How Can Leaders Restore Eroding Trust?
Posted inLeadership Topics
onJune 13th, 2017
“CAN WE TRUST YOU?” Leaders, Your Employees and Customers are Asking. How Would You Answer?
Trust, that most important of relationship foundations, rises to the top of our collective concern once again.
Can we trust the press?
Can we trust our institutions?
Can we trust our suppliers, our employees, our co-workers?
Can we trust our CEO?
Do we trust anyone at all to do what they say, to uphold our company values, to act with everyone’s best interest rather than self-interest in mind? According to the Edelman Trust Barometer 2017, when it comes to leaders in business, increasingly the answer is a resounding NO.
“CEO credibility dropped 12 points globally to an all-time low of 37 percent, plummeting in every country studied”.
For its annual Trust Barometer 2017, Edelman, a global communications marketing firm, surveyed 33,000 respondents in 28 countries to determine the percent of trust in four institutions, government, business, media and NGOs. Specifically, their findings regarding trust in business and its leaders are telling.
“Employees, on average, are trusted 16 points more than CEOs on messaging around employee/customer relations (53 percent), financial earnings (38 percent), crises (37 percent), innovation (33 percent), industry issues (32 percent) or programs addressing societal issues (30 percent).”
Clearly, a further look at this trend is warranted. Trust, or more specifically the reasons for the lack of trust in our corporate leaders is also highlighted in a recent Strategy+Business article, Are CEO’s Less Ethical than in the Past, and the accompanying Infographic, CEOs Under Fire, published by PWC to articulate the results of their recent CEO Success Study.
The CEO Success Study reflected similar results as the Edelman Trust Barometer 2017, stating that although raw numbers are small, CEO’s in the US are almost 20% more likely to be dismissed for ethical lapses this year than last due to “greater scrutiny and a smaller margin of error for leaders.” The study calls out systemic oversight and cultural shifts as reasons that underlie a CEO’s risk for ethical jeopardy. These include:
- An increasingly vocal populace who point out shortfalls in CEO or corporate behavior, and who are difficult to ignore; hence boards are more likely to act to remove CEO’s who are caught in unseemly or unethical behaviors
- An inescapable electronic trail via all types of digital communications makes it easier to identify and prove any misconduct
- Globalization requires U.S. firms to operate in regions of the world where bribery or fraud are expected or at the very least, more accepted
- A stronger US regulatory environment instituted after the 2008 Great Recession layered on additional expectations for increased governance, and enhanced individual penalties for wrong-doing
One might take a gloomy view of business leaders reading these statistics. And business leaders do have a long way to go to restore customer and employee trust. Yet, among the four institutions highlighted in the Edelman Trust Barometer 2017 survey, Government, Media, Non-Governmental Organizations and Business, business is viewed as the one remaining bulwark with the capacity to make a difference in people’s lives.
“Business is the last retaining wall for trust,” said Kathryn Beiser, Global Chair of Edelman’s Corporate practice. “Its leaders must step up on the issues that matter for society. It has done a masterful job of illustrating the benefits of innovation, but has done little to discuss the impact those advances will have on people’s jobs. Business must also focus on paying employees fairly, while providing better benefits and job training.”
The rank and file in organizations is disenchanted and distressed. But in the cited studies, there are clear signals on how to restore, then maintain trust. There is reason to have hope, to have confidence that by seizing the right way forward, leaders can restore trust.
Leaders Restoring Trust
Chief among trust building measures for CEO’s is creating an Integrity Culture. The CEO Success Study identified three keys to an ethical culture that they call the Ethical Behavior Ecosystem (EBE). Elements of the EBE are:
- Ensure a leadership style and open communication flow among employees and leaders that encourages early warning of mistakes and speaking up swiftly, and without negative repercussions, to alert others about red flags.
- Establish a compensation/incentive structure and strong governance systems that monitor results; insist on accountability; and instill intrinsic checks and balances.
- Engage employees with honesty and transparency, exhibiting how to handle and resolve difficult situations and make challenging decisions. Lead by example, acting swiftly to address and eliminate incidents of misconduct.
The May – June issue of the Harvard Business Review cites a longitudinal study of CEO success called the CEO Genome Project, conducted by ghSmart. This 10-year investigation, intriguing for its breadth and depth of information, cites four behaviors that CEOs must possess to excel in their role. A 2014 parallel study by Korn Ferry found that those who “deliberately developed these four behaviors dramatically raise the odds that they will become high-performing chief executives.”
How do these four behaviors match those needed to increase trust in organizations?
|CEO Behaviors / Traits that Instill Trust||Behaviors / Traits of Successful CEOs|
Integrity/Ethics – Lead by example, make challenging decisions
Decisiveness: Make decisions earlier, faster and with great conviction.
|Open Communication/Transparency||Engagement: Engage stakeholders with an unrelenting focus on delivering results.|
|Address issues as they arise. Monitor red flags, act swiftly to address misconduct.||Adaptability: Possess a long-term focus to enable strategic adaptability to the unexpected|
|Monitor Results/Insist on Accountability||Reliably Deliver: Consistently and reliably set and meet realistic performance expectations|
Although not perfectly aligned, one can see important parallels in the two sets of traits and behaviors. Underpinning it all, integrity is the table stakes for a leader desiring to advance a successful career and to build an organization that thrives in this distrustful world.
So, I ask again. Leaders, can we trust you? Your employees and customers want to know.
AJO specializes in Executive/Leadership Coaching and Leadership Development, with a focus on developing leaders and their teams to turn their strategic intent into business results. Building trust is a common theme in our work with leaders and teams. If you would like to learn more, contact us. A complimentary copy of our Trust Coaching Guide is available to download by clicking on the graphic.
Recommended Reading & References
- Edelman Trust Barometer 2017 Annual Global Survey Reveals a Global Implosion of Trust, January 15, 2017.
- Are CEOs Less Ethical than in the Past?, Karlsson, Per-Ola; Aguirre, DeAnne; and Rivera, Kristen, Strategy + Leadership, May 15, 2017.
- CEOs Under Fire infographic, Opto Design/Christian Delavedova, 2017.
- CEO Genome Project. Take the 5-minute assessment to discover how you rank on the four essential CEO behaviors.
- CEO Success Study. In its 17th year, Strategy& has been analyzing CEO succession at the world’s largest 2,500 public companies. In addition to exploring why more CEOs are being forced out of office due to ethical lapses and building a culture of integrity, the report also includes analysis on CEO turnover and the 2016 incoming class of CEOs.
- What Sets Successful CEOs Apart, Elena Lytkina Botelho, Kim Rosenkoetter Powell, Stephen Kincaid, and Dina Want, Harvard Business Review, May- June 2017.
Kathy Flora is a Career and Executive Coach and AJO Blogger who is actively pursuing her life’s passion, helping others find and fulfill theirs. Known as a positive change agent, mentor and guide, she has assisted hundreds of leaders and their teams understand their strengths, collaborate effectively, and drive organizational success. She has a special affinity for working with virtual teams, using webinars, virtual meet-ups, and online collaborative communities to optimize communication and productivity. Her experience spans over 25 years in executive management and leadership, career development, facilitation, and consulting in private firms, state government, and in federal agencies.