Trust & regulation mix like oil and water, yet oil always rises to the top.
The 2015 PWC CEO Survey has just been released, and 78% of CEOs are concerned about over-regulation, and for good reason. Regulation happens to be a trust killer, but that’s not their main cause for concern. Regulation, like low trust slows down the pace of business and innovation. It’s also very costly.
Richard Sexton, PWC’s Vice Chairman of Global Assurance, filmed this short video in which he (attempts to) explain the important role of trust in business, except he misses the mark. To PWC, the route to trust is through (more) reporting. Create more boxes to check and teach companies how to check them and like magic, you’ve got trust!
So let’s recap, CEOs are burdened by increasing regulation and the escape hatch is via more reporting. Except trust CANNOT be regulated and it’s also NOT a check the box finite reporting “project.”
Building organizational trust begins when the CEO, with the support of his or her Board, commits to run a trust-based organization and takes the required steps to do so. But there are certain prerequisites that must be met in order to make this commitment:
- The C-Suite must acknowledge and embrace the importance of building trust. The business case has been made but it is being ignored by the vast majority of organizations.
- Building trust is a long-term strategy that may have a short-term negative impact on earnings.
- Trust as a business strategy requires a certain mindset and “type” of CEO, and a Board that supports this.
- And perhaps most important, building trust cannot be delegated.
Hiring more compliance staff, increasing regulation and checking more boxes will not build stakeholder trust, regardless of what this survey and others have claimed. PWC may be carving out a “reporting” practice area that will serve it’s internal needs and that of its clients for many years to come, but it’s as much about trust as oil and water.
Barbara Brooks Kimmel is the Executive Director of Trust Across America-Trust Around the World whose mission is to help organizations build trust, and runs the world’s largest membership program for those interested in the subject. She is also the editor of the award winning TRUST INC. book series and the Executive Editor of TRUST! Magazine. In 2012 Barbara was named “One of 25 Women Changing the World” by Good Business International.
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Copyright 2015, Next Decade, Inc.
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