It was caused by forces out of our control. That line is not from a 1950s sci-fi movie in reference to aliens taking over the world. Rather it seems to be the assessment of many senior leaders in the financial services industry as to the causes of the economic meltdown.
“Nobody was prepared for this” is what Robert Rubin, a senior official at Citigroup, told the Wall Street Journal in 2008. “Maybe there are things, in context of the facts [the board] knew then, we should have done differently,” Rubin admits. Not acting “differently,” however, caused Citigroup to lose $20 billion over the past year and to receive $45 billion in federal assistance. Although Rubin turned down his 2007 bonus, he has earned $115 million from Citigroup since joining the firm in 1999. As for “regrets,” Rubin told the Journal, “I guess I don’t think of it quite that way… If you look back from now, there’s an enormous amount that needs to be learned.”
One thing that may need to be learned (or re-learned) is a lesson in responsibility. It rests on three principles.
Be aware. Every leader needs to take a moment to drink up the action. You need to step back from the day to day flow and assess what is happening. Acknowledge what is going well as well as what is going poorly. Always be aware that things are not always as they seem and be prepared for surprises.
Accept consequences. Few executives need schooling in taking credit, but too many need some reminding about what happens when things go wrong. Accepting the consequences for failure is not a sign of weakness; it’s a measure of leadership. While no one likes to fail, the sooner you accept what happened, the sooner you can move forward.
Resolve to improve. Some crises are too great for the current leadership to continue. We are seeing replacements of CEOs in nearly every business sector. But the majority of senior executives have their jobs, or new ones, and so they will need to discover ways to improve things. That starts with a resolution to make a positive difference. In crisis it means sacrificing short-term gains, e.g. bonus compensation, for long-term growth.
Behavioral scientists teach us that the first step in recovery is an acknowledgement of responsibility. But sadly too few executives are holding themselves accountable. This is not only bad for the future of our economy. It sets a poor example to younger managers and those about to become managers. Forget what you might have learned in school (or from your parents), these executives seem to say, do what you want to do and deny responsibility.
“The price of greatness,” said Winston Churchill, “is responsibility.” Something the all of us facing tough times need to remember.