Obama to nominate former P&G chief to lead Veterans Affairs

30 June-2014, WSP: President Obama on Monday will nominate Bob McDonald, a West Point graduate who served as the chief executive of Procter & Gamble, to take over as head of the troubled Department of Veterans Affairs, according to White House officials.

Obama to nominate former P&G chief to lead Veterans Affairs

Obama to nominate former P&G chief to lead Veterans Affairs

The un­or­tho­dox pick of a retired corporate executive whose former company produces iconic household products such as Tide detergent and Charmin toilet paper — rather than a former military general — underscores the serious management problems facing the agency charged with serving more than 8 million veterans a year. On Friday, White House deputy chief of staff Rob Nabors submitted a report to the president finding “significant and chronic system failures” and a “corrosive culture” at the Veterans Health Administration, which has come under fire for skewed record-keeping in an effort to cover up the long waits it has imposed on former soldiers seeking medical care.

In recent years, the job of VA secretary has been filled by retired generals, medical professionals or politicians. McDonald’s background is a significant departure, though he and his wife have deep family ties to the military. McDonald graduated in the top 2 percent of his class at the U.S. Military Academy at West Point, N.Y., and served in the Army for five years, achieving the rank of captain in the 82nd Airborne Division before taking an entry-level job at P&G. He is the son of an Army Air Corps veteran of World War II, and his wife’s father was shot down over Europe and survived harsh treatment as a prisoner of war.

“The choice suggests a real focus on customer satisfaction, as opposed to what you might get from a retired general or medical leader,” said Phillip Carter, who follows veterans issues for the Center for a New American Security.

“It is probably a wise choice given the concerns right now of veterans.”

McDonald, 61, graduated from West Point in 1975 and is about the same age as most of the most senior generals in the Pentagon with whom he will have to work closely in the coming years. Gen. Martin Dempsey, the chairman of the Joint Chiefs of Staff, graduated from West Point one year before McDonald, and Gen. Ray Odierno, the Army chief of staff, finished up at the academy one year after him. McDonald and acting VA secretary Sloan Gibson, who is expected to serve as his deputy, were West Point classmates.

“McDonald is right in the sweet spot of the current four-stars in the Pentagon,” Carter said. “He’s got that social connective tissue with them. The VA is more like a big business than a military organization, so his background probably makes him more qualified to run the VA than a retired general officer.”

How McDonald relates to the younger population of veterans who served in Iraq and Afghanistan — smaller in numbers compared with the overall group of veterans but powerful politically — will be critical. McDonald has maintained his Army ties over the years as a major supporter of the U.S. Military Academy and as a life member of the U.S. Army Ranger Association and the 75th Ranger Regiment Association. He is also a member of the Association of Graduates of West Point, where he established the McDonald Cadet Leadership Conference to address emerging global issues.

McDonald stepped down from his post at P&G in May 2013, and it remains unclear whether the move was voluntary. Analysts reported at the time that large investors and some employees were losing confidence in his ability to expand the company in the face of increasing global competition.

In the year leading up to his departure from P&G, investors openly criticized McDonald, saying he was taking too long to turn the company around; he was replaced by the chief executive who had originally appointed him.

“So, I’m just trying to understand. How long do you expect investors to wait?” asked one investor during a conference call, according to Business Insider. “How long does your current plan have to work? How much patience does the board have?”

The Wall Street Journal and other business publications also reported that McDonald had come under fire over the time he spent serving on an array of corporate boards. One activist investor who was especially critical of McDonald and sought to oust him from P&G estimated that the corporate board positions took up 25 percent of McDonald’s time.

Still, he has won plaudits from many of his fellow corporate executives and has experience running a global consumer products firm with more than 120,000 employees and with sales in more than 180 countries.

The White House has yet to select a new head for the Veterans Health Administration, but top officials were particularly intent on finding a replacement for former VA secretary Eric K. Shinseki, who resigned a month ago.

Jim McNerney, chairman of Boeing, said in a statement Sunday that McDonald was “an outstanding choice for this critically important position.”

“Prior to retirement, he navigated Procter & Gamble through the difficult post-financial-crisis years, where he expanded business in developing markets and made substantial progress improving the efficiency of the company’s internal operations,” McNerney said.

American Express chief executive Ken Chenault said in a statement that McDonald is a “very strong manager who came up through the ranks with an outstanding track record of dealing with challenges and delivering results. He stays on top of the details.”

McNerney and Chenault both served on P&G’s board when McDonald headed the company.

During McDonald’s tenure, P&G was recognized multiple times for its leadership development, including twice being named the best company for leaders by Chief Executive Magazine and being named No. 1 in Hay Group’s Best Companies for Leadership Study, which annually analyzes more than 2,200 companies around the world.

It is unclear how key Republicans and Democrats on Capitol Hill — many of whom pressed for Shinseki’s resignation — will react to his nomination, though several are likely to welcome the selection of someone with extensive business experience. The House and Senate are negotiating legislation that would make it easier to fire senior VA officials, while the FBI has opened an investigation into whether VA hospital administrators knowingly lied about wait times for veterans in order to receive performance bonuses.

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