Sonnenfeld: Divided Congress Presents Opportunities, Challenges To CEOs

Congress will be divided with Democrats regaining the House

With midterm elections results in and Republicans losing control of the House of Representatives but extending their majority in the Senate, the CEO community will be serving a divided nation that’s represented by a divided Congress.

Jeffrey Sonnenfeld, senior associate dean of leadership studies at the Yale School of Management, sees both opportunities and challenges for CEOs in this new environment. In terms of challenges, he says unlike politicians, CEOs are in the business of harmony. A divided Congress emphasizes an environment of political polarization that hasn’t been seen in quite some time.

“CEOs are going to have to tread a difficult line. How do they reinforce a sense of collaboration to their workforce and in their messages to consumers and in positions they take with investors?” Sonnenfeld says. Moreover, Sonnenfeld says their political voice will be more impactful than ever before, which means they have to be more careful than ever before.

On the opportunities side, the end of a one-party rule means that CEOs and the business community at large have more leverage to push for and enact favorable policies. They can appeal to either the House or the Senate and get better footing on an issue, rather than having to work with just one dominating party. Plus, if a CEO thinks regulatory agencies and the Trump administration are being unfair or acting against their company’s best interests, they can use the House as a check, Sonnenfeld says.

In looking at the results, Sonnenfeld sees issues that might embolden business leaders to speak publicly. In particular, the election emphasized the importance of healthcare and the protection of pre-existing conditions. “Even though the healthcare business community is divided… the nation has more unanimity when it comes to [healthcare issues]. We saw of lot of [districts] flip [because of that issue],” Sonnenfeld says. According to a recent poll, healthcare was named the number one issue for the midterm elections.

Two other important issues—immigration and infrastructure—are areas where CEOs tend to be more unified and may speak up on after the election. On immigration, which divides the public, this is an area where business leaders will have to navigate a fine line when making comments. On the trade front, CEOs who feel the dispute with China is hurting their business may feel emboldened to speak up with Congress now being split and Republicans in impacted agricultural districts feeling the heat from their constituents.

The divided Congress also means the Trump administration will likely face a rockier path toward implementing its agenda than it has over the past two years. Business-friendly legislation such as last year’s big corporate tax cuts faced little opposition in the Republican-controlled House, but that will change in 2019.

Lastly, Sonnenfeld expects the rumors for the 2020 presidential race to begin soon—“I think [former Starbucks CEO] Howard Schultz and [former vice president] Joe Biden are getting their running shoes on.”

Read more: Conscious Capitalism: Redefining What Makes A ‘Good Business’