The answer may not lie in Romney’s record as Massachusetts governor, in his much-discussed years running the private-equity firm Bain Capital or even in his someday-to-be-revealed tax returns. To uncover the authentic Romney, the richest clues may be found in the years he spent at corporate consulting firms straight out of Harvard’s business and lawschools.
This was Romney in his late 20s and early 30s, working for the Boston Consulting Group and Bain & Co., when he became fluent in the language and principles of modern business, a cutthroat world where the only way to thrive is to analyze your business model from every possible angle, keep your operations ruthlessly lean and serve one master above all else: the shareholder.
On the campaign trail, Romney has weathered criticism for some supposed gaffes he’s made — “corporations are people” and “I like being able to fire people who provide services to me” are the most prominent. But these are not simply unfortunate slips of an overtired campaigner; they may reveal the real Romney. Far from backing away from them, he’s dug in. “Corporations are collections of people that are trying to have good jobs for themselves and promote the future,” Romney said while campaigning in New Hampshire, five months after uttering the original quote.
Even his insistence on having the leeway to fire people is not a one-time, isolated statement. In his 2010 book “No Apology,” Romney bemoans unions that make it tougher for employers to lay off workers: “Unfortunately, some union CEOs are less concerned about an industry’s competitiveness than they are with how many of their union’s jobs they can protect.”
The comments have been decried as tone-deaf, but they may reflect Romney’s background in the peculiar world of corporate consulting.
A generation of consultants, beginning in the 1960s, turned business into a science. The Boston Consulting Group created “the growth-share matrix,” which helped corporations divide their business units into “stars,” “cash cows,” “question marks” and “dogs.” Meanwhile, Bain pioneered a rigorous way of comparing a client’s methods with those of its competitors; the firm went so far as to send Freedom of Information Act requests to the government to learn about its clients’ rivals, according to the book “The Lords of Strategy: The Secret Intellectual History of the New Corporate World” by former Fortune magazine managing editor Walter Kiechel.
For these consultants, there was no business problem that couldn’t be solved through empiricism and smarts.
The methods of Bain & Co. led directly to Bain Capital, which Romney helped start with two other Bain partners in 1984. Bain’s leaders thought that instead of being paid fees to fix companies, the firm could make even more money investing in companies, improving them — and then cashing out. Bain Capital’s methods would forever change the private-equity industry. These firms routinely act more like consultants now, developing expertise in certain industries and getting into the guts of a company’s operations.
The nagging problem with the consulting worldview, however, is that it easily loses sight of the human costs of business efficiency. Corporate consultants — now part of a $366 billionglobal industry — may have revolutionized the way people think about companies. But they’ve rarely been asked to assess how a company fits into society, what its purpose is beyond raising returns for shareholders or what happens after an employee is laid off in the name of efficiency.
“I’ve never seen a strategy consultant that was given a project [that asked] how can we create more jobs?” Kiechel said. “I do think that over the course of most of its history, corporate strategy and the people who thought about corporate strategy — like the consultants — they did have rather a blind spot to the human dimension of what their ideas and analysis would entail.”
Of course, it can be argued that the role of a business consultant is to make a company more efficient and more profitable, whatever the human costs. The role of an American president, however, is often to soften precisely those human losses. As a presidential candidate, Romney has translated his business experience into an economic policy focused on helping companies make more money. His plan largely calls for loosening regulations and lowering corporate taxes. The unspoken assumption is that helping American companies will also help the American people — another way of saying that corporations are people.
Romney says he helped create more than 100,000 jobs at companies that received investments from Bain Capital, including new jobs that were added at the firms after he left the private-equity world. The central argument of his candidacy is that his private-sector experience qualifies him to be president at a time of high unemployment.
“I think if people want to have someone who understands how the economy works, having worked in the real economy, then I’m the guy that can best post up against Barack Obama,” he said at a debate Mondayin South Carolina.
But there have been signs in recent years that some of the ties between corporate America and the rest of the country have weakened. Major U.S. multinational firms — think marquee names such as General Electric and Intel — have become hugely profitable as they’ve expanded overseas. Yet that success has not necessarily resulted in more jobs in this country. As a whole, U.S. multinational firms reduced their workforce here by 2.9 million between 1999 and 2009, according to Commerce Department data. Meanwhile, they added 2.4 million workers overseas.
It has also been hard to miss that since the financial crisis, corporate profits have largely rebounded, but unemployment remains stuck far above pre-recession levels. Wages have been stagnant for working-class Americans, and inequality has grown.
Romney has certainly noted that as companies chase growth, there can be personal costs. In “No Apology,” he writes that as a lay pastor in the Mormon Church, he counseled families that were hit by job losses.
“Marriages faltered, faith dwindled, illnesses appeared, countenances changed,” Romney writes of the people he helped in the Boston area through his church. “Ever since these experiences, unemployment is not merely a statistic to me.”
He adds: “Given the beneficial effects for the economy, for the nation and for the average citizen, we should not restrict trade or burden productivity. But as a nation we must do everything we can imagine to help the affected people transition to new and more productive employment.”
Romney spent his private-sector career fixated on the productivity question. The test of his campaign may be whether he can convince voters in a struggling economy that he’s the best candidate to handle the people question, too.
Jia Lynn Yang is a business reporter for The Washington Post.