Leading in tough times

4/2/2009 - Mitt Romney has navigated through troubled waters as a politician and a business leader, leading the turnaround of firm Bain & Co. and the Massachusetts state economy.

Recalling those professional experiences, the former Massachusetts governor and Republican presidential candidate spoke to about two dozen Kellogg students March 31 about leadership during tough economic times. The roundtable discussion was held at the Chicago Club in downtown Chicago.

In addition to seeking the presidency in 2008, Romney is known for founding Bain Capital, a venture capital and investment company, and overseeing the Salt Lake Organizing Committee, which coordinated the 2002 Winter Olympics.

Romney said transparency is key to gaining employees’ trust during bad times. As CEO of Bain & Co., Romney said he made it a point to share the financials of the firm with all employees. He also took no compensation as a CEO until the company turned around.

“If you tell people the truth, the truth is rarely as frightening as the rumor,” Romney said. “The right answer is to lay out the problems in complete detail.”

Romney also told students about a principle he learned as an MBA student, which still resonates with him today.

“Every problem is solvable,” Romney said. “Give people the confidence that every problem is solvable if you get the data you need.”

Turning to the economy, Romney told the MBA students that they should closely watch federal entitlements, such as Social Security, Medicare and Medicaid. Currently, he said, those programs account for 11 percent of the gross domestic product. In 20 years’ time, Romney said, entitlements could make up 20 percent of the GDP due to the aging of the baby boomer generation, inflation and other factors. To sustain the federal budget, Romney said, taxes would have to be doubled.

Romney called for a movement to ensure that the funding of entitlements is economically sustainable. He also called for a freeze on discretionary spending, which he said is vital to regaining other countries’ support and investment in the U.S. economy.

“Countries won’t loan to the government if there is no foreseeable time that we can pay it back,” Romney said.