Archive for October, 2009
3rd in Series: Calling All (Crisis) Leaders to Rebuild Trust in the Finance Industry
Friday, October 30th, 2009In this ongoing blog series that calls on crisis leaders to rebuild trust in the finance industry, I ended the second blog with the observation that “gifted crisis leaders create possibilities even in the most dire of circumstances. These leaders establish followers based on trust.” And there is no doubt that we are in dire circumstances in the finance industry, and probably will be for a while.
In this blog I’ll explore the elements of trust in relation to the financial industry and what led to the public’s feeling of their trust being betrayed.
What do I mean by “trust”? I think in this case organizational and industry reputations are built largely on the premise that trust is defined within a market-driven, economic context where we weigh the potential outcomes of creating trust relative to the cost of destroying it. So when one party (the financial institution) does not follow through in a competent and predictable manner, trust in the relationship is eroded. Collectively, the financial industry is suffering from a lack of perceived trust. In recent months, the industry’s clients have questioned the judgment and decision making of its leaders and their capability to manage in a transparent manner. Moreover, stakeholders (retailers in particular) are feeling the undue burdens brought on by the initial actions and subsequent reactions of the industry. In blunt terms, stakeholders of the financial industry feel betrayed on many different levels, with trust betrayal at the foundation. (more…)
Second in Series: Calling All (Crisis) Leaders to Rebuild Trust in the Finance Industry
Sunday, October 18th, 2009In the first segment of this ongoing blog series, I ended with the question, “How can the financial industry rebuild its image?“ An obvious answer is through performance, right? Once investors and others begin to recoup losses and the market rebounds, any concern or hostility toward the industry should dissipate, at least temporarily. In fact, should we not begin to see evidence of this happening now? The market is beginning to rebound. The Dow has climbed to over 10,000. Investment banks are once again paying out enormous bonuses. In the past such performance let to public cheers. Today, however there are jeers rather than cheers. What accounts for the differing reaction? For one, the public’s relationship to the industry has changed: Before, the industry could get by on competence-based trust (demonstrating the capability to produce economic prosperity), but now, having been betrayed by the industry, the stakes are higher and the public is demanding not only competence-based trust but communication-based trust (e.g. being open and honest about their process for producing wealth) and integrity. I think society has always had an expectation that industry leaders were working with their customers’ (the public’s) best interests in mind; they trusted that their money was being taken care of. There are many layers to this breach of trust, and it will take a gargantuan effort for the public to even enter back into a sense of comfort, much less trust. So, although performance is critical to image management, the industry must also consider a more humanistic approach in the midst of the financial crisis. What I propose for doing so requires the careful and deliberate establishment of trust, a fundamental element of what I refer to as “crisis leadership.”
Crisis leadership is more than managing communication and public relations during a crisis. (more…)
First in Series: Calling All (Crisis) Leaders to Rebuild Trust in the Finance Industry
Monday, October 12th, 2009In one of my earlier blogs, I called on today’s leaders to put their egos aside in order to guide us out of a vicious cycle of bad decisions, short-sightedness, and financial despair toward an integrity-based vision where innovation and creativity is the norm. And now, several months later, I am calling all (crisis) leaders once again…but this time, specifically to guide us out of this financial crisis. In this series of blogs, I’ll address the destroyed trust that has occurred and recommend ways to rebuild that trust through effective crisis leadership.
The financial industry is undergoing one of the most tumultuous times in history and the consequence has been a precipitous decline in the public’s trust in the industry and in its leadership. Over the next few weeks I’ll provide an overview of the construct of trust, describes why crisis events erode trust, and offers guidelines for how to rebuild trust following a crisis. Using the principles of crisis leadership as a backdrop, I’ll demonstrate the significance of integrity, positive intent, capability, mutual respect, and transparency on the trust building process. Here I present the first in a series of blogs on Rebuilding the Image of the Finance Industry through Trust:
In a two week period in the fall of 2008, the U.S. witnessed the shocking collapse of several of its most seemingly stable and secure financial institutions. On September 14 Merrill Lynch entered bankruptcy and was quickly acquired by Bank of America. The next day Lehman Brothers filed for bankruptcy, was split up, and portions of the former firm were purchased by Barclays. The following week the nation’s largest savings and loan association was placed into receivership, ironically on the same day as that firm’s 119 year anniversary. The demise of Washington Mutual represented the largest single bank failure in American history. The landslide of financial failures started several months earlier when Bear Stearns, once recognized as the “Most Admired” securities firm in Fortune’s “America’s Most Admired Companies” survey was acquired by JPMorgan Chase for $10 per share, down from the 52 week high of more than $130 per share. Among them, these once stalwarts had almost 450 years of history, having previously survived other economic downturns, including the Wall Street Crash of 1929. (more…)
The Value of Time- 2nd of 2
Monday, October 5th, 2009Second in Series
Many companies transpose the terms “vacation” time with any type of time off, and so do employees for that matter. I’ve heard of countless corporate executives brag about not having taken a vacation in five years! Now when I hear this I immediately think of my experience in the past year. It certainly never occurred to me that I was “on vacation!” If companies realized that blocks of time given to an employee will return to them ten-fold in a rejuvenated, energized, and knowledgeable approach to their work, they may be more encouraging. Of course there is a fear on both sides: On the employer side, they are afraid that they can’t do without that employee or executive for a length of time, and that the individual might “lose their edge”; and on the employee side, they may be fearful that they will be forgotten or replaced.
In order to ease the anxiety and incorporate this gift of time into corporate culture, I have a few suggestions: (more…)