How Elections Impact Corporate Decision Making

Move Forward or Wait-and-See When Hiring a Fractional Executive

“We believe that investment decisions should be based on longer‑term fundamentals, not near‑term political outcomes.”

T.RowePrice, “How do U.S. elections affect stock market performance?”

In the run-up to U.S. elections, businesses are often confronted with a critical decision: should they move forward with strategic decisions or adopt a "wait-and-see" approach until the political landscape becomes clearer?

And I hear this thinking quite often when discussing the placement of a fractional sales leader. And in some cases, the election is then cited as a reason to not move forward and to stay with the status quo.

Of course, the outcome of an election can significantly influence factors like taxes, regulations, and economic policy, prompting many business leaders to wonder if delaying decisions is a safer bet:

Policy Uncertainty: Elections, particularly presidential ones, create uncertainty about future policy directions. A shift in power can result in dramatic changes in fiscal and regulatory policies that affect industries differently.

Taxation and Economic Policies: Different political parties typically propose contrasting approaches to taxation, which can heavily influence business strategies. If a party advocating for higher corporate taxes wins, it could lead businesses to rethink expansion plans or cost structures. Conversely, if tax cuts are on the horizon, it may open the door for increased investment.

Regulatory Environment: Some industries, like tech and pharmaceuticals, are highly regulated, and election outcomes can determine whether regulations will tighten or relax. A more business-friendly administration might reduce regulatory burdens, making it easier to expand or introduce new products. On the other hand, a more stringent regulatory framework could result in higher costs for compliance.

Market Sentiment and Stability: The stock market and other financial markets are often volatile in the lead-up to and aftermath of elections. Uncertainty regarding the economic direction of the country can lead to fluctuations in market sentiment, causing businesses to become cautious.

And at the same time there are clear reasons why it does not make sense to hold off on business decisions:

Elections Are Cyclical: One of the most compelling reasons not to delay decisions is the cyclical nature of elections. Every two to four years, businesses face the same question of whether to wait until after the elections. Given that these cycles are perpetual, businesses cannot afford to halt growth or innovation every time there’s an election. Industries with longer planning cycles, such as manufacturing or tech development, risk losing competitive advantage if they continually delay decision-making.

Business Continuity: Waiting too long can lead to stagnation. In fast-moving industries, where technological advancement or consumer behavior evolves quickly, delays can put a company at risk of falling behind competitors. If your competitors are continuing to innovate or expand while you wait, your business might lose market share or miss out on lucrative opportunities. Business growth depends on taking calculated risks, and delaying decisions based on political uncertainty may cause missed opportunities for those willing to act swiftly.

Overreaction to Political Outcomes: While election results can bring about changes in policy, many of these changes are not as drastic or immediate as some might fear. For example, tax laws and regulatory changes often take months or even years to be enacted. This lag time provides companies with a window to adjust their strategies accordingly. Making decisions based solely on speculative political outcomes can lead to an overreaction, where businesses unnecessarily put off decisions that could actually be beneficial in the current environment.

External Economic Factors: Politics is just one factor in a larger global economy. Market forces such as supply and demand, international trade, and innovation continue regardless of electoral outcomes. Delaying decisions solely based on an upcoming election overlooks the broader economic landscape, which may present more immediate risks or opportunities. In some cases, the potential loss of momentum from waiting can be more harmful than any negative impact from a change in political administration.

The decision to hold off business decisions until after an election is neither wholly right nor wrong.

Ultimately, successful businesses are those that can navigate uncertainty while balancing short-term gains with long-term strategy. Instead of waiting for elections to dictate decisions, businesses should consider building flexibility into their strategies, allowing them to pivot as needed while still moving forward.

And in the roam of talent acquisition, contracting a fractional executive is the most flexible low risk-high impact decision.

It allows businesses to access seasoned leadership without the long-term commitment or financial burden of a full-time hire. Companies can tap into the expertise of an experienced executive to address immediate challenges, implement strategic initiatives, or lead key departments, all while maintaining flexibility in budgeting and staffing. Since fractional executives are results-driven and focused on delivering measurable outcomes, organizations can quickly assess the value they bring. This approach reduces the risk associated with traditional executive hiring and maximizes the impact on business growth and transformation.

Talk to us about business continuity in an election year with the help of a fractional sales leader.