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Sanjay Sanghoee Headshot

How Romney Has Failed as a CEO

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ROMNEY OHIO
AP

Mitt Romney's primary selling point this election season is his business experience as the CEO of Bain Capital. Given that our economy is struggling and job creation is the top priority for the nation, it is understandable that some voters want to put their faith in a man who successfully led a large business and who might be able to repeat that performance as president.

But even if an ex-CEO is the right person for the job (which is not necessarily true: see my piece Why America Doesn't Need a CEO), Romney has not demonstrated the qualities of a good CEO lately. Despite all the press about his hands-on management style for the campaign, his missteps on several mission-critical fronts show that he is actually a poor leader, or at least not ready for primetime.

The facets of good stewardship that he has violated include:

Competent Management
Any CEO worth his salt is an expert at keeping his employees in line and working cooperatively towards a common goal. Romney's campaign, on the other hand, has been all over the map, with mixed messages coming from different quarters confusing the electorate on what the candidate really stands for.

The finest example of this is the jaw-droppingly stupid statement by Todd Akin about rape that probably hurt the image of the Republican Party more than any amount of media scrutiny of Romney's positions could have. There was also the Sununu gaffe and the vocal criticism of Romney by many in the GOP establishment. I am not saying that a political party cannot criticize its own, especially when they feel that he is off track, but to do it publicly destroys the integrity of the campaign and hurts their candidate. Yet Romney has been woefully incompetent at corralling his troops and keeping his Party on message, which is just bad management.

Concern for Shareholders
The one thing that every smart CEO knows is that his employment depends upon the shareholders and whatever else he does, his biggest responsibility is to look after their interests. As a political candidate, Romney's shareholder base is the entire American public, and so logic dictates that he should be sensitive to the needs of people from all walks of life. But Romney has made it clear on many occasions that the only constituencies he cares about are wealthy individuals and major corporations, while low to middle-income Americans are really not his concern. That is blatantly unprofessional and brings into question the Republican challenger's suitability for running even a Chick Fil-A, forget the United States of America.

A responsible CEO does not and should not favor one shareholder group over another and certainly does not ignore anyone; for one thing it is a gross dereliction of duty, bordering on malfeasance, and for another it is bad business practice. If there is one thing that illustrates Romney's lack of leadership potential more clearly than anything else, it is this.

Strong Principles
A CEO without direction and particularly one who flip-flops soon drives his company into the ground. Romney's change of heart on issues ranging from universal healthcare, contraception, and gay marriage to gun control from his time as Governor of Massachusetts to his current Presidential run indicates a lack of resolve and purpose. Quite simply, he seems to go whichever way he thinks the wind is blowing, and is willing to compromise his principles in order to pander to the far-right wing of the GOP. In the business world, that would be called diluting your own equity.

Even his pick of Paul Ryan for Vice President shows that he cannot decide which way he wants America to go; on one hand, he advocates lower taxes and deep cuts in government spending but on the other is hesitant to embrace Ryan's complete road map for fear that it is too extreme. On the issue of minority voters, he tries to portray himself as a friend of those communities while supporting the voter suppression efforts of his own Party. Ironically, the one thing that he has stood firm on is his belief in elitism, which is probably the worst aspect of his candidacy. All of this exhibits poor judgment and a convenient schizophrenia that does not belong in the White House.

Good Public Relations
Part of a CEO's job, and a big reason that they get paid a lot of money, is to present and maintain a sterling image for the company in public. Charismatic messaging and good press often lead to increased patronage of the company by consumers and the stock market. Romney, however, has done exactly the opposite for his campaign. By putting his foot in his mouth again and again, he has eroded the credibility of his platform and the GOP itself.

For starters, his repetitive vow to repeal Obamacare if elected, combined with his hammering of the "welfare" state, has firmly positioned the Republicans as being insensitive to the needs of working class Americans. As if that was not enough, his infamous "47%" remark conveys the image of a man who is willing to alienate half the nation, not to mention that his reasoning itself is flawed: while some people may not pay income tax, they still pay payroll and sales taxes and some simply enjoy loopholes which means that they are likely middle class or rich and not the welfare-loving freeloaders that Romney automatically assumes them to be. And finally, his gratuitous criticism of Obama after the killing of the American ambassador to Libya only made him appear as an opportunistic jerk rather than Presidential. For someone vying to be America's front-man to the world, Romney's public relations skills are shockingly bad.

Clear Plan of Action
The devil, as they say, is in the details, and Romney's plan for fixing America's economy is vague and unconvincing. Other than advocating the cutting of taxes and government spending, he has not put forward any concrete ideas about how to actually spur economic growth. By relying on dubious trickle-down economic theories that have been discredited by many economists, and by adopting the attitude that once the government gets out of the way, the private sector will solve all our problems, Romney has chosen to deflect the question rather than addressing it.

A strong CEO has a clear vision of the future and can work out the details of how to get there, and an even better CEO delegates that task to smart deputies, who then craft a credible path for the company to follow, operationally, strategically, and financially. But who did Romney tap for this? Paul Ryan, whose 'Roadmap for America's Future' is more ideology, less road map, and leaves many important questions unanswered, such as how lowering taxes will not hamper our goal of deficit reduction, or how spending cuts will impact employment, consumer spending, the fragile small business sector, the welfare of the poor and the elderly (which carries an economic cost whether he admits it or not), and economic growth in general. In the end, Ryan's "blueprint" amounts to shutting down government and hoping for the best, which does not constitute a plan at all, and shows that his boss is either unable or unwilling to do the hard work required of a leader.

Conclusion

There are still six weeks left to the election and the outcome could well depend upon factors external to Romney or President Obama, but to the extent that Romney's credentials as a successful corporate chief are important in determining the right person to lead America for the next four years, his performance over the past few months has belied his track record, and brought into question his real competence as a CEO. Someone who has made so many mistakes in such a short time and seems unable to pull his campaign back together does not inspire a lot of confidence. In picking a President, I predict that voters' primary benchmark will not just be what the candidates have done in the past but what they seem capable of doing in the future.

SANJAY SANGHOEE has worked at leading investment banks Lazard Freres and Dresdner Kleinwort Wasserstein as well as at a multi-billion dollar hedge fund. He has an MBA from Columbia Business School and received an Award for Business Ethics from Henry Kravis. He is the author of two novels (available below), including "Merger" which Chicago Tribune called "Timely, Gripping, and Original" and writes regularly about politics and corporate excess. Please visit www.sanghoee.com to sign up for updates.