Great ResignationDiversity and InclusionCompensationCEO DailyCFO DailyModern Board

Why On Earth Are CEOs Joining Trump’s Cabinet?

December 12, 2016, 4:31 PM UTC

Now that Donald Trump is reportedly going to name Exxon CEO Rex Tillerson as his choice for secretary of state any minute now, we can count on a predictable line of media chatter. All these CEOs! CKE Restaurants chief Andrew Puzder for labor secretary; Wilbur Ross, head of his own investment firm, for commerce secretary; former WWE CEO Linda McMahon to run the Small Business Administration; hedge fund and film company boss Steven Mnuchin for treasury secretary; and now Tillerson. It’s the most CEO-intensive cabinet ever. Can this be good for the country? Do these mega-bosses even understand ordinary people? What about conflicts of interest?

They’re worthy questions, but here’s a less obvious one we should also ask: Why on earth are these CEOs doing it? Though it isn’t widely reported, many CEOs get asked by presidents of both parties to serve at high levels in Washington, and most of them turn and run as fast as they can. You can’t blame them. If you’re one of those nominees, consider what you’re in for:

You must be confirmed in public hearings. Sometimes these can be a love-fest for a CEO; for example, the Senate instantly confirmed former Goldman Sachs CEO Henry Paulson as Treasury Secretary on a voice vote in 2006. But such deferential treatment is unlikely this time. Senate Democrats are furious that the Republican majority refused even to consider President Obama’s nomination of Merrick Garland for the Supreme Court, and they’re vowing to make life miserable for some Trump cabinet nominees.

Many federal employees can be cavalier about following your orders because firing them is virtually impossible. Firing them for poor performance is especially difficult, the Government Accountability Office reported last year. It’s a decidedly different world from the private sector.

Your success is subjective. CEOs know exactly how their performance will be measured. Cabinet members don’t, and in the political world many people will likely argue you’re doing a terrible job no matter what.

Your board of directors has 535 members. They’re delighted to meddle in your affairs, and you dare not ignore them. They approve your funding (or not).

And then there’s this question, posed by a CEO I know who was asked, and declined, to serve in a previous administration: “How many CEOs have gone to Washington and come back with their reputation enhanced?” He could think of only one, former Goldman Sachs chief Robert Rubin, who was Bill Clinton’s treasury secretary from 1995 to 1999. He handled financial crises in Russia, Asia, and Latin America; the U.S. economy boomed; and the federal government ran a surplus. Clinton called him “the greatest secretary of the Treasury since Alexander Hamilton.” Anybody else? It’s hard to expand on that one-person list.

Sign up for daily insights, updates, and opinion on leadership and leaders in the news at the Power Sheet.

The wonder isn’t that Trump found five (and counting) CEOs he wants in his cabinet. The wonder is that he found five who are willing to do it.