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A matter of trust

Fri, 1st Feb 2013

As any blues singer will remind you, you never miss your water till your well runs dry. The same is true of trust – just ask the consultants at Arthur Andersen, which dematerialised overnight in the wake of the Enron collapse in 2001, or more recently the News of the World journalists whose livelihoods went up in a puff of smoke in the chain reaction triggered by the phone-hacking revelations of July 2011. This – and the subsequent arrest of News International hacks – throws into sharp relief questions of individual and collective trust that were explored in an illuminating discussion at the launch of PR firm Edelman’s 2013 Trust Barometer, now in its 13th year.

The Barometer tracks attitudes to trust in various institutions and individuals in 26 countries across the globe. For one panellist at the UK launch, FT.com managing editor Robert Shrimsley, there was a twinge of sympathy for some NOTW journalists caught up in a culture not of their own making: if everyone else is getting otherwise inaccessible stories by employing private eyes and bugs, it takes a conscious and public effort to go against the cultural grain. (For a less charitable professional reaction, see Sir Harry Evans, the long-time Sunday Times editor, here.)

But this is exactly why the role of the individual in trust is crucial, noted another panellist, the academic Sarah Churchwell, who made a crucial distinction between accountability and responsibility (something I have also written about). Accountability is imposed from the outside – something owed to a customer or, more problematically, a hierarchy or central regulator. Responsibility on the other hand is internal – an inner voice that tells you what is right or wrong. It may involve expressly refusing the mechanisms of bureaucratic accountability (ticking boxes, doing things right) in the name of doing the right thing. Whistleblowing or choosing to be accountable to citizens rather than inspectors or regulators are cases in point.

At News International, the generalised collapse of trust in the shape of a mass withdrawal of advertising was the direct result of irresponsible behaviour by journalists in the performance of their jobs. Interestingly, the macro story mapped out by Edelman in this year’s Barometer makes also makes a link between the individual and the wider evolution of trust in general, albeit a slightly different one.

Perhaps the most striking development in the narrative of the last few years is the growing trust gap between institutions and their leaders. Thus while with some exceptions (banks, media in the UK) trust in institutions has gradually been recovering ground since the low point of 2008, the same cannot be said of institutional leaders, who their underlings view with a much more jaundiced eye. Among the general population, only 13 per cent say they trust government leaders to tell the truth, compared with 41 per cent trusting government as an institution, the equivalent fitgures for business being 18 per cent and 50 per cent. These differences are unprecedented and ‘nothing short of extraordinary’, according to Edelman.

There are of course some obvious reasons for the thumbs-down for individuals – Edelman singles out the continued high-profile outing of individuals such as former McKinsey managing partner Rajat Gupta, Barclays CEO Bob Diamond and Chinese government official Bo Xilai, together with the drip-feed of poison from the ongoing Libor and phone-hacking affairs.

But together with other complementary findings, they have some sobering implications for CEOs and business leaders. In 2008, before the full implications of the financial crisis had hit, corporate reputation depended above all (76 per cent) on operational excellence: the ‘what’ of performance. In 2013, in another ‘extraordinary transformation’, executing well has become just table stakes – one of the basic competences necessary to get into the game. More important for reputation, and getting more so, are ‘how’ questions about the way business is done: does the company behave ethically, is it a good employer, does it put customers before profits and is it transparent and open in business affairs – all issues that in the past could be dealt with with a bit of lip service, but which in practice interfered little with the drive for shareholder value

That alone should put many traditional CEOs on red alert. But even if they start making the right noises now, it won’t be enough – for the very good reason that, as we have seen, people don’t believe them any more. According to Edelman, people now need to see or hear something three to five times in different places before they’ll accept it’s true.

But there’s more. If not their bosses, who do people believe? Experts and academics is one answer, but also peers – ‘people like us’ – who are twice as credible as CEOs or government officials.

What this means is that CEOs can no longer just push their chosen messages down to a mass audience from on high, as in the past. Just as important are continuing real-time conversations and assessments between consumers, employees and other stakeholders. The implications are profound. For the message to be believed, these constituents have to be engaged too. Or rather, the message from on high has to be consistent with the one that is being spontaneously generated from below. As Richard Edelman puts it: ‘The hierarchies of old are being replaced by more trusted peer-to-peer, horizontal networks of trust.’

Think about this for a moment. I’ve always been sceptical about the lasting significance of social media, at least in business. But could it be that the true, unexpected vocation of Twitter and FaceBook is not to peddle tittle-tattle, spread news or even organise flash crowds, but finally to kick out the foundations of top-down corporate management? The tweeting of the sacking of HMV headquarters staff this week is just a small illustration of the disruptive potency of the message from below. The emerging storyline of trust is: it can’t be pushed into existence. It’s reciprocal. That means that the individual’s role is critical, in both its creation and destruction. And accepting and exercising that responsibility just may be the most important, liberating thing that individual does. 


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