RESTORING TRUST IN BUSINESS

“We will die if we can not trust each other”. With these words, human activist writer, Ariel Dorfman, touched on one of the critical issues facing society today.

We have all experienced some breach of trust in a relationship. Few are not aware of how it tears at the threads of whatever binds us as people, in individual or societal relationships. Trust is not easy in a modern world where technology has enabled greater interaction but less direct contact and where transaction has become more aloof and mechanical. Indeed, with remote forms of communication it has become easier to mistrust and to sow the seeds of distrust by enabling puerile pranksters to throw venomous stones from behind the walls of anonymity.

Trust lies at the very heart of our freedom as individuals. Given the importance of this issue in our time we simply have to make an effort at fostering trust, and most certainly have to combat as a scourge those instances where it is broken down through competitiveness, petty jealousies, prejudices, rumour-mongering, innuendo and baseless assumptions.

As Dorfman pointed out, South Africa has a particular challenge in bridging the trust gap of the past and in fostering more open dialogue between cultures and classes and between distrusting collectives such as government with electorate, farmers with government, business with society, and employer with employee amongst many others.

For business internationally, trust has become the most pressing strategic issue of all. Until a few decades ago, business was largely structured hierarchically. It enjoyed a cosy relationship with shareholders, had customers with fewer choices and less information, and a greater autocratic control over employees. It pandered marginally to government, but had greater lobbying sway with the powers that be who in turn ruled over an arguably more naïve electorate. Of course, these were not relationships built on trust, but on expediency.

This has all changed… dramatically!

Within the space of a few years, the tide started to turn. From about a decade or so ago, we have seen a wave of public pressure shake old business paradigms to the core. Topics such as sustainability, governance, transparency, Mervyn King reports, triple bottom lines, balanced scorecards, ethics and values have become common in board room discussions.

Employee trust has always been a key concern for business and a variety of instruments and approaches have been implemented for a number of years now. They all basically come down to the same thing: employees will give or withhold their trust on the simple assessment of whether management has their interest at heart. The criteria used are whether employees feel cared for and are given the opportunities to develop. Holding leadership seriously accountable for these two criteria in regard to their immediate subordinates establishes a lasting process for enhancing trust. Of course, these efforts can be bedevilled by large pay discrepancies and a belligerent trade union, but these too tend to wane in the face of sound servant leadership.

For decades, public trust in business has been dismal to say the least, with less than 20% of people explicitly trusting business, according to Gallup. The public uses the same assessment as employees do: is the company perceived to have the public interest at heart. But the criteria are very different, covering very thorny issues such as governance and transparency, quality of product or service, customer relations, involvement in communities and environmental care.

The financial crisis has given further impetus to this scrutiny, reviving the Warren Buffet classic line: “only when the tide goes out do you see who is naked”. Like a veld fire clearing out strangling underbrush, the crash has already taken out quite a few rogues. So it is perhaps not surprising that according to the 2010 Edelman Trust Barometer released earlier this year, trust in business globally has risen compared with last year. The survey covered the world’s 10 biggest economies by GDP, and the improvement in trust was led by Western economies. The Edelman barometer should not be compared with the Gallup survey, but while percentages in all polls should be treated cautiously, changes in these percentages are more dependable.

The exposure of kings with no King attire has not been the only thing that has improved trust in business. A growing business trend to listen to and engage all stakeholders, treat employees well, and to be involved in solving social problems have been listed as playing a perhaps more important role in fostering trust. The improvement in trust is also tentative and conditional. According to Edelman, 70% of those polled said business would “get up to the same tricks” when conditions returned to normal.

Some other interesting features of the Barometer are:

• While public trust in governments to do the right thing has also improved, it is still below that of public trust in business.
• The banking sector is the least trusted and trust in the sector has declined further.
• Both China and India have substantially higher levels of trust in both business and government than the Western economies have.
• Conventional media are seen as the least trustworthy regarding business coverage.
• CEO’s generally are not highly trusted as a source of information, and
• Financial performance has fallen from being third ranked to being lowest ranked out of ten criteria fostering trust in business.

So what does engender trust? In U.S. companies, the top three are: transparent and honest practices, a trustworthy brand name and high quality products and services. From a public point of view (see graphic), when the CEO and the board make a strategic decision, specific shareholder considerations have to be among the least in their minds. At the very least they have to take a comprehensive stakeholder view.

Trust in business in South Africa is far more complex, clouded by race, class and ideological issues, as well as a combative labour collective. King III places much emphasis on ethics as part of governance and many companies have included ethics management as part of their business models. But according to the latest Ethics Institute of South Africa’s research, employee awareness of ethics policies is low, and their effectiveness only moderate.

That ethics have to be “processed” and “managed” at all, speaks volumes as to their sincerity. We have seen how easily this mask can slip with the BP and Toyota incidents. Unless ethics are underpinned by sound values, they will lack authenticity. Ethics are what you wear, values are what you are. Values are never a means to an end, but and end in themselves.

There are many concepts that address “benevolent” intent. I prefer “universal values” to the many others such as virtues, principles, and morals. By “values” I do not mean the rather narrow “things that we value”. Nor do I mean “cultural” or “religious values” such as polygamy or prayer. I also do not mean existential states such as liberty, rule of law, peace and contentment. They are all valid concepts and can be argued from a “values” perspective, but they tend to clutter the debate and often cannot stand up to universal acceptance. Values, by my understanding are really only a few such as care for others, love, fairness, integrity, courtesy and justice. A number could be added, but they have to meet the criterion of “do unto others” and are accepted by all reasonable people.

Business will always have a dilemma with these issues as long as it defines itself from a taking perspective, and as long as it sees its purpose as income rather than service, being driven by the wallet rather than the heart.

All of the shifts we have seen in the past few decades have still not addressed this fundamental issue. It is a leap of perception more than anything else. But perceptions create reality.

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