This July marks Christine Lagarde’s third anniversary as head of the International Monetary Fund. When she took the post, she faced a collapsing euro zone and an institution that itself was in something of a free fall following the resignation of its previous leader, Dominique Strauss-Kahn, over allegations of a sexual assault. It was, to put it simply, an interesting time to be the first woman and the first non-economist to lead the organization.
In the three years since, Largarde has helped cool the financial flames in such countries as Greece and Ireland. She has also, though perhaps with less notice, begun to reposition the IMF’s work. Climate change, income inequality and gender participation in the workforce — issues that only a decade ago would have hardly surfaced at the fund — have now become a focus of its analysis.
Yet while the organization has started to loosen its necktie in regard to its areas of research and the rigid internal hierarchy of economists, it still wrestles with a number of management challenges. Among them, Lagarde says, are difficulties in getting Congress to ratify a reform measure that would give emerging countries better representation and in getting more women — any women, in fact — onto the IMF’s board.
In this interview, which has been edited lightly for length and clarity, Lagarde speaks about these management hurdles. She also reflects on the leadership lessons she’s learned over a career in which she has headed international law firm Baker & McKenzie and France’s Finance Ministry.
Her final words of advice: “Don’t let the bastards get you.”
How do you define leadership?
To me, leadership is about encouraging people. It’s about stimulating them. It’s about enabling them to achieve what they can achieve — and to do that with a purpose. Others would call it “a vision,” but I’d rather use “purpose” because I think that everybody has a purpose in life, and that when collectively people work together, or practice sport together, they have a joint purpose.
What do you want to be your main achievement at the IMF?
I really want the institution to continue to be relevant, and to be regarded by its members — also its clients — as a place where they can receive the best possible advice, the most honest assessment of the situation, and where they can seek support and technical assistance. I sort of gather that under the word “relevance,” because I think that’s the most important service we can provide to the membership.
When you took over, your job was basically one of crisis management. Now perhaps there’s more time to think about your vision of how to make the fund relevant into the future. How have you transitioned between managing short-term and long-term challenges? Do you think you’re better at one or the other?
When I started, which was exactly three years ago, there were two crises. One was the internal situation at the IMF, because my predecessor had left under very dramatic circumstances, which had created anxiety, concern and complete lack of motivation on the part of many of the staff. The other crisis was outside, because many countries of the euro area were in great difficulties. Greece was one, but Ireland was another, Portugal was another, and soon Cyprus, and so on and so forth — and that was only in that part of the world. There were other countries elsewhere that were suffering and were seeking advice and financial support.
On both accounts, it was a question of making sure that everybody was on deck, prepared to deal with the issues, and completely motivated by the mission of the fund — which is to make sure that we put all our expertise, our money, our technical assistance and our ability to advise together, to fight the crisis and to procure some stability for the membership.
I have a theory that women are generally given space and appointed to jobs when the situation is tough. I’ve observed that in many instances. In times of crisis, women eventually are called upon to sort out the mess, face the difficult issues and be completely focused on restoring the situation.
Has the crisis abated, are the flames down? I wish that was the case. Obviously there is recovery in the air, but it is neither very strong nor very balanced, and there are still many countries that need support and advice. While it’s not as burning and obvious as it was three years ago, we’re not just doing maintenance at the moment. We are also doing some crisis management as well. It’s in a way the vocation of the IMF to face crises, whether they are very high on the world agenda or rather low on the radar screen.
Have you learned anything about your own leadership skills, or weaknesses, from leading during a time of crisis?
I learned that you can constantly improve, and that you should not be shy about your views, and about the direction that you believe is right. I also learn constantly about how much people can achieve; how much they can give; how much they can go beyond themselves, step out of their comfort zone and give a lot more than they ever thought they would, or that you ever expected them to do. And it’s a constant process to learn how much you should step in after having listened, and how much the team you work with can exceed your expectations.
I know your father passed away when you were young. I wonder in what ways that has shaped your character and your leadership development.
My father passed away after three years of debilitating disease, which transformed a very strong and bright man into a real wreck. And that is hard. You have to get out of that stronger, if you can, which I was lucky to be able to. I was the eldest of the family, and I had to support my mother and help my brothers. So there was an element of empowerment that resulted from his passing away, and an element of terrible sorrow and grief, which never goes away.
Words that seem to regularly come up in describing you are “charismatic,” “presence,” “ability to command a room.” Do you have any advice on how to cultivate those traits?
It’s a question of feeling confident about yourself, being reconciled with your own identity — and your own body, actually. I remember Hillary Clinton not long ago addressing the IMF staff and saying, “Stop being obsessed about losing weight. Be okay with yourself.” I thought about what she’d said, and she’s right. You have to first of all be okay with yourself, accept who you are, and not fight against yourself all the time. It’s hard, but I think being reconciled with your body and your identity is step one. The second step is about being honest and telling the truth, not covering up and pretending you are somebody that you are not deep down inside.
What’s the one thing that you would like to see change the most about the internal culture of the IMF?
I would very much like it if there were more women on the board. At the moment I have a board where all the executive directors are male, and I think that is wrong. There’s not much I can do about it other than say it loudly and clearly. Member states of the IMF designate the executive directors, and I happen to have 24 male executive directors and not a single woman.
As a second change, I would very much appreciate if the United States of America would ratify the reform that they themselves engineered about four years ago, which would give better representation to the emerging and developing countries, which are gaining ground, which are expanding and which must be given a bigger say at the international table of the IMF. Those are really two key components that would help the culture of the institution.
Other than that, I would like the culture to be as focused on quality and excellence as it is, but maybe a little less rigid in terms of attitude and willingness to let diverging views and dissenting opinions be expressed. That’s something that we’re working on. It’s not always obvious.
Let’s talk more about the quota reform. From a leadership perspective, what do you do when your biggest shareholder, the United States, is not supporting the reform you think you need?
Well, first of all, the IMF has to continue doing its job. Second, we have to acknowledge and deliver on the changes taking place in the world, by having a more diverse staff, by having a more diverse management, by welcoming representatives from China and other emerging markets, and making sure that we have more women, of course. That’s what we have to continue doing no matter what.
We are making collectively all the efforts we can to convince members of Congress that it is worth it to reform the institution, as was intended in the first place by all authorities but with a strong leadership from the United States of America. It’s a big letdown not to actually deliver on it, given that pretty much all members have now delivered and have ratified the reform.
The fund hasn’t really grown in the past five years or so, and it’s a place without high turnover. The result seems to be that a lot of good people can’t move up the ladder quickly, and that you can’t get women into senior positions at fast as you would like. As their leader, how are you wrestling with these personnel issues?
We have two major constraints: our demographics, which we can’t deal with except by natural departure over time, and the limited territory. When you lead a corporate institution, you can expand. And whether you grow the bottom line or the top line, you have incentives at both ends and you can manage those.
At an institution like the IMF, our vocation is not to grow. Our vocation is to continue to provide the best possible services within the parameters of the mandate. So in the leadership position I’m in, I have to identify what makes people click, what motivates them. And it’s not necessarily going to be promotion, as you said, so there have to be other ways to incentivize people.
I soon realized that people are motivated by the pride they take in the intellectual work they produce, and that’s an important driver. A second important driver is the pride they take in serving the public good. That’s another very strong engine to actually lead the institution and motivate people.
How long do you want to be there? What would you like to do after?
I know people doubt me when I say it, but I have never, never had a career plan. And maybe that was the wrong idea, but I never had a career plan. My career, which I know is successful and regarded as such, has been the result of circumstances, of meeting people, of being called, of being drafted, of taking on the job and rising to the circumstances when it was needed. So I have no idea, honestly, what I will do in two years’ time, which is the end of my term. What I know is that I will do my term, because you have to finish what you started. But after that, I don’t have a clue. I might be still here, I might be somewhere else. I might be doing something that I have no idea about.
What’s the best piece of leadership advice anyone’s given you?
Well there’s one encouragement that I was given once by my American father, in the family I stayed with when I was 17. Whenever I had tough times, he would send me a little note or give me a call and he would say, “Don’t let the bastards get you.” And I know this is not very polite. This is not very proper language. “Don’t let the bastards get you” means: “Hang on with the work that you are doing, and just don’t give up. Stand up.”