Opinion: Why Would Any Self-Respecting CEO Want to Be President?

Many believe our system of government is dysfunctional. CEOs are convinced of it. Any leader who has been called to Washington to testify before a Congressional committee or appear before a regulatory inquiry would rather have their back teeth extracted without anesthesia. And what about the presidential contenders in this election year?

Sixty percent of Gallup poll respondents are unhappy with the two choices that have been presented to them. No doubt business leaders agree. Most think that there is a disconnect between presidents and the government and this is true even when the same political party runs both the presidency and Congress. But how can this be so?

Elaine C. Kamarck, a Senior Fellow in the Governance Studies program, as well as the Director of the Center for Effective Public Management at the Brookings Institution, has just published “Why Presidents Fail And How They Can Succeed Again,” where she details exactly where government has gone off the rails. Kamarck argues that presidents today spend too much time talking and not enough time governing, and that they have allowed themselves to become more and more distant from the federal bureaucracy that is supposed to implement policy. After decades of “imperial” and “rhetorical” presidencies, she argues that we are in need of a “managerial” president. This White House insider and former Harvard academic explains the difficulties of governing in our modern political landscape.

For example, it’s no secret that secretaries of state have found themselves “out of the loop” and outmaneuvered by the president’s national security advisor. The best known example was Henry Kissinger running policy. This was much to the dismay of Secretary of State William Rogers owing to the fact that Nixon distrusted the State Department bureaucracy. In Roosevelt’s time, the Social Security Act—the most important piece of the New Deal—was run by Treasury Secretary Hans Morgenthau and not Labor Secretary Francis Perkins who was its architect. Health and Human Services Secretary Donna Shalala was given a back seat in two of the most important policy initiatives of the Clinton White House. She had to cede health care reform to Hillary Clinton and welfare reform to Domestic Policy Council aide Bruce Reed.

“More important from a management standpoint is the vast potential for distortion as the wishes of the president are passed along an extended chain of command.”

But the disconnect at the cabinet level is the least of it. Over the years, the size of the policy staff has grown and proliferated. Kamarck recalls scholar Stephen Hess warning as early as 1976  that, “the risks of imposing a large staff between the president and the departments are greater than in other types of large organizations…More important from a management standpoint is the vast potential for distortion as the wishes of the president are passed along an extended chain of command.”

Government has become an enormous and complex enterprise. Kamarck observes that at over $3 trillion in 2014 it is slightly larger than the combined revenues of 16 of the largest companies in the Fortune 500—Walmart through AmerisourceBergen. In terms of employment, Kamarck compares the federal government’s 4.2 million workers (including military personnel) to the total employment of the six largest U.S. companies: Walmart (2.2 million), McDonalds (420,000), IBM (412,775), Kroger (400,000), Home Depot (371,000), and Target (347,000), according to figures for 2014.

Even Peter Drucker would have argued that the span of control here is out of control.

During the Republican presidential primaries, two former CEOs—Donald Trump and Carly Fiorina of Hewlett-Packard argued over their business careers and whether it bestowed on them  special understanding of managing complex government. But comparing the size of government with organizations in the private sector is misleading. Kamarck argues that the two are fundamentally different.

  • The president manages a workforce divided into two classes of employees: career and political. Each has different time frames and different outlooks.
  • Budget rules impede managerial flexibility to a degree that would be unheard of in private business. (Wonder why Jack Welch repeatedly declined calls for him to run for public office?)
  • Finally, the president’s workforce does not, in fact, work just for the president. While career civil servants are part of the executive branch, they are, in many cases, more concerned with what Congress expects of them. Any way you slice it, Federal agencies have multiple boards of directors, something private sector CEOs wouldn’t stand for.

“If anything, “writes Kamarck,” the differences that exist between the two classes of employees have gotten worse as the government has gotten bigger and more complicated and as the political system has gotten more polarized and hostile.”  The bigger problem is that political appointees do not stay around very long. Between 1960 and 1972, 59% of all cabinet secretaries stayed on the job about two years. But at the level of undersecretaries and assistant secretaries—the grunts who are responsible for most of the heavy lifting when it comes to the implementation of policy—fewer than half stayed on the job more than two years.

By contrast, career employees are around for much longer spans of time. Senior civil servants can be around as long as 30 years. They know where the bodies are buried, as they have served under numerous presidents. If they don’t want to do what the president tells them, they can simply wait him out. Plus, civil servants outnumber the president’s appointees by about 1,000 to 1, and the president can’t get rid of them because their jobs are protected.

Donald Trump would be disappointed to learn that his command, “You’re fired,” would apply to very few employees. President Johnson exploded when told that some bureaucrat at Health Education and Welfare had “nipped a Great Society program in the bud.” When told by an aid that the president ought to “fire the S.O.B.,” Johnson roared back: “Fire him, I can’t even find him!”

“A director of the National Weather Service was punished for transferring $30 million from the travel budget to the critical forecast budget to avoid layoffs—a decision that would have been rewarded in the private sector.”

There is a second material difference between managing people in the government and the private sector. Federal employees work under a set of rules designed to impede managerial discretion to a degree unthinkable in the private sector. Because of the way Congress writes laws, many agencies find it impossible to transfer money from one part of the budget to another. Congress’s reprogramming guidelines are intended to control executive branch spending. Setting aside the political concerns, this has the practical effect of preventing managers from making sensible financial decisions.  A director of the National Weather Service was punished for transferring $30 million from the travel budget to the critical forecast budget to avoid layoffs—a decision that would have been rewarded in the private sector.

Despite having the trappings of power—a big house, Air Force One, Camp David, and scores of aids and attendees—the president is in charge of a vast entity over which he has limited power.  No doubt this frustration is one reason Barack Obama feels he has to resort to his “phone and his pen” in writing many of his executive orders.  It is unlikely any CEO from IBM’s Lou Gerstner to GE’s Jack Welch would tolerate such a situation.

One might think that some sort of early warning system could be set up to give a president a heads up. The management wing of the Office of Management and Budget was set up in 1970 to do just that, but no one at OMB is charged with systematically looking for management weakness or problems.  The problem is familiar to private company CEOs. When an organization is in trouble, people often lie or manipulate the data. Building dashboards to understand performance in large organizations has not prevented government failures. Used improperly, they can create a false sense of security. Also, to the rest of government, OMB is where budgets are cut. As a result, career officials in other agencies are loathe to share too much information with OMB.

So given the impediments that are built in, can a leader from the private sector have any hope of making a difference in government? McKinsey studied this issue and came up with a cautious yes—provided one follows a regimented prescription.

1. Establish your agenda—an overarching aspiration and a limited set of priorities. Understanding an organization’s context is vital, particularly in government institutions where so much of the staff is nonpolitical and has been there for many years and so many of the external stakeholders (for example, Congress, state and local governments, the press, and voters) have a say in what you do.

2. Start with your vision of where you want to end up. Decide what you are trying to accomplish for the American people and what key themes you want to emphasize before setting your agenda. The transition period is the time to refine the goals set during the campaign and then ruthlessly prioritize those that will define your tenure.

3. Focus on the next three years, not just the first 100 days. From the start, striking a balance between near-term and long-term impact is important. The media will make you feel like your success is determined in a sprint over the first 100 days. Inevitably, you will hear invocations of Franklin Roosevelt’s first 100 days, when he pushed through the legislative agenda that defined the New Deal. You will want to score a few quick wins that signal your priorities and demonstrate your ability to achieve them. As Convergys CEO Andrea Ayers has noted, it is important to stay focused on what matters and for “your early wins [to] tie back to your major goals.”

4. Act boldly. CEOs that make four or more strategic moves in their first two years tend to outperform similar organizations and stay longer than their more hesitant counterparts. Despite the constraints of government, successful leaders must take risks and act as boldly as the operating environment will allow.

“A government leader or CEO’s job is to explain the organization to the world, and to explain the world to the organization.”

5. Communicate, communicate, communicate. Effective CEOs in transition understand their unique strategic role as communicators. To mobilize your organization, you will need to set clear landmarks that will guide its everyday actions. Leonard Schaeffer, who was the founding chairman and CEO of WellPoint, and has diverse public-sector experience at the state and federal levels, emphasizes that “a government leader or CEO’s job is to explain the organization to the world, and to explain the world to the organization.”

6. Build a team that will support and challenge you—and help you deliver. Build a top team with trusted hands and new faces. While new leaders understandably want (and often need) to bring in people they know and trust, many leaders fail because they are too insular and resistant to including outsiders in key decision-making processes.

7. Surround yourself with diversity. Research from McKinsey shows that companies in the top quartile for gender or racial and ethnic diversity are more likely to see superior performance measured by average financial returns.

8. Welcome thoughtful internal critics. In any organization, and particularly in government, there is a natural tendency to rely upon a trusted inner circle. Sometimes this is by necessity, such as with national-security challenges where only those with a need to know can be included. But often the circle of dialogue reflects the emotional and psychological pressures of the senior-level jobs themselves.

9. Make tough decisions on personnel as early as possible. While there may be less flexibility in removing staff from government agencies, cabinet secretaries and agency leaders retain the power to adjust who is tasked with what responsibilities.

10. Recruit ‘doers’ as well as policy experts. There is a temptation in government to hire a team of the best thinkers and policy experts, rather than those focused on internal management or the implementation of policy. Developing policy initiatives is indisputably important—it is why we have elections and where you will undoubtedly spend much of your time. But a good management and operating team is also essential. John L. Thornton, executive chairman of the board at Barrick Gold, emphasizes that “a leader needs to ensure that government gets more ‘doers.’

J.P. Donlon: J.P. Donlon is Editor Emeritus of Chief Executive magazine.
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