“We need to keep some confidence in the system.What the Fed is doing … is taking every step possible to keep confidence in the financial system” (CNN)
AIG chairman and CEO Edward Liddy said this Monday, after the insurance giant had received a pledge of $30 billion in bailout money. This was in addition to the $150 billion it had already received.
And in spite of those large sums pouring into it, that very same day, AIG posted a 4th-quarter loss of $62 billion.
I’m sure with his words Liddy was trying to persuade the public that AIG would make good on the investment.
He even went on to say, “In the United States of America when you owe people money, you pay them back” (CNN Money)
So how reassured did Americans feel?
Well, the Dow plunged to record lows, closing below 7,000 points.
Why? Why weren’t Liddy’s words of reassurance enough? Because in past months, the financial industry had lost credibility and thus people’s trust.
***
It’s hard for a financial institution to perform without credibility. It’s equally difficult for a leader to do so. Why? Because credibility is a leader’s currency. With it, leaders are solvent. Without it, they’re bankrupt.
I think leaders in Liddy’s situation – trying to establish or re-establish credibility – need to remember:
1. Establishing credibility takes time.
When leaders are just starting out, this might not be obvious at first. That’s because for about the first six months of a leader’s tenure, followers put more stock in communication than in credibility. After all, they haven’t had time to judge leaders’ actions, so they listen to their words.
But after six months, followers have seen enough of the leaders’ actions to start deciding whether they’re trustworthy or not. At this point, words begin to matter less and less. And the effectiveness of the communication will depend more on the character of the messenger than on the content of the message.
For credible leaders, the longer they lead beyond this point, the better it gets. But if leaders are not credible, then the longer they lead, the worse it gets.
2. Established credibility equals trust.
And trust carries huge rewards. It means confidence. It erases worry and frees you to get on with other matters.
Stephen R. Covey, in his book, The Speed of Trust, said,
Low trust is an unseen cost in life and business because it creates hidden agendas and guarded communication, thereby slowing decision-making. A lack of trust stymies innovation and productivity. Trust, on the other hand, produces speed because it feeds collaboration, loyalty and ultimately, results.
Good leaders know that if their followers don’t trust them, they’ll stop following them. Credibility is truly your currency as a leader. People believe that you’ll do what you say when you do what you say.
Consistently live what you communicate, and over time you’ll establish solid credibility. With that, your followers will feel free to trust you. And they’ll be willing to partner with you in achieving great things for your organization.
And that’s especially important in times like these when people are wondering what – and who – they can trust.
11 responses so far ↓
1 Theresa // Mar 3, 2009 at 9:45 pm
“People believe that you’ll do what you say when you do what you say.”
This not only applies to the business world but is a valuable lesson for parenting teenagers. Consistancy and a true belief that you are going to do what you say, good or bad, is the best tool I have found in dealing with my teenagers.
2 Don // Mar 3, 2009 at 10:27 pm
Right on target. Credibility takes time to establish but can be wiped out in an instant. It’s not a one-to-one dynamic. Many good actions can be voided by one bad one.
3 Robert Overton II // Mar 3, 2009 at 10:51 pm
“Good leaders know that if their followers don’t trust them, they’ll stop following them.”
The key is that many in the workforce who are put into leadership these days do not know how to lead, they only “manage in fear” (SG).
Those under them are, as Seth Godin put it in his book ‘Tribes’, are “sheepwalking”. They may not want to follow but for fear of losing their jobs, they do.
I think that we are seeing the effects of bankrupt leadership in todays economic crisis. Many businesses are closing down because of it.
Great post John, now if we could get these ’so called leaders’ to just read your books and blog.
4 Tami // Mar 4, 2009 at 5:12 am
I was in this very situation… I was following and started noticing things, at first I would ignore the things that didn’t make sense, or jive with the words I was hearing. But as time went on, I came to a spot that I could not ignore it any longer. I tried, REALLY tried to find trust for this person… to stand on some tiny piece of solid ground. But in the end, I could not find any. I felt lost and had no confidence in the direction I was going, because I lost trust.
The situation was hard, it broke me… because I truly wanted to find a way to trust this person… but as I pick up the pieces I try to find the lessons in what I experienced. The biggest of those lessons is what you lay out in this post.
So glad you are on the web… getting a steady stream of your insight is going to be AWESOME! One of the things I like most about your writing is I know what I’m getting when I purchase a John Maxwell book. I don’t even have to flip through it before I decide whether or not I want it… If it’s got your name on it… I TRUST it’s going to be a great read; funny, heartfelt, full of inspiration and wisdom. Thank YOU for what you do!
5 Jim Gray // Mar 4, 2009 at 8:22 am
Great post.
6 Andy // Mar 4, 2009 at 11:55 am
Great post. As a Christ follower this really hits my heart. This is the leadership that He gives us. He has so much trust currency that sometimes it hard for my mind to fathom it. Our lack of trust in Him is actually a lack of trust in ourselves. He always come through. He proves it everyday. He is the way.
7 Sherli // Mar 5, 2009 at 2:25 am
hello, Mr. John Maxwell
I’m Sherli (or in English “Shirley”) from Indonesia
Thank you so much. ^^
I’m ur big fan. I have read “Make Today Count” and I am reading Winning with People right now. Next I will read “25 ways to win with people”. Those are amazing book, really. It changes my life alot.
U’re such a great and nice person. May God bless u always in every works that u do. Can’t wait to buy your next book.
8 Vince Beazel // Mar 5, 2009 at 6:53 am
I am really happy to find this blog on Twitter; John is the Leader among leaders and new to Twitter. I and thousands of others have the opportunity to follow a leader who is learning to follow the leaders on Social Networks!
We can expect that the nation will give our new President/Congress/Governor/Mayor down to the local director of Parks/Schools or Pastors/Teachers to prove their integrity in about six months in office…
At the middle of summer; specifically August there are wars and riots when systems fail and people take to the streets. Add to that, the returning soldiers are expecting help to find work, and we will have to provide opportunities for them and the tens of thousands to follow, for extending the Peace Dividend into education and training for young people who are banking on the promises of the elected.
Excellent observations about AIG; maybe the people should all be trained to learn to recognize true leaders from the herd of managers and pencil-pushers who are promoted for not making any type of risky decisions required of a True Leader. Thanks again for your thoughts on this; we will share it with our radio networks.
9 Android // Mar 15, 2009 at 9:46 am
Hey John,
When I first started reading about leadership, I picked up your book “developing the leader within you”. And let me tell you, that book has been my blueprint for leadership. there is so much GREAT and PRICELESS information in there that it blows my mind. That says a lot of about you and it definitely builds credibility with me. Because I liked your book so much, I hunted you down on the internet and found your blog! I also have memorized the character-driven/emotional driven people in the self discipline chapter of developing the leader within. I am going to remember that for rest of my life because I want a good character, not a flawed one. I am eventually going to be a leader, that much is a promise!
take care.
10 juanbonilla // Mar 27, 2009 at 10:49 am
John,
I’m very excited that you are starting to write your blog and sharing extra insights with your public. As you know today is the 24th and its been 21 days since you wrote this post. I’m curious to hear your thoughts on exactly what has been happening on the last couple of days with AIG and its bonuses to executives. I think this actually hurts AIG and Liddy’s credibility even further. Pretty much his credibility is bankrupt.
11 Don’t Bankrupt Your Leadership | John Maxwell on Leadership | Corporate Edge Leadership and Simulations // May 22, 2009 at 12:09 am
[...] I think leaders in Liddy’s situation – trying to establish or re-establish credibility – need to remember: 1. Establishing credibility takes time. Read the article on John Maxwell’s blog here [...]