The story of Zoe Cruz and her demise at Morgan Stanley is a great example of how we can learn from the mistakes of others. Although the story has been all over the news, Ms. Cruz and those closest to the actual events undoubtedly have their own version of events which we will never know. However, what we do know is filled with invaluable information on what leadership is NOT.

According to the Wall Street Journal (WSJ), Ms. Cruz appeared at first to have survived the challenges that hit Wall Street with the recent credit crisis. But her responses to her company’s $3.7 billion in losses helped to speed her from survival to ultimate failure.

Personal Responsibility

A powerful leader knows that she is ultimately responsible for anything and everything that happens on her watch. In other posts I have addressed the relationship between fear and taking risks, and the importance of each. Powerful leaders are unafraid to take risks, knowing that even if they encounter failure, these failures offer opportunities for learning and growth, for them individually and for their teams. In the event that a mistake happens, or that we encounter failure, the most powerful thing we can do for our leadership is take full responsibility. This fosters trust in us — confidence that we back up our words with real content instead of empty fluff. It also reassures our team that they can takes risks knowing that we have their backs. This gives them permission to think out of the box — to explore their most creative ideas and solutions with abandon. With this kind of permission there is a greater chance that something truly great can be created.

According to the WSJ, Ms. Cruz did not take personal responsibility for the losses at Morgan Stanley, choosing instead to lash out at fellow employees.

When we lash out at our peers or our direct reports, we encourage suspicion and defensiveness. Our trust is eroded, people no longer have confidence in their ability to freely speak their minds or explore their ideas with us. They never know when they might be at the receiving end of our anger and frustration. Anger and frustration, as we know, are frequently the result of our trying to control situations which are out of control, based on our fear of failure and embarrassment. The more successfully we can recognize when anger and frustration are building within us and express those feelings in more appropriate ways, the more likely we are to avoid lashing out and destroying the important qualities of trust and confidence necessary to maintain powerful leadership.

Alternative ways to expressing anger and frustration might be:

• Engage in intense physical activity
• Talk with a trusted confidante about our feelings
• Express our feelings to our team rationally but honestly, particularly our feelings of fear
• Engage in creatively expressive activities, such as art or music
• Work with a coach or therapist (depending on the intensity and depth of the feelings) to strategize other ways of dealing with the feelings

Understanding team activities

It is absolutely essential that a leader understand what every person on their team is doing and why. This is not about micro-managing. This is about having a clear picture of what your organization is about. Without that clear picture, people on your team can be very busy doing very important things which have very little to do with organizational goals. It is your job to communicate clearly exactly the nature of your team’s work, including how each individual fits into the overall plan. Each person on the team should understand what every other person does and why. This will allow team accountability to take place without you constantly having to hold the reins as tightly.

Likewise, even though we want to encourage team members to take appropriate risks, we also want to be absolutely aware of what those risks are and how they might impact the organization. We want clear and ongoing communication from every team member, not so we can check up on them, but so we know what’s going on and can keep our eyes open for additional resources, extenuating circumstances or anything else that the team cannot see from their vantage point. We have the advantage of having a broader view, so we can have their backs in this way when they do take risks — giving them additional information or making suggestions or offering guidance as needed.

Ms. Cruz did not have a clear picture of the risks her company took in one division — a division which she herself had helped to build over the years, according to WSJ reports.

This kind of ignorance is hurtful in several ways. First off, the team assumes the leader knows. That’s why they are the leader. So when it comes out later that the leader didn’t know, there is a great sense of betrayal. The leader didn’t care enough to find out. It’s not that it’s not information that is available, after all. The leader only needs to ask. When the leader stops knowing, they stop caring and then the team is indeed abandoned. Anything that happens goes on without the guidance of the leader, and the team may be doing their best, but they need a leader to give them the bigger picture that they lack. They also need that backing that gives them ultimate confidence in what they are doing.

Treating team members respectfully

No matter how frustrated we become with our team, we must commit to leadership values which do not change. Those values may differ depending on the team and the leader, but some values are common sense people values which are non-negotiable. Among them are:

• Never berate an employee or peer publicly. This humiliates the employee and makes you look like a jerk. Nothing you have to say in a moment like this is worth saying in this venue. Save it for a private meeting where you can make it meaningful. If you are trying to make a point to the team, schedule a meeting and generalize your message so no one is identified as a target.
• Never use inappropriate language when speaking to an employee. This includes swearing, name calling, belittling and anything else that constitutes rudeness. Again, this makes you look like someone who has no self control. Learn to channel your frustration and anger into other areas (see above) and keep your message clean and to the point. Inappropriate language does not enhance your message in any way.
• Never treat an employee as if you are better than they are. You may have the title, but they may be more intelligent, more experienced and may actually be better at leading than you are. Stay in touch with your humility. No one is impervious to a fatal career flaw, and if you suffer from a lot of pride, you may find yourself falling further than you’d like one day. Every person is both teacher and student, and this includes your lowliest employee. Try to figure out what you have to learn from them and your interpersonal skills and dynamics may improve dramatically.

Ms. Cruz frequently clashed with one of her peers, publicly correcting him at employee presentations (WSJ). This creates resentment not only in the employee, but in everyone who likes him. You create many enemies you don’t even realize you have when you take this route.

You have a team – use it!

Your team can be a huge resource for you when you are faced with big decisions. Rather than going it alone and then trying to get everyone on board with your big idea, powerful leaders go to their teams and solicit ideas. They engage in passionate debate over the possibilities. They listen, they let everyone weigh in, and when everyone has had a chance to say what they think, they thank everyone for their input and THEN make their decision, taking everyone’s ideas into consideration. This is not leading by consensus (which is when everyone agrees), but rather leading by getting all the ideas on the table in case yours isn’t actually the best one. Your people have insights into the picture that you may not have since you have the BIG view and they are deeply involved in the smaller pieces. Without their input, you might miss something crucial in making your decision. Then in trying to get everyone to fit your plan, you’ll create resentment and additional work, if it is even possible to implement your plan at all.

The WSJ reports that Ms. Cruz tried to implement changes that some of her executives thought were ill-informed. If she had sought everyone’s input, she would have been extremely well informed, and perhaps would have chosen a different set of changes to implement. We don’t have the complete story on how she went about planning for and designing these changes.

Reportedly Ms. Cruz was asked to leave quite suddenly. She initially had the backing of Chief Executive John Mack, but after she exhibited poor leadership choices, including those outlined above, among others, he withdrew his support. Leaders, this is the story of an individual who would not rely on her team, would not encourage controversy, dissent and debate, would not respect her peers and employees, and would not take personal responsibility for failure. Powerful leadership stories do not end the way Ms. Cruz’s story ends. My hope is that she has learned some important leadership lessons from her experiences at Morgan Stanley and can still become the powerful leader she has the potential to be.