The art of building consensus, the Janet Yellen way

When you talk, Yellen takes notes.
When you talk, Yellen takes notes.
Image: Reuters/Jonathan Ernst
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After his election, US president-elect Joe Biden promised his pick for treasury secretary would be well-received by Democrats of all stripes. This week, he delivered with the nomination of Federal Reserve chair Janet Yellen, which won plaudits from a wide range of policymakers, from progressive senator Elizabeth Warren to Gary Cohn, Donald Trump’s former top economic advisor.

No surprise there: Yellen has built a reputation as a unifying force. As head of the Fed, the Financial Times explains, she brought “an unruly body of outspoken central bankers into a smooth exit from the ultra-easy monetary policy of the crisis years.” The political landscape she’ll navigate in her new role will be similarly contentious, but analysts are already voicing hopes that she’ll bridge the rift between the Fed and the Treasury over how best to manage the economic crisis. “Instead of a dissonance and the break we’ve seen recently between Treasury and the Fed, this is a unified front,” Diane Swok, chief economist at accounting firm Grant Thornton told Bloomberg.

There’s a lot that managers can learn from Yellen’s methods for building consensus. Among the most important: She seems to be exceptional listener. A 2014 profile of her in the New Yorker contrasts the way she ran the Federal Open Market Committee, the group that determines monetary policy, with the approach of Alan Greenspan, who chaired the Fed from 1987 to 2006:

When Greenspan was chair, he offered a pronouncement at each meeting about where he thought the economy was going. The other members of the F.O.M.C. were encouraged to see him privately if they disagreed with him about something.

Greenspan, in other words, took a decidedly top-down approach to managing the committee. His notoriously imperious manner couldn’t have been more different from Yellen, who sought to make each member of the committee feel heard:

[Yellen] held an F.O.M.C. videoconference three weeks before the first meeting she chaired, to make sure that she knew what everyone thought. She opened the meeting, in March, by asking each of the other members to speak in turn, about the state of the economy and about what they thought the Fed should do next. Then she went around the room summarizing what each person had said, demonstrating that she had been listening. The F.O.M.C.’s vote on the pronouncement was eleven to one.

The important thing here isn’t just that Yellen encouraged everyone to have a voice—though research does suggest that giving people a chance to speak makes them more productive, engaged, and have a greater sense of well-being. It’s also that she repeated their points in her own words, thereby assuring them both that she was paying attention and that she understood their arguments.

Another consensus-building tactic that Yellen seems to favor is finding subtle ways to signal to various interest groups that she’s attuned to their priorities. The Financial Times reports that one way she “balanced competing views” at the Fed was by “injecting slivers of language into the Fed’s policy statements to quell the particular concerns of dissenters.”  For leaders who know their decisions will make some contingent of their organizations unhappy, acknowledging their objections out loud is one way to let them know their opinions still count.

Similarly, the New Yorker, parsing how Yellen won the backing of politicians who’d been critical of the big-bank bailouts of the 2008 financial crisis under her predecessor Ben Bernanke, describes Yellen as walking a delicate line: “In her public speeches, Yellen has used the phrase ‘too big to fail,’ but treated it as a concern the Fed knows it must address, rather than as a description of reality.” In private, with Fed critics like Ohio senator Sherrod Brown, “she had used the phrase in a less carefully distanced way.” The New Yorker doesn’t provide more detail about what she said in private, but the implication is that Yellen offered sufficient assurance that she wasn’t under Wall Street’s sway. That was enough to get Brown and other Democratic senators to rally behind Yellen as their choice for the top position at the Fed.

Using the phrase “too big to fail” was no doubt a political tactic on Yellen’s part—but not necessarily an insincere one. Her career is proof of just how much leaders can get done when they stop pushing their views on others, and start communicating instead.