Analysts Debate Value of Firm Hand : Aloof Reagan Style: Flaw or Model of Management?

In castigating President Reagan’s hands-off approach to running the nation’s affairs, the Tower Commission has dragged the ordinarily mundane subject of management style out of the corporate board room and catapulted it into the political arena.

So flawed is the President’s management style, the report by the presidential board concluded on Feb. 27, that it left room for Reagan’s aides to engage in the excesses of the Iran- contra scandal--the sale of arms to Iran and the diversion of profits to the Nicaraguan rebels.

“Any chief executive officer whose management style is the way Reagan’s has been reported in the press wouldn’t last more than six months,” declared Rosabeth Moss Kanter, a business consultant and professor of management at Harvard University.

Yet the issue is not quite that straightforward. If anything, the management challenges of running the sprawling federal government are even more daunting than those facing chief executives of even the largest companies.

“It simply isn’t true that if you can manage General Motors you can run the government,” asserted Stephen Hess, a senior fellow at Washington’s Brookings Institution.

Moreover, the same presidential management style that is blamed for permitting the Iran-contra scandal was held up by Fortune magazine only last year as a model for business executives to follow. And this is the same President who won a landslide reelection little more than two years ago and gained congressional enactment just last year of a complex and controversial overhaul of the tax code.

The President himself acknowledged promptly after release of the report of the commission, headed by former Sen. John Tower (R-Tex.), that his penchant for delegating authority, which he said had served him well for two terms as California governor and most of his presidency, was not effective in managing his National Security Council. He pledged to correct the flaws.

Reagan Hears From Confidant

Reagan’s long-time friend and confidant, former Sen. Paul Laxalt (R-Nev.), has advised the President to adopt a hands-on management style now that his preferred technique has “backfired.” But hardly anyone else is encouraging a return to the style of former President Jimmy Carter, who was so wrapped up in details that not even the White House tennis court schedule escaped his attention.

“If I were counseling the President, I’d make sure he didn’t just swing to the other extreme,” said Robert Paulson, who heads the Los Angeles office of the McKinsey & Co. management consulting firm.

Some scholars and management advisers dismiss the Tower Commission’s searing indictment of Reagan’s aloof management style as merely a polite way of saying that he lacks what it takes to lead the nation.

“Management style is being grossly overplayed,” Hess said. “It’s not hands-off management that was the problem. It’s (his) not being interested. It was just kinder to criticize the President’s management style rather than question his leadership ability.”

‘Very Old, Very Tired’

University of Pennsylvania historian Bruce Kuklick, author of a forthcoming book comparing the effectiveness of U.S. presidents, added: “They really meant he is just very old and very tired.”

Members of the Tower Commission--former Secretary of State Edmund S. Muskie and former National Security Adviser Brent Scowcroft, as well as Chairman Tower--could not be reached to comment on Hess’ and Kuklick’s observations. Regardless of their accuracy, the commission’s report has thrust management to the forefront of the political debate.

“Mark my words, there will be much more attention to management style for the next two years,” predicted Republican political analyst Kevin Phillips. “Management style has suddenly become an issue for presidential candidates, people who want to run presidential campaigns and politicians at lower levels.”

Reagan’s style of governing, borrowed from the world of business, was shaped early in his eight years as California governor and has changed little since. As he described it himself last week in his televised response to the Tower report: “The way I work is to identify the problem, find the right individuals to do the job and then let them go to it.”

Firms Use Hands-off Style

In corporations, such hands-off management is one of the tenets of good management. As the President put it, this approach “invariably brings out the best in people . . . and in the long run you get more done.”

But as management consultants and historians alike are quick to point out, companies and governments are entirely different beasts and require different management approaches.

“Not everyone is required to do your bidding in government the way they are in business,” said Robert W. Lear, executive in residence at Columbia Business School and a former chief executive of the F&M; Schaefer Brewing Co. “As a CEO, you get all sorts of early warning signals that tell you when things begin to go astray, so you can afford to have a looser, hands-off style than the President can.”

Nor is sticking with a single management style--as Reagan has done for 20 years--necessarily the mark of a good manager.

A Time to Play Sergeant

“In business, most effective leaders find they need a wide range of styles depending on the situation,” said McKinsey’s Paulson. “People who study leadership like to say that if your followers are both willing and able, get out of their way . . . but if they’re neither willing nor able, you have to step in and play sergeant.”

When Reagan moved into the White House in 1981, his approach to running the government stood in welcome relief to Carter’s meticulous attention to detail--at the expense, according to his critics, of an understanding of government’s broad purposes and limits. Reagan’s straightforward, corporate brand of organization also won kudos from many in both government and business.

Particularly memorable was a glowing story last September in Fortune magazine that advised corporate managers what they could learn from Reagan. In that article, the President advised executives to “surround yourself with the best people you can find, delegate authority and don’t interfere.”

The Tower Commission blamed that very philosophy for leaving the President at the mercy of his National Security Council staff--notably National Security Adviser John M. Poindexter, who resigned last November, and NSC aide Oliver L. North, who was fired on the same day--as it operated the ill-advised Iran arms sales and diverted profits to the contras.

Finds Other Problems

But James O’Toole, a management professor at the University of Southern California and the author of a book on leadership, said that the misdeeds of Reagan’s National Security Council staff had little to do with his hands-off management style.

“Some corporations that have gotten into trouble when underlings got engaged in unethical behavior are among the most authoritative, centralized, hands-on businesses you would care to know about,” O’Toole said.

“The problem in most of these cases is a lack of a clear policy from the top, lack of direction, lack of a firm set of facts and beliefs. That’s a leadership problem. And that’s what it seems to me we have here.”

Like corporate executives, other analysts said, presidents cannot guarantee that they will keep out of trouble simply by managing with a firm hand.

Kuklick, the University of Pennsylvania historian, found that Franklin D. Roosevelt, widely regarded as the worst manager of modern presidents, was also the most effective.

Like Reagan, Dwight D. Eisenhower was criticized for letting his subordinates do too much of the work of running the country. “But the record later showed that he clearly knew what was going on and was quite effective,” Hess said.