Nearly every day news reports bring us fresh ideas for curbing the wild risk-taking that has rocked the U.S. financial system and the global economy. Many of these reform schemes seem predicated on the same shared assumption, that greed for bigger compensation packages drove investment bankers to recklessly pursue rewards while ignoring risks.
In my view, though, unchecked ego, rather than money itself, is the real root cause of the problem. Why? Because out-of-control ego badly skews leadership judgment. And good judgment, along with clear vision and consistent communication, is absolutely fundamental to effective leadership. Without it, as we have unfortunately seen of late, promising careers and entire organizations can self-destruct.
Judgment begins with humility, which has a couple key elements. First, humility calls for recognizing that we don't know everything. Too many leaders in the financial sector apparently thought it was impossible for them to make big mistakes. As money poured in over the short term, they simply weren't inclined to reflect on the effect of their decisions over the long term. The truth, of course, is that we are all quite fallible, regardless of our educational pedigree or our professional résumé or the size of our bank account. Humility also requires regular acts that remind us we are not bigger than our organizations.
In his wise new book Mojo, executive coach Marshall Goldsmith tells a wonderful story about humility in action. During her time as chief executive officer of the Girl Scouts of America, Frances Hesselbein asked Marshall to conduct a complimentary training session for some of her top volunteer leaders. Marshall said he'd be delighted to help, but when the time came he had been on the road for a week and needed to get some laundry done first. Frances told him to leave his dirty clothes in the room and someone would take care of it. At breakfast Marshall noticed Frances walking down the hallway with a pile of laundry--his laundry--in her arms. She was taking it to the laundry room herself. "Frances was sending a clear message--this is how we help people who volunteer to help us," Marshall writes in Mojo. "It's not about ego. The mission is more important than anyone's ego."
If you accept that you don't know everything and that successful leadership involves serving your men and women instead of bending them to your will, another crucial aspect of judgment follows: You must identify the most pivotal roles in your organization, play a key role in filling them and listen to what the people in those roles tell you. This is a lesson I learned well during a 35-year career in the U.S. Navy.
Aircraft carriers typically have several thousand men and women working on them. If you're in charge of one, there's just no way to interact with all those people in a personal and meaningful way. But you can communicate via the ship's internal communication system and ensure that everyone's kept informed of the big picture and how the entire team is doing. It's crucial that you know and have full confidence in the 30 or 40 people in pivotal roles and focus most of your attention on them. You want to know them well. How comfortable are you with them? Will they help recruit, train, advance and retain the women and men they are privileged to lead? Are they the right people for their roles? If they're not, or if a key position comes open for some reason, you need to be closely involved in choosing successors. That is work that senior leaders in corporations, government and nonprofits sometimes try to pawn off on others. But that is a serious error in judgment. If we put the right people in the right spots, ensure that they have the appropriate resources and training, listen to them and let them do their jobs, the ship will hum. If we don't, we jeopardize our ship's overall performance--and, quite possibly, the well-being of our women and men.
Taking a highly active role in filling and supervising the most pivotal roles in our organization, however, does not guarantee we'll make the right hiring calls every time. That brings us to a third critical aspect of judgment: the willingness to acknowledge personnel mistakes and to rectify them quickly. After we put a lot of time into filling an important job, we understandably hesitate to undo all that work right away. A sunk-cost mentality dupes us into believing that letting a bad decision stand is still preferable to the huge hassle of redoing it. As a university administrator, I supervised a senior executive whose performance proved consistently subpar. I thought I could fix things without firing him, and the problem dragged on for months as I offered coaching and second and even third chances. Finally, a trusted adviser framed it for me this way: I was trying hard to be fair to a poor performer, but that leader's shortcomings were causing big headaches for the talented people serving below him, and that wasn't fair to them. In the end, I moved the executive out of the organization. The moral of the story: Don't wait too long to act when you have the wrong person in a key role.
Beyond showing humility, investing energy in pivotal roles and correcting personnel mistakes promptly when you make them, there's a fourth, and often overlooked, element of good judgment: reflection. Keep a journal, and block time off on your calendar every three months or so to sit down and review the key people decisions you made over the previous year. Would you hire the same senior vice president of product development again? Did you listen to what your director of strategy told you about entering that new market? What coaching and development opportunities can you provide to help the talented head of your sales team take her performance up another notch or two? As leaders, we easily get caught up in our own legacies and lose sight of the men and women we depend on to carry our organizations into the future. And that's dangerous to us and our organizations. Your legacy, after all, will be decided as much by your successors as by you.
John Ryan is president of the Center for Creative Leadership, a global provider of leadership education and research. He previously served as chancellor of the State University of New York and superintendent of the U.S. Naval Academy, in Annapolis, Md. He was a pilot during a 35-year career in the Navy, retiring as a vice-admiral.
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