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How are you exercising your leadership power?

Leadership Collaboration SkillsThere was a striking confluence of events as I was concluding a webinar on the Economics of Trust late last week. I had just reviewed a slide citing corporate and government examples of the linkage between Leadership, Trust, Culture and Results.

As I finished the slide, a work colleague sitting with me received this news update on his email:

Germany Blasts Deutsche Bank Executives Over Broken Culture.

In case you missed the excitement, German regulators accused several Deutsche Bank executives of keeping quiet about years of attempted market manipulation. The 37 page report portrays the bank as suffering from a “badly broken corporate culture”. Within a month of its publication, the bank’s co-CEOs had resigned (officially “unrelated”); many others including the bank’s General Counsel, Chief Risk Officer and COO were implicated in the report.

The top regulator wrote her concern that: “this is a manifestation of...culture that is possibly still characteristic to your bank, i.e. to prefer hiding, covering up or entirely negating problems instead of addressing them openly and actively in order to prevent similar issues in the future."

A long time Wall Street trader tweeted in response to the report: “In all cases managers encouraged bad behavior: rewarded it.”

No, it’s not the latest summer movie; it’s not the return of Gordon Gekko; it’s real life.

As noted in the webinar, there is a positive link between employee perception of the integrity of their company and corporate performance (productivity and profitability). However, we also know that leaders in their words and actions powerfully create the culture and norms of their organizations. Well, what if the culture openly encourages unethical or illegal behavior? What if other companies in your industry seem to be doing the same, and in fact it seems like accepted practice?

This is an interesting twist on trust and culture, and a powerful and potentially dangerous one. We must all recognize that our leadership actions and the culture we create as leaders are steeped in context. Context, especially in fast moving, competitive, high stakes environments, can be like warming water to the soon-to-be-boiled frog. Before we know it, we’re in deep trouble, and the actions that seemed appropriate in the moment may look very different afterward in the eyes of a regulator, or maybe a customer.

A key part of our job as leaders is creating organizational cultures that drive engagement and performance in our employees. Trust and transparency are critical factors in that performance equation. But as leaders and employees at all levels, we must be careful to step back and pay attention to the context- the big picture. That’s a leadership responsibility. Cultures can be powerfully good, or powerfully bad. What’s yours, and what are you doing to shape it? How are you exercising your leadership power?


The Economics of Trust


Nick Noyes is co-founder of Insight Experience, a Boston-based firm delivering contextually rich, immersive business simulations and learning experiences to accelerate and integrate leadership, business acumen and strategy execution.