Trust Across America-Trust Around the World™

Companies Ignoring the Social Fallout of Bad Customer Service

Will Find Themselves at a Competitive Disadvantage

I didn’t set out to write 3 blog posts in 24 hours, but what’s that expression about “striking while the iron is hot,” especially when the subject is trust?

This afternoon one of my sons and I headed out to run a few errands. First stop was Verizon Wireless to inquire about my data plan. There was no wait and customer service was fast and knowledgeable. Kudos to Verizon. Maybe Wednesday afternoons are the best time to visit!

Next we headed over to the home improvement store. Think The Home Depot or Lowe’s and my luck abruptly ran out. First stop was the door and window department. I needed to order a few window screens and brought the old ones with me to ensure the right purchase. Upon completion of the $70.00 order I politely asked the employee to discard the old screens. And then I heard one of my favorite lines, “Sorry our policy doesn’t permit it.”  The employee turned his back and walked away.

We proceeded to finish shopping.  I carried the screens (one was 6 feet long) while my son flat bedded 8 bags of mulch, and then off to checkout where I asked the checker whether there was a suggestion box in the store. “Suggestions? They must be made online and instructions are to be found on the back of the receipt.” She never asked if she could help me, and apparently had no interest in hearing my story, but I told her anyway.  Her response, “Customers always try to hand off all sorts of trash to store employees.” According to the checker, if the store took the garbage that all the (evil) customers brought in the door, they would have to raise their prices. She then completed the transaction, handed me the paperwork for the screens I had ordered, along with a separate sales receipt and commented that she would be happy to attach them, but the store did not provide staplers at checkout… something about a policy. As we were leaving the store, my son asked me why I had even bothered to engage the checker in a conversation.

Moral of the story… I have no loyalty to this store. My experience today was pretty typical. Next time, I’ll just shop at their competitor a few miles up the road. And all because store #1 would not discard my screens, which might  have been the right thing to do, policy aside. And finally, just a few years ago, a consumer facing a customer service issue had only a few avenues of recourse-  a letter, a phone call or a glass of wine. Now the customer has an additional opportunity  to report their story on social media, “outing” the offender should they choose to do so.

Companies recognizing that good customer service is an important component of a trustworthy organization build a competitive advantage called loyalty. They bank trust with their customers. They don’t have an intern standing by on Twitter to send a stock “I’m sorry” response when something goes wrong. They don’t need to do that. They have happy loyal customers and they have staplers.

Those interested in reading more about the history of customer service at both The Home Depot and Lowe’s, might want to read this great article from Babson.

www.babson.edu/executive-education/thought-leadership/retailing/Documents/improving-customer-experience-at-home-depot.pdf

Please share your comments and suggestions! Email: barbara@trustacrossamerica.com

Barbara Brooks Kimmel is the Executive Director of Trust Across America-Trust Around the World whose mission is to help organizations build trust. She is also the editor of the award winning TRUST INC. book series. In 2012 Barbara was named “One of 25 Women Changing the World” by Good Business International.

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Do  Trustworthy Companies Sacrifice Profitability?

Not a Chance!

Copyright © 2014 Next Decade, Inc.

Trust Across America, via its  FACTS® Framework has been tracking the performance of the most trustworthy public companies for over 5 years, and the results are nothing short of staggering. Trustworthy companies have produced an 82.9% return vs. the S&P’s 42.2% since August 2012.

But the daily headlines continue to feature countless  stories about bad corporate behavior and the ongoing distrust in business. Rarely do we hear senior management even mention the word “trust” until they are attempting to minimize the fallout from the latest crisis. And what is usually the root cause of the crisis? Low trust, and a failure of senior leadership to place trust on its agenda. If it sounds like a vicious cycle it is, and certainly no way to reverse decades of declining trust in business.

Combine the chart above with the following data and The Case for Trust  becomes increasingly difficult to ignore.

The Hard Costs of Low Trust

• Gallup’s research (2011) places 71% percent of U.S. workers as either not engaged or actively disengaged.

• The disengaged workforce (Gallup, August, 2013) is costing the US economy $450-550 billion a year, which is over 15% of payroll costs.

• The Washington Post reported that “the federal government imposed an estimated $216 billion in regulatory costs on the economy (in 2012), nearly double its previous record.”
• The cost of the tort litigation system alone in the United States is over $250 billion. – or 2% of GDP (Forbes, January 2012)

• The six biggest U.S. banks, led by JP Morgan Chase & Co. and Bank of America Corp. have piled up $103 billion in legal costs since the financial crisis (Bloomberg, August 2013)

• According to The Economist Intelligence Unit (2010), 84% of senior leaders say disengaged employees are considered one of the biggest threats facing their business. However, only 12% of them reported doing anything about this problem.

• According to Edelman globally, 50% of consumers trust businesses, but just 18% trust business leadership.

• And finally, in the United States, the statistics are similar, but the story is a bit worse for leadership. While 50% of U.S. consumers trust businesses, just 15% trust business leadership.

This trust gap negatively impacts a company’s revenue, market share, brand reputation, employee engagement and turnover, stock price, and bottom line profitability.

The Low Cost of Hard Trust

Building a trustworthy business will improve a company’s profitability and organizational sustainability.

A growing body of evidence shows increasing correlation between trustworthiness and superior financial performance. Over the past decade, a series of qualitative and quantitative studies have built a strong case for senior business leaders to place building trust among stakeholders high on their priority list. While none of these studies are perfect, over the next decade their results will be increasingly difficult to ignore.

In a Harvard Business School working paper from July 2013 called The Impact of Corporate Sustainability on Organizational Processes and Performance, Robert G. Eccles, Ioannis Ioannou, and George Serafeim provide evidence that High Sustainability companies (those integrating both environmental and social issues) significantly outperform their counterparts over the long-term, both in terms of stock market as well as accounting performance.

According to Fortune’s  “100 Best Companies to Work For”, based on Great Place to Work Employee Surveys, best companies experience as much as 50% less turnover and Great Workplaces perform more than 2X better than the general market (Source: Russell Investment Group)

Forbes and GMI Ratings have produced the “Most Trustworthy Companies” list for the past six years. They examine over 8,000 firms traded on U.S. stock exchanges using forensic accounting measures, a more limited definition of trustworthy companies than Trust Across America’s FACTS Framework but still somewhat revealing. The conclusions they draw are:

• “… the cost of capital of the most trustworthy companies is lower …”
• “… outperform their peers over the long run …”
• “… their risk of negative events is minimized …”

 In addition to the chart above, numerous indirect indicators of trust also show a direct correlation to superior financial performance.

From Deutsche Bank:

• 100% concurrence on Lower Cost of Capital (“… academic studies agree that companies with high ratings for CSR (corporate social responsibility) and ESG (environment, social responsibility, governance) factors have a lower cost of capital in terms of debt (loans and bonds) and equity.”)
• 89% concurrence on Superior Market Performance (“,,,studies indicate companies with high ratings for ESG factors outperform market-based indices”)
• 85% concurrence on Greater Performance on Accounting –Based Standards (“… studies reveal these types of company’s consistently outperform their rivals on accounting-based criteria.”)

From Global Alliance for Banking on Values, which compared values-based and sustainable banks to their big-bank rivals and found:

• 7% higher Return on Equity for values-based banks (7.1% ROE compared to 6.6% for big banks).
•  51% higher Return On Assets for sustainable banks (.50% average ROA for sustainable banks compared to big bank earning 0.33%)

These studies are bolstered by analyses from dozens of other respected sources including the American Association of Individual Investors, the Dutch University of Maastricht, Erasmus University, and Harvard Business Review.

Business leaders may choose to continue to challenge the business case for trust but the evidence is mounting. There is not only a business case but also a financial case for trust.  Trust works.

Please share your comments and suggestions! Email: barbara@trustacrossamerica.com Barbara Brooks Kimmel is the Executive Director of Trust Across America-Trust Around the World whose mission is to help organizations build trust. She is also the editor of the award winning TRUST INC. book series. In 2012 Barbara was named One of 25 Women Who are Changing the World by Good Business International.

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Copyright © 2014 Next Decade, Inc.

Leaders Often Overlook the Obvious

Remember, What You Give is Often What You Get 

The following comments are sure to reduce the level of trust among your team.

How often have you heard these?

• Who works for whom?
• Because I said so.
• Fudge it if you don’t know.
• Who do you think you are?
• Not now.
• So what? Who cares?
• Don’t make a mistake.
• Who do you think you’re talking to?
• My door is closed for a reason.
• Because I make the rules.

What would you add to this list of things trustworthy leaders should never say?

Please share your comments and suggestions! Email: barbara@trustacrossamerica.com

Barbara Kimmel is the Executive Director of Trust Across America-Trust Around the World whose mission is to help organizations build trust. She is also the editor of the award winning TRUST INC. book series.

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July is “Truth” Month 

according to Trust Across America’s

2014 Calendar

Truth-telling is at the core of trust. Any leader who wants to build a trustworthy organization must have an extremely comfortable relationship with the truth. No company is perfect and it’s not necessary to air all the dirty laundry – just don’t lie about it or intentionally mislead. In times of crisis, a habit of truth-telling yields particularly good returns.

During the  52 weeks of 2014 you can build trust in your organization by thinking about, discussing and following the advice of the experts. Below are weekly reflections on trust for the 5 weeks in July 2014.

Week 1: Trust is the glue that will bind the private, public and civil sectors together Eric Lowitt, Nexus Global Advisors

Week 2: Trust is the absence of fear. James Lukaszewski, The Lukaszewski Group

Week 3: When leaders convey their overall vision to employees, a high trust, highly committed organization can be created. Amy Lyman, The Trustworthy Leader

Week 4: The real advantage of trust is that it is the deepest yearning of all humans. Robert Porter Lynch, The Warren Company

Week 5: Ethics is the foundation of trust. Chris MacDonald, PhD, Ryserson University

Please share your comments and suggestions! Email: barbara@trustacrossamerica.com

Barbara Kimmel is the Executive Director of Trust Across America-Trust Around the World and editor of the award winning TRUST INC. book series.

Which sounds better? High stress, meaningless relationships, frequent job loss and suspicion OR well-being, great friendships and frequent promotions?

We’ve all heard the expression “Happy Wife, Happy Life” but how about “High Trust, It’s a Must” or “Low Trust Go Bust!.” I contend that being trustworthy will not only make you happy, but wealthier in many ways than you are today.

What do we mean by being trustworthy? Let’s use this very simple definition.

Act with integrity and always keep your word.

First, let’s talk about the inherent risks of being untrustworthy: 

It takes more time and  psychological energy than it’s trustworthy counterpart and results in:

• High stress
• Low energy
• Frequent job loss
• Meaningless relationships
• Low levels of creativity
• High levels of suspicion among friends, family and coworkers
• High barriers to communication due to lack of honesty and broken promises
• Poor and slow decision making
• High transaction costs
• Win/lose situations

On the flip side, here are ten great reasons to be trustworthy:

• Psychological well-being
• Meaningful friendships and business relationships
• Faster, more efficient decision making
• Greater personal effectiveness in groups
• Greater support for your decisions
• Career promotions
• Win/win opportunities
• Role modeling trustworthy behavior
• More time for creativity and relaxation
• More money in your pocket (people want to do business with those they trust)

Be trustworthy. The benefits are far greater than the alternative. What do you think? Leave a comment.

Barbara Kimmel is the Executive Director of Trust Across America-Trust Around the World and the “Tribal Chief” of the growing Alliance of Trustworthy Business Experts. She is also the editor of the award-winning crowd sourced book series TRUST INC. In 2012, Barbara was named “One of 25 Women Who Are Changing the World.”

June is “Talk” Month 

according to Trust Across America’s

2014 Calendar

Your stakeholders need to know what steps you are taking to build a trustworthy organization. Quarterly numbers are no longer the “be all and end all.” In fact, evidence is mounting that a trustworthy culture and profitability go hand in hand.

During the  52 weeks of 2014 you can build trust in your organization by thinking about, discussing and following the advice of the experts. Below are weekly reflections on trust for the 5 weeks in June 2014.

Week 1:  It’s going to take a substantial collaborative effort to bring trust back to the heart of how we live and work. Barbara Brooks Kimmel, Trust Across America – Trust Around the World @BarbaraKimmel

Week 2: There’s nothing more destructive to trust than deceit, and nothing more constructive than candor, Jim Kouzes & Barry Posner, The Leadership Challenge @KouzesPosner

Week 3: Doctor-patient relationships that don’t foster trust don’t work because the doctor or the patient has not sought a way to share or relinquish control. Shirie Leng, MD

Week 4: When people trust an organization, they are more likely to exhibit supportive behavior. Linda Locke @Reputationista

Week 5: Corporate trust and reputation matter, and they are the most valuable asset of every enterprise. Michael Lowenstein, Ph.D., CMC, Beyond Philosophy @Lowen42

Please share your comments and suggestions! Email: barbara@trustacrossamerica.com

Barbara Brooks Kimmel, Executive Director, Trust Across America – Trust Around the World

Editor  Trust Inc. Strategies for Building Your Company’s Most Valuable Asset (a 2014 Nautilus & Eric Hoffer Book Award winner)

Are we moving into a new age of “transparency” in corporate America?

Let’s review a bit of history.

The term “corporate responsibility” has enjoyed a shelf-life of over 50 years, since the 1960s to be exact. Some argue that CSR is merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations (Wikipedia) and it’s hard to believe that almost thirty years have passed since “greenwashing”  came into vogue in a big way.

The term greenwashing was coined by New York environmentalist Jay Westervelt in a 1986 essay regarding the hotel industry‘s practice of placing placards in each room promoting reuse of towels ostensibly to “save the environment.” Westervelt noted that, in most cases, little or no effort toward reducing energy waste was being made by these institutions—as evidenced by the lack of cost reduction this practice effected. (Wikipedia)

Now we’re staring to not only hear but also see a new “trend” in corporate communications. It sort of sounds like transparency via the social networks but it’s disingenuous. It lacks the right “feel.” Here’s a few recent Tweets that caught my attention.

Here are a few basic tips for storing and prepping vegetables & melons monsantoblog.com/2014/05/27/keeping-your-salad-safe-and-tasty-proper-care-of-your-salad-ingredients/ … #nationalsaladmonth

AmeriHealth NJ @AmeriHealthNJ · 18h

#Breakfast is the most important meal of the day. A #healthybreakfast can help you stay focused all day! #Good4U bit.ly/1csnKRk 

General Motors @GM · May 19

Last year, GM saved $162 million in combined energy costs at an industry-leading total of 63 facilities worldwide. #sustainability #CSR

Are you seeing the same pattern that I see?

Let’s talk about vegetables, breakfast and energy costs instead of  Roundup, escalating insurance premiums and culture change.

Are companies genuinely interested in being more transparent, or have they found a new “short-term thinking” PR loophole via social media? My guess is the stumbling block lies with the legal and compliance folks, whose focus on what’s legal always seems to trump what’s right. But in reality, consumers don’t want to hear about washing vegetables as much as they do about culture, values and authenticity.

That’s the stuff that trust is made of. The rest is just more noise in an increasingly noisy world.

Barbara Kimmel, Executive Director, Trust Across America-Trust Around the World

What do you think? Do you have examples of companies that are using social media in the ways that really matter, the ways that will bring trust back from the sidelines? Email me at barbara@trustacrossamerica.com

Trust Inc.

May is “Teamwork” Month 

according to Trust Across America’s

2014 Calendar

Teamwork leads to better decisions and better outcomes. Teams create trust, and trust creates teams, especially when silos are broken down.

During the  52 weeks of 2014 you can build trust in your organization by thinking about, discussing and following the advice of the experts. Below are four reflections on trust for the 4 weeks in May 2014.

Week 1: People now trust one in four companies on average, making its scarcity in the marketplace an object of value. John Gerzema, BAV Consulting @JohnGerzema

Week 2: The most trust-destroying thing you can say is, “trust me.” Charles H. Green, Trusted Advisor Associates @CharlesHGreen

Week 3: Building trust creates a premium value for product brands as well as enterprise value for the corporate brand. James R. Gregory, CoreBrand @Corebrand

 Week 4: Trust is the core issue impacting organizational, team and leadership effectiveness. Noreen Kelly, Noreen Kelly Communication @NoreenJKelly

Please share your comments and suggestions! Email: barbara@trustacrossamerica.com

Barbara Brooks Kimmel, Executive Director, Trust Across America – Trust Around the World

Editor  Trust Inc. Strategies for Building Your Company’s Most Valuable Asset (a 2014 Nautilus Book Award winner)

Last week we announced the results of our 4th annual “Most Trustworthy Companies,” ranking almost 2500 US based, publicly traded companies on 5 indicators of trustworthy business behavior. Utilizing our proprietary FACTS Framework, Trust Across America picks up where other lists leave off, analyzing Financial stability, Accounting conservativeness, Corporate governance, Transparency and Sustainability from several independent data sources.

The “Top Ten” companies are shown below.

#1 Manpower Group (MAN), human resource consulting firm

#2 Hormel Foods (HRL), food producer

#3 Jones Lang Lasalle (JLL), commercial real estate

#4 CA Technologies, Inc. (CA), computer software

#5 The Boeing Company (BA), aerospace

#6 CBRE Group (CBG), commercial real estate

#7 Capital One Financial Corporation (COF), bank holding company

#8 The Sherwin Williams Company (SHW), general building materials

#9 Lexmark International, Inc. (LXK), office equipment

#10 Delta Airlines (DAL), transportation

The full press release is reproduced here.

This week we compare the performance of this group to the S&P 500.

Are you surprised about the recent past performance of these companies against the S&P 500? We aren’t. The business case for trust has been proven once again.

One-year return for “Top 10” vs. S&P 500:  38.8% vs. 17.59%, or 120% higher.

Two-year return for “Top 10” vs. S&P 500:  65.74% vs. 33.29%, or 97% higher.

Five-year return for “Top 10” vs. S&P 500: 240% vs. 114.81%, or 109% higher.

*Returns do not include dividends but the yield is similar to the S&P 500.

*While the returns show past performance of the ten companies, a live portfolio being rebalanced monthly has a similar profile.

Investors can choose to support trustworthy companies who are doing business “well” and are also highly profitable. This creates a virtuous cycle whereby less trustworthy companies may be inclined to focus more on corporate culture and  less on quarterly returns.

For more information, tools and programs on building trust in your organization, please visit us at Trust Across America.

Who are America’s Most Trustworthy Public Companies for 2013?

Trust Across America picks up where the “other” list leaves off, looking at 5 indicator of trustworthy business from three independent data sources.

Here’s our latest press release.