GUEST AUTHOR BLOG: "Restoring Trust by Dr. Robert F. Hurley author of The Decision To Trust: How Leaders Create High-Trust Organizations."
Everyday there are new headlines confirming the dangerously low levels of trust that exist today. A recent New York Times/CBS News pollfinds that 89% of Americans do not trust government to do what is right. On the business front we see front-page stories of arrests and convictions for insider trading. Oh and let’s not forget personal lives of public figures and the spousal betrayals of Schwarzenegger, Straus Kahn and Weiner.
This deluge leaves us asking ourselves: is any person or institution trustworthy anymore?
But trust has been on the decline for the past 30 years. Harris Poll data in 1966 showed that 55% of people trusted business; in 2008 the number had fallen to 15%.
In 1966 pools showed that 42% of Americans had a great deal of confidence in Congress and today that number is less than 10%.
What is new is that the scarcity of jobs, perceived injustice of income distribution and bailout of banks seems to have pushed us into crisis territory concerning trust. Now we are seeing it on the streets as Occupy Wall Street and Tea Party protestors’ express their frustration with the institutions that have breeched the public trust.
Can we restore trust? If so, how?
The answer is yes, but it will take persistent effort and cannot be done with short cuts and by fooling people. Fortunately we have 50 years of excellent research. We even have some examples of successful trust repair. Take two recent examples. In 1998 President Clinton was impeached by the House of Representatives for lying about the Monica Lewinsky scandal. By 2011 he was widely cited as having one of the most impressive post-presidential careers ever and he has been labeled “President of the World” by a number of media pundits. In 2007 Mattel’s reputation was under extreme pressure for selling toys with lead paint (from China) to children. In 2011 Mattel has been widely praised for safety and trustworthiness by consumer groups and regulators. My colleagues and I have studied trust repair and identified the difference between successful and failed repair efforts.
How Clinton and Mattel reformed themselves helps us understand both trust and trustworthiness. In both cases three specific dimensions of trust were damaged by the betrayal and were subsequently repaired leading to a restoration of trust:
- Ability - they re-proved their competence in delivering on commitments
- Benevolence – they demonstrated care and concern for the well-being of others
- Integrity – they adhered to commonly accepted moral principles, including honoring promises, honesty and fairness.
Clinton proved both his ability and benevolence during the Katrina and Haiti disasters. Mattel proved its re-engineered supply chain was safer, benevolently requested more regulation in the industry and demonstrated honestly and fairness in admitting fault and offering extreme transparency in monitoring its efforts to become more trustworthy. Mattel went so far as to open the company to independent monitors to evaluate the company’s trustworthiness.
"The debate must change from big vs. small government to effective vs. ineffective government.""
How could we use these examples of effective trust repair to restore trust in government and business? In the case of the government they need to enhance their ability to end gridlock. Find common ground to solve the problems of jobs, climate change, health care and the budget deficit. If this means outsourcing governance to commissions whose judgments must be accepted or there will be automatic action, like the debt reduction committee now deliberating – so be it. The debate must change from big vs. small government to effective vs. ineffective government. Concerning benevolence the government must arrive at an operational definition of fairness and begin to govern on this basis. There can also be no trust without addressing the legal corruption of campaign finance and lobbying. As far as integrity we citizens need to force government officials replace self-interested spin with more truth telling. We will need an aggressive media to hold them accountable.
Concerning trust in business, the solution is more complicated. If we just take Wall Street, from an ability standpoint these firms need to rethink their business models and how they add value and make money. How can they make money for themselves and provide a valuable service to society?
Many community banks did this before and after the financial crisis. Their business model cannot be divorced from the society as a whole. While right about many things, Milton Friedman was wrong about corporate social responsibility.
Doing business while ignoring social context is not sustainable - it is bad business. With regard to benevolence, Wall Street firms along with other businesses need to adopt a wider stakeholder perspective and learn to fairly represent more of these interests in decisions. Serving senior management or shareholders’ interests at the expense of employees and communities will never lead to perceptions of justice and benevolence. Benevolent concern must also be directed at future generations and reflect care for the natural environment. Finally concerning integrity we need to put an end to lying or deception to gain advantage. We need to get back to a time where people would honor their word.
As Bear Sterns and Lehman Brothers started to fail, senior management deliberately misled employees and shareholders. In too many places the operating assumption buyer beware. The use of guile and deception is part of the winning strategy. Due to some reinvigorated regulators of distrust, at the SEC and the Justice Department, some of these “winners” are now facing jail time.
Restoring trust will not be easy but not because we do not know how. There is a roadmap. It just requires great commitment and perseverance to make the journey. We had better start now. Our quality of life will depend on it.
Dr. Robert F. Hurley is an award-winning Professor at Fordham University and President of Hurley Associates. He has been a core faculty member in Columbia Business School's Leading and Managing People Program for the past 15 years. He has consulted for such organizations as NASA, Avon Products, IBM, Mercedes Benz, State Farm Insurance, Kraft Foods, and Kinkos. His book The Decision To Trust: How Leaders Create High-Trust Organizations was published last month. For more, please visit http://www.drbobhurley.org/