The Real Challenge Facing Rex Tillerson

There is much speculation as to whether Rex Tillerson will make a good Secretary of State in a Trump administration, much of it to do with his relationship with Russia.  Personally I think ExxonMobil’s dealings in Russia are of no concern, and if anything make him more suited to the job.  (For some good articles on this subject see this from Steve Coll, author of Private Empire: ExxonMobil and American Power; this post from Streetwise Professor; and these two posts from The Dilettante).

I think Tillerson will do very well on the world stage in front of what passes for global leaders these days, and will do a fine job of representing America’s interests abroad.  Where I think he might struggle is when he stops looking upwards and outwards and casts his eye downwards through the organisation he will inherit.

ExxonMobil is extremely well run by any standards, let alone those of the oil industry.  It is by far and away the standout supermajor, and the only one that appears to have considered the full business cycle in its long term plans.  They haven’t even had to shed many workers during the downturn because they weren’t overstaffed in the first place.  ExxonMobil has a reputation for efficiency which Tillerson inherited from Lee Raymond, his predecessor as CEO, and it is well deserved.

ExxonMobil has achieved this largely by putting in place a rigid corporate management system containing ultra-strict procedures which are adhered to universally by a workforce who is under no illusions as to what happens to those who breach them.  This can often border on paranoia: I once saw an ExxonMobil staffer go purple in the face and demand to know from where I obtained a certain document, which was actually one that was specifically written to inform outsiders of a particular ExxonMobil internal process.  Nevertheless he snatched it from me as if it were reservoir data, leading me to joke for several years afterwards that ExxonMobil employees don’t give out business cards because they consider them proprietary information.

Like those of all large organisations, ExxonMobil’s employees are expected to toe the corporate line at all times, and departure from the company way of doing things is not tolerated for long.  In return for their cooperation and loyalty, ExxonMobil staff enjoy generous salaries, perks, work conditions, and career opportunities.  It also helps greatly that the ExxonMobil way produces some quite outstanding results, which cannot be said for all corporations which insist on absolute obedience and compliance from its workforce.  I can think of some exceptions, but if you ever come into contact with ExxonMobil employees they nearly all fit the same mold: well presented, intelligent, and ready to explain things with a PowerPoint presentation.  They speak always with caution, and are extremely aware of the applicable corporate policies and they refer to them constantly.  The attraction of remaining an ExxonMobil employee is too great for anyone to deviate too far from the norm, and any revolutionaries won’t last long.  Naturally, and like all oil majors, ExxonMobil can afford to recruit the best graduates from the top technical, oil and gas, and mining schools in the country.

It is one thing managing a giant corporation full of ultra-obedient high-flyers whose loyalty is beyond question and who can be fired immediately for the slightest breach of a corporate policy or directive, but quite another to manage public sector workers who are heavily unionised and many of whom shunned the private sector because it looked too much like hard work.  I don’t know what public bodies fall under the Secretary of State, or what the equivalent is of the British Civil Service is in the United States, but you can be sure that whatever there is will be chock-full of vested interests, entrenched archaic work practices, troublemaking employees, appalling inefficiencies, treachery, disloyalty, back-stabbing, dishonesty, and laziness.  These will be organisations of a type that Rex Tillerson will have no experience being in charge of: when he says “jump” as ExxonMobil CEO his entire workforce leaps into the air in unison; in his new job, be probably has to go around waking people up first only to hear them telling him that Kerry let them sleep until lunchtime before they go home crying about racism.

Rex Tillerson looks like a good fit for Secretary of State, but his greatest challenges might not be Russia, Iran, and China.

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16 thoughts on “The Real Challenge Facing Rex Tillerson

  1. If he is any good then he will bring the state back down to the level of Federal Government envisioned by his forefathers and some where like single figures as a % of GDP and starve the beast to a quick death. The benefits of both the reallocation from taxation in government revenue to capital retained and invested by risk takers would multiply the success factor. Government was never meant to be the size that it has become.

  2. I like, without knowing owt about ExxonMobil or indeed any oil business, that Trump is looking to industry for his people rather than the usual shallow truths of community organisers and paid stirrers of the racial pot.

    Most businesses, if they are to survive and thrive, have to have an idea of what is required and there is no reason why governments shouldn’t be populated by people who know how to survive and thrive, rather than fuzzy brained ‘social warriors’ who would run wailing from the first conflict they encountered. Our world has too much of late been ‘organised’ by people with little to offer other than the ability to read left-wing tripe and spout the emotional bits.

  3. And of course the people at the State Department actively working to further the opposition’s cause.

  4. This is a pretty common problem with CEO types going into politics / public service. They are used to giving orders and having them obeyed. Suddenly things are no longer like that.

  5. Bardon,

    If he is any good then he will bring the state back down to the level of Federal Government envisioned by his forefathers and some where like single figures as a % of GDP and starve the beast to a quick death.

    We can dream.

  6. Rob,

    And of course the people at the State Department actively working to further the opposition’s cause.

    That too.

  7. Michael,

    Indeed, and ExxonMobil is particularly good at getting its employees to obey orders.

  8. Nevertheless he snatched it from me as if it were reservoir data, leading me to joke for several years afterwards that ExxonMobil employees don’t give out business cards because they consider them proprietary information.

    Two other organizations similarly secretive are the Masons and Chatham House and indeed, there are things made of the XX in Exxon.

    Efficient, yes, apart from the Valdez but that’s old history now, overtaken by the Deepwater Horizon.

    However yes, agreed, he’ll probably do well in this role.

  9. James,

    Efficient, yes, apart from the Valdez but that’s old history now, overtaken by the Deepwater Horizon.

    Lee Raymond took over immediately after Valdez to turn it into a completely different company. He succeeded.

  10. Good blog, Tim. I found my way over here from Timmy Worstall’s.

    Getting an international oil man into that job does make a lot of sense. Given a lot of oil happens to be right under the places you’d rather not go to, he’ll be used to dealing with difficult folks while getting results.

    I hope he doesn’t take any shit from his public sector underlings. Might set an example for the UK’s ministers.

  11. Bolton is being brought in as deputy to take care of State. He is familiar enough with government employees to know what he has to do.

  12. The State Department is often nicknamed Foggy Bottom because the location of the building is build upon a drained swamp. It also describes the people working within it. The career personals that views their piece of fiefdom above reproach and does everything within their power to retain it. It’s Pournelle’s Iron Law of Bureaucracy in action. Similarly across the town, CIA is operated in pretty much the same fashion.

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