Notably since the global economic “crash” of 2008, business commentators – among others – have been remarking on a general loss of public “trust” in organisations.
According to Robert Phillips, a former PR practitioner, the author of “Trust me, PR is dead” and now the Co-Founder of Jericho Chambers (a strategy consultancy that’s been described as “a much-needed antidote to McKinsey and WPP”), a recent survey of Millennials revealed that only 60 percent placed trust in “business”. Among those of Generation K – young people born between 1995 and 2002 and growing-up in a post-crash, post-ISIS era – that figure had fallen to just six percent.
Yet people of all ages seem to be losing what faith they had in the world of business – so much so that some commentators are suggesting that the world may need to invent a “new capitalism” in the wake of this worldwide trust-based climate change.
Exploring the issues behind this loss of trust – and discussing if, and how, it could be restored – was the topic of a business leaders’ discussion, held at the headquarters of the Financial Times (FT), in London, under the auspices of FT | IE Corporate Learning Alliance.
Chaired by Michael Skapinker, a columnist on the FT and Executive Editor at FT | IE Corporate Learning Alliance, the discussion began with Peter Montagnon, Associate Director of the Institute of Business Ethics, saying, “Anecdotally, there’s a problem because of the increasing intensity of general ‘dislike’ of business. Notably, there are the issues of remuneration – executives are seen to be taking too much for themselves – and taxation, because companies don’t seem to give back to society what they should.
“Companies believe that they owe it to their shareholders to pay less tax. Taking everything into account, they may not be right.
“The trustworthiness of business won’t return until the public’s and business’ interests coincide,” he says.
Alison Cottrell, CEO of the Banking Standards Board, believes that, “Trust is given to you by others but trustworthiness is something you develop for yourself. Trustworthiness is a mix of honesty, reliability and confidence.
“Problems arise when you place your trust in an untrustworthy company.”
“Trustworthiness is personal and reciprocal,” says Robert Phillips, of Jericho Chambers, who claims to be driven by a desire for a more hopeful, open and tolerant world.
A Crisis of Leadership
“Trust, which is based on a combination of honesty, competence and reliability, is invested in leadership. In other words, if leaders aren’t trustworthy, there’s a crisis of leadership.
“The key message for business should be ‘put people – not share value – first.”
“So, is putting increasing pressure on workers to meet targets at the root of the problem?” wonders Skapinker.
“Leadership is key,” argues Montagnon. “In big organisations especially, values espoused by the leader must permeate throughout the organisation – and there are processes, including L&D activities, to achieve this.”
“An organization’s culture is greatly influenced by its leaders – but it’s also influenced by the environment and the composition of the group – a group of 25-year-old men has a different culture from that of a group of 60-year-old women, for example,” adds Cottrell. “Moreover, the culture needs to be organization-wide, not just existing within the HR department.
“Every business has its own culture – that’s its ‘competitive advantage’ – but that culture should be within limits. Key to this is how Boards listen to the views of their stakeholders – shareholders, workers and so on.
“Those views are not just ‘going to be made known’,” she says. “Managers have to be active in seeking them – and seeking honest views, not just what they want to hear.”
Phillips believes that many organisations engage in “listening exercises” but they don’t listen properly. He says that’s partly because the organisations are focused on their public image, via their share value. He argues that obsessing about share value, rather than focusing on process, leads to “message droning” – and that only contributes to falling levels of trust.
He says, “Words like ‘integrity’, ‘transparency’ and ‘trust’ are being devalued through message droning. We need to turn from talking about these things to doing them.
“We’re making a mistake if, by ‘leadership’, we mean ‘top-down command-and-controlling’,” Phillips continues. “We need activist leadership – and that’s characterised by showing vulnerability, not by imposing views on others. To have activist leadership you must also allow dissent.”
Montagnon observes, “Organisations must do all this for themselves. ‘Regulation’ can’t do it for them.”
“Businesses need to manage their own image and trustworthiness,” agrees Cottrell. “Otherwise everyone is ruled by the ‘lowest common denominator’.”
Societal and Cultural
“Injustice and inequality have been around for longer that the 2008 crisis which triggered a decline in the level of trust in business,” comments Phillips. “These are the issues we really need to address.
“For example, what’s fair, just and right in business? What’s the ‘right’ level of tax to pay? What’s the purpose of business? Can it address the big issues in society?
“The loss of trust in business is societal and cultural – and needs to be addressed urgently,” he believes.