Election 2020

Post-election policy outlook: With change in the White House, what’s changing for US companies?

As 2020 came to a close, vaccine rollouts and a $2.4-trillion legislative package to fund the government, featuring roughly $900 billion in COVID-19 economic relief, offered hopes of turning the corner. In the new legislative year, Democrat Joe Biden will seek to mount an aggressive federal response to the pandemic while working with the 117th Congress to steer the economic recovery.

PwC’s Pulse surveys are tracking senior executives’ perspectives on US policy trends through the transition to a new administration. In the days following the November general election, after the news media had called the election for Biden, 40% of respondents were more upbeat about business prospects in 2021 than they were before the election, pinning hopes on organic growth as well as acquisitions.

On the mind of US executives: Pulse survey results for November 9-13

A resurgent pandemic is chief among concerns. More than half of business leaders surveyed (54%) say shutdowns caused by a new wave of infections is their top concern, while one in four (26%) raise concern over the nation’s capacity to distribute safe and effective vaccines to large numbers of people. The pandemic’s continued fallout on the broader economy and business operations are also top-of-mind concerns. More than 40% are worried about financial impacts, e.g., on liquidity and capital resources, as well as impacts of the pandemic-induced downturn. And 31% are concerned about how overall uncertainty is impacting the workforce.

With companies continuing to adapt to a changing environment, business leaders told us about their immediate focus and priorities under a Biden administration:

• Additional fiscal policy support for the US economic recovery. Over half of executives (55%) say further economic federal relief or stimulus is “very important” for their business. Another 31% say it is marginally important.
  
• Taking a stepped up role to help bridge the social divisions exposed by the election. The workforce is at the center of this agenda. For example, close to half (47%) plan to create ways for employees to discuss difficult social issues.
• Preparing for heightened policy, regulatory and compliance risks. Biden is likely to use a combination of executive authority and agency rulemaking to advance parts of his agenda, given the close divide in the Senate.
  
• Enhancing their company’s capacity to innovate, collaborate and pivot quickly when hit by the next disruption. As COVID-19 mainstreams digital transformation, success will now come down to execution.
  

Policy risks will be more pressing in the next four years compared to the last four

As Biden widened his lead amid legal challenges to the outcome in several states, respondents weighed in on policy issues arising from the political shift. Here’s what they told us:

• 64% of corporate leaders say that policy and regulatory realignments will become a more pressing risk over the next four years. With business expecting Biden to roll back President Trump-era deregulations, compliance as well as environment-related risks have also become more pressing concerns. To compare, perceptions of other business risks such as skills shortages, cybersecurity, workplace safety and third-party disruptions remain unchanged after the election for around half of business leaders.

Actions to consider

Scenario plans and modeling should consider how uncertainties will play out over multiple pathways.

• From a domestic policy lens: With Republicans gaining ground in the House and control of the Senate dependent on the results of two Georgia runoffs in January, assess what can get done legislatively and alternatively, where might a Biden administration proceed through executive orders and agency rulemaking. For example, Biden could use executive authority on environmental rules to move the US faster toward his goal of net-zero emissions by 2050. Agency rulemaking can be opaque for businesses more used to tracking legislative processes. Companies should closely watch agency appointees for signals on policy shifts, as well as state policy. With compliance-related risk expected to become more pressing, companies can consider preparing for a potential increased focus on audits and compliance to address pandemic-related revenue effects, especially with the defeat of some state tax increase referendums.
• From a global policy lens: Trade, privacy, international digital tax and climate change are all global issues executives are weighing as they navigate the risk environment. Given Biden’s multilateral orientation, the new administration is likely to seek cooperation with allies in Europe and Asia on framing common approaches and standards in these areas. But trade and competition issues with China will likely continue to be addressed bilaterally. President Trump is continuing to issue executive orders during the transition period to further restrict doing business with China. As being seen as soft on China is fraught with political risk, a more restrictive trade environment may just endure as Trump’s legacy.
  

Companies are taking action to support their workforce, even in the absence of federal relief

US executives are more concerned about the current environment’s impact on employees than on consumers. Thirty-one percent say they are worried about the effects on the workforce, more than twice the proportion that are worried about consumer issues such as decrease in consumer confidence (14%) and lack of demand (12%).

Companies are implementing concrete plans, whether or not another federal stimulus is in the offing, to support people through this public health crisis and heightened societal tensions. Nearly three-quarters (72%) of companies are increasing mental health support for the workforce, and 59% are extending new benefits, such as reduced hours and extended leave of absence. Childcare (48%) and private transportation (41%) are also part of this mix, along with benefits like COVID-19 testing and greater workplace flexibility. These well-being initiatives are rolling out alongside efforts to upskill the workforce, cited by 52% of respondents, during this period of accelerated automation and remote working.

The pandemic and social unrest had already intensified companies’ focus on the well-being of their employees. Many are now also paying close attention to the impact on the workforce of the divides underscored by the election. Around half of business leaders say they are increasing diversity and inclusion training for employees and creating new opportunities for employees to have conversations about difficult social issues. A third are making a conscious effort to nurture traits like empathy and humility in organizational culture and taking a public stance on societal issues.

Actions to consider

• Inclusive leadership: As the Business Roundtable signaled in its statement on the Biden-Harris win, companies have an immediate role in rebuilding a more civil society. In recent months, businesses have ramped up their diversity, equity and inclusion (DEI) initiatives. But assembling diverse teams is not enough; bringing people together and leading with traits like empathy, tolerance and humility can make a measurable difference in performance. A common purpose and set of values can bridge divides created by political differences.
• Develop a broad set of long-term benefits: The benefits companies rolled out quickly during the pandemic outbreak may be here to stay for the foreseeable future, given the unpredictable trajectory of the pandemic and vaccine distribution. Different segments of the workforce are working under different constraints, making it necessary to design a broad-based set of benefits from hazard pay to childcare support. The new administration’s heightened focus on workplace safety, which may be reflected in revamped Occupational Safety and Health Administration (OSHA) standards, will also propel businesses to take steps to improve workforce safety and health.
  

Ability to execute has become the differentiator in digital transformation

Since we started this Pulse survey series at the start of the pandemic shutdowns in March, executives have consistently told us that continuing to invest in technology is the smartest way forward. In June, 56% of CFOs said that technology investments will make their businesses better in the long run. In this poll, 76% of business leaders said they will be allocating more resources to digital transformation, and 72% are planning increases in cyber risk management in 2021.

Data analytics, automation, cloud, customer experience, and product and service transformation are the top areas for digital investments identified by executives last month. Now it’s clear that companies are applying these technologies in new and emerging areas, from charting their paths back to the office with enhanced tools for remote collaboration and expanding the digital customer experience to gathering and processing data for new forms of reporting, like environmental, social and governance (ESG) reporting. Almost a third of CFOs, for example, plan to include ESG disclosures in their next annual report.

Actions to consider

• Redefine how people work to execute digital transformation: How teams innovate and collaborate has become a more pressing question with the pandemic transforming our ways of working. Companies that broke down silos during the pandemic with new collaboration tools and workforce models should consider how to retain the hard-won agility during the transition back to the workplace and in the post-pandemic economy.