One Year On What Can We Learn From Lehman Brothers?

In an article provided by Hogan Assessments in the USA, Personality and Financial Management*, they look at the personality of the CEO at the time of the Lehman Brothers collapse and point to some of the actions he took which ultimately led to its demise.
The recurring themes of emotional intelligence demonstrated by the CEO and the culture that this nurtured in the organisation are explored to hint at what actually might have happened.
In their article, they suggest that Richard Fuld, the CEO comes across as someone who is extremely competitive, tough, reserved, introverted to the extent that he is difficult to read, thick skinned and overly confident which means he is less likely to take on board or seek feedback. Ultimately, his massive self belief meant that he was impervious to data telling him that things were not going well.When you couple this with the way that people are influenced in organisations you can see that this is a heady mix.

In their book Yes! 50 Secrets From The Science of Persuasion Goldstein, Martin and Cialdini, talk about a phenomenon known as 'Captinitis'. In short, this is the danger of both seeing yourself and being seen by others as the person best placed to make decisions. They cite the case of the Air Florida flight that went down in the Potamac river in Washington DC in 1982. On that occasion the co-pilot doubted his own ability to read the instruments because the captain's judement was deemed more valid.

Clearly in both scenarios, having leaders that are fantastic at making decisions and have bags of self belief was not necessarily in the best interests of everyone else. However, the culture that this type of leadership creates makes it difficult for others to question the actions of their leaders. And in fact, stupifies them into thinking that their judgement must be flawed because the leader knows best.

So the lessons I picked out from these two scenarios are that :

• Leaders don't always have the best solutions to the problems
• Getting input from the people who work for you might actually give you a different perspective
• By being unapproachable you miss the opportunity to get feedback and so never develop unused aspects of your personality which might just help you in times of crisis
• Be constantly vigiliant about the type of culture you as a leader are creating in your organisation
• Leadership can be a lonely occupation; the need to be 'right' and 'in control' will make it even lonelier

Sometimes, taking the career limiting decision to speak up about what you see going on in your organisation can feel very scary. And sometimes you can indeed lose your job for speaking up. Given the personality profile of the CEO of Lehman Brothers it's no wonder that those around him were reluctant to call the situation for what it was. Perhaps, if he had demonstrated more emotional intelligence then maybe 25,000 employees would still be employed today and the 150 year old Lehman Brothers would still be the 4th largest investment bank.
I leave you with this final thought:

The next time you hear that culture is not important think back to Lehman Brothers and remind yourself:

"Culture played a huge part in the demise of a 150 year old business that was acknowledged as the 4th largest investment bank in the world. If culture can have that much impact, we need to understand how emotional intelligence and organisational values and beliefs impacts our own sustainability."
http://news.bbc.co.uk/1/hi/business/8234734.stm
* Thanks to Advanced People Strategies