With the last days of the Bush administration fast approaching, many of its highest-profile officials may need to gird themselves for the possibility that they won't be showered with the same chummy lobbying gigs and lucrative offers to join corporate boards as their predecessors, according to a study appearing in the current issue of the Academy of Management Journal.
After studying the fates of the 66 cabinet officials who served in government between 1988 and 2003, a group of management scholars find that the administrators' job prospects—particularly when it comes to high-status gigs like Al Gore's board spots at Apple and Google or Colin Powell's advisory role at Kleiner Perkins—tend to suffer when the opposite party assumes control in Washington.
"Former government officials are much less in demand for company boards when their party is out of power," says Richard Lester, a clinical associate professor of management at Texas A&M University, who coauthored the paper with three other academics. "Our research reveals that, if a party is shut out of both congressional houses plus the executive branch, as Republicans will be, its members' chance of joining the board of a large corporation is about 30 percent less than it would otherwise be."
In addition to being a handy primer for the soon-to-be-unemployed, Lester's study, "Former Government Officials as Outside Directors: The Role of Human and Social Capital," is among the first to quantify just how fast the revolving door between business and government spins—and, for political losers, how suddenly it can slam shut. Cabinet secretaries, with their political connections and legislative savvy, have long been welcomed with open arms by the private sector, and the study finds that 64 percent of those who served in government between 1988 and 2003 found jobs afterward sitting on the boards of public corporations. Ann McLaughlin, secretary of labor under the first President Bush, went on to serve as a director on 13 companies' boards. Four other Bush appointees, including Jack Kemp and Louis Sullivan, were appointed to 10 boards each.
When today's cabinet officers hit the job market, however, cushy corporate opportunities may be increasingly hard to find. According to the study, when the party of a former cabinet official holds no power in Washington—and their beltway connections and political expertise are no longer valued so highly—these same political movers and shakers find spots on corporate boards only about 35 percent of the time. The rate at which former senators and representatives land corporate gigs—something the paper also studies—is even lower. "If your company needs to navigate a new SEC rule or get to someone in Congress, these people can help you navigate this process," says Lester. "But if your party is completely out of power, your Rolodex is not as lucrative as it used to be. The people you know are probably gone."
It wasn't always this way, of course. In 1973, the study finds, only 14 percent of large corporations had any government officials at all on their boards. But in the past few decades, to the chagrin of many political purists, the foxes have been welcomed into the hen house—and vice versa. By the late 1990s, more than half of large public companies had old Washington hands serving as company directors. "Business and government are supposed to operate separately," writes Lester, who coauthored the paper with Amy Hillman of Arizona State University, Asghar Zardkoohi of Texas A&M, and Albert Cannella Jr. of Tulane University. "But in reality, they are highly intertwined."
It is not clear how this year's political changing of the guard will affect Bush's appointees, because so many of them sat on corporate boards before they took positions in government. Michael Brown, most infamously, the FEMA director who oversaw the government's response to Hurricane Katrina, served as the chairman of the board of the Oklahoma Municipal Power Authority before coming to Washington. Mitch Daniels, now the governor of Indiana, gave up his position on the board of the Indianapolis Power & Light Co. to serve as Bush's director of the Office of Management and Budget. Dick Cheney served as the chairman and CEO of Halliburton before becoming vice president. And Bush himself sat on the board of Harken Energy.
Finding a new job won't be difficult for everyone in the Bush administration, of course, even if the Democrats are in power. "For celebrities like Cheney, if they want to get on a board, they'll be able to," says Lester. But for others, the future may not be quite so lucrative. "They have to hit this pretty hard as soon as they leave office," says Lester. "If you don't get a board seat within the first few years, your chances go way down. It's significant and lasting." At least until the next election, that is.