Trust Across America-Trust Around the World™

PART II OF II

Barbara: So what are you saying about companies? Why don’t they see the benefits as well as the costs of trustworthy behavior?

Mark: Some management experts say if you don’t measure it you won’t manage it. Problem is, financial statements don’t have lines for reputation, customer loyalty, product quality, and so on, and they don’t show how a loss of reputation trickles down to a lousy bottom line. And management culture is dominated by financial statements.

Barbara: In your writing you often talk about the quality of decision-making. What do you mean by that?

Mark: Imagine you have a persistent cough. You would not expect your doctor simply to say “in my experience, people with persistent coughs usually have bacterial pneumonia, so take these antibiotics and you’ll be fine.” Well, you won’t be fine if your persistent cough comes from asthma, emphysema, or lung cancer. A doctor who just gives antibiotics to every coughing patient who comes in without asking questions and running tests… that sounds to me like it’d be malpractice. But an executive following that approach might have a fine career in the business world. See my essays “It’s Working!”Read Blog Post and “Gross Galactic Product.” Read Blog Post

Barbara: In other words, part of trustworthiness is good decision-making.

Mark: Yes, even for shareholders. I think everyone would agree that the quality of decisions affects the probability of good outcomes. The better the decisions, the better the outcomes. It’s not a guarantee, but it raises the odds. Good outcomes mean jobs for employees, healthy communities, happy customers, and fair returns for shareholders. Bad decisions and bad outcomes help no one.

Barbara: Okay, so how do we get good-quality decisions? Isn’t that why companies try to hire the best managers, with experience and education?

Mark: Yes, but if that’s all it took we wouldn’t have companies going under. GM didn’t go under after a slow decline of 40 years because it hired bad managers; on the contrary, it went under in spite of hiring good managers. See my essay “Suffering Was Optional.”Read Blog Post

Barbara: If having good managers isn’t enough, what else do we need?

Mark: Just as there are modern tools of medicine that help your doctor make good decisions about your persistent cough, there are modern tools of management that help managers make good decisions about their businesses. But in management we still have a culture of experience, even “instinct,” instead of rigorous, critical thinking. One of the themes in my book Marvelous Techniques is that we have biased humans using flawed tools, and that leads to bad decisions.

Barbara: What do you mean by “biased humans” and “flawed tools”?

Mark:
I don’t mean that humans are biased in the sense of prejudice, and I don’t mean tools are flawed in the sense that they make mistakes in arithmetic. I mean that all managers are humans, and humans have a variety of unconscious biases that interfere with our ability to make good decisions. I mean that tools are flawed if they are the wrong tool for the problem, such as using an accounting-based spreadsheet to answer a strategy question.

Barbara: Give me examples of biased humans.

Mark: Russo and Shoemaker, in Decision Traps, talk about overconfidence and group biases that led, among other things, to the Challenger disaster. Tavris and Aronson, in Mistakes Were Made (but not by me), talk about cognitive dissonance, which makes people cling to past beliefs, such as the guilt of a person held in prison for many years, even after there’s conclusive evidence to the contrary. Dörner, in The Logic of Failure, describes the disaster at Chernobyl, when people overrode safety systems because they believed they were experts and knew what they were doing.

Barbara: How does that apply to business?

Mark: Perhaps the most obvious example is price wars. Price wars can be devastating to companies; look at the airlines. You’d think that smart, experienced managers wouldn’t start price wars. Yet they do, and getting out of them can take a long, unprofitable time. Price wars are a more complicated subject than they might appear, but the key thing is that no one expects to suffer a price war. They expect to enjoy a price advantage.

Barbara: What’s another mistake due to bias?

Mark: Managers often think they can forecast the results of a strategy in their heads; that’s what they’re doing when they say “if I do this, then I’ll get that result.” Business, though, is immensely complicated. Just to give you an idea of that: I conducted a recent program for a Fortune 500 company in which we determined that there were over 39 million possible outcomes from the options they faced. No human being can even list them, let alone pick which are the most probable or most profitable. See my essay “The How-Likely Case.Read Full Essay

Barbara: How about flawed tools?

Mark: We talked earlier about financial statements that don’t take into account reputation, customer loyalty, product quality, and similar factors. Those spreadsheets also don’t take competitors’ reactions into account. As a result, many analyses based on financial spreadsheets leave companies vulnerable to surprises. Generally unpleasant surprises, because spreadsheet analysis implicitly assumes that a strategy will work.

Barbara: How, then, can companies avoid falling into those traps?

Mark: The best techniques I’ve seen involve business war games and strategy simulations, which are ways to stress-test business strategies. They’re able to get past the limitations of spreadsheets and trend lines, and they’re able to handle the arithmetic. By the way, business war games aren’t about war or conquest. See my essay “The War (Game) Metaphor.”Read Full Essay

Barbara: Should we not trust companies unless they use business war games or strategy simulations?

Mark: My point is not about business war games or strategy simulations, although they do work. The point is that companies need conscious, deliberate processes that ask tough questions, such as what could make our strategy fail. The USA and the EU took a step in that direction when we started to stress-test banks after the financial crisis. Without that question we get wishful thinking, results that disappoint, careers that flame out, people losing their jobs, and contributions to economic problems instead of to economic recovery.

Barbara: Why look at what could make a strategy fail?

Mark: Because that’s how we know how risky it is and what we have to do to strengthen it. Imagine how much better off we’d all be if we’d run those stress-tests before the financial crisis instead of after.

Barbara: Have any stories about that?

Mark: Sure, see my essay “When I Was Wrong.”Read Essay I put together a pricing simulation that, so far, about 300 strategists have tried. I put in my own strategies, and they didn’t do very well. After I got over my private humiliation, I realized it was a good thing. Before the simulation, you’d have every reason to trust my advice: I’m an expert in my field, and you could expect me to know what I’m talking about. After the simulation — that is, after I learned from the simulation — you’d get much better advice from me. The trick is to make mistakes where it’s fast, cheap, and educational, not when real jobs, real careers, and real money depend on it.

Barbara: Mark, thank you for sharing your thoughts with me. What is the best way to reach you?

Mark: My contact information is as follows:
Mark Chussil, Advanced Competitive Strategies, Inc., 1673A SW Montgomery Drive, Portland, Oregon 97201 USA
+503-243-3548
mchussil@whatifyourstrategy.com
www.whatifyourstrategy.comLink to Website
Visit our blog at Link to Blog

INTERVIEW WITH MARK CHUSSIL FROM ADVANCED COMPETITIVE STRATEGIES (PART I of II)

This week we had Mark Chussil from Advanced Competitive Strategies join us on our radio show. Since he had only begun to share his thoughts on trustworthy business behavior during the show, I decided to ask some follow up questions. Due to the length of this blog, this is Part I. Part II will follow.

Barbara: Mark, tell us a little about your background.

Mark: I am the Founder and CEO of Advanced Competitive Strategies See Website Link, and author of Marvelous Techniques: Essays on Going Beyond Strategy as We’ve Known It Nice Start: Questions Only You Can Answer to Create the Life Only You Can Live

I lecture and consult globally about strategic thinking, business war games, and strategy simulation. My work has appeared in Fast Company, The Wall Street Journal, and elsewhere. And finally, I earned an MBA at Harvard and a BA at Yale.

Barbara: Why do companies engage in untrustworthy behavior?

Mark: No one gets up in the morning saying “My job today is to screw up the world. If I make people miserable, if I hurt the general well-being, if I damage our civilization in even the slightest way, then I can go to sleep with the satisfaction in a job well done.” Most people want to do good things, but when we work for a company, we are bound, in a keep-my-job way, to “do good” according to the company’s definition of “doing good.” We do what we’re paid to do.

Barbara: On your blog you have an essay called “What You Pay For.”Read Blog PostIs that what you mean?

Mark: Yes. The customer gets what he or she pays for, and companies are our customers when it comes to employment. If the customer, the company, pays you for sales growth, it will get sales growth from you. It may also get profits or innovation or social responsibility, and it may also get shortcuts or bribery or non-compliance with safety regulations, but those are side effects.

Barbara: Presumably a trustworthy company cares about more than just sales growth.

Mark: Yes, a trustworthy company will care about other metrics too, such as impact on the environment, fair treatment of employees, customers, and suppliers, and living up to its word. The point is that compensation programs — what companies pay for — are tremendously important. Perhaps one way to identify trustworthy companies is to find out what they pay for.

Barbara: What else can we look at besides compensation programs?

Mark: Look also at how they work. Kaiser Permanente, the big HMO, is proactively using data on medical tests. Over the last 15 years they identified 450 patients with new or recurring cancers or abnormal biopsies who would not otherwise have been found. I’m one of their customers, and that proaction is one reason why. See “What the Doctor Missed”Read Full Article

Barbara:The Wall Street Journal had an another article on automobile safety. See “What’s Safer A Chevy or Mercedes?”Read Full Article

I think you blogged about it, in “Who Doesn’t Like Airbags?”Read Blog Post. The auto industry has often resisted mandatory safety improvements, even going back to seat belts, as well as fuel-economy standards. Now they compete on safety features and fuel economy. What happened?

Mark: Regulations forced some good behavior, such as publicizing crash-test results so customers would have the information they need to compare car models. Plus, Lee Iacocca, who used to run Chrysler, decided to stop resisting safety improvements and, instead, make safety a selling point. The resulting competition directly benefits customers.

Barbara: Why did Mr. Iacocca do that?

Mark: I don’t know. Did he change his mind because he saw there was money to be made or because he wanted to save people’s lives? Do we care about the answer?

Barbara: Are you saying that it doesn’t matter why a company does good things? What, then, does it mean to be “trustworthy?”

Mark: At one level I don’t care why a company does good things. I want Delta to fly me safely from one place to another. I don’t care if they do it because they’re afraid of punishment if they fail, they don’t want to lose customers (perhaps literally), or they think it’s honorable to keep their customers safe. Does it matter if I give to a charity because I like the charity or because I think the donation will get me into heaven?

Barbara: But the threat of punishment seems to happen when a company has proven itself untrustworthy.

Mark: I agree. We expect “trustworthy” to have some connection to good motives and intentions, not merely following the rules. A company that demonstrates good intentions makes us trust that it will not deceive us or put us at risk. We’re all sadly familiar with the opposite kind of company.

Barbara: So let’s talk about a company’s motives and intentions. Is it reasonable to expect a company to behave well?

Mark: Professors Jay Lorsch and Rakesh Khurana of the Harvard Business School wrote an article called “The Pay Problem.”Read Full Article They say corporations have shifted their focus from “stakeholders” to “shareholders.” Stakeholders can include customers, employees, and society in general; shareholders means just the people who own shares in the company. When we evaluate decisions in terms of effects on stakeholders, we look more broadly than when we think only of shareholders.

Barbara:Mark: I believe it means we have more need of government regulation, and I think that recent events ranging from the financial crisis to the BP oil spill show why. We need rules to ensure that the shareholders-perspective does not go too far. That’s why we have anti-trust laws, the FAA, FDA, and FTC, minimum fuel economy rules, and so on. Those solutions might have been controversial when they were first put in place, but just try to take them away now.

Barbara: You mentioned regulations, which are enforced with fines and other actions. An article in Newsweek, “Do Fines Ever Make Corporations Change” (September 13, 2010), suggested that fines won’t make corporations change because they are tiny relative to the size of the companies. Do we get untrustworthy behavior because fines are too low?

Mark: Perhaps fines are too low, and perhaps inspections are too infrequent or lax. An option might be for fines to go up as a company accumulates offenses, just as insurance companies raise our rates if we get into too many accidents or we face more years in prison for repeated offenses. But those are punishments. We really want to prevent bad behavior, and there are reasons why companies may think it’s profitable to risk take chances.

Barbara: Why?

Mark: One reason is that companies generally don’t quantify the value of their reputations, so they don’t know until it’s too late (and maybe not even then) how much it hurts to have their name dragged through the mud. A second is that human beings underestimate the odds of a bad event; “it won’t happen to us.” A third is that there’s little incentive to be the first one to play fair. Managers can clearly see, or think they see, the costs of playing fair, and it’s harder for them to see the benefits.

Barbara: It’s important to level the playing field or to have vigorous competition.

Mark: I agree. Regulations level the playing field so no one has extra costs. I’ve worked with executives who want stronger regulations so that they can do what they know is right without making themselves uncompetitive. And Lee Iacocca’s move, being the first to embrace safety features, was important because he changed the calculus for the other automakers. They could see the costs of falling behind.

PLEASE READ PART II

TRUST ACROSS AMERICA™ RELEASES FIRST FINDINGS FROM ITS STUDY OF TRUSTWORTHY BUSINESS PRACTICES IN PUBLIC COMPANIES

While there may be a continuing and complex trust crisis in America, our research shows that there is a direct relationship between business performance and trustworthy behavior. And while a universal definition of trust may not exist, it’s not really a problem,—it’s just the way things are. We love to put precise metrics in place that describe and explain, in linear and causal terms, things like human behavior. But reality doesn’t always cooperate. And because what can’t be measured also gets overlooked, trust, which is absolutely critical in business relationships, needs measuring.

A 2008 paper written by the Economist Intelligence Unit entitled “The Role of Trust in Business Collaboration” concluded with the following statement:

“Even though best-practice corporate governance has been on the corporate radar for some time now, it seems that the trust element of governance, despite being so closely linked to ethics, has yet to become a business standard.”

We believe that many important concepts cannot be reduced to a single metric, and that is certainly true for trust. However, what can be defined and measured are various contributory components of trustworthy behavior in business—factors that we can all agree are definitely somewhere in the trust neighborhood. And when these factors are evaluated and aggregated, there are some encouraging results about companies that somehow seem to be “doing the right thing.” We may not be able to precisely measure trust; but that doesn’t mean we can’t rate it, test it, evaluate it, and above all—manage it. What we have recently done is removed the ‘yet’ out of the Economist’s description.

In 2007 we set a goal of developing a rigorous approach to better understanding and evaluating trustworthy business practices. We began laying a foundation for a trust ecosystem, and Trust Across America™ (TAA) was hatched. Through our professional relationships, LinkedIn group, and our radio show, we have spoken to dozens of academic and corporate experts and consultants across the wide range of specialized silos relating to organizational trust- ethics, integrity, reputation, ESG, CSR, accounting, and sustainability to get their feedback on this elusive concept of trust. From this collaborative effort, we have developed a methodology that we think approximates the most holistic and comprehensive definition and measurement of trustworthy corporate behavior to date. We named it FACTS™. It allows us to provide meaning, definition and measurement to both the business and behavioral side of trust.

FACTS™ is an acronym. It stands for:

Financial strength and stability
Accounting controls
Corporate governance and community impact
Treatment of Stakeholders and Transparency
Sustainability

We ran the FACTS model again historical public data for thousands of public companies from 1998-2009, and eliminated those that did not have complete data. In essence, our methodology analyzes hundreds of data points from three independent providers, and with equal weighting, arrives at a cumulative FACTS™ trust score for almost 2000 of the largest publicly traded companies. Currently, thirty nine companies reach the Gold Standard of 50 points or more in each of the FACTS data categories.

Some other noteworthy findings from this study:

•The company with the highest trust ranking (across sixteen sectors) is in the same industry as BP Global. We find this somewhat timely since it is a goal of TAA to have the most trustworthy companies share their best practices.

•The companies with the highest scores in all data categories come from six different industry groups, so no single industry dominates in the “trust” category.

•The retail sector has the highest average trust rating of the sixteen.

•When we rank the 1954 companies, the top 10% are almost evenly split between large and small (over and under $2 billion market cap).

•Only two hundred companies in the database scored above a “50” in sustainability efforts.

Over the next few weeks we will be populating the Trust Across America website Link to Website with the following material:

-An alphabetical listing of the names of all 1954 companies for which we have complete data.
-An alphabetical listing of the top 10% of all companies.
-Company specific and industry reports that will allow C-Suite executives to anticipate “surprises”, manage risk, and better protect their company’s reputation; provide a workable framework for enhancing organizational trust and reputation; and provide meaning, definition and measurement to both the business and behavioral side of trust..
-Reports for consumers and other professionals.
-Additional resources for public companies that wish to delve deeper into internal and external behavioral assessments.

We will also begin conversations with the media (both print and broadcast) about our findings and will start to contact some of the top companies for interviews and further involvement. Our mission is to highlight companies that are “doing the right thing”, refocus media attention away from the negative, and provide opportunities for companies to share best practices.

I look forward to your comments and feedback. The best initial method to communicate is via email: barbara@trustacrossamerica.com

Barbara Kimmel, Executive Director Read more…

TRUST ACROSS AMERICA™ MONTHLY UPDATE JULY 2010

A close family member likes to remind me that “Slow and steady wins the race”…as long as you are heading in the right direction. Our VISION is slowly and steadily reaching its lofty goal as our trust ecosystem continues to expand, and collaboratively we elevate the discussion and develop solutions for building a more trustworthy world.

Over the past month we have spent much of our time finalizing our study on trustworthy business practices in public companies. Look for a major announcement in August and a special newsletter explaining our methodology and some of our observations.

Our core programs continue to grow:

• Our LinkedIn Group called Trust Across America launched in mid-April. It’s a place for discussion, dialogue and debate on trustworthy behavior in business. Most of our members are thought leaders from academia, consulting and corporate America in the fields of ethics, trust, reputation, leadership, integrity, CSR, ESG, sustainability and impact investing. If you have not already done so, please join the group and take a minute to introduce yourself. Please invite a professional colleague to join the group as well.

• The Trust Across America Blog for July includes interviews with Brian Moriarty from the Business Roundtable Institute for Corporate Ethics; Jeffrey Seglin, the NY Times Ethics Columnist; Karen Mishra, a Michigan State Professor who, along with her husband Aneil, has spent the past twenty years studying trust; and Tony Simons a leadership and management professor at Cornell, and an expert in business trust and integrity. I also wrote a few pieces on how companies can damage their reputation through poor marketing and customer service, and you can follow my fender bender saga navigating the auto insurance industry. Our blog index has grown to almost forty covering trustworthy behavior in business from various viewpoints including ethics, trust, reputation, integrity, sustainability, ESG, CSR and leadership. Click on link

• Trust Across America Radio Show: We had a surprise visit from Jeffrey Hollender of Seventh Generation on July 21. We continue to be honored by the outstanding thought leaders who have appeared, and will be appearing on the show. All past shows are archived, so you can listen at your convenience: Click on Show Link
Our guests for the month of August, all leading experts in various aspects of organizational trustworthiness, include: (August 4) Steve Farber, the President of Extreme Leadership and author of Greater than Yourself; Paula Marshall the CEO of Bama Companies, a Malcolm Baldrige Award Winner and author of Finding the Soul of Big Business; (August 11) Fran Maier, the founder of Match.com and the President of TRUSTe that currently certifies the privacy practices of over 3,000 websites; Traci Fenton, the Founder and CEO of WorldBlu, Inc., whose mission is championing the growth of democratic companies worldwide. WorldBlu publishes the annual WorldBlu List of Most Democratic Workplaces™; (August 18) Bob Schoultz, Director of the Master of Science Program in Global Leadership at the University of San Diego; Art Stewart, a consultant, educator, and purveyor of a strategic framework – the ‘New Responsibility Paradigm’; (August 25) Nick Andrews, Managing Director North America for the Centre for Sustainability and Excellence; and Karen Mishra, a clinical professor in the Broad College of Business at Michigan State University. Karen’s research focuses on how organizations build trust with employees through internal communication.

• Consultant’s Collaborative Our Consultant’s Collaborative is growing. It is another opportunity for experts to highlight and share their knowledge with visitors to our site, as well as serving as a centralized internal and external resource for consulting, media and program referrals. We hope to expand the Collaborative to include professionals with expertise in Organizational Trust, Leadership, Ethics, Integrity, Reputation, Accountability, Sustainability, CSR, ESG, Governance/GRC and Impact Investing. Special programs are being developed for those who participate through enhanced listings. Click for Consultants Page

• Reading Room Looking for a book on organizational trust? Our Reading Room should be your first stop. Books are written by experts from corporate America, academia and consulting. We added several new titles for August. Click Here to Go to the Reading Room

We hope you will choose to get involved and stay involved in some of the following ways. Trust Across America is a collaborative effort. We cannot do this alone.

• Join our Linkedin group called Trust Across America. We have also started a group on Facebook by the same name but have not quite figured out what we will do with it!

• Be a guest on our radio show.Refer a colleague to appear on the show. Please have them send an email to
Barbara@trustacrossamerica.com with their expertise and contact information.

• Link your blog to our site – Follow the format on the existing blogs at the link below and send it back in an email-we will add your blog within a few days.

• Be listed in the Consultants Collaborative- Please email me for more information on various listing options. (Barbara@trustacrossamerica.com)

• Suggest a book for our Reading Room

• Collaborate in some way we have not yet considered.

Thank you for your interest in Trust Across America. We look forward to continuing to build our trust ecosystem and in providing valuable resources to both individuals and companies. Please feel free to forward this newsletter to others who may be interested.

Barbara Brooks Kimmel, Executive Director
www.trustacrossamerica.com
Copyright © 2010 Next Decade, Inc.

Barbara: Tony, tell us a bit about your background, qualifications and expertise. Please provide the title of any books you have written.

Tony: As the president of Integrity Dividend LLC, I teach people, teams and organizations how to boost their bottom line through integrity. I speak, train and consult. I have been a professor of leadership and management at Cornell University’s School of Hotel Administration since 1993, when I earned my doctorate from Northwestern University’s Kellogg School of Management in Organizational Behavior. Before that, I worked as a psychiatric counselor and as a sales and sales management training consultant. I have published over 30 articles and book chapters for scholars and managers, and most recently published a book for managers based on 13 years of research – titled, The Integrity Dividend: Leading by the Power of Your Word (Jossey Bass, 2008). Link to The Integrity Dividend

I have trained executives and managers in negotiation and leadership since 1991.

Barbara: Trust Across America’s mission is to rebuild trustworthy behavior in North America, starting with public companies. How would you generally define trustworthy behavior?

Tony: In the broadest sense, I would think about ability, benevolence, and integrity, as per Mayer et al.’s (1995) classic article. My own work, however, focuses in on the aspect of integrity which is word-action alignment: consistently fulfilling promises and demonstrating by actions the same values one talks about. How good is your word? Is it impeccable? This one element is really hard to achieve, and it has huge, measurable impact on effectiveness. There are other things that are important, but perhaps nothing else works without this one ingredient.

Barbara: Are trustworthy behavior and integrity synonymous?

Tony: It depends how precisely you want to speak about the ideas. By some definitions, yes. By my definition, I would say that integrity (or more specifically, “behavioral integrity”) is a necessary element of trustworthiness, which is a broader notion.

Barbara: Can you provide some examples of public companies that are doing this well?

Tony: Johnson and Johnson comes to mind, for how well they managed the Tylenol scare. Marriott seems to be a company that consistently delivers on its brand promise. I once returned something to LL Bean under really bizarre circumstances, but they honored their money-back satisfaction guarantee even when they had every opportunity not to – the dress was delivered okay, but then my dog chewed on the package and then it got run over by a truck when a bee flew into the cab… The operator laughed at the story, but there was never any question about whether they would honor their guarantee.

Barbara: Why are high trust organizations more efficient?

Tony: Three main reasons – first, they engage their employees’ hearts better, which means their employees try harder and go the extra mile. Second, people understand each others’ intent and requests better, because they do not need to second-guess each other. Third, they can focus their attention on getting the job done, rather than jockeying for political advantage.

Barbara: Is the “trust” climate in corporate America improving or worsening? What actions will turn things around?

Tony: There are forces working in both directions, but mostly it is worsening. The economic struggles and the prevalence of layoffs tend to pit people against each other, and they raise fear levels, which are antithetical to trust. Bigger wealth disparities between the C-suite and the line workers reduce trust, and the recent corporate scandals do not help either. On the positive side, more and more people are recognizing the importance of trust – as witnessed by this blog!

Barbara: Any final thoughts?

Tony: For any who heard my radio show/podcast, I want to acknowledge a broken promise: The promise-keeping guy phoned in 15 minutes late, which broke my commitment to Barbara and Jordan. As a result, I have damaged my own credibility with all of you. I can rebuild credibility by making and keeping a series of promises… but it will take several to bring me back even to a starting place of neutrality, and a few more to build trust. This experience shows how important it is to deliver on your word, and it also shows (by the Kimmel’s grace) the slow and necessary process of rebuilding. Acknowledge the break, fix the damage, and then make very sure it does not happen again…and keep working at it. It is a process we all need to master, as it is necessary for managing trust. Aren’t you glad I arranged this demonstration?

Note from Barbara: As fate would have it, Jordan Kimmel was scheduled to appear as a guest on another radio show later that same day. He forgot all about the commitment and called in late. As I told Tony, all mistakes are being blamed on the tropical weather we are experiencing this summer in the Northeast! Tony, we forgive you and look forward to getting to know you better.

Barbara: Please provide contact information for readers.
integritydividend.com
tony.simons@integritydividend.com
607-342-1091

Do you have any questions for Tony about trust and integrity? Leave them here and he will respond quickly.

Today I received a “Dear Barbara” email from the Marketing Manager of a company I have never heard of. The first sentence read “I know you have been anxiously waiting to see the full program for the (Blah Blah Blah University and Conference) and it’s finally here!

Nicole whoever you are, next time you think it’s okay to address me by my first name, and tell me that I have been anxiously awaiting your email when I have never heard of you or your company, remember that I have the power to put all future spam from your organization on “block”. That’s one great feature of the internet.

And may I humbly suggest that before your next email promotion, study the definitions of the words trust, authenticity and integrity.

Last weekend I blogged about a recent fender bender and the trustworthy behavior that was exhibited by all parties up to that point.

www.trustacrossamerica.com/blog/?p=172 Read First Blog

It’s now five days later and I am waiting for the insurance adjuster to examine the car. I have learned a few life lessons about auto insurance that I would like to pass along.

1. Auto insurers want to pay you the least possible, even if you had no fault or blame in the accident (as was the case here). One of the ways they do this (without necessarily telling you) is by slipping after market or reconditioned parts on your automobile. Don’t settle for this. It’s not trustworthy behavior.

2. Right now this accident is a third party claim, meaning that the guilty party’s insurance company is trying to settle directly with me instead of the claim being processed through my insurer. At first this sounds like a good idea. But here is the catch. Should I get “fed up” with how this third party insurer does business, and alternatively choose to put the claim through my own company, I must wait for my insurer to reclaim my deductible from the other party’s insurance company. And from what I’ve been told by my insurer, there is NO TIME LIMIT for repayment. In fact, I could wait for the $500.00 for years. Remember, the other party in this accident assumed full responsibility. Where is the consumer law that limits the amount of time one must wait to recover a deductible? Doesn’t seem like trustworthy behavior to me.

3. Finally, I’m going to let you in on a little secret that your insurance company hopes you never learn. It’s a two word term called “diminished value”. Diminished value is essentially the difference between what your automobile was worth before the accident and what it is worth after repairs. You know that online CARFAX report that shows up when you go to trade in or sell your car? Well, that little fender bender that was not my fault, may have devalued my low mileage, expensive SUV up to 20%, even if it is repaired back to its original state. Can a consumer collect for diminished value? Well, it depends where you live and who you ask. Am I eligible to collect? What do you think? Where’s the trust? Where’s the love?

Barbara: Tell us a bit about your background, qualifications and expertise. If you have written a book, please provide the title.

Jeffrey: For many years, I was an editor at Inc. magazine when it was still based in Boston. When I was executive editor, I noticed that a curious thing occurred with the letters we received from readers. Whenever we would run a story that highlighted how an entrepreneur had cut some corners or played fast and loose with the truth to get ahead, we would get letters from readers who objected to us featuring such behavior on our pages. We’d run some of those letters and then in the next issue we’d get letters from other readers who took those who had a problem with the practices we features to task and claimed it was how you had to behave to succeed and grow a company. We found something fascinating there and that led to my writing of several features that focused on ethical issues company owners faced.

Shortly after several of these features ran, I was offered a year-long fellowship at the Center for the Study of Values in Public Life at Harvard University. I had done my graduate work at Harvard Divinity School years earlier. I spent the year of my fellowship there running a seminar on ethical decision-making in business (largely attended by business and divinity students) and completing my book, The Good, the Bad, and Your Business: Choosing Right When Ethical Dilemmas Pull You Apart. As I began the fellowship in September 1998, I also started writing a monthly business ethics column called “The Right Thing” for The New York Times. A collection of those columns appeared in book form as The Right Thing: Conscience, Profit and Personal Responsibility in Today’s Business. I have also written about a dozen other books on writing, marketing, banking, and other topics. In 2004, “The Right Thing” column became a weekly column syndicated by The New York Times Syndicate.

Barbara: Trust Across America’s mission is to rebuild trustworthy behavior in America, starting with public companies. Is ethical behavior a component of trustworthy behavior, or are they essentially the same?

Jeffrey: Trustworthy behavior can be one critical component of ethical decision making in business. But ethical decision making encompasses a broad range of elements that result in a final decision. Ethical decision making explores how someone walks through a tough decision. Trustworthiness can be an important character trait and certainly one that should be valued in business. But it in itself does not guarantee that someone will do the necessary work of making an ethical decision.

Barbara: Is the “trust” climate in corporate America improving or worsening? What actions will turn things around?

Jeffrey: Hard to say. There is a great deal of skepticism about honest behavior in business that heated up during many of the business scandals of 2002. The recent issues of safety with Toyota and oil spills with BP have not helped restore the public’s trust. The vast majority of business owners may indeed be trustworthy. But a handful of high profile cases of bad behavior can wreak havoc on public perception. When things go wrong, business leaders need to address issues head on if they expect to turn the situation around. They must come clean and make right what has gone wrong. Given that by the time things go wrong few can agree on what will make things right, this is no easy task.

Barbara: It seems that ethical corporate behavior has frequently taken second place to short term stockholder returns. Do you see companies shifting towards long termism and greater emphasis on all stakeholders?

Jeffrey: Such a shift will only be possible if stockholders don’t demand short-term rewards. Given the impatience of the markets, it’s hard to see how this will turn around fast. But boards should take the lead here and do what’s in the long-term interest of the company and all of its stakeholders…even if they know they might take a short-term hit.

Barbara: Please provide contact information.
The email for the column is rightthing@nytimes.com. My personal email is jseglin@post.harvard.edu.
Jeffrey L. Seglin
www.jeffreyseglin.com
jseglin@post.harvard.edu
rightthing@nytimes.com
617.824.8240 (Emerson)

Do you have any questions about this interview? Please don’t hesitate to ask.

Yesterday afternoon I was driving my kids to the dentist and got “rear-ended”. And while any accident is unfortunate, there were several components of trustworthy behavior (accountability, integrity, reputation, leadership, efficiency) exhibited during the critical minutes that followed the accident. And the best news is that nobody went to the hospital.

1. Within 30 seconds of the crash, a “Good Samaritan” (might have been a town public works employee) walked to the scene to ensure that we were all okay and see if he could help. I believe he was parked across the street.

2. The 911 operator had a police officer on the scene within 2 minutes.

3. The person who caused the accident did not try to bend the facts with me or the police. She was honest and took full responsibility. Kudos to a 23 year old who was willing to own up to her mistake.

4. The police officer was professional in his handling of the paper work and in taking time to explain what he was doing and providing post accident directions.

5. We were back on our way to the dentist within 20 minutes.

6. I was in contact with both insurance companies within 6 hours, and was assured that there would be no out of pocket costs on my part.

While nobody wants to be in a car accident, yesterday my faith in human nature got a very large boost. Trustworthy personal and professional behavior was exhibited by all parties involved. A very good outcome to a bad experience.

Now, if I could just figure out a way to bypass the wisdom teeth extraction!

This email exchange could be the “Poster Child” for how not to “do” customer service. Names have been deleted to protect the offender.

Me: Today I opened a box of (Name of Company) 12 Taco Shells. Much to my surprise, there were only 10 shells in the box. The UPC code is XXXXX XXXXXX. It seems like you have a quality control problem. My address is _____________ if you would like to send me the $2.39 that I paid for 12 taco shells.

The Company’s Response: Subject: RE: Taco shells

To ensure that our staff conducts itself in a manner that reflects the high regard that we have for our customers, we’ve notified the proper department of your complaint.

If you send the receipt or the proof of purchase with the attached Refund Request form, we will reimburse you for the objectionable product. In the meantime, I’m sending the enclosed coupons because we value your goodwill and would like to give you the opportunity to try our products again. If you have questions or comments in the future, please don’t hesitate to contact us.

We appreciate your time in bringing your concern to our attention and apologize for this problem.

Sincerely,

(Name of Company)
Customer Service Department

Me: Dear (Name of Company): There were no coupons attached to your email, only a refund form.

May I also suggest the following:

1.Change the word “complaint” to “inquiry”.
2.Change the word “objectionable” to “product in question”.
3.Do not make it difficult for customers who take the time to write to you to obtain coupons or refunds. A UPC code should be satisfactory.
4.Have an actual “person” sign your email responses.
5.Remember that without customers, you have no business 