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Do CEOs Make Good Politicians?

Well, now we know what all that hefty CEO pay is helping to fund. Meg Whitman, the former CEO of eBay and current Republican candidate for governor in California, has spent $99 million of her own money on her campaign, newly released financial reports show, setting up potentially the most expensive gubernatorial race on record.

Whitman's not the only former CEO plowing her own money into a political campaign this season. Linda McMahon, the former World Wrestling Entertainment CEO, is running a self-financed campaign for senate in Connecticut and has reportedly said she'll spend up to $50 million. Rick Scott, the former CEO of Columbia/HCA, is pouring millions into his campaign for governor in Florida. And of course, Carly Fiorina, the former Hewlett-Packard chief executive, is spending her wealth to become a senator in California.

Whether or not big bucks can buy electoral wins, at least in these races, is a question that will have to wait until November for an answer. But here's one we can consider now. With so many MBAs littering the campaign trail, do CEOs really make good politicians?

Leadership pundits have pondered the idea, contending both that CEOs, with their focus on budgets and broad management expertise, make great governors--but also that the reverse is true. The consensus building needed to govern well is radically different from the more rule-by-fiat role of many CEOs.

Of course, it doesn't take a leadership expert to know that the answer is it depends. The track record is certainly mixed. The presidency of George W. Bush, famously the nation's first MBA president, wins accolades from almost no one. Others, like former Goldman Sachs CEO Jon Corzine, flourished as a Senator from New Jersey, but served just one term as governor of the Garden State, losing his re-election bid. Meanwhile, New York City Mayor Michael Bloomberg has been an unqualified success, applying the hard-charging efficiency he used to build his namesake firm to manage the complexity of governing the country's largest city.

In my mind, what matters most is what the government job demands, and whether the CEO's personality and experience is a match for it. Each job, and each executive, after all, is different. Meg Whitman may have grown eBay from a $4.7 million startup with 30 employees into an $8 billion giant with 15,000 people, but that's dwarfed by the state of California, which is the eighth-largest economy in the world. More importantly, she took over eBay during a period of rapid growth, and is not known as a turnaround specialist. That, unfortunately, is exactly what California direly needs.

In a bit of irony, former Hewlett-Packard CEO Carly Fiorina, who is running for Senate herself in California, put it well during the 2008 campaign. She defended comments she made that Vice Presidential nominee Sarah Palin lacked the experience to run a major corporation by saying that "running a corporation is a different set of things."

Indeed. The incentives are different: corporate CEOs can dangle stock options and bonuses to motivate employees, while government executives can't. The stakeholders are different: no matter what they say, corporate CEOs manage for profits, putting shareholders first, whereas government leaders must answer to many stakeholders simultaneously. And the management styles are different: Successful politicians manage by consensus building, while most CEOs manage by edict. (To be fair, Whitman's management style has been described as exemplifying a kind of leadership that "weaves a texture out of the threads flowing from [her] company's community." Which is a fancy way of saying she involves people in her decision making.)

In the end, it's not as simple as whether the central-casting qualities of a good CEO make for a good politician. What matters is what skills are needed for a particular government leadership job, and what kind of experience a particular CEO has to match it.

By Jena McGregor

 |  August 3, 2010; 11:42 AM ET |  Category:  CEO watch , Government leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Yes, it is the age of information technology business leaders taking some of their self-made fortunes to finance election for public office.

Here in Michigan, Rick Synder, branding himself as the "tough nerd" who worked as an executive at Gateway and is now a venture capitalist, won the Repubican nomination for governor by spending more than $5.8 million of his own money to help finance his campaign.

It is time that those who have lead the digital revolution for decades to now step into political leadership roles as our nation experiences a structual shift into today's global economy.

Posted by: agno1234 | August 6, 2010 12:40 PM

I hope people read all the way to the end of your post. The question is not what you pose in your headline "Do CEOs make good politicians?". It is whether they have the strengths required for the particular leadership challenge they face.

The Gallup strengths definition is helpful: talent + knowledge + skills.

TALENT: Almost by definition, CEOs running for elected office have some leadership talents. They would not have been CEOs without them.

KNOWLEDGE: This is where things get trickier. The knowledge required to run a business is different than the knowledge required to run a state or represent a state. It's not clear how CEOs will, do, can acquire the required knowledge.

SKILLS: This goes to your last point. At least some of the skills needed for government leadership jobs are different than the skills needed for a corporate leadership job - and they are going to vary across the particular leadership jobs.

It will be interesting to see what some of your other readers think about the comparison of particular candidates' strengths vs what is needed in the jobs they are campaigning for.

George Bradt
PrimeGenesis Executive Onboarding

Posted by: GeorgeBradt | August 3, 2010 6:14 PM

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