Lessons From Citigroup CEO’s Unexpected Departure

Turbulent economic times are bound to lead to unforeseen and unexpected shifts in leadership. With the announcement this week of Citigroup CEO Vikram Pandit’s resignation, I can’t say I’m too surprised. For one, the shareholders stood their ground in April, denying Pandit and other top executives their pay packages simply because they didn’t earn it. (Read previous post: Wall Street is Waking Up! Shareholders Send a Message.)

But rather than spend time analyzing the reasons for Pandit’s sudden departure, if I were its shareholders, employees or customers, I would be most interested in what they are doing to ensure the success of their incoming CEO.

To begin with, I think it’s essential that the newly appointed CEO understand that leadership is all about behavior: his or her own behavior and the behavior of those who follow (i.e. followers or employees). To be an effective leader, behavior must be understood in a precise way. Even though it appears that organizations are acknowledging the importance of behavior at the executive level, this group tends to still be far removed from the specific behaviors that are creating the results in their organization, good or bad. Watch “Undercover Boss” for dramatic examples. And, because organizations are trained to focus on results, it is more than common for behavior to be ignored.

Competent performance at all levels of management is a matter of creating results through the correct behavior. When we track both the behaviors and the results, we gain a much clearer picture of the relationship between our own efforts, the efforts of others and the success or failure of initiatives.

In my years working with hundreds of leaders across all industries, one thing proved common: the only way to truly measure a leader’s effectiveness is to look at the behavior of his or her followers. In my book, Measure of a Leader, I explain that the most powerful predictors of effective leadership fall into four categories:

1. Momentum: Maximum momentum can only be achieved through the creation of a culture of positive reinforcement. How leaders build momentum within their organization, at all levels, is crucial.

2. Commitment: The leader has to make the work worthwhile, and if you are providing a product or service that benefits the customer, it is important, and possible, to get employees in those businesses to be committed to that.

3. Initiative: All employees start a job wanting to do it the best way possible. Surprisingly many employees generate ideas in the first days or weeks of employment of how to do the job better.  Unfortunately, most of their ideas are dismissed, leading the employees to the conclusion that they have value only from what their hands can produce. It is one of business’ significant failures and one that is clearly avoidable. An effective leader builds and reinforces initiative in all followers.

4. Reciprocity: Respect and trust can only be achieved by having a high correlation between what the leader says and does. Not following through on commitments erodes trust quickly. If the leader acts as though he or she is above employees, building a culture where employees interact freely and openly with leaders to create the best product or service at a reasonable cost is impossible.

Introducing a new CEO, leader or manager can be either highly successful or detrimental to the company and its employees. It seems that the newly appointed CEO at Citigroup has the results; the question is, does he have the follower behavior he needs to lead Citigroup to a successful future?