Patrick Lencioni on Leadership & the Financial Crisis
One of my favorite leadership authors is a guy named Patrick Lencioni. He’s written a number of really respected books like, The Five Dysfunctions of Team, Death by Meeting, The Four Obsessions of an Extraordinary Executive.
He has a semi-regular column that you can/should signup for here. In his last article he addressed the topic of leadership and the current financial crisis. I think he makes a great and very valid point.
I couldn’t find a link to the article online so I am copying it in full here. If you like it, I encoruage you to sign up for his newsletter and even grab a few of his books. They are subtly profound. If you were asking me, I would suggest starting with The Five Dysfunctions of Team.
The Financial Crisis
In the midst of the financial crisis going on in America these days, there is a natural tendency to search for a villain we can blame and move on with a sense of tidiness and moral certitude. Unfortunately, I don’t think there is such a villain.
Sure, there’s more than likely a good number of people who made serious mistakes out of carelessness or greed, and they will need to be held accountable for that. But the real culprit here, in my opinion, has nothing to do with economics or regulations or finance. It is about the desire of leaders to avoid interpersonal discomfort.
I realize that this doesn’t sound very sexy, and certainly isn’t going to make for a compelling television movie-of-the-week. It would be better if there were a group of sinister old men out there who sit around in three piece suits smoking stogies and laughing about how rich and powerful they are going to get stealing people’s homes and investments. That would actually be easier because then we could track those guys down, throw them in jail, and achieve a measure of closure. But based on my experience consulting to CEOs and their teams over the past decade, I can say with a high degree of confidence that this just isn’t the case.
The biggest cause of this and other crises is that most leaders operate under the assumption that they should never have to engage in discussions that are awkward, confrontational or career-limiting. As a result, they rarely have the kind of uncomfortable discussions that prevent people from doing stupid and harmful things. Instead, they are polite and guarded and collegial with one another, even when what is called for is passionate disagreement or even outrage.
This is a surprise to people who don’t have a view into corporate America. They are usually shocked when I tell them that I rarely see people passionately argue with one another or take a strong, moral stand. What they don’t realize is that the real world is nothing like what we see in movies where executives routinely pound their fists on the table and announce, “this is just plain wrong and I won’t stand for it!”
Consider the current situation at various banks, some of which no longer exist. Plenty of intelligent and well-intentioned board members and executives must have known that something was wrong with granting a CEO a $20 million bonus in the event that he were fired. And even the least sophisticated executive had to have seen the potential problem with approving home loans to people who would not be able to afford them if and when interest rates changed. So why didn’t they do something?
Because they looked around and saw other intelligent and well-intentioned people who weren’t standing up on their chairs and objecting. And they figured that perhaps what was going on wasn’t so bad after all, especially if so many other executives and banks and boards of directors were doing it. “Who am I to rain on this parade?”
To be fair, some of them probably made a quiet comment during a meeting, or more likely, mentioned something to another board member over lunch. But they weren’t laying down on the railroad tracks and risking their compensation or their friendships or their reputation if no one else would. Of course, plenty of them will come out now and say they saw the problem all along, and they might even be able to convince enough people that they should be considered whistle blowers.
The fact is, too few people in life have the courage and clarity of thinking to stand up at the right time and say what needs to be said. And that’s what makes real leaders different. They are ready and willing to do what is unseemly, uncomfortable, and even personally risky for the sake of what is right.
And so the lesson that comes from all of his, or at least one of the most important ones, has nothing to do with legislation or economic policy or oversight. It is a personal lesson that each of us can learn by honestly and humbly asking ourselves what we would have done had we been a board member or an executive at one of those companies that did something that seems so clearly wrong in hindsight. By considering that question, we will probably shift our emotional energy away from trying to find a legislative, economic or legal explanation for the mess we’re in, and shine the light on the behavioral one that really deserves the attention. And perhaps that will help us avoid the next crisis.