Business Executives in Government

Business leaders have served in government since the founding, but the practice grew during the world wars, when hundreds of executives worked for a token salary as dollar-a-year men to run war production. Since then Presidents of both parties have named chief executives to the Cabinet, including Charles Wilson of General Motors and Robert McNamara of Ford at Defense, Paul O'Neill of Alcoa and Henry Paulson of Goldman Sachs at Treasury, and Rex Tillerson of ExxonMobil at State, and several Presidents and many governors have come from business.

Former executives bring experience running large organizations, managing budgets, and negotiating deals, and they often push for clearer goals and better technology. But government differs in ways that frustrate many of them: leaders cannot pick their own board, budget, or mission, since Congress sets all three, cannot easily hire, fire, or pay as they choose because of civil service rules, must follow open records, ethics, and contracting laws, serve many groups rather than shareholders, and face intense public and press scrutiny. Senate-confirmed officials often serve only two or three years.

Results have been mixed. McNamara brought data-driven management to the Pentagon but became identified with the Vietnam War, O'Neill was pushed out within two years after clashing with the White House, and Tillerson was fired after about 14 months. Others, such as Paulson during the 2008 financial crisis, used their market knowledge effectively. Executives entering government must sell or divest conflicting stock, which can cost them, and the Office of Government Ethics reviews their holdings. Scholars of public management say the most successful learn to build coalitions with Congress, career staff, and the public rather than act like a CEO with command authority.