Question:  My colleagues and I have been hustling the last six to eight years, but salaries have not even kept up with inflation and now our 401(k)'s are badly hit.  It doesn't seem unfair to ask: "What's wrong with our business leaders?" -  Jake L.

Bob's Answer: There's clearly a lot of frustration in your question, Jake. It's justified and many people are asking the same thing.  Leaders have a responsibility to know what's going on - to "Focus on the Whole" and understand their entire system. Yet we are at a point technologically where many CEO's don't understand how their systems or products work.  The technology boom has made sweeping changes in most businesses in just the last 25 years so individuals who started their careers leading one way have had to develop a new approach to business leadership. There seem to be two factors that led business leaders astray - complexity that they didn't understand (and didn't bother to understand) AND "greed and good times" that kept everyone pushing for more without thinking about the end game or asking the questions that needed to be asked.

Lyn's Answer: Ignorance is no excuse for failing to think strategically about what's best for your company when you are an executive. And awareness is now the law for public companies - the Sarbanes Oxley legislation requires executives to sign off on the veracity of their financial statements. As Jack and Suzy Welch said about the sub prime mortgage fiasco in their article "Shrugging Toward Recession,"   "...complexity wasn't the problem. Lots of innovations are complex. The problem was that these products were sold into a yield-hungry market without enough top managers abreast of why or how they made money." 

I can't resist this: One thing those top managers needed is more "KISS ing."

Keep It Simple Slim.

If you don't get it, say so - we should have stopped buying the "you're not smart enough to understand, but trust me it's a great business model" with Enron.  All of us - to save face - at times nod our heads and smile when we don't understand something. Jason Zweig, who authors the Intelligent Investor column for the Wall Street Journal, explains that asset managers had unclear facts, but moved forward with risky investments anyway. "The banks aren't lying," he warned. "They're guessing."

So what's the lesson here for business people? Nodding when you don't really understand is just "pretense" or taking the easy, face-saving road. It's not immoral, but it's not high in integrity either. What we have found in many years of working with large and small organizations, Jake, is that integrity is better for the bottom line. 

Bob:  So if you are a leader, or aspire to be one, the real question is: How do you develop a leadership style that will avoid a meltdown of your company?  We asked a panel of respected business leaders this question recently and their answers might interest you.  Tom Crawford, CEO of Crawford & Company, a global insurance corporation with annual revenue of more than a billion dollars relies on principles of leadership character to grow his firm. He suggested walking around. When the company leaders visit a department or job site, always talk to the employees. Companies benefit when leaders have close contact with the front line. They model respect and integrity, build commitment and engagement, AND they find out what's going on.

Jim Huling, an executive consultant and former CEO, said a simple way to find out if your organization has a breakdown in integrity is to ask: People in the organization know. Several panel members used anonymous surveys to accomplish this, and one said she learned a lot from a simple suggestion box.

Lyn: Ann Stallard, a partner in Graphic Communications Inc., coined the word "want-flation" as an underlying problem of this financial fiasco. We all get into trouble - individuals and business leaders alike - when we always want more than we can afford and don't have the discipline to say no.