Amex CEO Ken Chenault: Define reality and give hope

May 12, 2009, 11:56 PM UTC

by Jessica Shambora

It’s a given that when corporations suffer, so do the charitable groups that rely on them for support.

Amidst the financial crisis, many strapped non-profits face funding losses as the need for their services rises. And unlike their counterparts at for-profit corporations, not-for-profit execs haven’t had the proper leadership training do what’s needed — restructuring, staff cuts, even mergers with other organizations. A recent study by Bridgespan Group shows a major talent deficit in the non-profit sector: It anticipates job openings for 24,000 senior managers throughout 2009. It’ll be harder than ever to fill the holes, Bridgespan contends.

Fortunately, leadership advice is universal — applicable to non-profits and corporations alike — and American Express CEO Ken Chenault is happy to hand it out. Chenault, chief since 2001 and on the boards of Procter & Gamble and IBM , is one of Warren Buffett’s favorite leaders; Berkshire Hathaway owns 13.1% of American Express.

In late April Amex held its second non-profit leadership academy, a week-long program that offers training and development courses to 24 rising stars from non-profits nationwide. Participants included leaders from the American Red Cross, Feeding America, and the National Trust for Historic Preservation. I had the chance to hear Chenault address these leaders-in-training.

When I arrived at American Express headquarters in lower Manhattan, the participants were in the midst of a role play, practicing their “influence tactics.” Using strategies like “coalition-building, legitimizing and rationalization,” they attempted to win a fictional $50 million endowment. The exercise led to some insightful observations: “The business world uses all nine strategies, while the non-profit world tends to use a personal approach,” one participant noted.

Once Chenault arrived, he perched comfortably on a stool among the academy’s attendees and began by explaining that he knew a thing or two about leading through crisis. Only nine months into his stint as CEO, with the World Trade Center across the street from American Express’s headquarters, 9/11 happened. Chenault’s leadership skills were put to the test. He proved himself then and again recently: Last Friday the government announced that American Express had passed the bank stress test and was well-capitalized enough to survive the recession.

Leadership is one of the most written about subjects, but it doesn’t need to be complicated, Chenault says. He abides by a quote from Napoleon that he summarizes this way: “The role of a leader is to define reality and give hope.” In other words, Chenault says, “How do I construct a vision to engender hope and motivate people to reach challenging objectives?”

To start, Chenault emphasizes that during times of crisis leaders must be visible, communicate constantly and maintain their composure.

Born leaders do exist, he believes, but if you don’t work at it, you can’t attain the followership needed to be successful. You get there through feedback and training. Recalling his first 360-degree review at Amex, Chenault said it was humbling to learn that he had work to do on his listening skills, a trait he says he’s praised for today.

Chenault also shared what he looks for in a leader:

  • Integrity is critical in uncertain times. “Not just being honest, but a consistency of actions and words.” Chenault advises avoiding those who shade what they say depending on who they’re talking to.
  • Encourage people to speak up and state their point of view. “I look for those who let people see they can disagree and give different perspectives. You want open dialogue and constructive confrontation or you risk group-think.”
  • Be a team player and collaborate. This is often misunderstood. “It’s not just about being nice. A good teammate says ‘Here’s what I’m going to do to help you to improve.'” It’s about putting the team ahead of individual egos.
  • Execute. “Be personally accountable. Don’t have a long list of excuses why you couldn’t execute an idea.”
  • Engage people by demonstrating authentic concern. “The different decisions you make impact the success of the organization and the livelihood of employees. They want to understand why you’re doing what you’re doing.”
  • Adaptability. Chenault looks for willingness to change the business model. He cites another favorite quote from Darwin: “It is not the strongest species that survive, nor the most intelligent, but the ones most adaptive to change.”

“I can’t think of a more important role than to be a leader of a nonprofit,” Chenault told the group in closing. “Your resources are limited, and the most valuable resource you have are your people.”