Chief Executive Governor

Why CEOs make good political leaders—and why they don’t.

Dennis Grilli wasn’t shocked that the vote went down or that it went down hard. But Grilli, executive director of the state’s largest municipal employees union, was surprised that even those who would have benefited from it rejected the four-year contract on which Governor Don Carcieri attempted to balance the state budget.

Council 94, the American Federation of State, County & Municipal Employees, overwhelmingly rejected a proposal in July that would have awarded raises in the last three years of the contract while steadily increasing healthcare premiums. In casting the vote 2,870 to 196, state employees also raised a collective middle finger to their boss.

“Many told me: You can’t trust the guy,” says Grilli. The three-year-old memory of Carcieri’s attempt to force Council 94—mid-contract—to pay higher health insurer co-pays was still fresh. “Even when we come to an agreement, he tries to change it. Because of the ongoing situation of adversity, they decided to vote it down. And they expressed themselves—as only union people can.”

Six years ago, Donald Carcieri was an unknown retired corporate executive from East Greenwich when he snatched the governor’s office from seasoned politician Myrth York with a promise to apply his business acumen. Union hardball is certainly a well-worn page from the management playbook. But with a yawning deficit, one of the highest unemployment rates and one of the weakest economies in the nation, is this any way to run a business?

That governments should operate with the market’s efficiency is a popular sentiment. And, occasionally, voters have embraced the image of the CEO busting through the swinging doors of the General Assembly, forcing fiscal discipline on an unruly state. New Jersey Governor Jon Corzine, New York Mayor Michael Bloomberg, former Massachusetts Governor Mitt Romney and former Governor Bruce Sundlun have made the transition with varying degrees of success.   

But, for all that, the comparison of politics to business is tortured, says Judith E. Glaser, an executive coach and author of The DNA of Leadership.

“People do make the mistake of equating them, but the two are completely different. It isn’t even apples to oranges. It’s apples to pizza,” she says. “They both involve decision-making and planning at the global level. But a company is a self-contained system and the CEO has the right to make decisions that don’t involve everybody. Politics is all about influencing people with different points of views and getting consensus.”
Warwick Mayor Scott Avedisian, a Republican, praises Carcieri for framing the issues—the state budget, illegal immigration, pension reform —on his own terms.

“In respects I think the Carcieri administration has been successful because they stay on message. They’ve chosen a few key points and they continue to hit those points. And they’ve created a unified target in union and budget issues. But it’s hard to be successful when no one in the legislature is with you.”

Edward M. Mazze, a University of Rhode Island business professor and a Republican, says that the polarization has spread beyond the statehouse.

“In the first term, he came out doing all of these good things. He tried to take what he had picked up in business and apply it to politics, and was beginning to get some support,” says Mazze. “But as time went on, the communication channels between the executive, legislative and judicial branch were completely broken down, which led to lots of distrust from one to the other.”

And some of Carcieri’s venues for reaching the public—talk radio, Fox News programs such as “The O’Reilly Factor,” CNN’s Lou Dobbs—broadcasts with a decidedly conservative bent—have merely provided the governor with an echo chamber on controversial issues.

“Most of his problem is that he uses the bully pulpit in a very distorted way,” says Maureen Moakley, a political science professor from URI and regular commentator on the state’s National Public Radio station,

WRNI. “In a small state, it’s a pretty effective tool for a constitutionally weak executive. But he hasn’t used the bully pulpit well. On occasion, he can be very decisive. But he doesn’t use the position to communicate with people. He’s used it to preach to the choir, but he hasn’t used it to bring other people in.”

With six years of governance under his belt, Carcieri has bumped up against other stark differences between the worlds of business and politics.

“In business, whether it’s a for-profit or nonprofit, there is only one focus: to make the bottom line,” the governor says. “And smart businesses incentivize all their employees to achieve the goal. In government, you have many, many public policy dimensions. There’s no single focus and there is no competitive pressure, no incentive for government members to perform well.

“The other big difference between the business world and the government is: In the private sector, the cash is real,” Carcieri says. “What incentivizes business at the end of the day is to generate cash so you can pay your people. In the public sector, the money is not real. It’s just a number. If the public sector needs money, they tax us. It’s never a problem.”

But if competition is missing from the execution of public policy, it dominates the formation of it.

“Government is a big bureaucracy and by nature, difficult to change,” says Carcieri. “There are a lot of special interests embedded in the status quo that are going to be resistant to change. I knew intellectually that there would be partisanship, and I never thought of myself as a partisan person, but I was shocked by the degree to which the partisanship takes over.” 

Carcieri’s approval ratings have been a casualty. From a high-water mark of 72 percent in June 2003, Carcieri’s ratings in Brown University polls have steadily dropped. This past February, 40 percent of respondents approved of the governor’s performance—a decrease from 44 percent in September 2007. Meanwhile the number of Rhode Islanders who believe that the state is on the wrong track has risen from 74 percent in February to 78 percent in August. Nonetheless, Carcieri believes he has mastered the transition from business to politics well. The controversies that have dogged his administration are simply the stiff price of challenging the status quo.

“People say to me: ‘Governor, you pick a lot of fights,’” Carcieri says. “The changes are difficult to get done. But I fight because I love this state and it’s worth fighting for.”

Of course, it takes more than love—or a corporate resume—to run a state.