Healing IMF’s wounds

The first thing Christine Lagarde will need to do as chief of the International Monetary Fund, of course, is to wrestle with the evolving debt crisis in Europe, particularly Greece. But equally important, as she noted in her statement to the board, will be healing the “open wounds” that have festered amid the resignation of her predecessor, Dominique Strauss-Kahn, accused of sexually assaulting a hotel housekeeper.

The incoming director, she wrote, “must take pains to show the outside world that this great institution is not only leading in terms of expertise, but also in terms of integrity and work ethics. We must consolidate and, if needed, restore staff pride in working at the IMF, to get us through the healing process.” So what’s the best way to go about doing so?

Lagarde’s presence itself as the first female head of the IMF will go a long way. Granted, Lagarde is poised to earn the job because she’s the most qualified and best positioned to help the organization deal with pressing economic crises. And while putting an extremely successful woman atop the IMF won’t erase the Strauss-Kahn scandal or stop every unwanted advance, it should remind staffers how much the organization values gender equality. At the very least, having someone in charge who doesn’t have the reputation of being a womanizer is surely a good thing.

It’s unclear how much the internal culture at IMF actually needs fixing. A New York Times story in May laid out an image of the IMF as a place “in which romances often flourish — and lines are sometimes crossed,” where a pressured, “sharp-elbowed” place left complaints of harassment unanswered and where “rules are more like guidelines.” About 676 women in the organization filed a response to the story, saying they were insulted by the way their workplace was depicted.

Still, Lagarde says the organization will need to “take pains to show the outside world” that it is a leader in ethical behavior. And she acknowledges that staff morale will need some mending after the august organization’s embarrassing time in the spotlight. As a result, the temptation will be to bring in an army of consultants, start up a battery of ethics training sessions she can boast about to outsiders, and launch staff-wide pride-building exercises that are sure to elicit more complaints than cheers.

True, authentic change will take time. Going out of her way to recognize people who demonstrate honorable, pride-worthy behavior will help. Highlighting the institution’s achievements through more and more staff communication will be key, too. Most of all, healing those “open wounds” will require Lagarde to make sure no one gets promoted or rewarded who doesn’t have an impeccable character. And that no one in a position of senior leadership has a reputation for anything but infallible ethical behavior.

McGregor writes about leading in a changing world.

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