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Boardroom lessons for Biden and Congress

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Boardroom lessons for Biden and Congress

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President Biden speaks about his administration’s response to Covid-19 in Washington, January 13.


Oliver Contreras/Press Pool

If America was a business, investors and regulators would view its corporate governance as a mess. CEO Joe Biden doesn’t seem to agree with the board – Congress – on strategy, priorities, budget or just about anything else. Some directors go rogue, ignoring board meetings and the normal chain of command.

Worse, these governance issues cripple USA Inc. when it can least afford it. China and Russia are challenging the global leadership of America and its allies. The Covid-19 pandemic is a major health and economic sinkhole, and the fiscal outlook is bleak.

The United States is not a business and its problems are more complicated than those faced by even a large multinational. But Mr. Biden and Congress can use the lessons from the boardroom to rebuild their relationship, agree an agenda, and come up with policies that people agree are both necessary and reasonable:

Be more transparent. It’s not just about telling people things. It’s about being clear where you’re going, what your priorities are, and then sticking to them. On Covid, Mr Biden articulated an ever-changing list of priorities and struggled to meet many of them, such as providing consistent guidance on reopening schools and making testing widely available. Promising speeches and snap decisions can win the news cycle, but they tend to surprise stakeholders and frustrate voters.

Governance takes two. If a director opposed the CEO without coming up with something better, he would be ignored. In Washington, the Republicans do not seem interested in negotiating. When I headed the Securities and Exchange Commission, my goal was to persuade Republican-appointed board members to follow my initiatives. Their adherence has led to more sustainable regulatory actions. Republicans, you can oppose, but if you have an opportunity to shape politics, take it.

Increase accountability. Some of the best directors are specialists. They may know a lot about transactions, or audit and compliance, or succession planning. Either way, they are appreciated and the other administrators defer to them on their area of ​​expertise. Congressional committee chairmen once enjoyed such respect. Not anymore. Term limits and the loot system ended the seniority-based system. The real governance and negotiation skills are not present when deals need to be made. Both parties need their best legislative experts in charge of the main committees.

Set a budget. Say what you will about the occasional financial shenanigans of US corporations, they are the exception, not the rule. No company could afford – or would be allowed – to manage itself for years without a functional, sensible and constraining budget. In Washington, it’s business as usual. The problem is not only the absence of a balanced budget, it is the absence of any budget.

Execution matters. Rarely does a business strategy go up or down based on how good it sounds when launched. Mr. Biden and Congress, along with Republicans and Democrats, need to spend more time delivering on past promises instead of doing more. Politicians, like business leaders, earn trust by doing what they’re supposed to do, whether it’s clearing highways, getting Covid test kits to pharmacies or keeping Russia out. from Ukraine.

I’ve seen dozens of companies whose governance was once a mess but have managed to put things right. In each case, investors were the driving force behind change. In USA Inc., voters have the same power as investors. It’s just whether the CEO and the board of directors—Mr. Biden and Congress – realize they need to change course before a boardroom shake-up happens.

Mr. Levitt served as Chairman of the Securities and Exchange Commission from 1993 to 2001.

Wonder Land: The weaponization of “science” started with climate politics and accelerated with Covid-19. Now many think that’s misinformation. Images: AFP/Getty Images Composition: Mark Kelly

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Appeared in the print edition of January 19, 2022.

Boardroom lessons for Biden and Congress

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