Trust Across America-Trust Around the World™

When a baby decides it is time to be born…”the show must go on.”

Such was the case on January 23, 2016 when approximately 103 million people were affected by a blizzard that hit the east coast of the US, requiring eleven states to declare emergencies, including New Jersey.

Assisted by local EMTs, the healthy baby was delivered at home on the living room couch, the second child of a couple with a fully paid health insurance policy. But the extreme weather conditions and treacherous roads required both the healthy mother and her new baby to be transported to the closest hospital, not one designated by the family’s insurance plan, and certainly not through any special requests on the family’s part. In less than 24 hours, both mother and child were released from the “unaffiliated” hospital, returning home to celebrate their new arrival.

But the biggest surprise for this family was yet to arrive.

The following week a hospital bill was delivered for $53,000. And in case you are not totally shocked by that number, it didn’t include subsequent invoices from the EMTs, emergency room doctors, nor the $39.00 adult diaper that was “sold” to the mother following delivery, to name just a few “incidentals” that brought the total “hit” to over $60,000.

Now this family, who should be bonding and celebrating the birth of their healthy second child, is instead:

1) Faced with a daunting bill that no insured young middle class family could ever possibly pay, and mounds of paperwork and invoice totals that change with every postal delivery.

2) Spending countless hours away from their children and professional obligations listening to prerecorded messages claiming “our menus have changed,” “your call is important to us” and “we are experiencing unusually high call volume.”

The following are some not so simple questions for insurance companies, hospitals, doctors, miscellaneous health services providers and any other parties who would like to weigh in on this story:

What responsibility, if any, do organizations have to ensure their customers are treated fairly, ethically and in a trustworthy manner?

Has corporate greed and the “maximization of shareholder value” permanently replaced doing what’s right?

If this child had been born to a family with no health insurance what would their bill be?

How can this family, who believed they had done everything “right” except better timing the birth of their baby, expeditiously resolve this and “get on” with what matters and their daily lives?”

I suppose the moral of the story is “buyer beware:” 

Even under the most extreme circumstances caused by acts of nature, thousands of dollars in monthly health insurance premiums don’t “cut it” once companies are asked to honor their obligations and do the right thing. Why is this so?

Please send any suggestions or advice to barbara@trustacrossamerica.com

Barbara Brooks Kimmel is the CEO and Cofounder of Trust Across America-Trust Around the World whose mission is to help organizations build trust. Now in its seventh year, the program’s proprietary FACTS® Framework ranks and measures the trustworthiness of over 2000 US public companies on five quantitative indicators of trustworthy business behavior. Barbara is also the editor of the award winning TRUST INC. book series and the Executive Editor of TRUST! Magazine.

Copyright 2016, Next Decade, Inc.

In Capitalism and Freedom (1962) the late American economist Milton Friedman wrote:

There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.

During the 50+ years following the book’s publication the meaning of Friedman’s quote has been debated in C-Suites around the world, particularly the “rules of the game.” The widely held interpretation is one of a status quo; as long as it’s legal the corporation has fulfilled its role in society. Hence, with Friedman’s legacy in mind, the majority of leaders and their boards tend to focus on regulatory compliance as the “golden rule” and push the “soft stuff” like culture, trust, employee engagement and community off to the side, or perhaps to a functional silo that then creates a “program” or a philanthropic PR campaign.

There is a small and growing cadre of CEOs who are simply no longer accepting Friedman’s theory as gospel.

One of them is Howard Schultz, CEO of Starbucks. This past January, Schultz was the first CEO to be honored with a Lifetime Achievement Award by Trust Across America. And just recently in his annual address to shareholders, Howard asked his audience to consider two questions:

1. What is the role & responsibility of a for profit company?
2. What is the role and responsibility of all of us as citizens?

We asked members of our Trust Alliance and our Top Thought Leaders to weigh in on Howard’s video and questions, and are sharing a few of the responses.

Nadine Hack: Yes, we live and work at a time when our collective values often are alarmingly devoid of compassion, generosity, concern for others or common civility. But, we’ve always had backward-looking fear-mongers concurrent with forward-looking hope-givers. So, like Schultz, I choose to be optimistic, caring, and a committed participant in expanding awareness of and desire to effect positive change. Every day we do have a choice to advance the relay race towards greater compassion.

Bob Vanourek: For profit companies have done more than any other organization to raise people out of poverty, enhance living standards, lengthen life spans, and lower costs. But many market-based companies have gone seriously off-track. Regulations to set boundaries are necessary, but real reform must come from within.

Organizations at the board and CEO level must set the overarching goal to be excellent, ethical, and enduring. That is their overriding role and responsibility.

The days of the heroic leader riding in to save us all are gone. Yes, we need better CEO’s and government leaders, but the real work belongs to us in our families, neighborhoods, places of worship and work, and where we volunteer our time. There we need to engage in civil dialogue once more. As English writer Mary Wortley Montagu said, Civility costs nothing but buys everything.

Mark Crowley: The truth is humans have survived as a species not through competition or selfishness, but through intentional cooperation and collaboration.  The lesson from this is that nature intends for us to unite. It’s only by caring about each other that we can truly thrive. 

The greatest good businesses can do for society is to honor the human beings they employ. Giving workers respect, appreciation and fair treatment will only strengthen us.

And while valuing employees is an inherently noble thing to do, nature, once again, rewards it. One only needs to look at Starbucks financial success to confirm this.

Linda Fisher Thornton: Ethical leaders know they are responsible for upholding values that build strong companies, strong communities and strong societies– including care and compassion.

People have tried shortcuts that go around respect, civility and tolerance, but there is no acceptable shortcut on the road to profit (or power) that “goes around ethics.”

As the world changes, leaders who stay competent know that respect, human connection and trust matter. Those positive factors keep employees engaged in doing good work and that engagement translates into excellent service to customers, which translates into responsible profits.

And finally, Donna Boehme provides this summary. Many would dwell on the for-profit’s duty to generate profits for its investors, but there is an important element to that – transparency and good behavior in “how” the company does business. For example, if a company were to discover a giant bribery scheme in its operations, that company should seek to maintain the Trust of its constituencies by self-reporting to authorities and cleaning house immediately, and be transparent to its investors and employees about the discovery and subsequent actions.

Every Board and C-Suite has a duty and responsibility to ensure that their respective business is conducted consistent with relevant legal and ethical standards.

Each individual has many roles (as parent, citizen, voter, shareholder, professional, etc.) and spheres of influence where they can uniquely promote and support ethical and trustworthy behavior. To act consistently with the law and in a manner that will promote trust in our communities. That includes being informed and educated about trustworthy behavior and supporting those individuals, organizations, and institutions that promote ethical leadership and trust.

And, naturally, Howard Schultz has a few thoughts of his own about the role and responsibility of a for profit company.

“The heart of this question is a belief that the private sector must begin to hold itself more accountable in ways that include but go beyond fiscal responsibility. More than ever, the fragility of the times we live in requires us to extend ourselves in expected and unexpected ways. Companies such as Starbucks have the financial, intellectual, and human resources to step in and try to create new solutions for a multitude of communities, and since our earliest of days, we have done just that. We have worked to build a different kind of company –  one committed to delivering shareholder value while embracing values and guiding principles that serve our people, our customers, and the neighborhoods where we do business.”

And, it doesn’t stop there.

Howard has also said that we all have a collective responsibility for civility, personal responsibility and collective accountability for our communities and one another. As Howard Schultz framed on stage at its recent Annual Meeting of Shareholders: “Sadly, our reservoir is running dry, depleted by cynicism, despair, division, exclusion, fear and indifference.” He suggested citizens refill the reservoir of the American Dream, “not with cynicism, but with optimism. Not with despair, but with possibility. Not with division, but with unity. Not with exclusion, but with inclusion. Not with fear, but with compassion. Not with indifference, but with love…It’s not about the choice we make every four years. This is about the choices we make every day.”

Starbuck’s mission is to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time. Howard Schultz continues to live that mission through both his words and actions.

Barbara Brooks Kimmel is the CEO and Cofounder of Trust Across America-Trust Around the World whose mission is to help organizations build trust. Now in its sixth year, the program’s proprietary FACTS® Framework ranks and measures the trustworthiness of over 2000 US public companies on five quantitative indicators of trust. Barbara is also the editor of the award winning TRUST INC. book series and the Executive Editor of TRUST! Magazine.

Tuning in to Trust & Ethics is a new monthly column of Trust Across America-Trust Around the World’s Trust Alliance compiled by Barbara Brooks Kimmel

A shorter version of this article first appeared on the FCPA Blog.

Copyright © 2016, Next Decade, Inc.

Organizations and their leaders often find themselves caught in “trust and ethics traps.”

Jes Staley the newly appointed American CEO of the beleaguered British Barclays Bank is one such leader. In fact, as he recently announced in this BBC News Article “I do believe that trust is returning to our institution. But we will never rest, we are never done. We have to focus on building that trust every day.”

Eerily, Staley’s comments have a familiar ring. In the wake of the Libor scandal in 2012 the Bank’s new CEO, an insider named Antony Jenkins also spoke extensively about rebuilding trust. Yet in an all too common response when faced with a crisis of trust and ethics, the Board Chair John McFarlane recently passed blame to regulators for picking on the bank.

We asked our Trust Alliance members to weigh in on the steps Barclays new CEO should take to build trust and ethics, carrying on the legacy of his predecessor.

Leadership Momentum’s Elizabeth Doty emphasizes the importance of building on the company’s new purpose and values, by making clearer, stronger commitments to stakeholders:

Though outsiders can never know a company’s internal reality, Mr. Staley’s comments show that he recognizes that trust is earned by being trustworthy. It is also positive that Mr. Staley’s predecessor, Mr. Jenkins, clarified the company’s purpose and values, and outlined specific behaviors, such as “I honour my commitments.” Still, given the turmoil of repeated leadership changes and reorganization, Mr. Staley and his team are likely to face serious credibility challenges, regardless of their intent.

The purpose of a commitment is to reduce others’ uncertainty, so they feel less risk in trusting us. Making and keeping meaningful commitments is a powerful way to proactively demonstrate trustworthiness. Yet, despite Barclay’s clarification of its purpose and values, stakeholders are still left with their primary uncertainty: How will you make tradeoffs under pressure? “I see nothing to indicate rates and markets will not be rigged again in future or that schemes to enhance bank profits at customers’ expense…could not repeat,” posted one commenter. One solution is to make clearer, stronger commitments specifically related to the side-stepping stakeholders worry about. For example, Barclay’s could commit to doing whatever most contributes to a customer’s goals, or to a level playing field in the market. Though it takes courage, companies that put such a stake in the ground and learn how to deliver a) increase credibility by showing they understand stakeholders’ true risks, b) reduce the potential for mixed messages to staff, c) force themselves to innovate, and d) differentiate themselves in a way that is extremely difficult to emulate. The key will be not to underestimate the challenges of re-shaping their culture to get there.

Davia Temin, a leading reputation and crisis response consultant speaks of the trust challenges continuing to plague most of the largest global financial institutions years after the 2008 financial meltdown.

Rebuilding trust in financial institutions is a complex algorithm that can test the skills of the best financial engineering “rocket scientist.”  

Far from simply making a pronouncement of one’s intent (although that can be the first step), the organization needs to first deconstruct all the elements that went into building trust in their particular firm in the first place, analyze all the things that went wrong, and then construct a plan to overcorrect the breaches. Because simply fixing them will not rebuild trust, it will only, maybe, stop the erosion. 

But this is seriously hard work. Barclays, as most banks, has a number of critical audiences, each of whom needs a different set of fixes in order to begin to restore their trust. And some of those fixes are in direct conflict with others. Individual customers, shareholders, institutional clients, counterparties, regulators and legislators in every country in which they operate, and even the public at large must each feel that the bank puts THEIR INTERESTS in front of its own. Because it has been the self-dealing aspect of financial institutions’ behavior that did the most damage to their reputations and caused the greatest loss of trust.   

So, to rebuild trust, Barclays and others will need to show their audiences that the bank puts them first…and that’s a hard thing to do and remain profitable. But it is almost impossible to make such a promise and then ignore it, or to fail in its announced attempt. So, now that Mr. Staley has thrown down the gauntlet, perhaps he can get his financial product rocket scientists to reverse-engineer all the elements that went into the losing of public trust, share them with us all, and then announce how he will redress them, one by one. That, indeed, just might work, and would be my prescription.”

And finally Bob Whipple of Leadergrow reminds us where trust starts in all institutions.

It sounds like a lot of problems have been swept under the rug for some time and are impacting all facets of Barclays. I applaud the resolve to rebuild trust in the bank and the candor at admitting the many unpopular steps it will take.  My advice is to recognize that rebuilding a culture starts at the top and works its way down the organization.  Establish an understanding that it is safe for people to tell you the things that are hard to say. Do not punish people when they bring up issues that are uncomfortable or difficult to address.    

Similar to Barclays many organizations find themselves in trust traps because they hold on to the notion that trust and ethics are “soft skills.”

And because trust is ignored or taken for granted, its decline continues across all major institutions. Some of the warning signs of low trust include:

• Disengaged boards with minimal diversity- not only must the board be “on board” with the mission and vision of the organization but research, including our own points to a correlation between high trust organizations and gender diversity.
• Frequent crises- identifying core values, practicing and reinforcing them daily heads off many “would be” crises. Leaders who view trust as “soft” often find themselves spending the majority of their time putting out fires instead of improving their culture.
• Short-term profit maximization at all costs including layoffs and job cuts as a first line of defense- it’s not unusual for companies like Barclays to think the bleeding can be stopped by cutting jobs and divisions, but these are simply bandages and they never cure diseases.
• Decreasing CEO tenure and increasing compensation packages tied to quarterly earnings- try tying CEO compensation to some point in the future (3-5 years) and suddenly the focus changes from the short to the long term.
• Increasing regulation (and scrutiny from regulators) and larger legal and compliance departments- as we have discussed in the past, trust simply can’t be regulated. It’s voluntary.

Fortunately the most progressive organizations have begun to recognize the strategic advantages of a high trust culture.

• Fewer crises and the ability to recover more rapidly
• A large trust “bank account”
• Faster decision making and improved execution
• Higher employee engagement
• Higher customer loyalty and retention
• Greater innovation (high trust fuels high innovation, not the other way around)
• Increased long-term profitability

The trust and ethics crisis at Barclays will not end until insiders, beginning at the Board level, not only accept blame and take responsibility, but also put actionable measures in place to clean up the culture. Will Jes Staley be the CEO who turns Barclays around? Will he walk the trust he is talking? What do you think?

Tuning in to Trust & Ethics is a new monthly column of Trust Across America-Trust Around the World’s Trust Alliance compiled by Barbara Brooks Kimmel

Another version of this article first appeared on the FCPA Blog.

Part I: bit.ly/1Mp9LO7

Part II: bit.ly/1UcHiTJ

Copyright (c)  2016 Next Decade, Inc.