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Feature

John Endean
President
American Business Conference

Thinking about Getting Active in Washington?

Open an office? Hire a lobbyist? Five rules for companies wanting to advance their interests on Capitol Hill.

By John Endean

“How does it feel to live in the new financial and commercial center of the world?” a Wall Street friend of mine recently asked me. He was talking about Washington, D.C.

His joking description of Washington contained some truth. From corporate governance, to compensation policy, to labor relations, to increased financial oversight to that old stand-by, business taxation, the federal government has been wielding a big stick. And, while it is possible to overstate this development, companies would be wise to consider whether they ought to be doing a more effective job communicating their views on the direction of those public policies affecting their future.

The question is: how to go about making that decision? At the very least, companies should keep these five rules in mind:

1. Strategy Before Tactics
No company should invest money or energy in Washington without having specific, identifiable goals for doing so and developing an overall strategy that can get the job done. It’s easy to think “maybe we should have a PAC,” or “maybe we need representation,” without thinking through why, exactly, that’s the case. Before committing to anything, make sure you need to. Unless your company is highly regulated and has no choice about being in Washington, assume the best course is doing nothing until convinced otherwise.

2. Hire the Right Person
Companies with government affairs offices typically hire people from the Hill or a relevant regulatory agency to run them. Very few of these people dream of a corner office at headquarters, and that disinterest in advancing within the company can be a problem. It makes sense to assign bright executives within the company to head the D.C. office, similar to the way many companies tap their best and brightest for overseas assignments. A tour of duty in Washington would endow operating executives with political experience — a desirable skill in this environment — while insuring that the interests of the company are intelligently and fully represented by someone whose career path depends upon it.

3. Have a Consistent Message
What companies tell their employees should be truthful and consistent with what they tell their investors, what they tell the press, what they tell their communities, and what they tell Washington. Being truthful and consistent is toughest in Washington where people are uncomfortable challenging the conventional wisdom and where a hyperpartisan atmosphere puts tremendous pressure on companies to “go along” with the particular imperatives of the party in power. It’s always best for companies to stick with competitive and economic reality and leave the spin to the spin doctors. Few companies do, unfortunately, in part because of who represents them (see rule 2).

4. ‘The Magnificent Seven’ v. ‘High Noon’
Whenever possible (and it isn’t always), companies should advance their interests in collaboration with others. That may mean joining an association with like-minded firms, putting together temporary coalitions for specific legislative purposes, or, simply, signing joint comment letters to the SEC or other regulatory agencies. Gary Cooper survived his high noon, but companies rarely carry the day going it alone. Let the group make the argument and keep the solitary policy gun fighting to a minimum.

5. Is This Trip Still Necessary?
A company that commits to a presence in Washington, whether by opening a new office, signing a consulting contract with a lobbyist, or merely establishing a political action committee, should plan on reevaluating the utility of that decision periodically. This latter point is as difficult as it is crucial since there is no objective metric — such as profit and loss — to measure progress in Washington. And because such a metric does not exist and because it is easy to be seduced by Potomac fever, the CEO and perhaps the board should cast a cold eye on proposals to continue or broaden a firm’s presence in Washington. As the political philosopher Kenny Rogers observed in another context, when it comes to Washington, sometimes you hold, sometimes you fold, and it is the smart company that knows the difference and acts on it.

John Endean is president of the American Business Conference, a coalition of CEOs of midsized American companies founded by Arthur Levitt Jr. in 1981. He can be contacted at jendean@americanbusinessconference.org.