Trust Across America-Trust Around the World™

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Part I: bit.ly/1Mp9LO7

Part II: bit.ly/1UcHiTJ

Copyright (c)  2016 Next Decade, Inc.

Rahm Emanuel, besieged by angry crowds clamoring for his resignation or recall, now admits, “We have a trust problem.” Well, Duh. We think both Chicago and its Mayor have some strong and graphic lessons in trust to share with CEOs, Boards, C-Suites, CCOs, government officials, and even some of the political candidates for our nation’s highest office.

The authors have a particular interest in trust and culture development, and have carefully followed Chicago’s protests for this reason. In any organization (corporation, government agency, city or nation), trust is a precious and highly valued commodity. Trust, like all other elements comprising an organization’s culture, can’t be bought or “delegated” by its leaders, but evolves organically in direct proportion to individuals’ perception of transparency, honesty, fair play and organizational justice. Trust Across America-Trust Around the World (TAA-TAW) has offered some guidance for community leaders seeking to build a culture of trust and transparency that provides a good starting point.

Leaders of any organization always find their words and actions carefully scrutinized by their constituents including employees, voters, and others affected by their leadership. Senior leadership of companies would be well advised to think of their organization’s level of trust as the fluctuating result of the “ripple effect” of leadership’s words and actions at any given point in time. When leadership’s actions match its words, positive ripples of trust occur. Similarly, when leadership’s actions do not match its words, or do not reflect consistent values or transparency, negative ripples result. It’s human nature for employees, voters, and other constituencies to have a natural, basic hunger for organizational justice – the sense that the rules of the organization are fully transparent and apply equally to everyone. Every police force needs its citizenry to feel that its actions are moderated by protocols and rules (consistently applied), and every community hungers for leaders who act with transparency, trustworthiness and a sense of organizational justice.

Experts in the field of organizational trust and ethics often point to the value of organizational justice in successful “layoff” programs by companies faced with a business need to reduce the number of certain groups of employees, whether due to a simple “downsizing” or a corporate merger, consolidation or relocation of company offices. Despite the effects on both those employees that are laid off and the remaining “survivors,” fairness and consistency in the procedure to carry out the layoff program has a notable and positive effect on both parties and the organization. Former RAND expert on organizational justice, Jerald Greenberg, says that such recalls go well where:

• Management is clear and truthful on the reasons for, and process to be used to implement, the layoff program;
• The terms of the program are explained accurately in employee communications in advance of the event; and
• Employees have confidence that the rules have been fairly applied to all.

The layoff case studies confirm one enduring principle of organizational justice: Companies can’t guarantee fair results, but they CAN guarantee that the process will be fairly applied to everyone. This principle of procedural fairness is Exhibit A for the value of truth and candor in employee communications – a key element of any successful culture of trust and ethical leadership.

And here are the lessons we think companies and their leadership can take from Chicago and its embattled Mayor:

• Leaders who match words to action (“walk the talk”) build trust as ethical leaders and role models.
• Transparency drives trust and an ethical culture.
• The cover-up is always worse than the original problem.
• If there’s a problem, tell it early, tell it all, and tell it yourself.

But let’s be real here. The time it takes to build trust is directly proportional to the frequency and number of positive trust – building interactions combined with attributes like character, competence and consistency. TAA-TAW calls this the “VIP Leadership Model (Values, Integrity and Promises kept).” There is no doubt that Chicago has a trust problem, and from all accounts the roots are deeply embedded in the culture, in both the Mayor’s administration and the police department. In a perfect world all Mayors and their respective administrations would choose to act, visibly and transparently, in a way that encourages trust, but the world is far from perfect. Chicago is simply the latest example of misdirected leadership and politically driven decision-making. There is a better way forward for all organizations, but first, leaders must acknowledge when a problem exists.

If Chicago and its embattled Mayor want to move forward and heal the wounds of the recent controversies, he and his administration must actively work to rebuild trust and credibility as a foundation of an ethical culture and organizational justice.

We would like to hear what you think about Chicago and Rahm Emanuel. You can take our confidential  Trust Quest poll at this link.

Donna Boehme is the Principal of Compliance Strategists LLC, Donna has advised a wide spectrum of private, public, governmental, academic and non-profit entities on organizational compliance and ethics. @DonnaCBoehme

Barbara Brooks Kimmel is the CEO of Trust Across America – Trust Around the World whose mission is simply to help organizations build trust. @BarbaraKimmel

This article first appeared in:

The winter issue of TRUST! Magazine

The FCPA Blog

Compliance Strategists Blog

Copyright 2016 Next Decade, Inc.