The phrase “Plain Talk From Judge…” on the front page of the August 24, 2009 New York Times business section caught my eye.   It sounded like a good thing, also unusual.  Like “Man bites dog.”  What’s up?   Judge Rakoff of the United States District Court in Manhattan wants to know exactly who decided keep shareholders in the dark about the $3.6 billion bonus payout until after the Merrill Lynch, Bank of America merger closed.  It’s a fair question since taxpayers provided the $45 billion in cash and $118 billion in guarantees that enabled the merger and life afterwards. 

Judge Rakoff apparently questions the SEC’s logic in proposing to fine Bank of America for this behavior because that would be fining the shareholders.  With B of A stock trading at less than half its value of two years ago shareholders would argue they have already been punished.   Severely.    It would appear that Judge Rakoff feels a fine would more appropriately be levied on the people responsible.     Since it is the shareholders who create capital markets, that seems fair and wise. 

The question isn’t whether making the bonus payments was a good decision.   Everyone has 20/20 hindsight.  No one wants to go into a merger with key people bailing out.   The question in this case; Who is accountable?   Judge Rakoff argues that “The legitimacy of the courts comes from the fact that they reason openly, on the record, based on the facts.”  I agree and I’d argue that business leaders who do that, and do it well, create competitive advantage.  The people in their organizations know what their leaders value and how they think.   They’re in a position to share the vision and values and do something about it.  This is the stuff of engagement.  This drives performance.  

When these two leadership fundamentals are inconsistently applied productivity, motivation and innovation all suffer.  And think about this; when people put pleasing the boss before doing the right thing for the business, we are all penalized.  Motivation suffers because it’s not the best work that’s recognized, it’s the shiniest apple.  Revenue suffers because customer concerns are secondary or tertiary.  Long term growth suffers because the best and brightest move elsewhere and innovate.  Shareholders suffer diminished returns.  The nation suffers because capital seeks innovation elsewhere.

To paraphrase Jim Collins, when it’s time to give credit, great leaders look out the window, when it’s time to apportion responsibility, they look in the mirror.  If you’re in a leadership position, would you give yourself an “A” for accountability?  If not, what do you need to do to earn one?

And there came a time when 80 banking businesses, who had been joined by a leader, needed to become one bank, Bank One.  Ever wonder how leader might make the case?  How would you?  How do you managed to people away from “flavor of the week” or “I’ll do it my way?” 

This audio interview with Ron Baldwin, former President of the Bank One Retail Delivery, recounts how CEO  John McCoy told the team, “Starting now, it’s all changing,” and made it stick.    Listen in.

uncommon-partnership

What is surprising is that leaders whom we want to respect, whom we want to invest with greater thoughtfulness and strength of principle than we might own, show up with such big clay feet which they manage to stick in their mouths.

We expect a great deal of leaders.  Scrutiny is as constant as our expectations.  Whether a person chooses a leadership position in public or private life, we are always being judged.  

In the “Good to Great” research Jim Collins found that when things aren’t they way they would have them, the great leaders look in the mirror first then seek to create solutions.

What a simple model this is.  Look at the powerful questions that come up “What’s my part in this?” and its’ corollary “What can I do that will help?”

These questions – and their answers – are game changers that leaders are well advised to ask every time the world is not as they would have it.  There’s all kinds of drama to be found there as well