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McDonald would face uphill battle in reforming VA

The troubled Department of Veterans Affairs is about to undergo yet more changes. This time, President Obama has announced that he intends to nominate former Procter & Gamble CEO Robert 'Bob' McDonald to replace the embattled former Secretary of the VA, Eric Shinseki.

So will McDonald, himself an Army veteran, be able to change the Department of Veterans Affairs—or will the U.S. government's second-largest agency change him?


Robert McDonald
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Robert McDonald

The Iraq and Afghanistan Veterans of America (IAVA), arguably the organization whose mostly younger veterans will be most affected by changes in leadership, issued a statement saying that Bob McDonald was "definitely a surprising pick."

"His branding background may prove helpful, because there are few organizations in America with a worse reputation with its customers than the VA right now," IAVA CEO and founder Paul Reickhoff said.

Read MoreEx-P&G head Obama choice to lead Veterans Affairs

Interbrand New York CEO Josh Feldmeth, who has had 13 years in corporate and government branding experience, told CNBC, "I think there is a big opportunity for McDonald to bring his experience as a brand builder, to shape the culture of the VA and articulate a new north star for the organization."

Feldmeth called P&G one of the greatest brand-building organizations of all time and said that the country's perception of the VA will be a crucial component in this move.

McDonald served as CEO of P&G from 2009 to May 2013 and is credited with adding nearly one billion P&G customers under his tenure, generating sales of over $84 billion yearly.

Steven Rattner, CNBC contributor and President Obama's former Car Czar, told CNBC that he was a big believer in a strong CEO coming in to address management problems, of which the VA has plenty.

Read MoreWhite House review of VA finds 'corrosive culture'

"He's being asked to take on fundamental mismanagement problems and turn it around, and those are the qualifications you want," Rattner said. "The VA is a big, complicated business like Procter & Gamble."

On the question of whether McDonald would attempt to privatize parts of the Department of Veterans Affairs, Rattner said he would be shocked if there were a major policy change in how the VA is organized under McDonald.

Sydney Finkelstein, professor at Tuck School of Business at Dartmouth College, told CNBC that looking to successful corporate leaders can be a good thing for government agencies, but corporate experience does not always translate perfectly to the public sector. Finkelstein warns about over-valuing what has worked for a leader before his new post.

Chairman of the House Committee on Veterans Affairs Jeff Miller (R-Fla.) told CNBC that although he does not know Bob McDonald personally, he believes that McDonald's management skills as a former CEO make him a good fit to run the department, which Miller says is plagued by chronic mismanagement.

Read MoreSenate's VA deal 'revolutionary:' Veterans advocate

The American Legion, the largest Veterans Service Organization, and which was perhaps the most vocal in calling for Secretary Shinseki's resignation, released a statement saying that although they do not endorse or oppose political nominees, "He [McDonald] will need to have complete hiring and firing authority, along with a willingness to see that those who committed illegal acts are prosecuted."

Alison Levine, author and adviser to the Thayer Leader Development Group at West Point, told CNBC that McDonald's effective leadership in both the military and corporate America is a perfect fit for the Department of Veterans Affairs.

"He understands that doing things a certain way because 'they've always been done that way' is never going to cut it," Levine said.

Levine says McDonald is an ideal candidate because he understands the military and business.

"The transition from managing soldiers to managing civilians can often present some serious challenges, and it doesn't always go smoothly—but that would not be an issue for Bob McDonald," Levine told CNBC.

CNBC first reported on issues within the VA Healthcare System last August, culminating in a documentary "Death & Dishonor: Crisis at the VA" that was released on Veterans Day of last year.

— By CNBC's Dina Gusovsky

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