Former BP chief executive Lord Browne has been appointed to oversee moves to make Whitehall "more businesslike".
He will be the government's "lead non-executive director", working with cabinet ministers to appoint people to improve efficiency in each department.
Cabinet Office minister Francis Maude said Lord Browne's experience would be of "real benefit".
The appointment comes as Whitehall is being asked to make spending cuts averaging 25% over five years.
Lord Browne will sit on the Cabinet Office board, chaired by Mr Maude. This will look to take on non-executive directors for all government departments.
The appointment of an executive who, until his retirement in 2007, was responsible for shaping the corporate culture of BP, comes as the company faces criticism over its handling of the enormous oil spill in the Gulf of Mexico.
Lord Browne was also close to many senior ministers under the Labour government.
Announcing the peer's new role, Mr Maude said: "The appointment of non-executive directors will galvanise departmental boards as forums where political and official leadership is brought together to drive up performance.
"It's great news for the government and taxpayer that Lord Browne has accepted this powerful role.
"His experience will be a real benefit in our drive to make Whitehall work in a more businesslike manner and I am looking forward to working with him to implement our vital reform programme."
Lord Browne said: "This is a role within government but also independent of it. Its purpose is to assist in the delivery of policy using relevant experience from business.
"There is a great need for the best of the business community to be involved during these challenging times for the UK."
But Conservative MP Douglas Carswell said the appointment had "more in common with corporatism than the post-bureaucratic age".
Writing on his blog, he said: "I thought it was the job of MPs to provide non-executive scrutiny of government. It should be for Parliament to appoint those who run government departments, not Lord Browne.
"And what is the point of the newly reformed Commons select committees if it's ex-FTSE CEOs who now do the scrutiny?"
Lord Browne was appointed by the previous government to lead a review of university tuition fees, which is due to report by the end of this year.