The current economic crisis offers plenty of change, but little in the way of change leadership. Harris Diamond writes in an Op-Ed in the October 14, 2008 edition of The Washington Times…

“What we’ve got here is failure to communicate.” The immortal line from the movie “Cool Hand Luke” is especially apt these days.

The systemic failures plaguing our banking and financial system are real and have caused genuine pain to millions of Americans. But the problems have likely been made worse by the public’s reaction, or overreaction, to the systematic failure of our nation’s political and financial leaders to communicate effectively with us since the crisis began.

At every step along the way, we have been told that the most recent government initiative taken to resolve the problem was sufficient and would be successful. And, within a matter of days or weeks, the claim was proven wrong. As a result, the banking crisis has morphed into a crisis of confidence in our leaders, our institutions and, in no small measure, in the free market system itself.

There are many rules to follow in the practice of crisis communications, but two are inviolate: when in crisis, communicate; and don’t do anything to undermine your credibility. The people who run our government and financial institutions have violated both.

(The whole piece is available at this link: http://washingtontimes.com/news/2008/oct/14/a-crisis-of-confidence/)

I saw the effects of this leadership crisis on Saturday night during a dinner with several friends. One of these friends is a nationally-known investment manager. (Our children go to school together and you may have seen him on the television.) He told a story about eating dinner with somebody even more well-known – a general of the financial industry and a political appointee of the highest level. It wasn’t a good story.

Much like we were waiting for some form of comforting wisdom from our friend, he had had wanted to hear similar wisdom from this uberexpert. The general’s answer to the question, “how do we get out of this,” was relayed to us with just one degree of separation, two days of aging and three measures of nervousness: “pause…. pause…. clear throat…. pause…. I’m not sure if anybody knows.”

We were crushed. If anybody could have provided us wisdom and comfort, it would have been our friend. Instead, he gave us cause to worry well beyond his own pedigree.

Whether it is a dinner among friends, or a meeting where a VP says, “I don’t have time to worry about preserving productivity, I need to cut heads quickly,” our leaders are showing fear these days.

I’d suggest a “cool hand” is far more necessary in times of crisis. People who look up to you are basing their actions on yours.

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