What Does a CEO Need to Be Thinking About On an Election Year?

By |2019-07-22T15:53:27-05:00Monday, August 1, 2016|Categories: Cost Reduction, Document Output, Electricity, Telecom|

One thing that makes CEOs uneasy more than anything is uncertainty, and this current election cycle is nothing if not uncertain. Anticipated losses can be brutal, but preparing for them in advance can soften the blow. Uncertainty, however, means that there is no clear right or wrong way to act. What constitutes going too far or not going far enough? CEOs must ponder these questions and how to cut costs in a business in anticipation of the unknown.

Naturally, there are no right or clear answers. In fact, the election of a new president and a reshuffling of Congress may not have any clear implications for businesses. For instance, the U.S. does not face nearly the level of uncertainty that the U.K. does, now that the Brexit referendum passed.

Despite these small signs of surety, the current election cycle has been anything but normal, and CEOs wondering how to cut costs in a business and mitigate losses will therefore have a tough time devising a long-game strategy.

2016 Election Economic Factors at Risk

Some may consider the changes implemented after an election a vague prospect. After all, the biggest economic event of the millennium — the 2009 housing crisis — happened just months before an election. No matter if John McCain won, the bipartisan TARP reaction to the crisis would have likely been similar, if not identical.

On the other hand, several key economic issues sit at the top of both candidates’ platforms. Like Bernie Sanders, Hillary Clinton has begun supporting the idea of an increased federal minimum wage. She also advocates keeping the ACA (Obamacare) in place with strategic modifications aimed at improving it. Prospects like these will not cause a sea change overnight, but they definitely could signal increased costs and risk for businesses.

Looking at the other end of the political spectrum, Donald Trump has an air of patent unpredictability, something some pundits claim is a feature, not a bug. One of his few consistent campaign messages is that he strongly opposes the Trans-Pacific Partnership (TPP) trade agreement, as well as NAFTA, because of their complex, sweeping implications. He also strongly favors dismantling much or all of the ACA. Rejecting could have good or bad economic consequences in the long run but contribute to volatility in the here and now.

Trump is also very much in favor of slashing taxes on both corporate revenues and individual incomes, something that many theorize could be healthy for the economy, at least in the short run.

Yet, who knows if these plans come to fruition? The bottom line is that mulling over these issues does little good for CEOs trying to anticipate costs within the next few quarters. Politicians on both sides are notorious for saying things just to get elected, after all. And even if they do follow through on their promises, the results could take months or years to feel their effects.

How CEOs Are Actually Reacting and Deciding How to Cut Costs in a Business

Polls differ in how CEOs are reacting to this uncertainty and discord.

One Duke University/CEO Global Business Outlook poll states that nearly half of CEOs are scaling back both spending and hiring plans. Another, earlier poll states the opposite: that the election results rank fairly far down in a CEO’s list of worries, dwarfed by issues like direct shifts in the economy, interest rate fluctuations and the outlook for their specific industry.

In the latter poll, only 13% of respondents indicated they were holding off on major hiring decisions until after the election. Eighty percent said the election will not affect their capital spending or expansion plans. However, two thirds said that the election was on their radar in some form or fashion.

As for your own decisions, presidential platforms and projections of fiscal changes should never come before the day-to-day expenses, prospects and risk you face. Also, there are ways to cut costs in a business regardless of the political climate.

Let Freedom Profit Recovery help you save no matter whether America turns Red or stays Blue with our cost reduction consultation services.

About FPR

FPR is a privately-held North American-based consulting, technology services and outsourcing company. Through our industry-unique VISIONAnalysis™ process, we have successfully combined unparalleled expertise and comprehensive intelligence to deliver significant value and cost management to our clients. FPR collaborates with its clients to help them achieve high performance.

For more information, please feel free to contact Mr. Brent Newton at FPR at (972) 650-0700.

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