President Obama will announce he is replacing the retired Army general who was running the VA with a former Army captain—swapping four-star salutes for business smarts. The pick suggests just how tough the VA assignment is, and an acknowledges that the sprawling bureaucracy of 300,000 doesn't always salute when it's given orders.
Bob McDonald, a former chief executive of soap giant Procter & Gamble, is replacing Eric Shinseki, who stepped down May 30 after it became clear many officials at the Department of Veterans Affairs were hiding how long it took veterans to get their promised medical care.
Obama picked the right guy to clean an agency tarnished by accusations that its managers repeatedly gamed VA records—potentially leading to the deaths of some veterans—to help VA officials win annual cash bonuses. Early in his career at P&G, McDonald managed the company's Tide detergent business, before heading to Canada and then Asia to run the company's laundry and cleaning operations. The White House leaked news of McDonald's nomination, expected Monday, and said his business skills and military background make him the right choice.
Paul Rieckhoff, chief of the Iraq and Afghanistan Veterans of America, suggested McDonald's corporate background could be an asset. "His branding background may prove helpful," he said. "There are few organizations in America with a worse reputation with its customers than the VA right now."
A native of Gary, Ind., McDonald spent five years in the Army, primarily with the 82nd Airborne Division, after his graduation from the U.S. Military Academy at West Point in 1975. He joined P&G—and its lengthy roster of brands, which now includes Gillette, Crest and Febreze—in 1980. He ran the company for four years before retiring in 2013, after pressure from investors that he wasn't cutting spending sufficiently.
Congressional reaction was muted. Senator Bernie Saunders, I-Vt., who chairs the veterans committee that will hold McDonald's confirmation hearing, said simply that he looks forward to meeting McDonald "in order to ascertain his views" on the VA's problems. His Republican House counterpart was even less welcoming. "The only way McDonald can set the department up for long term success is to take the opposite approach of some other VA senior leaders," said Rep. Jeff Miller of Florida, chairman of the House Committee on Veterans Affairs. "That means focusing on solving problems instead of downplaying or hiding them, holding employees accountable for mismanagement and negligence that harms veterans, and understanding that taxpayer funded organizations such as VA have a responsibility to provide information to Congress and the public rather than stonewalling them."
McDonald spoke about such fudging as P&G's chief operating officer. "We don’t lie, cheat, or steal," he said in remarks he would make to new P&G employees in 2008 and 2009, "and we don’t tolerate people who do."
McDonald has his work cut out for him, as detailed in a report by White House deputy chief of staff Rob Nabors, who Obama dispatched to the VA's Veterans Health Administration to determine how bad things are. "The VHA leadership team is not prepared to deliver effective day-to-day management or crisis management," Nabors report, released Friday, concluded. "Instead, VHA is marked by an inherent lack of responsiveness and a belief many issues raised by the public, the VA Leadership, or oversight entities are exaggerated, unimportant, or `will pass.'"
McDonald will be the first VA chief of the last four who didn't retire from the service after an Army career. The prior four VA secretaries—since it became a Cabinet-level agency in 1989—served, like McDonald, in uniform early in their careers. He qualified for many badges during his five years in uniform: Airborne, Ranger, Jungle, Arctic and Desert Warfare, Jumpmaster, Expert Infantry, and Senior Parachutist.
He brought that same approach to P&G. When he took control of the Tide account in 1984, "Tide only came in one form, which was powder Tide regular scent," he told a Yale audience last year. "Today…you can get liquid Tide, you can get Tide with bleach, and you can get Tide with Febreze. We just launched a Tide for fitness clothes."
Knowing consumers—and what they want—is key, he explained: "You’re going to create better loyalty, more indispensability, and as a result of that you will have a higher market share."
He's going to need all the business savvy he can muster, assuming Senate approval, in his new job. When McDonald left P&G, it had annual sales of about $84 billion, half of the VA's annual budget. The Congressional Budget Office estimated earlier this month that the reforms the Senate wants to make in providing veterans with better access to health care could double the VA's annual $44 billion health-care budget.