Rebuilding Trust
It's encouraging when the Harvard Business Review agrees with you. That was my initial reaction when I saw the bright yellow cover of the most recent issue of HBR highlighting the topic for the month -- "Rebuilding Trust" -- and featuring a smashed coffee cup to symbolize just how much things are broken. It's the same topic of the Page white paper - “The Dynamics of Public Trust in Business - Emerging Opportunities for Leaders” - released this morning. The paper, which we developed in conjunction with the Business Roundtable Institute on Corporate Ethics, specifically addresses the current crisis of trust in business and lays out some approaches that we might take to start to rebuild that trust.
We don’t pretend that the report is the last word on the issue. Nor is it meant to be a definitive position that's endorsed by all Page members. It does, however, provide a new framework for understanding how public trust operates. It highlights the importance of three core dynamics in relationships between business and stakeholder groups - the fact that we have shared values and interests, that we share risks and opportunities, and that a feeling of vulnerability can be detrimental to the building of trust.
Understanding these dynamics can point the way to solutions. What I hope is that the report is a significant contribution to the debate, and that that debate amongst members of the Society will be vigorous and productive.
Of course we can always ask “Does it really matter? Why are we even spending time talking about this issue?” I strongly believe that this is a fundamental business issue that's important to every organization, and so it's a very relevant and important topic for us to be discussing. Without society's approval, ultimately business cannot survive. Companies that can figure out how to align their core business objectives with the public interest can earn trust, and that is essential to the achievement of business objectives. And when trust is broken as much as it is now, I believe that it is incumbent on business to take the initiative -- as Anne Mulcahy, Chairman and CEO of Xerox Corporation and Chairman of the Business Roundtable Corporate Leadership Initiative, says in commenting on the report, we have "an opportunity to step forward." The ongoing relationship between the Page Society and the BRT Institute will provide an opportunity for business and academic leaders to work together on building and sustaining trust, and make a commitment that can change reality. That would be an important contribution for us to have made to the future of society and of the profession.
Maril MacDonald
President, Arthur W. Page Society
CEO, Gagen MacDonald
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Comment:
This is a good deal, Maril. I like the way we and BRT have parsed the “three core dynamics” of public trust in business (mutuality, balance of power, trust safeguards). Putting this into corporate communication terms, we’re affirming win-win engagement with stakeholders. We’re fair, we’re open, we treat them pretty much as equals—respecting them as responsible stakeholders in our success. We get their permission to succeed with business plans (like Arthur Page said) and they get what’s in it for them. CCOs will work with C-suite peers on this, and it’s great that BRT big hitters seem to be of like mind. It’s great to be positioned to help activate the implementation. What I’d bear down on? The thing that’s probably least comfortable: the governmental “trust safeguard”. We can be agile on the customary stakeholder fronts—investors, customers, business partners, the usual range. Do we put government into the first line of communication, do we jump into the shape and timing of laws and rules, and if so when? I’d say yes, yes and soon.
By Bruce Harrison on July, 05 2009
Member Comment:
I was delighted to see the Arthur Page Society partner with the BRT on the issue of trust, or lack of it, in business. In a market society, trust is the real currency. Without trust, customers do not buy, potential employees do not join, investors pull their money out and stay out of the market, and government feels increasing pressure from the public to regulate. All of these things have become manifest in the past year. The economy not only turned south, but there also were examples of corporate misconduct that left most of us incredulous.
As someone who had a career in corporate communications, I can feel the pain of leaders like Anne Mulcahy who have focused on values-based management and corporate reputation only to see Xerox tainted with the rest of the business community. As a current business school professor, I feel a sense of responsibility to assure that students understand the importance of trust. I am troubled by the fact that many of those who created the mess that we are in are products of some of our country’s best business schools.
The issue is becoming so prevasive that business students now are starting to worry that corporate executives are giving them a bad name. Students at the Harvard Business School have started a grass-roots campaign to have MBA students take an ethics oath--the business equivalent to the Hippocratic Oath taken by newly-minted physicians. It pledges to act in good faith with an eye toward the good of society, not just profits. About 1/2 the graduating class of Harvard signed the oath. So, depending on your perspectives of whether or not the glass is half full or half empty, you can either celebrate the fact that 1/2 the students at the Harvard B-School wanted to pledge to be ethical and to have a social as well as a profit-oriented perspective, or you can bemoan the fact that 1/2 did not want to be bound by an oath. However, the new oath is spreading to other business schools. Moreover, the president of Harvard has indicated that she takes full responsibility to assure that Harvard B-School students take ethics courses in the futurel.
Our faculty had a discussion about this. I am proud to say that we have a new strategic document in which we make the statement as a faculty that “greed is not good” and that we pledge to train students to take a holistic view and to balance the financial interests of shareholders against the needs and interests of other stakeholders.
Some of my colleagues, however, have asked a very interesting question: “would Bernie Madoff have benefited from an ethics course in college?” I see this as a rhetorical question. Crooks are crooks and no amount of courses will correct a poorly wired brain. Madoff was like the modern day Willy Sutton who when asked why he robbed banks said: “because that’s where the money is”.
Those who wanted only to attract personal wealth went where the money was--to Wall Street--bolstered still by Milton Friedman’s admonition that the only true role of business is to make shareholders wealthy. There are still Friedman followers, both among faculty and their students. There are still those developing brilliant mathematical models of the next derivative and preditory loan. We cannot eliminate the crooks and the amoral from business, but we can marginalize them and try to frame the perspective that they are the isolated few, not the norm in business. The latter, sadly, is the current perspective amongst the public.
Simply talking about trust is not sufficient. This really is a time for the profession to step up to the plate on issues like values and corporate culture, which are the precursors of reputation and trust. I hope our focus will not be like that of the US Chamber that has just started a campaign to convince the public that capitalism is still a wonderful economic model. Our focus should be less on advocacy for a business model and more on real change, being catylsts for our companies to refocus them on making certain that they have the ability as well as the desire to be trustworthy. Let’s remember that it is trustworthy behaviors that build trust, not messages and campaigns. The Authentic Enterprsie document addressed the issues well. I would hope that this becomes operationalized by companies--its a good starting point.
By Elliot S. Schreiber, Ph.D. on June, 11 2009