Monday, February 6, 2012

The Trust in Leadership crisis.

Trust holds the fabric of society together. When trust in leadership in particular goes, it affects all levels and aspects of social behaviour and, as we have seen, promotes growing levels of social unrest.

Global trust in leadership, both in business and government, has fallen sharply again At levels well below 40% of people who trust these leaders, the level of distrust can only be described as a crisis, and the latest Edelman Trust Barometer researched in 25 countries and among 25 000 respondents, deserves close attention.

While South Africa was not included in the survey report, there can be little doubt that we will mirror, if not show a worse trend than that seen in the sample countries. A rather strange phenomenon in this country is that while the ruling party is clearly trusted more than others by the general public, its leaders and particularly those in government are just as clearly losing the trust battle. We need not look much further than the ongoing service delivery protests, Cosatu’s anti-corruption efforts, and regular media coverage to illustrate this.

People have been skeptical about the credibility of politicians for as long as I can remember. It took an exceptional leader or statesman to bridge this gap and win general popular trust. But few would have expected global trust in the credibility of government officials or regulators to fall by 14 percentage points to below 30% in the past year. This is not only the biggest slump for this group in the Barometer’s history, but makes them the least credible by far of any leadership group.

clip_image002The sad thing is that no leadership group has gained credibility. Business CEO credibility has fallen nearly as dramatically – 12 points to 38%. Just a year ago, about half of the informed respondents trusted CEO statements as being credible. The report says the fall in the credibility of CEO’s in mature markets such as the United States, the U.K., France and Germany was as, if not more pronounced than the fall experienced after the 2007 global financial crisis.

Circumstances obviously play a huge role in people’s perceptions. It can be argued that skepticism is a product of the times and should not be attributed only to the behaviour of those attracting the skepticism. In good times people will trust leadership more and in bad times less. This is an expedient view at best. Leaders who ignore the distrust of their subordinates and general public do so at a terrible risk. I doubt too, whether distrust in business leadership is a passing phase. I remember a survey done in the 1990’s by CNN/USA Today which showed that company chiefs ranked second-lowest among people that could be trusted; they were just above second-hand car salesmen!

What has eroded trust more than anything else are the coinciding behaviours of declining service, near exclusive focus on profit maximisation, excessive levels of executive pay and increasing wealth disparities. These are all within the control of business itself, and as I wrote last week offer opportunities for business leaders to take a greater initiative in building new customer focused business models and shaping society in future.

So who do people trust? When it comes to information, the credibility of “someone like yourself” has risen from 43% to 65%. Information supplied by a regular employee in a company or government institution ranks as trustworthy by 50% of informed respondents. The most trustworthy sources are still an academic or expert and a technical expert in the company. The credibility of financial or industry analysts has slipped from 53% to 46%.

Traditional media are still trusted the most as sources of information, although at 32% they are not much ahead of online multiple sources at 26%. The huge 75% leap in social media as trustworthy sources of information confirms the challenges facing business leaders in managing perceptions. Social media by their very nature tend to encourage and fuel skepticism rather positive spin. 14% of the informed respondents said they trusted this source, compared with only 8% the year before. This is close to the 16% that said they trusted company sourced information.

There are no surprises in the survey regarding trust in specific industries. Financial services rank lowest with banks second lowest. Media are only marginally ahead of them at third lowest spot. Technology is still the highest trusted industry.

The rise in credibility of ordinary folk, whether peers, pals, employees, Facebook or Twitter, shows that institutions have lost much of their control on information, how it is distributed, received and interpreted. In an age where greater transparency is demanded, this must be a frightening challenge for many. It becomes infinitely more so when behaviour is indefensible.

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