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How Great Executives React in a Disaster

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Kevin Kabat, former CEO of Fifth Third Bancorp and current board member of NiSource and Unum Group, discusses how executive reactions in a crisis shape the future of the company.

How Great Executives React in a Disaster

A 480 PODCAST

How Great Executives React in a Disaster

16 minutes | 4/15/2020

00:00:00 00:00

The stress of a crisis quickly reveals the true strengths and weaknesses of executives. Kevin Kabat, former CEO of Fifth Third Bancorp and current board member of NiSource and Unum Group, discusses how executive reactions in a crisis shape the future of the company.

Episode Transcript

Kevin Kabat:  We had, what I would call, a normal bell curve. We had some executives that accepted the challenge open arms, they embraced it, they were engaged. There were some that were disengaged and there were some in shock and a good deal of shock throughout the process. It was almost, I would say, I hate to make generalizations, but it was almost like a bell curve of the engaged on one, the disengaged on the other and most folks are in shock.

Matt Paese: This is the Leadership 480 Podcast. Welcome back to the Leadership 480 Podcast. I'm Matt Paese, your host, and we have something special for you today. As some of you may know from previous episodes in which I've been a guest on this show, I work closely with boards, CEOs and executives as a coach and a consultant. Today, we're shaking things up a bit on Leadership 480 and I'm sitting in the host seat because right now as we work through a global pandemic, absolutely everything has been shaken up and that puts a lot of pressure on executive leaders who are faced with making really tough decisions in this time.

To talk about that, I've got a very special guest with me today, Kevin Kabat. Kevin is the former CEO and board chair of Fifth Third Bank Corp and currently chairs the board for NiSource, a large energy provider covering the Midwest and Northeast, and he's the lead independent director for Unum Group, a disability and life insurance provider to over 36 million people across the country. Add to that the many community and charity boards and committees that Kevin is on and you have one very experienced leader with us today. Kevin, welcome.

Kevin Kabat: Thank you, Matt. Good to be with you today.

Matt Paese: So Kevin, in your leadership, both as a CEO and a member of multiple boards, you've led organizations through more than one crisis; financial meltdowns, safety catastrophes, just to name a couple. But you've also managed to see them through to success more than once as you know, and I know you're going to share some of that with us, but going to start out with a question about the way you see executives react in times like this. So in your experience, what are the strongest impulses or reflexes among executives in times of crisis? What I mean by that is how are they most inclined to react and what do they get wrong?

Kevin Kabat: Yeah, it's a good question, Matt. I would say to you, I guess in my career I've been lucky to experience two crises sees, most of these black swans only come across once in a generation, but I've unfortunately kind of fit two in from that perspective. So, yeah, I have experienced some of these. When you asked the question about executives in times of crisis and how they are inclined to react to them, you have to remember that executives are people too; it's human nature. So in times of crisis, human nature oftentimes gets revealed. Just like you and I, most people are the same and that in the sense that they actually reveal their own human thoughts, sometimes frailties in those situations. So you really get to see a broad swath of how executives handle it.

My example, I would tell you that we had, what I would call, a normal bell curve. We had some executives that accepted the challenge open arms, they embraced it, they were engaged. There were some that were disengaged and there were some in shock and a good deal of shock throughout the process. It was almost, I would say, I hate to make generalizations, but it was almost like a bell curve of the engaged on one end, the disengaged on the other and most folks are in shock. I would tell you that the engaged can play a very, very important and key role in getting an organization through that crisis by getting the kind of the middle bell curve moving in a positive direction, doing things really that are helpful and moving the corporation and peers in a very positive direction.

You asked me also, about what do executives do wrong? I would tell you that there can be a lot of specifics there, but I think one of the biggest mistakes that we as executives make in that timeline, particularly when you're talking about a crisis, is that we don't broaden the base. By that, what I mean is we don't count on or expand the number of people included in understanding, learning, assessing and developing a game plan relative to approach. We oftentimes feel as leaders and executives, that it's up to us because that's how many of us kind of advanced our careers, right? We were the problem solvers. We were the ones who kind of advanced the ball.

In times of crisis, we're not talking about little crises, we're talking about black swan, never experienced before in our generations. In these types of crises that we're talking about, it's not a one person problem. So broadening the base, I think is the biggest issue where get more people, get more input, get more assessment as you develop your game plan for moving forward. I think that's the biggest mistake we, as executives, can make at this time.

Matt Paese: That's interesting. It really leads to the next thing I wanted to ask you about, which is see if you can take us into, if you will, in quotes, "the situation room." So let's say you and your senior team and maybe even one or more board members are around a table and you're looking at options, trying to frame how you're going to go forward. You're talking about cost-cutting options, but you're trying to maintain continuity. That's a lot of talk about that right now in this coronavirus crisis. What's the recovery going to look like? When is it coming? How deep are we going to go into recession? It's hard to know, but as you're sitting and evaluating all the bad alternatives, how do you weigh your options and how do you frame the needs of your people with the needs of the needs of the business, both short and longterm?

Kevin Kabat: Yeah, that's a great question and it is situational. So in the situation room, really kind of depends. I would tell you there's an awful lot of differences between The Great Recession and pandemic. So making generalizations about them as one is not right. They are really different, they are very separate and I'll explain that a little bit more as we go on in our conversation, I'm sure. I think though, as I think about some of my experience and I think about the recession, The Great Recession for example, one of the things that was an outcome of that I think was very positive led by the fed, in my case in banking, really developing muscles during that time period that we'd never really developed before. Specifically, I'm talking about scenario planning, in our case in banks, was capital planning. What would you do if these different scenarios occurred and how would you react to them? What would you do about them?

It really took you down a path of really kind of thinking, pardon the phrase, but thinking really outside the box, outside of the norm and really trying to understand what the ramifications to the business and to your people and to your constituents really were. So that was a really helpful thing for us. As I said, this crisis, this pandemic is very different. This black swan is really different and if I were to have asked you, or this group that we're talking to today, if you'd have been able to define for me four to six weeks ago, what social distancing was, I doubt many people would be able to really express what we all know and I've learned so far today. So one of the things that I would tell you in a crisis and the situation room is that it's not a onetime thing. Crises are by the very nature; they change and we learn minute by minute in some cases, hour by hour, certainly day by day, all the time.

So really being fluid in terms of understanding what the situation is and making those assessments becomes really critical. Again, having eyes and ears and understanding all the ramifications are really important as you go through a crisis of this nature. But also say, in this particular situation, and you mentioned, Matt, in your question about kind of the battle alternatives, how do you weigh the options up, et cetera, you've really got, in this case, a very symbiotic relationship, right? So you've got the health of your people and the health of your company. By the way, you can't have either fail because one doesn't survive without the other. So that really sets up a very difficult challenge; a very, very critical situation where you've got to be very mindful of the things that you're going to need to identify and assess that are critical needs for both of those conditions to exist, right? You've got to keep the health of the business going. You've got to keep the health of your people mindful. You need both to get through the crisis, so elements of what we would do, "normally," don't matter.

What becomes really important then is focusing on those specific items of success, health of your business and the health of your people and really peeling away all of the other noise is critical to success. To give you an example. I learned from my own son, it's a true story. My son's now, we just celebrated his 37th birthday, he's a major in US army, very proud of him. When he was a young boy, he was very interested in the new technology that was coming out, and particularly in some games. He wanted to learn... He wanted me to get for him a game that was all about flying airplanes. I said... Finally, I broke down and I got a for him and as was usual in those days, right? Because I'm a little bit older than you, is I loaded the software and I proceeded to sit my son next to me and show him how the software worked. This is one of those software games where you got your assignment, you were a pilot and you had to accomplish the mission in order to be promoted.

So I walked him through all that. I showed him by moving the plane out to the runway, we got it out to the runway and I took off. As I took off, I was instantly surrounded by enemy aircraft shot me down. I don't even think I made a hundred feet. We did that several times. And fortunately for me, the phone rang. So I said to my son, "Just hang out here for a minute. I'll be back to teach you more," and I took the phone calls, a business call, lasted for about 20 minutes and came back and there was my son playing in the game, and watching and he got his new assignment as he was now a Lieutenant Colonel. I said, "Oh my gosh. Son, how did you do that? Show me. What'd you do? How'd you do that? That was great."

So he got his new assignment, got into the jet and he taxied out and he just kept driving the plane and accomplished his mission by never leaving the ground. I said, "Man, you can't do that. You're in an airplane." He drove over water. He said, "Dad, I'm a Lieutenant Colonel." And the point of the story, Matt, is he got over and prioritized his biggest problem; he didn't fly. He accomplished the mission. He cut out things that you would have thought normal by just dealing with it as a problem to be solved later, something that he refocused and reprioritized as not necessary to the mission. That's the type of out of the box thinking you need in a crisis and you need people around you kind of thinking about to help you be successful in the problems that you have before you. So that's the type of focus, that's the type of thinking you need really to be successful.

Matt Paese: It's such a vivid story and I think we can all relate to what it feels like to give something away to someone, not certain that they can do it. To your point, I guess maybe having some default assumptions that people can't do what they might be fully capable of doing. So it relates back to your point about broadening the base, doesn't it? [crosstalk 00: 14: 05] Because there's probably more opportunity in it. Yeah. [crosstalk 00: 14: 09]

Kevin Kabat: Exactly right, Matt. You will be pleasantly... It's one of the learnings you have when you come out of these. You get both sides of that coin, unfortunately. But one side of that coin is you will be pleasantly surprised by some of the people and some of the stories and some of the talent that really steps up to help.

Matt Paese: Let's talk about talent a little bit more. This is a scenario that... I'm raising this because a lot of our listeners are people who are keenly interested in this component of how to lead through a crisis. I think a lot of times they are up against a way of thinking that they're unfamiliar with or perhaps they just don't know how to navigate the rationale of how to think about talent. So I'll position this with a simple scenario. Let's say you're back in the situation room and one of your senior leaders makes the case that look, "Yeah. I can see that talent's important and we should invest in it, but we just can't right now. We've got a business to take care of. We got to wait until things stabilize and then we can think about talent." What do you say to that? What's the right way to think about that kind of position?

Kevin Kabat: Well, the way I think in a situation like that is that it's always about talent. At the end of the day... And particularly in my business, my business sold a product that every one of my competitors had. There was no difference between my dollar bill and the dollar bill from the bank down the street. So I believed very, very strongly that the key differentiation of success in our business was the people and talent that we had in the organization, and the systems and processes we've put in place to nurture that talent. So to me, it was never trade off. Now having said all that, obviously one of the biggest challenges I think this pandemic has is that it has created an environment where you can't gather people in a room to solve your problem. Right? And there's another thing though that I think will accelerate, and you'll see on the other side of this, ways of doing business that were probably adhered to or thought of or occasionally used, but will be dramatically more impactful in the future and that's technology.

That's being able to really utilize technology in a way to communicate, in a way to problem solve in a way to run the business that we really probably didn't fully leverage or contemplate in a way that's really meaningful today and will be tomorrow as well. Because beyond what the way we think about it for our talent and for our people, you've got a whole bunch of constituents as well, our customers specifically that are going to need, want to be reassured and still communicated to but in a very different way. So I say that you do need to prioritize, you do need to focus on the things at hand, but don't miss the prize. Don't confuse what really is important today, tomorrow and forever with the crisis of today.

You asked me earlier about one of the big mistakes that executives make. Well, one of the big mistakes the executive makes when the house is on fire, when the house is burning, is looking for the match; doesn't help. Looking for the fire bucket and water helps a lot. So that's the prioritization that has to take place and keeping your people first and in that mindset, in that frame of mind, I think becomes really critical. So one of the things that we did through our crisis is we increased communication by over 60% [inaudible 00: 18: 18] folks. That was without all the tools that we have today. So I would do that as something that's really important and really critical to success in today's environment that doesn't interfere with or cloud the water to solutioning and getting through this crisis.

Matt Paese: Did you have to redeploy talent and did redeploy talent in a way that created change?

Kevin Kabat: Yes, and the short answer, very much so. Again, it crisis is very fluid. So just when you think one thing, you get new data, a new perspective, a new component of change that comes about that you really have to react to. When it's all hands on deck, you've got to use everybody available. This is a situation that's to me, even more challenging than The Great Recession was. I had my full team at all times. In this pandemic, there are populations and people that are going to be impacted personally that you're not going to be able to leverage and you're not going to be able to take advantage of from that standpoint. But we had to do that and we did do that. We moved teams, we moved talent.

We took one of our very senior executives, on the ex-co committee reporting to me, and we took him out of his role and put him into a role specifically around a troubled assets, a function that before the crisis hit, was grossly undermanned and under and understaffed; we didn't need it. He really came out of his role as one of the senior leaders and took that and developed a muscle for us that really helped us get through the crisis in a much quicker, much stronger way than some of our competitors.

Matt Paese: You got me thinking about how this starts to affect leaders from a personal standpoint. I'm thinking about the leader who suddenly, yesterday is playing one role, managing one type of a business or a component thereof. And then tomorrow, it's utterly different. When you've watched executives cope with crisis, how have you seen them handle the stress and the challenges and the chaos?

Kevin Kabat: Yeah. Yeah. I guess that to me from my perspective and experience, we're talking about people and we're talking about teams and teams of people. I would tell you that one of the most critical things for leadership at this time now is keeping people engaged or moving people to be engaged. Right? That's one of the biggest things you want to make sure that you're able to do. As we did that, I would tell you I saw executives very focused and very challenged on moving everybody forward in addressing the issues and addressing the challenges that we, as an organization, had. I still think that's a very critical role. If you do that well by communicating, building loyalty, building a culture that promotes that and pride in the brand and pride in the organization and the people that we have, it's easier at time of crisis to move people in that engaged format.

Once the crisis is over, I would tell you, Matt, that we saw, there's no generalization I can make, but we saw a lot of varying responses to after the crisis was over. In some cases ,we saw incredible growth by people. They changed, they grew, they really became a much better executives. Others we saw, quite frankly, burned out. They redirected their focus. They redirected their careers. In some cases, they left the business altogether to do something totally different from that standpoint. Not good is not bad, it's just self-learning. It's people understanding and getting exposed to who they really are and then coming to different decisions about who they would have been had they not been challenged. I think a crisis brings out in a lot of people as well.

I think you'll see that as well, but you'll have to have that fluidity. You'll have to be open minded about where the biggest holes in the dike are, that you need folks to be able to put their fingers in at the time that you wouldn't have thought about them prior to the crisis. That's your flexibility that you should be thinking open minded about how best to solve the problem to keep everybody moving forward.

Matt Paese: You got me thinking now about some people who react in one direction and others who react in another direction. Earlier you mentioned there are some of your leaders who are going to quickly get engaged and others who may be more slow to do so and maybe never get there. In your experience, is there anything you can do to maneuver your talent in the midst of it, to increase the likelihood that people are moving to the side of engagement and not to the other side?

Kevin Kabat: Yeah. There is, there are some things you can do. What I would implore people, and again, it's tough when we're talking today cause we're in the middle of-

Matt Paese: Yeah.

Kevin Kabat: ... a crisis. But I would first say that before a crisis hits, you should be investing in talent, you should be focused on really kind of conveying to them how important and critical they are to the organization's success, to our future, to their future, to meeting goals, needs and growth. Those are investments that pay you dividends, particularly in times of crisis because those are the people, Matt, that were the first to step up. They were the first that didn't need me to lead them or to shine the spotlight on. Those were the ladies and gentlemen that really were impressive in terms of the things that they took on from that perspective.

And as I said, a good portion of our people in a crisis really are a deer in headlights. They really don't know how to react and they do need That positively engaged leadership, communication and focus to get people moving, but it does start a stampede. It does begin to move everyone proactively toward the right door and getting them focused on that. I think really understanding and knowing and highlighting those folks that are the positively engaged folks can help become a multiplier in the organization to move everyone along that line. Again, I think your listeners today probably have a much greater challenge than I did in the recession because you can't gather folks together where we could really share, look in the whites of their eyes so to speak, and can then convince them that these were the right things to do. So finding ways to communicate, finding ways to reach out, develop those relationships, communicate to people what the expectations are and move people forward or keep them engaged is a critical challenge that everyone in every today is thinking through and working on.

Matt Paese: That those uniquenesses to today's challenge from ones you've experienced in the past and that many of us have experienced in the past are really, I think what a lot of our listeners and a lot of organizations are trying to get their fingers on. You have the benefit of hindsight. You can look back at these and say, "Here's what we did," and I'm sure you can identify things you, you might've done differently, but if you took stock of the things that you wish you would've done differently, and I want to ask you to go through them all, I'll ask you to maybe reposition them and say when you think about the things that you would have... the moments you'd like back or the things you might've done differently, what do you think people might be missing right now? You just mentioned one; the challenge of communication just got a lot harder. Are there other things based in your experience, that you think people might be missing right now?

Kevin Kabat: Yeah. It's a great question and Matt, your point is dead on that it's specific to the group, the industry, the business that you're in. I think the thing I would say is that it can be a matter of almost everything in anything. But almost always in my experience, it's faster and sooner are the things that come to mind. So when you asked me about... I mentioned that we increased our internal and external communication by over 60% from what we did previous to the crisis. I would do that faster and sooner. That was a strength that became a real differentiator for us. But in hindsight, I would tell you I would have done it faster, I would've done it sooner. The same is true of almost anything that you can think about or that you could identify as a component of focus and prioritization within your company.

I'm sure your executives or your CEO is going to sit back afterwards and say, "We should've done this fast. We should have done this sooner. We should have done it harder." Then like I said, I think you could apply almost anything to that and those are the things that you're going to find are critical; action moving forward, and then having the ability to assess, re-prioritize and redirect. Those are skillsets and skill focuses you're going to need in this because you're going to be wrong. You're going to have to fix some of the things that you moved quickly on. If you're good at it, out of the box, you will be wrong. Hopefully, you will be. I guarantee you. Out of the 10 big things we did, I'd say we got seven of them right. The last three we changed and we made them right, we made them better or we stopped doing them and that's the type of learning and assessment and rear view mirroring that I think executive teams and executives do and recognize going into this, that that's going to be a part of the process.

Again, it goes back to that point, looking for the matches for what started the fire. At this point, doesn't matter; what matters is getting focused on the things that add value, create progress and move us forward from that perspective. There's plenty of time later to go back and reassess kind of the things that we could've done better or who's to blame. But today, it's all about the health and the moving forward and the progress being made from that perspective, knowing that you're going to make some mistakes along the way, all with the right things in mind to help us succeed. That's really the key to success in my mind.

Matt Paese: Okay, I've got one more for you. You've been giving us a really in depth view of sort of the organization and the way to maneuver it from inside the senior teams conference room, so to speak. But I'm going to just in my last question here, invite you to talk a little bit more personally from your own experience because I know, and you do too, that with every step upward in leadership, you get just a little bit more alone and a little bit more isolated if you're not careful. So I'm wondering if there's a moment as you think back through the crises that you've been through that affected you most as a leader and why it affected you and how it affected you?

Kevin Kabat: Well, I would tell you, Matt, that you're exactly right in question. You oftentimes, particularly in times of crisis, fuel the burden on your shoulders of an organization. In our case, it was 22,000 employees. It was close to three to five million customers that we felt a direct, I felt a direct accountability to and responsible for. What I would tell you is that that can be paralyzing, right? That's that shock group of folks. Wat we decided to do, what I decided to do was really get on the road, become visible, get out there and communicate very, very specifically, even in times when, as you recall, during that time, many folks blamed us, blamed the banks for the problem. What I found, which was very moving to me, was particularly with some of our most significant, and I would tell you, verbal customers and employees is how incredible they were in and thoughtful in making me feel better.

It wasn't intended that way. I was supposed to make them feel better and hopefully, I did some of that. But I was returned that favor a thousand fold over in their stories, in their thanks and in their communications to me about how significant and relevant the work and the people in the organization I was a part of meant to them. It was moving and it really changed me, touched me very deep in a crisis that quite frankly, I needed at that time and they were fantastic. Again, it's part of that not doing something and taking the risk to step out and to do something changed the perspective of the outcome, gave me more confidence to move forward, gave me the ability to give our people more confidence to move forward and we did. It helped pick up and accelerate our progress in a tremendous fashion. So it was a very, very moving for me in that time period to be out talking with both our customers and our employees.

Matt Paese: Kevin, thank you for that and thank you for your time today.

Kevin Kabat: Appreciate it, Matt. Thank you for what you guys do too.

Matt Paese: And thank you to our listeners for taking part of your 480 today to join us for this powerful conversation and remember, make every moment of leadership count.

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