Trust in the Competence + Goodness of Leaders = Effective Leadership – (A Lesson Gleaned from All The Devils Are Here)

Leadership is all about trust…  If people trust their leader(s), anything is possible.  If people lose trust in their leader(s), almost nothing can hold against the onslaught.

This Friday at the First Friday Book Synopsis, I will be presenting my synopsis of All The Devils are Here by Bethany McLean and Joe Nocera.  This idea about trust is one of their vivid, profound, powerful conclusions.  In this case, they reflect on the loss of trust in the system and its leaders.  And that loss was, in every sense of the word, devastating.

Here are a couple of quotes, from near the end of the book, to help us understand this:

“Without reciprocal trust between the parties to any securities transaction, the money stops.  Doubt fills the vacuum, and credit and liquidity are the chief casualties.  Bad news, whether it derives form false rumor or verifiable fact, then has an alarming capacity to become contagious and self-perpetuating.” (Alan “Ace” Greenberg, former Bear Stearns chairman).
and
“The way I think about the crisis is that it occurred because of the systemic abuse of trust in capital markets.  The blowups of subprime, then of Bear Stearns, and then of Fannie exposed massive lies.  Then we went from a collective belief in soundness to a collective belief in insolvency.” (John Hampton, Australian financial analyst and historian).

I think this is right, and significant.  And it simply works like this:  the average worker is something of a “prisoner,” utterly dependent on the direction set, the decisions made, by people way above his or her pay grade.  And, in some sense, this is also true of the average borrower, investor…  in other words, all of us.

When good decisions are made, then the results can be wonderful and profitable and truly successful.  When bad decisions are made, then the best work and the best workers in the world can not “save the company” from those bad decisions.

And so, people act they way they do because of the trust they have (or, the lack of trust they have), in their leaders.  When that trust is broken, morale is broken, the future is uncertain, and everything feels, and is, “broken.”

And that trust is shaped by two major factors:  the competence of the leaders, and the morality and integrity of the leaders.  In other words, it is the combination,  competence + goodness, that matters.  Take away either, and trust is destroyed.

So whatever else the task of the leader is, it is certainly this:  winning, maintaining, and continually being worthy of, the trust of the people they lead and the people they serve.

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If you will be in the DFW area this Friday morning, come join us for the First Friday Book Synopsis.  Just click on home on this page, and click on the “Register Now” sunburst. the

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