Trust Across America-Trust Around the World™

As the Executive Director of Trust Across America, I often find myself discussing the difference between being legal and being ethical. The legal side of the discussion is pretty easy to explain. If you and/or your organization comply with the law, you are meeting your legal requirement. Being ethical- not so easy to describe. It’s going beyond what’s legal to “doing the right thing” and I’ve learned there is no standard for the “right thing.”

In reading today’s headlines, I may have found a perfect case study for legal vs. ethical, right in my own backyard. Talk about not “getting it!” The story has do do with NJ taxpayers paying dozens of school superintendents twice via a paycheck and a pension. It’s called “double-dipping” and it’s perfectly legal. But is it ethical? You can read the full article here.

bit.ly/12m0p3Q

Basic human decency- has it disappeared? It certainly seems that way- and perhaps this is why trustworthy business behavior has too.

My holiday wish for all of you is to consider the following professional business practices and share them with your team, every month beginning in January.  Together we can begin to rebuild human decency in 2013 and collectively elevate the level of trust in business. Naïve? – Maybe, but certainly worth a try.

January–  Promises: If you make a promise, keep it.

February– Behavior: Practice what you preach.

March– Accountability: If you say you are going to do something, follow through.

April– Obligations: If you owe someone money, pay them. Don’t hide behind your legal department.

May– Integrity: If you are told something in confidence, don’t betray it.

June– Teamwork: Have your colleague’s back.

July– Respect:  Be on time for the meeting or the phone call.

August– Honor: Your handshake should be worth as much as a written contract.

September– Humility:  Be humble. Don’t brag about how much money you make and all the toys you bought with it.

October– Social Responsibility: Practice good corporate social responsibility regardless of whether a “program” is in place to do it.

November– Selflessness: Think of others before yourself.

December– Trust:  Don’t forget that trustworthy business is not about quarterly earnings and international expansion, but rather about “doing the right thing.”

Barbara Kimmel, Executive Director

Trust Across America

You may direct questions or comments to Barbara@trustacrossamerica.com

It seems like business leaders may finally be waking up to the importance of trust as as a brand/company asset.

This week we heard from Sheryl Connolly Ford’s Futurist, about the increasing value of trust as the “new black” www.businessinsider.com/fords-biggest-trends-for-2013-2012-12, and from Cheryl Guerin Senior Vice President at Mastercard, positing that trust is an advantage for established companies. www.businessinsider.com/trust-could-be-the-achilles-heel-of-new-payment-companies-2012-12

Amen ladies! Perhaps it’s the Sheryls/Cheryls of the world, or female business leaders for that matter, who are about to turn the “trust” switch to the “on” position as a management tool that should not be ignored.  Trust is measurable and companies that embrace it as a business tool reap the rewards. Trust Across America has been preaching this, to a growing audience, for quite some time. www.trustacrossamerica.com/blog/?p=573

Let’s just hope that companies are genuinely waking up to the importance of stakeholder trust, rather than using trust as the latest “in” buzzword.

What do you think?

Barbara Kimmel, Executive Director

Trust Across America

Barbara@trustacrossamerica.com

The Steward of Trust for 2013

Regardless of the size of the organization, it’s no secret that every “buck” stops on the CEO’s desk and trust is no exception. A CEO who fails to “model” trust cannot build or maintain a sustainable business. So while the following “10 T’s of Trustworthy Leadership” may seem somewhat obvious to you, they may not be to your CEO. Share them the next time your team meets and deliver a copy of this blog to the CEO’s office. If he or she doesn’t thank you for it, you’re probably working for the wrong leader.

#1 Trustworthy- Very simply, a culture of trust cannot exist with an untrustworthy leader. Trustworthy behavior must start at the top and flow down through every manager within the organization. Trust building tools should be incorporated into meetings. Management should reward those who model trust and CEO’s should regularly address all stakeholders about the steps being taken to build trustworthy behavior within the organization.

#2 Tools- and speaking of tools, there are many trust tools that CEO’s can utilize to build trust amongst their internal and external stakeholders. They run the gamut from metrics to assessments and online surveys. The results may be surprisingly good, or just the opposite. And if they are the latter, it’s time to get busy.  Either way, maybe it’s time to add a Chief Trust Officer to the staff. And remember, what can be measured can be managed.

#3 Treatment- The Golden Rule says to “treat others the way you want to be treated” and certainly holds true with trust. The CEO that extends trust to his/her stakeholders is more likely to have it returned.

#4 Teamwork- As we all know, teamwork leads to better decisions and better outcomes. Breaking down the silos to make trustworthy behavior the #1 priority in the C-Suite, should be on every CEO’s “to do” list. Trust should not be confused with compliance. Being “legal” is not the same as being trustworthy.

#5 Talk- Your stakeholders need to know what steps you are taking to build a trustworthy organization. Let’s face facts, quarterly numbers are no longer the “be all and end all,” and the evidence is building that one need not sacrifice “good numbers” for a trustworthy culture. Companies can simultaneously “do good and do well. “ www.trustacrossamerica.com/blog/?p=573

#6 Truth- for goodness sake, any CEO who wants to build a trustworthy organization, must always tell the truth. No company is perfect. It’s not necessary to air all the dirty laundry, just don’t lie about it.

#7 Time- Building a culture of trustworthy business does not happen overnight. It takes time, maybe even years. The CEO who invests the time to educate himself or herself about how to build trust among teams and with stakeholders, develops a plan, communicates and implements it, will be rewarded with greater stakeholder trust. And when the slip up occurs, those who “banked” trust will recover faster.

#8 Transparency- Merriam Webster defines “transparent” as characterized by visibility or accessibility of information especially concerning business practices. Any CEO who thinks he/or she can still hide behind a veil of secrecy need only spend a few minutes on the social networks reading what stakeholders are saying about his/her company. Why not be proactive? It’s time to stop viewing transparency as a risk.

#9 Thoughtful- that’s not to say that stakeholders must know the company’s trade secrets or what the CEO had for dinner. But the CEO who thinks about building a trustworthy organization, might consider making “trust” more prominent through a well-developed communications strategy. It’s still the rare company that makes trust a priority, so if yours is one of the few that do, why not brag about it? Your stakeholders will thank you for it.

#10 Tweet- If Bill George sees a reason to do it, it’s probably time you did too!

online.wsj.com/article/SB10000872396390444083304578018423363962886.html?mod=rss_Technology

Barbara Kimmel is the Executive Director of Trust Across America, the leading source of information, standards and data on trustworthy business.

She is also the self-designated Tribal Chief of The Alliance of Trustworthy Business Experts (#trusttribe)

trustacrossamerica.com/cgi-bin/alliance.cgi

Barbara was recently named one of 25 Women Changing the World 2012

You can follow her on Twitter @BarbaraKimmel and direct comments to

Barbara@trustacrossamerica.com

Will you join Trust Across America in a pledge to model trustworthy business behavior?

Curtis C. Verschoor, CMA, a member of the IMA Committee on Ethics and one of Trust Across America’s Top Thought Leaders in Trustworthy Business Behavior trustacrossamerica.com/offerings-thought-leaders.shtml recently wrote a blog post called A Disturbing Thirty Days www.accountingweb.com/article/disturbing-thirty-days/219658

Essentially, the post talks about the enormous worldwide corporate transgressions that occurred from mid-June to mid-July 2012 beginning with $4 billion in fraud and ethics fines levied against the pharmaceutical industry. The enormity of these global trust violations is staggering.

Life is a series of small interpersonal transactions that either build trust or lose trust. I believe that the economics of trust works as follows: every small positive deed, whether seen or unseen, adds to ones personal and professional value. In this environment, a single transgression can derail decades worth of “brand” building if trust has not been “banked”.

Lately I’ve thought quite a bit about trust violations and what’s behind them. In most cases, the root cause of the breakdown of trust is self-serving and self-interested behavior, often on the part of those in the most trusted positions in business. While all professionals, regardless of their field, can build and bank trust, sadly few choose to. Even those who work in the fields of trust and ethics don’t always take the high road. And so here we are today witnessing some of the worlds largest companies paying billions of dollars in fraud and ethics fines, with no apparent end in sight.

Most of us have fallen victim to trust violations, and while the “big” cases, like those referenced in the link above, make the news, the day-to-day transgressions may not. Regardless of their size, trust violations harm interpersonal, inter-organizational and international relations.

Franklin Delano Roosevelt’s second inaugural address in 1937 included the following passage. “We have always known that heedless self interest was bad morals, we now know that it is bad economics. Out of the collapse of a prosperity whose builders boasted their practicality has come the conviction that in the long run economic morality pays.” Roosevelt was correct. Economic morality does pay but it seems that the business world needs a reminder.

Will you join Trust Across America in a pledge to model trustworthy business behavior? Will you take that pledge today? Will you serve as a role model for your children, your friends and your co-workers? Will you remind them (as often as needed) that economic morality pays? Will you share this short blog post with those who have banked trust and those who should start?

On Twitter: #pledgetobetrustworthy

Barbara Kimmel is the Executive Director of Trust Across America. Send your comments to barbara at trustacrossamerica.com

Trust Across America (TAA) receives frequent inquiries from the financial media. Here’s how the conversation usually goes.

TAA: Hello TAA. How can I help you?

Media: Hi! This is Debbie Downer from major financial news network. We understand that TAA ranks public companies according to their trustworthiness. Is that correct?

TAA: Yes we maintain a database of approximately 2500 public companies and our FACTS® Algorithm can measure the major drivers of trustworthy business behavior. We can even show you how each company ranks according to its market cap, industry and sector peers.

Media: Great. Can we get a list of the lowest ranked companies?

TAA: Just to clarify. You want a list of the least trustworthy companies?

Media: Yes

TAA: Sorry but TAA’s mission is to highlight the good guys. How about if we give you some examples of companies doing good and doing well at the same time?

Media: Good guys? No thanks. The public is not interested. Only bad news sells.

Click.

Jonathan Low at www.lowdownblog.com recently wrote about the disappearance of the small investor, and with the help of Barry Ritholtz www.ritholtz.com/blog/ listed 10 reasons why. I propose #11.

#11 The financial media industry is obsessed with bad news and scandals of the day. How will confidence in the financial markets ever be restored if this cycle continues? Jonathan and Barry, it’s really not a matter of poor returns. There are great companies who are meeting the needs of all their stakeholders including their shareholders.

It’s the responsibility of the financial news networks to refocus. Report to the public about companies that are behaving in a trustworthy manner. A few names that come to mind are Accenture (Symbol: ACN) and United Natural Foods (Symbol: UNFI). We are not suggesting that these companies are perfect. They may trip along the way.  But our research shows that they will also recover much faster. They have “banked” trust.

So to all the Debbie Downers of the financial news networks. Here’s my suggestion. Try highlighting a few of the good guys. Treat the public with more respect. Use this as an opportunity to be a positive role model for the rest of your industry. Don’t be part of the race to the bottom. Don’t be that guy (or gal)!

What do you think? Should the financial news networks report more good news? Send your comments to barbara at trustacrossamerica.com

Anyone still hesitating to embrace the business notion that trust is an asset – an asset that can leverage real business gains – should look at the ongoing data from Trust Across America (TAA) comparing companies with strong trust profiles to all other companies.   TAA is a US-based think tank exploring the issues of corporate trust and the relationship between trustworthy business and company performance in America – this, at a time when we feel corporate trust is not only rare, but also misunderstood and unappreciated as a business-building tool.

Among the empirical data we have collected over three years studying 3,000 US public companies, is the vivid performance of our “Gold 59” – including US brands such as Mattel, United Natural Foods and Accenture.   The Gold 59 comprises the US-based public companies that met our minimum benchmarks of trustworthy business behavior – which essentially means an above-average score in each of our five drivers of trust including Financial stability, Accounting Conservativeness, Corporate Integrity, Transparency and Sustainability (FACTS®). While many companies may be strong in multiple drivers, our research shows that a “weak link breaks the chain” and this is why only 59 companies qualified.

Compared to the S&P Index, an accepted standard for stock performance among some of the largest 500 companies in America, the Gold 59 is presently 500 basis points (or 5%) ahead since November 2010 when TAA began to formally share its data. Certainly the 10-year trend is even more enlightening, compared to a very stagnant S&P.

Source: Trust Across America May 2012

  We can point to five critical areas that show why the Gold 59 is so much further ahead of the S&P:

• Governance: Companies that made it into our Gold 59 put transparency and governance high on their priorities lists to ensure they have operations that meet and exceed the minimum standards expected. They are not “just compliant.”
• Stakeholder Engagement: Trust is a tango of at least two, and companies that engaged key stakeholders in meaningful, two-way communication received unbiased high trust marks.
• Consistency: There is nothing like being reliably consistent in delivering on product and service excellence and business performance to solidify trust with the audiences that make a business succeed.
• Authenticity: “Keeping it real” is a motto that rises to the highest levels in business performance, which means being honest about successes, failures, goofs and unexpected triumphs.
• Relevance: Companies that reflect real needs and real opportunities are the companies that attract the highest level of interest and potential for trust dividends by delivering on those high expectations. Sales increase because customers like doing business with trustworthy companies. We see this in other highly ranked FACTS companies like Nike and Starbucks.

“When we deliberately and consistently behave in ways that inspire trust, we will experience high-trust ‘dividends’,” says Stephen M.R. Covey, author of the bestseller The Speed of Trust. “There are actual economics to high trust – the dividends of greater speed and lower cost – just like there are economics to low trust – the “taxes” of lower speed and higher cost.  These economics of trust are experienced in relationships, on teams and in organizations, and ultimately these economics translate and extend into the financial marketplace.”

Perhaps the most exciting aspect of trusted companies “beating the street’ is the evidence of the upward virtuous cycle that is created because of the reciprocal nature of trust. When we trust people, they tend to trust us back. When we reward trusting behavior in organizations, it begets more trust-building behavior — which is the essence of a free and civil society.   The Gold 59 proves that the market values trustworthy behavior.   So why does the crisis of distrust continue and why are companies not running to prove their trustworthiness?   This is the inspiration for many more columns on the asset of corporate trust, but it boils down to a system that makes other assets priorities over trust – specifically, antiquated notions of shareholder value and settling for regulatory compliance as the marker of ethical behavior, among other distractions. The value of a company is derived from the relationships it maintains will all its stakeholders, not just shareholders. When we look at corporate performance we can no longer look at the short-term and we cannot merely look at investors.

If we study the other 2,941 pubic companies that don’t meet TAA’s minimum threshold for trustworthy business behavior, we see how rare trust is and how easily poor performance is justified by the apparent fact that “everyone else is doing it.” Trust leadership requires a more progressive stance on building authentic relationships with stakeholders – a relationship that pays trust dividends.  It also requires a long-term focus. And for those pioneers in valuing trust and investing in trust, the upside is clear –and the short-term takes care of it self.

Barbara Kimmel, Executive Director of Trust Across America (TAA), a US based think tank and communications program (www.trustacrossamerica.com) whose mission is to restore corporate trust. Email your thoughts and ideas to barbara at trustacrossamerica.com

Indra Nooyi is leading PepsiCo on a journey. But folks like Barron’s Andrew Barry believe she has chosen the wrong path. He argues in the November 21, 2011 edition that Indra Nooyi is a “potentially vulnerable CEO whose departure probably would be greeted favorably on Wall Street.” Let’s hope he is wrong, suffering like so many of his downtown brethren from a case of short-term thinking.

At the center of the debate lies the following question: Can a large established multi-national corporation change its way of doing business from the quarterly earnings focus to a shared value approach? Or must this approach be built from the ground up, as was the case with Jeffrey Hollender’s (www.jeffreyhollender.com) 7th Generation and John Mackey’s Whole Foods.

The story of 7^th Generation is a great one. Even the name selection was purposeful- derived from the Iroquois Indians’ credo to think of your actions in terms of how they will affect your community and the world at large seven generations from now. It is just as admirable to see Indra Nooyi, the CEO of PepsiCo, beginning the journey on behalf of one of the world’s largest and well-established companies.

At Trust Across America (www.trustacrossamerica.com) our model takes a broad cross-silo view of the holistic health of a company, a full body scan of sorts, to determine its trustworthiness. We examine both financial and non-financial drivers of trustworthy business behavior- specifically, financial stability, accounting conservativeness, corporate integrity, transparency and sustainability. So while, for example, environmental sustainability efforts are critically important, they only tell a small portion about the company’s overall well being.

According to our model, PepsiCo has enjoyed relatively strong scores with regards to both “transparency” and “sustainability” for several years. But what currently catches our attention is the significant increase in its “accounting conservativeness” and “corporate governance” scores. This leads us to believe that the company is getting healthier in ways that may not be important to the pervasive short-term thinking on Wall Street.

Yes, Pepsi’s financial metrics appear weaker in our model than they were a year ago. So do Coke’s. But we know that companies starting out on the journey of improvement might not show an immediate increase in shareholder value. According to Dov Seidman, the author of How (www.howsmatter.com) and the head of LRN (www.lrn.com), organizations take non-linear roads through periods of self- improvement. He quotes legendary Hall of Fame basketball coach John Wooden who said, “It isn’t what you do, but how you do it.” While Wooden’s first few years were not exemplary, he went on to build perhaps the strongest and most successful college basketball program in history.

Setting off on a journey, by its very meaning, does not imply a simple straight road to a destination. Even on successful journeys unfruitful trails may be encountered and backtracking is often required. While the short-term thinkers may be focused on splitting PepsiCo up to enhance short-term shareholder value, our guess is that Ms. Nooyi is making strategic decisions based upon longer-term “deeper meaning” Performance with Purpose implications.  She is among a handful of CEO’s that do more than just talk about this somewhat new management approach. Lenny Mendonca of McKinsey echoes these sentiments in a recent video he produced for The Management Exchange. www.managementexchange.com/video/lenny-mendonca-true-accountability-journey-0  Building great companies is no easy journey. We hope Indra Nooyi is allowed to continue down the path she has chosen.

Barbara Brooks Kimmel is the Executive Director of Trust Across America, a program that is setting the “Gold Standard” for trustworthy business behavior.  Let us know what you think about Indra Nooyi’s performance at PepsiCo. Leave your comments here or email Barbara@trustacrossamerica.com

A colleague likes to remind me that all politics are local. But the sad fact is that so little, if any, are based on accountability or trust.  

This past year I have witnessed local “bad” politics set against the backdrop of national “worse” politics, and while the local players may not have nationally recognized names, their tactics are no different than what is playing out in Washington today. While some will say “who can blame them, just look at their role models,” this is no longer a satisfactory answer, at least not to me.

Two of our regional school board members are the subject of recall petitions filed by separate groups in different towns. The targeted officials are claiming that the recalls are about intimidation. I’m reminded that often when people accuse others of a specific character flaw or personality defect, they may be pointing to their own shortcomings. What further strikes me as odd is that these are the same individuals who I have personally seen intimidate their own members and the public, while disparaging and excluding those who don’t agree with them. 

The politicians are piling in to the local battle in the hopes of gaining “control”-  citizen activists, board members, town councils and mayors are all trying to grab their share of some elusive power pie, while balancing themselves on both sides of an imaginary political fence. Sound familiar? Lines are being drawn faster than summertime lightening strikes and alliances are made (and broken) with a mere phone call or wink of the eye. Meanwhile, the individual political motives and alliances remain nontransparent, finger pointing is rampant and the issues are spiraling out of control. If it sounds to you like a scene from the TV show Big Brother, it could be.

But what is the “real” issue at the local level? What makes it different than what’s going on in Washington? For me… well nothing.  We, as a nation, have tossed ethics and morality to the wind. Those in power, at whatever political level, have forgotten what it means to be “servant leaders” and to do so with humility, dignity and grace. Elected officials are no longer accountable to their constituents, nor do they perform their duties with integrity or trust. In this particular case, a regional school district full of kids is suffering. At the national level, the whole country feels the same pain. What a shame. We have nobody to blame but ourselves.

I live in small town America. I speak to those in neighboring towns and I hear that the issues are the same. Only the names and faces are different. Imagine this.  What if a copy of this blog was sent to every local school board, every town council and every mayor with a note that said “Say what you mean and do what you say. We, your citizens, are watching and we want you to help restore trust to this nation.”  Imagine if these elected officials began setting the examples, at the local level, that our country so desperately needs right now. What is the downside? Where is the risk?

Readers of this blog have the power to start a movement. Forward this short blog to your School Board, your Town Council and your Mayor. Ask them whether they want to continue to be part of the problem or part of the solution.  Remind them that collectively, they have the power to change the course of this nation.

Barbara Kimmel is the Executive Director of Trust Across America. Please feel free to send any questions or comments to barbara@trustacrossamerica.com

Last week’s  release of the 2011 Edelman Trust Barometer www.edelman.com/trust has prompted much discussion in the news . Edelman sampled over 5000 people in 23 countries. Highlights of their survey, for our purposes focusing on US business, are as follows:

1. Trust is now an essential line of business

2. Trust in US business to do what is “right” dropped 8 percent

3. Trust in the US media to do what is “right” dropped 11%

4. Trust in the following US industries decreased from 2008-2011:

                – Technology- down 5%

                – Banks- down 46%

5. Trust in Automotive increased 17%

6. The most trustworthy industries in rank order are:

                -Technology

                -Automotive

                -Telecommunications

7. The least trustworthy industries, starting with the worst are:

                -Financial

                -Banks

                -Insurance

Charles H. Green at Trusted Advisor Associates www.trustedadvisor.com followed the release of the survey with an excellent blog post “Can You Trust the Data on Trust?” that explores the meaning of the word “trust” and how data can be interpreted in various ways:

trustedadvisor.com/trustmatters/can-you-trust-the-data-on-trust

As Charlie notes, the Edelman Survey is an opinion poll while Trust Across America (TAA) www.trustacrossamerica.com  uses quantitative data to assess the trustworthiness of American business. Both are important, but TAA’s findings are somewhat different than Edelman’s, especially in terms of the trustworthiness of various industries, as a whole.

Our data segments the largest 3000 companies into 16 sectors. While they cannot be fully aligned with Edelman’s industry categories, they are close enough to make several observations. Utilities, retail/wholesale and auto represent our most trustworthy sectors, while oils/energy, finance and transportation are the least trustworthy.

Edelman’s findings include estimates of how much people trust varies by industry. In our data, we have found that industry is not destiny; there is considerable room for individual company variation in trustworthiness. For example, technology is just slightly above average as a group. But when we delve a bit deeper into our data, the findings reveal something more interesting- thirteen of our Top 59 Gold List Companies www.trustacrossamerica.com/documents/media/PressArticle-v9.pdf are in the technology sector, lead by Lexmark www.lexmark.com , Texas Instruments www.ti.com , Analog Devices www.analog.com  and Teradyne www.teradyne.com– that’s over 20%. 

No one can argue with Edelman that trust is an essential line of business, and if trust in business to do what is right is down, we must find ways to reverse this cycle of mistrust. Quantitative data and surveys are certainly useful, but until CEOs acknowledge the trust crisis and agree to examine the data, we don’t see much changing in the short term. In other words, talking is fine, but moving the needle is essential.  

Trust Across America’s challenge to the C-Suite for 2011: The opinion surveys are out and our quantitative data does not lie. Very few companies have adopted  trust as a corporate culture.  Collectively, you have the power to reverse the downtrend in trust. Study your worst practices and improve them. Communicate your actions with your stakeholders. Get the needle moving in the right direction.