White House Chief of Staff John Kelly started yesterday with prescient bravado.
The retired four-star Marine general told about 20 West Wing officials — including National Security Adviser H.R. McMaster — in the 8 a.m. senior staff meeting: This is on the record, since you’re all going to go out and tell the press, anyway.
On the Washington Post front page, above the fold, was the headline: "Trump plans to replace McMaster, maybe others."
Kelly stunned the room by declaring: We all read the same newspapers and watch the same shows. Contrary to what’s been reported, H.R. and I are still here.
Kelly then told the silent staffers: The press's worst day was when I came in. The press wants to take down the president. I stand between the press and the president. They have to take me down first.
Lindsay Reynolds, the first lady's chief of staff, broke the tension by joking: “We thought this was Black Friday — everybody gets fired.”
Economic adviser Gary Cohn topped her: “I can’t get fired. I already resigned.”
During senior staff meetings, the staff goes around the room, and General McMaster usually makes several orderly, numbered points.
Yesterday, he passed when his turn came.
All of this was before Kelly called in reporters for an off-the-record meeting (Axios didn't attend or make any agreement, so we're able to share the contents with you) where he acknowledged that Trump himself was probably responsible for a significant number of the stories about staffing chaos.
As we reported yesterday, and we told you in Axios PM, Kelly said it’s likely that Trump is talking to people outside the White House, who then talk to reporters.
Kelly also said that past cocaine use by Larry Kudlow, named this week to succeed Cohn, won’t be a problem for his security clearance, as it is public knowledge. Kelly joked that the 1990s were “a crazy time.”
Staffers were shocked that Kelly revealed to reporters that Secretary of State Rex Tillerson, during a diplomatic swing through Africa, was suffering from a stomach bug and was using a toilet when Kelly told him to cut the trip short and return to Washington.
Be smart: Kelly defended McMaster at the senior staff meeting — even though the chief is widely known to be casting about for a replacement.
Now you'll better appreciate this bit in the WashPost story: "The mood inside the White House in recent days has verged on mania ... White House officials have begun betting about which staffer will be ousted next."
Those who track top executive branch moves say the dizzying number of changes really is different than past administrations. Turnover among the most senior staff members within the Executive Office of the President was 34 percent last year, according to an analysis by Brookings Institution fellow Kathryn Dunn Tenpas — double the churn of Ronald Reagan’s first year and more than triple the rate of Obama’s. That figure has grown to 43 percent this year, not including Cabinet secretary changes, and Tenpas said there has been a change in seven of the top 12 staff positions since inauguration day. "In this administration the problems are exacerbated," she said.
Yet Trump is not a conventional president, and he campaigned on his business experience. So it seems only fair to compare the amount of churn in his White House to senior teams in the private sector — and to examine the consequences management experts say can imperil teams when the revolving door spins too fast.
Though there isn't a lot of data about turnover on top executive teams in corporate America, the figures that are available suggest the numbers aren’t even close. One 2014 study of executive teams in S&P 1500 companies put the average turnover at 11 percent. A Harvard Business Review article from 2004 put the average figure at only about 8 percent. Donald Hambrick, a professor at Penn State University's business school who has studied executive team dynamics for years, says he’d estimate that typical senior team turnover is about 15 to 20 percent a year.
“I really can’t construct an argument why it would be more beneficial” to have as much turnover as Trump’s White House has had, he said. “Whether it’s voluntary or involuntary, there’s some kind of mismatch. It’s a sign that Trump is not very good at picking people — or sees it as a random draw of how loyal or agreeable people are.”
No organization wants high turnover — it’s costly, distracting and requires time to get new people up to speed. But management experts say turnover at the executive level is particularly damaging.
“At the mid-level and lower levels, things can be more programmed — there can be more rules and rulebooks about how to handle tasks," Hambrick said. "But for executives, there’s a level of abstraction, the work is more implicit, and the interpersonal trust and relationships are all the more crucial.”
James Guthrie, a professor at the University of Kansas’s business school, studied the effect of executive turnover and found that too much turnover leads to subsequently worse financial performance. "If the White House was a company where you could measure [return on assets] and stock price, you’d start to see the same effects,” he said. “When teams have this level of turnover, they don’t work effectively. It’s really not a good sign."
It’s also particularly important for executive teams to project a sense of calm about the organization’s stability in order to lead the rank-and-file.
“The one thing you don’t want is people around you panicked, and thinking this process is unpredictable,” said Peter Cappelli, a professor at the University of Pennsylvania’s Wharton School. “The real problem is the uncertainty of it."
Another problem with too much executive turnover is that it tends to invite even more churn, whereas the departure of front-line workers typically doesn't.
"Just as an example, you've got to figure when Tillerson goes, three to five senior people are going to go as well -- his people," Hambrick said. "It’s a cascade of chaos into the upper middle ranks. It creates and adds to the trauma."