington – will be poised for more success this year, in 2025 and beyond.