Forum

BEHIND DONALD REGAN'S DOWNFALL

Why Businessmen Fail in Government

By JAMES M. KOUZES

James M. Kouzes is director of the Executive Development Center in Santa Clara University's Leavey School of Business.

Blame current turmoil in the White House on Franklin D. Roosevelt. He appointed Louis Brownlow in 1936 to head a committee on management of the executive branch. It was the Brownlow Committee that recommended creating the Executive Office of the President, which would be patterned after the modem corporation.

The President was to be chief executive officer. To ease the growing administrative demands of the presidency, the committee recommended that the President have a few personal assistants in the White House - six to be exact - to watch over the line organizations. But above all else, the Brownlow Committee urged that the President's staff have a "passion for anonymity."

That was more than 50 years ago. Since then, there have been numerous chiefs presiding over a professional staff that has grown to about 100 (over 1,000 if you count secretaries, guards and other support personnel).

It was also long before Donald T. Regan became the first Wall Street chief executive officer to serve as chief of staff and the first to take seriously the notion that the executive branch was just like a corporation. Shortly after Mr. Regan swapped jobs with James A. Baker 3d to become chief of staff, he described his role as "chief executive officer of the White House."

Suddenly -- as if the Brownlow committee had never urged the White House staff to remain anonymous -- Mr. Regan thrust himself Into the job reserved for the President of the United States. Certainly Mr. Regan, who served as chairman of Merrill Lynch & Company for 10 years before joining the Reagan Administration, knew the difference between the chief executive and a staff manager.

How then did it come to pass that the former chief of staff assumed his job was to be the chief executive officer? We can only speculate, but it might be that the experiences and training that Mr. Regan carried from Wall Street to the Treasury Department and then to the White House, taught him to practice the job of senior staff manager quite differently from the men and women that the Brownlow Committee had in mind.

The Government is not a corporation, any more than a corporation is the Government. It we are to restore the White House staff to its proper role, then we must rid ourselves of the notion that running government is like running a corporation.

Although some companies have challenged the traditional view of management, the dominant principle of large corporations is in direct conflict with the dynamics of democratic governance. Businesses are characterized by their focus on management as the rationalizing force, asserting influence and control over the company by using its hierarchical organization. Authority relationships must be clear and explicit, and power flows from top to bottom. Cost efficiency and effectiveness are the measures of success.

Donald Regan had the experience to run this kind of company. But he seemed to lack the experience, skills or predisposition to operate in a very different kind of organization -- a staff office in a democratic government. The cardinal rule in our society holds that the government derives its legitimacy from the consent of the governed.

And the first shortcoming of the Regan staff was its failure to remember that the President of the United States is responsible to numerous, and often competing, constituencies. The duty of the White House staff is to insure that the President considers the legitimate concerns of those who consent to be governed. Elected officials and their staffs are not masters of the people; they are servants.

There is, therefore, no disloyalty involved in expressing opinions that are opposed to the President's. On the contrary, it is essential that those opinions be heard for a democracy to govern effectively. Above all, secrecy, disinformation and autocratic rule have no place in the functioning of a representative democracy.

The Regan staff also failed to realize fully that our system of shared powers depends on negotiation and compromise. It might be possible to run a corporation without involving employees or customers in policy decisions. Naturally, this kind of command-oriented structure makes for a much more efficient decision-making process than do approaches that depend on building a consensus.

But a democratic government, whose success is measured in terms of just and equitable policies, needs give-and-take bargaining to work. Negotiating is a way of life. Those with opposing points of view are not the competition, a group to be defeated. Rather they must be seen as potential collaborators working toward a common goal. Furthermore, successful negotiators know that the process depends on listening to the other side's position rather than on reiterating one's own views.

It follows logically that the White House staff is obligated to inform and involve the duly elected representatives and the President in the process of governing the nation. In this regard, Mr. Regan again failed to make the switch from the world of business to the world of government. All too often he was seen as delivering thunderbolts from the White House, rather than coordinating and facilitating the discussions that form the basis of consensus.

As with all failures, there is much we can learn from this current crisis. The first lesson is that running a government office requires a different view of organization and a unique set of skills.

Those who make a successful transition from private sector to public sector learn to view our Government not as a corporation, but as a political institution, driven by democratic principles. They accept the legitimacy of competing views. They learn how to build consensus and negotiate with those opposing them. They let go of the role of master and cherish the role of civil servant.

Another lesson to be learned from this crisis in the White House, and one that applies equally to business and government, is simply that the foundation of all leadership is credibility. Two colleagues and I have surveyed more than 5,000 public and private managers across the country, with results that are striking in their regularity. Our research shows that admired leaders were almost always described as possessing these four qualities: honesty, competence, the ability to be forward looking and the capacity to inspire.

Taken singularly, this list of leadership attributes may not be altogether surprising. But together, they constitute what communications experts call credibility. Above all else, it seems. we must be able to believe in our leaders.

If credibility is the single most important attribute in effective leaders, it Is also one of the hardest to earn -- and one of the most fragile. Credibility is earned minute by minute, and year by year. If not carefully tended, it can be lost in short order. And when leaders have used up their credibility, they discover that it is nearly impossible to win it back.