The terrible events of Sept. 11, 2001, took place five months after Kenneth I. Chenault was named chairman and chief executive officer of American Express. In addition to the human toll, the events of 9/11 dealt difficult blows to nearly all of American Express’s major lines of business: charge and credit cards, financial and investment services, travel and insurance.

What’s more, the World Trade Center was located directly across the street from American Express’s Manhattan headquarters. The collapse of the twin towers damaged the company’s headquarters, forced it to shut down for nearly a year and required the emergency relocation of 4,000 people who worked in the building. It was during this time that Chenault realized a leader’s reputation is made in times of crisis.

When Lehman Brothers shut its doors in 2008 and the global financial crisis began in earnest, Chenault’s leadership principles were tested once again. Building on what he had learned from the turmoil of 9/11, Chenault immediately reached out to people in the company and to clients, customers and shareholders. He worked hard to build confidence and allay fears. He held televised town-hall meetings, served as host of smaller local sessions, engaged his leadership team and visited sites around the world. Chenault connected.

He also set clear goals — stay liquid, stay profitable and invest for market share — all of which the company met. One page from Chenault’s leadership playbook is borrowed directly from Napoleon: define reality, give hope. Another is common sense: when people are fearful, get them focused. Yet another is derived from his ethical approach: leadership begins with integrity.

Chenault grew up on Long Island, N.Y., studied history at Bowdoin College, trained as a lawyer at the Harvard Law School and worked as a consultant and lawyer before joining American Express in 1981.

In this interview with Joel Kurtzman, editor in chief of The Korn/Ferry Institute’s Briefings on Talent and Leadership, Chenault discusses what leadership means in times of crisis and what a company needs to do to prepare.

You led American Express through two major crises - 9/11, when you were a new CEO and the global financial and economic crisis. What have these crises taught you about leadership?

CHENAULT: I came up with a saying right after 9/11 when I was talking to my leadership team. It just popped into my head. It’s that leadership reputations are made or lost during times of crises. What’s important about that are the following: to reaffirm and reinforce the privilege and responsibility of leadership. At the end of the day your responsibility is to the institution, to the people, to your customers, to your shareholders and to society at large. That’s where your responsibilities lie and if you don’t make good on those, then that’s where you lose the privilege to lead. But I also learned another important lesson from 9/11 that’s been of critical help to me in this financial crisis. That is, it’s important to connect to people and to understand the anxieties and issues they are dealing with in their business and personal lives.

How do you do that?

CHENAULT: You have to understand the feelings people have in a crisis. The uncertainty they feel, the anxiety they have when the markets collapse. And you have to acknowledge to them that “this is indeed frightening.” You have to acknowledge that what is happening is a cause for anxiety. But you also have to explain that there are good reasons why they should also feel confident. You have to explain that our company has been around for 159 years and that we’ve been through a range of crises during that time. And you have to remind them that we have a very strong commitment to the hallmark of our company, which is service. When you’re in the people business, like we are, you’ve got to have people motivated, you’ve got to have people engaged and you’ve got to have people composed, because if you think about all of the issues during 9/11, and about the financial crisis, our people have to be a solid force for our customers and our clients. We have to be a reassuring voice for them. Now this is a very important point. Prior to any crisis, you have to have built integrity, which I think is the foundation of leadership. I say that because I can give you the most rational strategy and you might say, “Well, wait a minute, 9/11, the downturn, and you’re telling me we’re going to be fine?” In a crisis, with even the most rational strategy, there has to be a trust. It has to be there because how else can people believe in the strategy or in leadership unless they’ve seen consistency?

So, to lead in a crisis, you have to have built up your reputation for integrity in advance of the crisis. Do I have that right?

CHENAULT Yes. People have to believe in your leadership. They have to see consistency and values. That’s why I talk about integrity so much. But, in addition, people are also looking for courage. I define courage in this context as a willingness to make tough calls, to speak up about issues. And they also look for compassion. Real compassion. “Does the leader care about me?” “Do the leaders care about the company or do they just care about themselves?”

What other traits does a leader have to exhibit in a crisis?

CHENAULT: Decisiveness. You have to be absolutely decisive. And that means you may bruise some feelings. But you’ve got to risk people being upset with you, because you have to take action. So, what was important both in 9/11 and in the financial crisis was that very early on I asserted what were the key priorities that we needed to focus on as a company. In the financial crisis I came up with what I called the mantra, which were our three priorities. They were based on my assessment of the environment and what I thought was important to motivate and galvanize the organization, because part of what I think a leader has to do is motivate followership around a vision. 

What are the three principles you used to motivate people during the financial crisis?

CHENAULT: First, stay liquid. Now, one might say, “Gosh, Ken, what’s inspiring about that?” Well, let’s face it, for financial services companies in the midst of a financial crisis, that was a big concern. In addition, I wanted the organization to understand that I’m realistic. Survival is critical, and to do that we have to stay liquid. So we needed to orient and align our actions against that principle. The second principle was to stay profitable. That was important because what I was then able to say — even in the midst of chaos — was that there’s a way we can differentiate ourselves from other financial-services companies, by staying profitable. And, I actually believed we could stay profitable. That’s important for the future of our company, that’s important for our employees, that’s important for our shareholders, that’s important for our customers. Our third principle was to selectively invest in growth.

Growth? In a time of crisis?

CHENAULT: Yes. Now, that takes me back to the leadership maxim that I’ve used for probably the last 20 years of my career. It is something I’ve paraphrased from Napoleon, that I used in 9/11, and that I used in the financial crisis. In fact, I start off probably 80 percent of my leadership speeches by talking about it. To me it is the essence of the definition of leadership. It is that the role of a leader is to define reality and give hope. So, you can see in my mantra that while I laid out some very practical objectives, what I really was doing was reflecting back and saying, “How do I define reality for the organization and how do I define hope?” Now, I emphasize with regard to reality that there’s nothing more real than saying, “We’re going to stay liquid.” And the hope was that we could actually grow in this environment. We could invest, we could plan for the future. It’s critical that we do that even in this time of financial crisis.

How did you know whether your messages were getting through to the thousands of people in the organization?

CHENAULT: I knew that those messages were getting through during the financial crisis because the organization didn’t freeze and the organization didn’t panic. Let’s be clear, people were anxious, they were nervous, they were scared, they were concerned. But they just didn’t come to work and sit at their desk. They were focused against the objectives I mentioned. Now, one of our overriding priorities is that we’re in the service business, so we have to serve our people. Our front-line employees and our entire management team really galvanized behind that notion of service. Now, we live in uncertain times, and if our customers can trust American Express in these times to deliver service, we can gain an advantage. And what we talked about was “don’t just think in the short term.” Don’t let your selfworth be defined by the daily fluctuations of our stock price when, in fact, we are operating in the worst economic environment since the 1930s. So, I reminded people to look for some signs of progress. One was, we have remained profitable, which was a goal. We’ve made major reductions in our expenses. While difficult, we eliminated 17 percent of our work force to align with the current economic environment. We did these things.

What was the reaction of people in the organization to following the objectives you set out?

CHENAULT: An interesting thing happened. We do an employee survey every year. The employee survey was administered close to the low point of the downturn, and we received an overall rating of 1 on our survey, which means best, which means trust, which means confidence in the leadership, and in our strategies. So, there was alignment with my mantra, which meant people understood what our priorities were. This meant the messages were getting through. By the way, during 9/11, we saw the same result. Some people back then even said not to administer the survey. But we did it and we got the same result. We scored very high. And this time, there was the recognition that in these challenging times, I was not holding back on the issues we were dealing with. Not on the economy, or the rating agencies, and not with our customers, and our clients.

What leadership techniques did you employ to produce those results?

CHENAULT: We set priorities, we were decisive, we demonstrated compassion. And from a communications standpoint, we connected the dots. You have to be visible to the organization. Now, I’m not just talking about me. I’m talking about my entire leadership team at every level. They got out to see people and talk to them about business issues they’re confronting, and about personal issues. I just came back from doing a visit to one of our largest facilities in the country — Phoenix, Ariz. — and while I was there we hosted a satellite town-hall meeting around the world. One of the purposes of that town hall was to acknowledge the progress we’ve made, but also to let people know that there are still major issues with the economy that we are dealing with. Another purpose was to recognize that a number of our people were personally impacted by the downturn. They were affected by unemployment in their families, the housing price crisis, and so on. And we wanted to acknowledge that and they were still coming to work and serving our customers incredibly well. We wanted to acknowledge that by doing that, they were reinforcing the mission of the company. My point is, it is essential that you are visible, that you are communicating the context for the decisions you need to make and for the actions that you need to take.

So you’ve conducted town-hall meetings. What are some of the other things you’ve done during the financial crisis to keep the organization focused?

CHENAULT: I’ve done a range of things. I really believe it’s important to set the tone from the top. At the same time, you have to have a leadership team that takes personal ownership and accountability for making things happen. And one of the points I’ve made to the organization, and I also use this in my approach to leadership, is that I believe leadership has to be exhibited irrespective of title or level. So I’m not into hierarchical leadership. I would call our customer-care professionals and say: “You’re leaders. You need to focus on being leaders.” It’s my belief that everyone should have a sense of common purpose and that everyone can play a leadership role. I often talk about how do you know if someone’s a leader? I say look at their followership. And I say to a customer-care professional: “You know how to know you’re a leader? When your colleagues come to you and ask you for advice and ask for your judgment, and ask you for support. If they do that, you’re an outstanding leader. So, you’ve got to focus on learning those leadership attributes.” And one of the things that has helped us is we’ve taken the training of our leaders very seriously at all levels over the last 15 years. We have what we call our authentic leadership program.

What do you mean by authentic leadership?

CHENAULT: There are people who are born leaders. But I think at the end of the day, as with any natural athlete, unless you work at the skills and capabilities of leadership, it’s very hard to evolve in a sustainable way into an outstanding leader. So, the authentic leadership program is all about educating and teaching our people to be authentic, genuine leaders, and about how to engage with employees, how to set an agenda, how to galvanize support around a vision and a mission, and how to put things in context.

How far does this program reach into the organization?

CHENAULT: It goes through the manager level of the organization, which is what might be called middle management. We have some leadership training programs at the manager level, at the entry manager level, too. Everyone has a leadership development plan that is reviewed through the hierarchy with the key elements checked by the individual and by their leaders to make sure there’s progress against the plan. Let’s face it, a lot of people put together plans that say, “I’ll do this or that.” But the check has to be, well, what progress has been made against their leadership plan? How are they performing against it? And, I think it goes back to reinforcing through your overall recognition and compensation system, that you take leadership very seriously. And so if you look at our compensation system, what we’ve said is that since we’re in the service business, we obviously want to perform for our shareholders, but our customers are paramount. So 50 percent of our weighting for compensation is shareholder performance; 25 percent is based on our customer evaluations and satisfaction scores; and 25 percent is based on the employee survey.

Is that throughout the organization?

CHENAULT: Yes. It’s throughout the organization.

So everyone has a stake in growing shareholder value, customer satisfaction and employee satisfaction?

CHENAULT: That’s absolutely right. Everyone has a stake in the customer no matter what they do in the organization because, at the end of the day, we’re a customer-driven organization. Now, in some cases, those customers may be internal, with some overlay of the external customer. We also have a very comprehensive feedback program — upward feedback, peer feedback, 360 feedback. My point is, I don’t care who you are, you can always learn from feedback, and part of what we evaluate in the performance of our people is, obviously, we’re very focused on outcomes and results, but then we are also very focused on how those results were achieved.

So results are not enough. It’s how you get those results that counts?

CHENAULT: Yes. We want to know what were the leadership behaviours that you exhibited to get your results. Did you demonstrate integrity? Decisiveness? Did you demonstrate a level of concern for your employees? Are you providing continuous feedback? Are you developing leaders?

How do you select people to become your future leaders?

CHENAULT: We’re very outcome driven, so we want to have people who achieve results, but the “how” part comes into it. What type of leadership behaviors have they exhibited? So we give people a goal rating and a leadership rating. And there are situations where someone could score a 1 on goals and a 3 or 4 on leadership, and then there would be an intervention. We’d say, “Here’s what you need to do on the leadership side,” because what our analyses have shown is that someone who has that profile hits a wall. They move up to the vice president or senior vice president level — where leadership skills are even more important — and all of a sudden their performance drops.

Do you get evaluated the same way?

CHENAULT: Yes, I do. Actually, I get input from my peers and subordinates and it’s a very useful exercise. And, what I also encourage and it’s part of our values — is constructive confrontation.

How do you define constructive confrontation?

CHENAULT: It’s giving feedback on issues. You can do this in a respectful and appropriate way without being personal. To have an effective team, you need as much transparency as possible. So if I want to know where you stand on an issue, you should feel comfortable giving me feedback on that issue, and you should be able to deliver that feedback in a direct way, without being disrespectful. And if there are areas that I need to improve in, or areas that I need to be focused on, or if there’s a business issue about which we disagree, you should be able to tell me directly.

So, when you talk about leadership, you’re not just talking about leading in a crisis. You’re talking about how you run the company and about the traits you value throughout the organization. Is that correct?

CHENAULT: Absolutely. Even our board is involved with it. Our board regularly spends time going through talent issues in the organization. As part of my regular update with the board, I take them through personnel issues and development issues, and I actually get individual board members involved. In fact, we spend close to a full day a year on these topics. In addition, in the regular board meetings, we have a session with directors where I go through these issues, where we discuss different people in the organization, where we talk about what they are confronting. I do it to get input from the board. In addition, on a formal basis, I will ask board members who have certain experience to spend some time with some of our people. I’ll ask board members to share their business and leadership perspectives. I really think our people can benefit from a board member’s feedback.

Do you discuss succession and bench strength issues as well?

CHENAULT: Absolutely. The key thing is that we go through this regularly. People are constantly updating the succession and bench strength list, so we have two or three successors for each senior job. We go through that, we talk about rotating people in and out of roles to make sure we have people that have a range of business experiences and a range of leadership experiences. An important obligation and responsibility of leadership is to make sure that you’re building a foundation that will continue the success, and that means you’ve got to have that bench strength. I believe it is important to develop bench strength internally, but I also think we want to ask ourselves whether there are positions where we should bring in people from the outside. In my view, you don’t want to have 100 percent home-grown talent. You want to have the majority of your leadership come up through the organization, but you also want to have some fresh perspectives coming into the organization from outside.

How do you evaluate when to go outside for talent?

CHENAULT: We look at the competencies we think we need to build the organization. We look at where we need people. For example, a few years ago we said we needed to have a broader range of people with Internet and online experience in the company. We also needed people who had certain types of marketing experience and service-development experience, and we also wanted people with specific geographic expertise. We then went through our lineup of internal talent, and we said it’ll be useful to add certain skills and experiences. In addition, we also said, on a selected basis: “I think in this particular area, so and so is one of the best people in the world. Let’s see if we can get that person to join us.”

How do you do the analysis?

CHENAULT: We’re constantly scanning. Part of what we do is scan for senior jobs, and we do this periodically. We actually match our people up against people that we consider best-in-class in different industries and different companies. So, we look at a particular finance role and ask, do we have the best finance person in that particular area? To find out, we benchmark ourselves against companies that are reputed to have the best people, and then we compare ourselves to them. We constantly compare and contrast because we want to make sure we’re not totally internally focused.

Do you compare your people to those in other organizations on a regular basis?

CHENAULT: Yes. We would rank people inside our organization, from top to bottom, and then we do a peer ranking review, just as you would on a business. I want to know, is my customer service the best? Fortunately, in the card business it is. But I want to constantly monitor that. I want to monitor and see where the talent is, how we compare, and where we see there are gaps we need to fill from the outside, and where we need to develop our people and put in programs to give our people the experiences they need to close those gaps and develop their skills.

It sounds as if you don’t draw a distinction between management and leadership, the way some people do.

CHENAULT: That’s correct. We don’t draw a distinction between the two because at the end of the day, we’re asking everyone to be a leader. And it’s not up for negotiation. If you want to be in management in this company, you have to embrace the leadership principles of the company, and you have to be focused on becoming a good leader.

Thank You.

American Express values

  • Customer Commitment 
    We develop relationships that make a positive difference in our customers’ lives.
  • Quality
    We provide outstanding products and unsurpassed service that, together, deliver premium value to our customers.
  • Integrity
    We uphold the highest standards of integrity in all of our actions.
  • Teamwork
    We work together, across boundaries, to meet the needs of our customers and to help the company win.
  • Respekt for People
    We value our people, encourage their development and reward their performance.
  • Good Citizenship
    We are good citizens in the communities in which we live and work.
  • A Will to Win
    We exhibit a strong will to win in the marketplace and in every aspect of our business.
  • Personal Accountability
    We are personally accountable for delivering on our commitments.
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