From these early tendrils, the Trump administration has let a thousand CEOs bloom. Among the more prominent private-sector folks in Trump’s Cabinet are: Goldman Sachs exec-turned Treasury Secretary Steve Mnuchin, financial manager-turned-Commerce Secretary Wilbur Ross, and, most notably, former ExxonMobil CEO-turned mythical Secretary of State Rex Tillerson. It was not an exaggeration when Trump’s Cabinet was described as consisting of generals and plutocrats.
Nine months in, looking at Trump’s Cabinet, it is striking at how those with prior government or military service have vastly outperformed the plutocrats. Jim Mattis has received strong reviews for his performance as secretary of defense, as has Nikki Haley as U.S. ambassador to the United Nations. John F. Kelly impressed enough during his stint at Homeland Security to be made the new
Prime Minister White House chief of staff. Jeff Sessions is more controversial, but no one disputes that he has been effective in pursuing his policy objectives at Justice. Slowly but steadily, H.R. McMaster is professionalizing the National Security Council staff.
The contrast with the CEO Cabinet secretaries is pretty stark. Mnuchin is only now getting around to the debt ceiling issue. He embarrassed himself after the Group of 20 summit by saying that President Trump handled Russian president Vladimir Putin “brilliantly” when even Trump himself reversed course. As commerce secretary, Ross has fumbled the steel issue, repeatedly delaying any action, while sounding clueless about Saudi Arabia.
Finally, Tillerson has been a management disaster. He has cut the lowest profile of any secretary of state in 45 years. He has micro-managed the State Department to a standstill. He has rejected congressional funding and closed pipelines to bring in trained diplomats. He has abjectly failed to staff the higher levels of the State Department. Morale at Foggy Bottom has crashed. He has successfully alienated almost every important stakeholder. No wonder fewer people want to become diplomats.
I will confess to minimal private-sector experience, but I am nonetheless pretty confident that neglecting senior hires, rejecting available capital, shutting off avenues to recruit new workers, and killing employee morale are a lousy way to run a railroad.
So yeah, Trump’s private-sector hires have performed abysmally. This does not even get into the dysfunction at the White House, in which the three leading players — Jared Kushner, Steve Bannon and Trump himself — had zero senior government experience prior to January of this year.
Mnuchin, Ross, Tillerson and even Trump had some measure of private sector success in their lives. Why have they proven to be such poor stewards of the public sector?
Maybe — and I’m just spitballing here — but maybe running the public sector well is different from running a for-profit organization.
There are no doubt principles of management that apply equally well to both sectors. But the public sector is different in numerous ways. One way is that it usually focuses on areas of public good provision — in other words, where the private sector has floundered. Also, public agencies require different management techniques because of dynamics such as civil service protections and congressional oversight. Public agencies rarely tackle a problem alone — they need to coordinate with other bureaucracies.
Perhaps the most important distinction is that the private sector is all about identifying and focusing on core competencies. High-performing private firms learn what they do well, learn what they don’t do well, sell the latter and prioritize the former. This is eminently sensible when the goal is profit maximization.
The public sector works differently — it has to be prepared for any contingency or emergency that falls under its purview. By definition, it has to be bloated, because it has to have reservoirs of expertise ready for whatever new crisis emerges. This might not seem ideal of efficient during normal times. It is far better than being short-handed during times of necessity, however.
In a recent interview, Tillerson vented about the difficulties of managing the State Department:
“It’s largely not a highly disciplined organization,” he said in an interview last month while on a flight back from the Middle East, where he tried unsuccessfully to resolve a bitter feud between Qatar and four Arab nations. “Decision-making is fragmented, and sometimes people don’t want to take decisions. Coordination is difficult through the interagency — has been for every administration.”
I have no idea what Tillerson means by “highly disciplined,” but his other complaints are not a bug of how public administration works — they are features. If he has not realized that after six months on the job, he really should do everyone a favor and resign.
The Trump administration has offered several object lessons in how not to govern. One of the most important is that success in the private sector means very little when it comes to managing the public sector.