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Tips for Leaders

A couple of news items caught my attention recently, which reinforced a key lesson of leadership. First was the United Airlines saga where they forcibly removed a seated passenger from a plane in order to accommodate a crew member. We all know how that turned out. Dr. Dao and United settled for an undisclosed amount. And a few days later, the CEO of United was front and center at a Senate hearing where he was blasted (along with other airlines) for lousy service. Add that to the $1.4 billion fall in market cap United immediately experienced and one could conclude that was a very costly blunder. Just a few days later, I then read about the settlement of $2.8 billion to be paid by VW for criminal penalty charges related to the company’s diesel engine emission scheme. Add that to the $17 billion in auto buy backs, other expenses, and the legal costs for the executives who were indicted and you have another very costly blunder.  

Here is the lesson to never forget. When facing a crossroads of sacrificing profitability or credibility, always choose to preserve credibility. Always. Losses in profitability can be recovered much more quickly than losses in credibility. Airlines, automobiles, manufacturing—there are many industries that have experienced very tough years financially and worked their way back to prosperity. But never forget Arthur Andersen, one of the most highly-regarded companies in any industry, who literally went out of business within months after losing the trust of clients from the Enron fiasco. They were never able to bounce back.

The bottom line: both United and VW had to buy their way out of the messes they behaved themselves into. They ended up losing financially and significantly harming their reputation—two of the most important bottom line measures of any business.  

As a leader, make it a point to continually ensure that all in your organization do their very best to strengthen personal and organizational credibility. When customers can no longer trust that you will treat them with respect, tell them the truth about your offerings, or deal with them ethically, you can bet they will go elsewhere. And if you think it is costly to win a new customer, think about how much more it will be to recapture one who has felt betrayed by you in the past.

Take care, and keep striving to be an exemplary role model of credibility.

Steve Coats
, Certified Master of The Leadership Challenge, is managing partner and co-owner of International Leadership Associates, a leadership development education and consulting firm. For over 25 years, Steve has taught, coached, and consulted with executives and all levels of managers around the world in leadership development, team development, personal growth, change, and business strategy. Steve can be reached at stevec@i-lead.com


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