Hiring Government Leaders LESSONS FROM THE PRIVATE SECTOR GEOFF SMART, MARIA BLAIR, AND JEFF MCLEAN NOVEMBER 2020 AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH Executive Summary electing the individuals to build a president’s our experience working as advisers across five cabinet Scabinet and lead executive agencies is one of the and senior staff selection processes for several sitting biggest challenges facing a newly elected president governors have demonstrated a more robust approach and likely one of the most important sets of deci- to selecting cabinet leaders and senior administration sions the president will make in his or her presidency. staff. The keys to successful selection are figuring out Cabinet structure and candidate selection will set the what you want the person to do on the job, generat- stage for how the president will formulate his or her ing a list of candidates, collecting valid and reliable agenda, implement policies, lead millions of federal data to be able to select a person who has at least a workers, and effectively govern the country. 90 percent chance of performing the role successfully, Our half century of research in industrial and orga- and convincing the person to accept the job offer. We nizational psychology; our over 25 years of professional illustrate how each step can be used in senior govern- practice in assessing tens of thousands of candidates ment hiring and suggest how it can be implemented for hiring, primarily in large private-sector organiza- through straightforward process changes. tions but also large not-for-profit organizations; and 1 Hiring Government Leaders LESSONS FROM THE PRIVATE SECTOR Geoff Smart, Maria Blair, and Jeff McLean electing a senior leadership team is a president’s historical perspective, combine scholarly research Sfirst priority. Making cabinet appointments and and expert practitioner observations in the disparate hiring senior administration staff are regarded as fields of political science and industrial and organiza- among the most important duties of a newly elected tional psychology, propose methodological improve- or reelected presidential administration. The process ments specifically at the “interviewing” step in the of evaluating candidates for executive roles is con- process, and provide illustrative real-life examples of sidered difficult in other sectors. It challenges leaders successful and unsuccessful selection. to predict a candidate’s future behavior accurately, For many reasons, political institutions cannot often in a short amount of time. Senior executive hir- hire like the private sector can. But by adopting ing mistakes outside the highest levels of government some of the best practices from private businesses, occur as often as 50 percent of the time and carry an incoming presidential administration can expect with them an estimated cost of 15 times the person’s streamlined hiring practices for the process of select- annual compensation.1 ing tens of thousands of federal appointees, better When selecting cabinet and senior staff, these performance from senior executive officials, and pressures are compounded by a heightened volume more effective program implementation. Incremen- of selection decisions that are required over a short- tal improvements in hiring efficiency can therefore ened time frame, political forces from Congress and dramatically affect the successful implementation the public, and intense media scrutiny. Not surpris- of presidential policy. Drawing on decades of expe- ingly, the success rate of cabinet selection appears rience in the private sector and millions of relevant low. Turnover of cabinet appointees, over the past data points, we distill four concrete steps that vastly six presidencies, ranges from 63 percent to 80 per- improve administrative outcomes. If a White House cent over a four-year term.2 The human and financial uses these four practices from the private sector— costs of making selection mistakes at senior levels in scorecard, source, select, and sell—a president can the federal government are significant; therefore, the expect to achieve a 90 percent selection success rate. need for scholarly nonpartisan research on this topic This report examines three central questions: motivated this report. The purpose of this report is to provide research- 1. How does a president select cabinet leaders based insights to improve the success rate of cabi- and senior staff? net and senior staff selections. To achieve this goal, we review the process of cabinet selection from a 2. Where can the process be improved? 2 HIRING GOVERNMENT LEADERS SMART, BLAIR, AND MCLEAN 3. What selection methods are likely to lead to send meaningful signals to the public about how higher success rates? the president intends to govern, the coming pri- orities in the first term, and the management skill Finally, appendixes are provided that may serve as and style that a president will bring to leading the hiring guides for presidents, chiefs of staff, or tran- nation. A close associate of President Abraham sition team leaders. The insights contained in this Lincoln described the endeavor as “an intensified report are also valuable to not only the president but crossword puzzle in which party loyalty and ser- also any government leader, deputy, or civil servant vice, personal fitness, geographical location and a seeking to improve hiring success and maximize the dozen other factors have to be taken into account positive impact of their department or agency. Imple- and made to harmonize.”5 menting a proven hiring system in the public sec- Aside from close interpretation by many varied tor can improve efficiency, reduce bias and selection stakeholder groups, each selection will face inten- errors, and create a workforce capable of implement- sive background checks and the political gauntlet of ing complex policy. Senate confirmation and will be closely scrutinized This report does not seek to identify the hundreds by the public for meaning and direction. Missteps in of detailed tasks and steps across the entire hiring selection that lead to withdrawn nominations, failed process for cabinet officials and senior appointees. confirmations, or early performance problems could Many such guides outline the legal requirements in cause significant disruptions in successfully execut- great depth.3 Rather, this report focuses specifically ing the administration’s agenda and often reflect on the step in the process when presidents and their negatively on the president’s management and judg- senior advisers conduct interviews and select a leader ment. Additionally, such disruptions capture news for a senior role in their administration. cycles and generate the replacement process that requires an administration to return to these selec- tion and confirmation challenges as opposed to focus- How Does a President Select Cabinet ing on moving policy forward. Leaders and Senior Staff? We are experts in executive selection with expe- rience helping companies, nonprofit organizations, Selecting the individuals to build a president’s cab- and governments. Through a series of interviews inet and lead executive agencies is one of the big- and studies, we have compiled more than 15 mil- gest challenges facing a newly elected president lion pieces of data that offer guidance on the best and likely one of the most important sets of deci- practices in hiring senior staff. Our two decades of sions the president will make in his presidency. research and work highlight that selecting a lead- Cabinet structure and candidate selection will set ership team is frequently considered the most the stage for how the president will formulate his important and most challenging decision facing an agenda, implement his policies, and lead millions organization. From our research and experience, of federal workers. the average cost of a hiring mistake in a company Modern-day presidential cabinets consist of the is 15 times the employee’s base salary in hard costs secretaries of the 15 executive departments and and lost productivity. Applying that figure to the other senior administration leaders such as the vice federal context and considering the lost productiv- president, White House chief of staff, US trade rep- ity in replacing the leaders of government agencies, resentative, UN ambassador, and heads of Office who set the agenda for millions of federal employ- of Management and Budget, Central Intelligence ees and oversee budgets of many billions of dollars, Agency, and Environmental Protection Agency— the cost of a failed cabinet appointment is likely totaling 23 members.4 Initial cabinet selections many times that estimate. 3 HIRING GOVERNMENT LEADERS SMART, BLAIR, AND MCLEAN Historical Perspectives Nearly a century later, Lincoln’s “Team of Rivals” cabinet established an important precedent that has In some circumstances, the process of appointing a shaped modern American governance. Lincoln’s trusted and high-impact cabinet leader can be brief. unprecedented appointment of strong and power- When President George H. W. Bush selected his good ful rivals to his cabinet reflected his personal genius, friend and proven leader James Baker to serve in his humility, and confidence in surrounding himself cabinet, the choice was easy. with the sharpest minds and most powerful figures of the day. However, his appointment of rivals to Two days before the election, over cocktails at the the cabinet also reflected a savvy political strategy Vice President’s residence, Bush had asked Jim to unite factions of the nascent Republican Party Baker—“out of the blue,” according to Baker—If that required fostering and political unity to survive. he would serve [as Secretary of State] assuming When asked by a reporter why he had selected ene- Bush won. Baker accepted on the spot.6 mies and fierce political opponents for his cabinet, Lincoln responded: By all measures successful in the case of Secre- tary Baker, this idyllic vision of the process is not rep- We needed the strongest men of the party in the licable or reliable for appointing leaders to the over Cabinet. We needed to hold our own people together. 20 cabinet positions.