ORANGE COUNTY IN BANKRUPTCY : County’s CEO Search Should Send Message, Experts Say
Move over IBM, Apple Computer, Kodak and the rest of you giant companies whose searches for chief executives have transfixed the ranks of management.
Now it’s Orange County’s turn.
Experts say the county’s search for its first CEO, announced after hours of closed-door meetings Monday, needs to send a powerful message to Wall Street, Main Street and the rest of the country that the Board of Supervisors is serious about resolving its fiscal crisis.
“Rearranging deck chairs on the Titanic is not what’s called for,” said Louis H. Masotti, a professor at UC Irvine’s management school. “No one doubts that Orange County has the financial capacity to deal with this. What they are troubled with is the Keystone Cops atmosphere. . . . There’s a craving for someone who’s unattached to the thing that got us here.”
County supervisors on Monday began a nationwide search for a CEO after demoting Chief Administrative Officer Ernie Schneider, the county’s top appointed official for the past five years.
As envisioned by local business leaders--and, apparently, embraced by county supervisors--the new chief executive would oversee many government functions now directed by members of the board and could, with voter approval, assume responsibility for directing the now-discredited treasurer’s office.
Despite fears of bond defaults, layoffs and tax hikes, experts agree that there is a wealth of public and private sector executives who would jump at the chance to help right Orange County’s finances.
“I don’t think there’s going to be any shortage of applicants,” said Harrison J. Goldin, who was New York City’s controller during its 1970s financial crisis. “And the kind of person who would be scared away by Orange County’s problems isn’t the person you want.”
Among those mentioned as possible contenders are Cliff Allenby, head of the California Building Industry Assn.; Clifford Graves, director of the San Francisco Redevelopment Agency and former San Diego County administrative officer; and Gary Hunt, a high-ranking executive for the Irvine Co.
County supervisors also tossed around the names of Jan Mittermeier, the manager of John Wayne Airport; Hugh Hewitt, an Orange County lawyer and political commentator; John Crean, a Republican activist who owns Fleetwood Enterprises, a mobile home manufacturer in Riverside; and George Argyros, president of Arnel Development in Newport Beach.
There was even talk about contacting George Shultz, the former U.S. secretary of state, and former Gov. George Deukmejian.
Some Orange County residents expressed disappointment that supervisors did not immediately replace Schneider with a powerful chief executive instead naming another county official as acting chief administrator. A permanent CEO is to be appointed within six months.
“We need a fireman to come in here and put out the fire,” said Buck Johns, a member of the conservative Lincoln Club of Orange County. Johns called for the county to immediately appoint an interim CEO with the power to “restructure Orange County government.”
County supervisors will hire the chief executive, but voters, Wall Street and the 186 local agencies that invested in the county’s failed bond pool will help shape the job description.
Private companies “could go out and hire Lee Iacocca (and) say, ‘It’s your ball; run with it,’ ” Goldin said. “But for better or worse . . , we live in a democracy, and that’s the critical context in which this person will function.”
Orange County’s still-evolving CEO’s post might call for the “business skills of a turnaround expert, the judgment of a master politician, the financial acumen of a savvy investor and . . . someone who’s a supreme diplomat,” said Richard Krell, a Los Angeles-based managing director with Russell Reynolds Associates Inc., which recently helped the Los Angeles County Employee Retirement System find a new chief investment officer.
Masotti suggests that Orange County supervisors follow the example of Los Angeles’ naming then-Philadelphia Police Commissioner Willie L. Williams to succeed controversial Police Chief Daryl F. Gates in 1992.
“There was a crisis of confidence, and the last thing you wanted was one of Gates’ friends or cronies,” Masotti said. “They got an outsider who was highly respected in the police community.”
Los Angeles’ search necessarily focused on police chiefs, but Orange County might find its new chief executive at a private business.
“There are people who are at mid-career in the private sectors who might find it attractive to take on a challenge,” Goldin said. “There are also people who have taken early retirement but who are still vibrant and energetic and who would find this to be a very attractive challenge.”
Indeed, one official said Orange County’s search will not be limited to senior government executives. “The board wants someone with private sector experience,” said Dave Kiff, an aide to Supervisor Marian Bergeson.
But private sector candidates would have to avoid what Masotti calls the “Ross Perot syndrome . . . the guy who says, ‘I’ve run businesses and now I’m going to run government.’ These guys always shoot themselves, not in the foot, but in the head, because they don’t understand politics.”
Experts caution that candidates--and their backers--must be prepared for intense public scrutiny. “Everything will be under the microscope,” Krell said. “Everyone will have an opinion . . , so all the warts will be magnified.”
Observers also caution county supervisors against portraying a powerful chief executive as the key to a complete financial recovery.
“It’s not practical or realistic to talk about finding a paid executive officer behind whose skirts everyone can hide,” Goldin said. “That will not fly. At the end of the day, there’s no hiding the fact that the elected officials have to assume responsibility.”
* NEW TAXES?
Two investment banks advising O.C. urge tax hikes. A3
