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Trust is a tricky thing....

...it can take a company years to build and it can be destroyed in moments

Chris MacDonald Business Ethics Blog @Canadian Business - "Valeant Pharmaceuticals has suffered a crisis of trust over the last few weeks. More specifically, the trust that investors had in the company was substantially diminished in the wake of revelations that Valeant had an unclear but apparently too-cozy relationship with specialty pharmacy called Philidor. The loss in trust in this case was quite concrete, measured by a substantial drop in the company’s share price.

The source of this loss of trust was, as is generally the case, a question about the company’s ethics.

Doing business in the long run absolutely requires ethics. At the very least, doing business requires a degree of mutual respect, embodied in our commitment to getting things from others by offering them what we think they want in return. It also requires a commitment to basic honesty, and a commitment to honour our contracts. These ethical basics are essential because they are the foundation of trust. And if you don’t trust someone—at some level—you’re just not going to do business with them.

If trust enables business, then trust has a real value, in real dollars and cents. So what, then, is the dollar value of trust? I estimate the dollar value of trust, within the global economy, at roughly $102 trillion—in other words, the entire nominal Gross World Product for 2014. Without trust, all commerce on the planet would literally grind to a halt.

The fact that trust is crucial in markets is evidenced by the fact that businesses have come up with such a dizzying array of mechanisms designed to generate trust—everything from brands (which carry reputations) through to warranties, return policies, endorsements and third-party guarantors.

But what exactly is trust? What does it mean to trust someone? Functionally, it’s an expectation that someone will behave in certain ways. Trust is also an attitude—part calculation, part emotion—that involves an expectation of goodwill, or at least good behaviour. It is an expectation that the other party to a transaction will not do us harm. As my friend and fellow philosopher Daryl Koehn once put it, trust is a mean between paranoia and foolish faith.

But what happens when trust is broken? How can a company like Valeant (or Volkswagen, for that matter) regain the trust of consumers and the investing public? There are many ways to rebuild trust, and none of them is quick.

A company that has lost the trust of the investing public is likely going to need to show a consistent pattern of trustworthy behaviour over a substantial period of time. And the focus, here, is on the showing. CEO Michael Pearson has said how important ethics is to the company. And—present appearances aside—that may well be true. But in the light of the current wave of mistrust, the company is going to need to do more. It is going to need to engage in substantial disclosures, far beyond detailing the nature of its relationship with Philidor. In the face of a failure of disclosure, the company may well find that that it needs to engage in more disclosure than any company—even one with nothing to hide—would be fully comfortable with."

The question is, how do organisations diagnose where it has gone wrong in the first place and have specific insights into how the organisation and individuals within them feel.

Does Ethics Matter In Business?

Having 'consulted' for many years in a plethora of organisations from commercial through to public service and charity on areas from leadership, through team working and subsequently high performance cultures, I am left with some common threads that seem to always be present in those that work most effectively.

These include;

What actually are organisations (whether from Commercial FTSE 100s or Church)?

Perhaps it's better to look at them as a 'system' constructed by its members through the interaction of its members. So to be a bit off-the-wall, an organization is just a thought, not a thing. An imaginary construct of what is happening. Fundamentally it works because on the whole people come to work each day to do tasks that, should they agree locally it is right to do and this extends out throughout the whole group, it all works as a whole rather than by 'divine direction' from the physical top.

If leaders do decide what we do and set the vision, then why are we here now? Would they have designed the current position for any one of their organisations? NO.

So, the organisation emerges. The effective partnership emerges.

Ultimately, if individuals interact positively and agree what they do is right, this affects others near them and the overall thing creates patterns that appear coherent and effective – known therefore as emergence – though one has to accept somewhat unpredictable.

 Ethics and the critical role it plays in leadership success.

One critical facet to include of course is the issue of ethics – not so much ethics of the whole organisation, but the ethics of each person in the individual decisions at the most local of levels (1-2-1) through the individual actions we take.

Let's face it, ethics form the basis of trust, and trust is only gained through actions (I see what you do – so you mean it, but only believe you when you repeat it consistently over time).

So the big question is, what do you do if you know this or understand this construct and want to influence and effect good leadership or leadership for good?

Leadership therefore in our context is NOT a 'heroic figure', but more all about the local interactions between human beings. Too many people are pre-occupied with the 'game' and not thinking how to decide what is best, so are engaged in 'politics, persuasion and negotiation' rather than what actually the whole thing is aiming to achieve. So for effective leadership we should stop thinking of pre-designed solutions or ultimate master plans, but more how to influence the 'group' in the 'right direction'.

Excellent leadership (which is in my mind a social phenomenon arising through the interaction between people) is where others recognise you lead and you recognise their roles. Leadership is therefore co-created.

Ethical Leaders therefore must:

  1. Interact locally (regularly)
  2. Communicate to large numbers of people. However remember the interpretation is how it is taken up by local interactions. Pronouncements are but gestures and the effect once again is through local responses – we can't control how it is interpreted.
  3. Understand how it works locally which ultimately is by 'conversations'. Conversations within groups and between individuals.
  4. Realise they are leaders, only if they are sensitive to the situation and able to articulate what is emerging, which helps the group move forward and on.

Ethical Leaders therefore have to:

  1. Widen and deepen communication to help the group move forward
  2. Try and explore what to do in change (options)
  3. Stimulate ordinary conversations in times of anxiety. Why? Because if we don't, people jump to conclusions as they look for safety (or to meet their own agenda).
  4. Live longer with being anxious so they keep the conversations going longer so a solution arises that is far better than jumping to quick fixes and mundane solutions no one in the end believes really work.
  5. Be self-reflective to realise they should not be idealised as this can lead to ultimate denigration – let's face it, Barak Obama realised this when he said he is 'not the Messiah' or has all the answers.
  6. Help others take the next step. 

So, I agree with those that say selection and training of leaders is essential. That same training should open leaders' minds to all these insights and help them understand how to manage this uncertainty, while finding the way forward for themselves and for the group as a whole. We have a portfolio of products and services that can affect leadership for good in your organisation. Should you wish to know more, or even put something in place for your leaders, Entrusted can help you put the right things in place.

The Dark Side of Leadership Reputation

Within the film industry, George Lucas had a great reputation, built partly on his success with Star Wars. As the story goes, wisely he outsourced the original Star Wars sequels to a capable group of screenwriters and directors. Despite the massive success of Empire Strikes Back and Return of the Jedi, ego and reputation meant he then opted to fly solo as a writer, director, and producer of the prequel trilogy. The resulting films proved that the director had absolutely no understanding of what audiences wanted from the franchise and by neglecting to reflect on what audiences loved about the franchise, Lucas created three boring films that barely qualified as action figure commercials nor made any return on investment.

There are strange, but often repeated outcomes that appear when the board of an organization appoints a leader with a known reputation, who fundamentally isn't up for the challenge itself, but rather approaches their role with total selfishness.

Reputation is a mercurial aspect of perceived successful individuals. Such is the nature of reputation it prompts a discussion and blog in itself... for another time. Suffice to say, in such instances as this it rests on delivering an outcome, often change, that a board considers the holder is able to bring to their own challenge 'at home'. Of course this presupposes the conditions both internal and external match theirs at that time and place, which of course can, and never will, be the same. Yet here they are appointed to the role.

So what are the outcomes of such actions? Firstly, single-minded, selfish individuals are only fuelled in their excess through each and every move, appointment and often increased reward package. Their power knows no bounds. So, to their actions and the long term effects: Change is brought about and while short term leading to perceived success, long term a change takes place in the soul. Soul of individuals, mores and culture.

Short term EBITDA, profit, growth and value appear enhanced, yet underneath a deterioration is happening. Deterioration is the ability of the organization to continually deliver cost savings, increased individual and group productivity and most of all limited creativity.

While these outcomes do not show up in the near horizon of 3-5 year plans, this does not seem to matter either to the incumbent leader nor the board. The inevitable results: Change in the leader. They move on to another challenge, fuelled by their own perceived self-worth and in many instances a knowledge that it is the 'right time' to move on (perhaps before being found out).

For a moment though let us consider what happens inside the organization. A common conversation revolves around 'sitting it out, change is inevitable and while this is the current way, hopefully the soul will prevail'. Of course this is seldom the outcome and instead another change takes place as those that have ability and resolve chose to find employment that offers values and beliefs similar to their own. Others fight to survive by adopting the prevailing behaviours in this 'new order' that can provide them short term success, but actually, in long term, affects their own sense of balance and fulfilment. In terms of delivery, whether achieving targets, results and sustainable creativity and innovation, sadly efforts, campaigns and initiatives fail. Not immediately, but rather they end up being sub-optimal and limited in their sustainability as mentioned. This is mainly as a result of staff not really being committed heart and soul to what the leader really wants, as demonstrated by his or her actions and selfish intent.

What can be done? In truth, this conundrum is best resolved through a combination of decisions and actions, namely;

Board members define what they want from a new CEO. This definition has to include;

  • A previous track record in dealing with challenges similar to their own
  • A clear set of behavioural skills considered important to maintain morale, mores and norms that enable the business to succeed then and now
  • Insight and ability to diagnose and act upon the few, yet critical blocks to improved performance and success going forward.
  • A robust and thorough selection process that takes time to really explore the fundamental motives and strategic intent underlying applicants desire to become the CEO.

Notwithstanding all the above, it is fair to say that these core insights not only apply to the appointment of CEOs, but equally to Directors and leaders throughout organisations. It is simply that the scale of risk and potential long term damage to the organization is greater the higher 'up the food chain' one goes.

'Jive Talking'

I remember when the Bee Gees released the song "Jive talkin'" in 1975. Oh those halcyon days as a teenager with no cares in the world, enjoying school (I actually really did!), and that enjoyment in life extended to most things including sports and playing football that summer in the streets of north London where I lived. Good times indeed. Truth is that at that time I didn't realise what the words really meant to the song, but sensed it was something about double talking and being misunderstood.

Anyway, it was only the other day while working with a client I asked a question to explore further with her why an excellent initiative to bring about innovative solutions to enhance business performance and productivity had floundered. It transpired she had taken the lead in offering to co-ordinate the work we had begun with her team and draw together their support – offered publicly at the time – to return to a final event and share the outcomes. Sadly she announced the initiative had not delivered as expected, although on the original day everyone was both enthused and enjoyed the work. Indeed, they came up with many robust ideas and potential ways of delivering the solutions, but when it came to working with her to bring them into practice she found everyone had a reason not to either reply, commit or even take their level of responsibility, declaring in most instances that they were either too busy or felt their personal priorities took precedence.
While this short synopsis spares any further details to save exposing anyone, it is fair to say these sorts of outcomes are not uncommon. Why do so many initiatives, plans and stated actions, whether around cost-savings, increased productivity or simply improved customer service, flounder?

What is it about making promises when the spirits are high only to back down, finding excuses or simply avoiding doing what we said we would do? It all sounds like "Jive talkin'" to me.
Truth is it doesn't have to be that way. By developing real trust within a team through open dialogue, conversations and discussions that really say what we think and think what we say, followed by doing what we say, consistently, things can be different, promises fulfilled and success achieved beyond the norm. All these simple, yet necessary actions will fundamentally serve as the true building blocks to sustainable trust in relationships, teams and organisations.

Have you had similar experiences? What worked and what actions complement the fundamental principle of trust?

The seasons change, life is constant change and work... well you don't need me to tell you!

We all look for some certainties in life. This includes aspects of our work life where we feel 'assured', and this is no more relevant than in the behaviours and skills of our leaders and in you as a leader of others.

I just read this short, but insightful article by Heidi Grant Halvorson which encapsulates firstly, why trust is so important a consideration for leaders and, secondly, a number of strategies you might want to consciously consider about yourself:

The Most Important Skill for Great Leaders? Trustworthiness.

by Heidi Grant Halvorson

What makes a great leader? You are probably thinking it's something buzzword-worthy like confidence. Or maybe vision. Or emotional intelligence—you hear about that one all the time. For sure, those are all good qualities for a leader to have, but the answer is actually trustworthiness. Technically, it's not just being trustworthy that is key, but being seen as trustworthy.

The question "Can I trust you?" is always on our minds whenever we interact with other people (particularly when we meet them for the first time) though we usually aren't consciously aware of asking it. Studies suggest that in order to figure out whether or not someone is trustworthy, we analyze their words and deeds to find answers to two questions: "Do you have good intentions toward me—are you a friend or a foe?" and "Do you have what it takes to act on those intentions?"

So how do we find the answers? Decades of research show that we are all highly tuned-in to the warmth and competence of those around us. Warmth is being friendly, kind, loyal, and empathetic. It is taken as evidence that you have good intentions toward others. Your competence—being intelligent, creative, skilled, effective—is taken as evidence that you can act on your intentions if you want to. Competent people are therefore valuable allies or potent enemies. Less competent people are objects of compassion, or scorn.

When your team trusts you as a leader, it increases commitment to team goals. Communication improves, and ideas flow more freely, increasing creativity and productivity. Perhaps most important, in the hands of a trusted leader, employees are more comfortable with change and more willing to embrace a new vision. When your team doesn't trust you, you don't get their best effort. You'll then find yourself unable to inspire, influence, and create real change—an ineffective leader.

When your team doesn't trust you, you don't get their best effort.

We can all agree that trust is good. The problem, however, is that we are so eager to prove that we "know what we're doing" as leaders that we neglect the arguably more important part of the trust formula: proving that we will act with our colleagues' interests in mind. In other words, trust is an afterthought.

Harvard Business School professor Amy Cuddy, author of many of the key studies on trust and leadership, has argued that when you project competence before warmth, you run the risk of appearing cold and eliciting fear from your employees. They might respect you, but fearful employees are rarely able to work at their best. And you certainly can't blame them for wanting to jump ship once an offer to work for someone who doesn't make them constantly anxious comes along.

Fearful employees are rarely able to work at their best.

In a nutshell, being competent is certainly important, but it must be coupled with the sense that you have your employees' welfare and interests in mind and that what they experience matters to you. Think about how you can use the following strategies to up your trust quotient:

#1 Pay Attention

Make eye contact, and hold it—both when you are speaking and listening. Nod from time to time to show you are understanding what's being said to you (and if you don't understand, ask). Smile, especially when they do. And above all else, really focus and internalize what is being said to you—everyone needs to feel that they have been heard, even when you can't give them what they are asking for.

#2 Trust Them First

Human beings have a deeply-rooted tendency toward reciprocity. We are naturally inclined to want to do favours, give gifts, and work to promote those who have done these things for us in the past. And the same holds true when it comes to trust—we are more likely to feel we can trust someone who has trusted us first. So assign tasks and projects that reflect this trust. Socially, share personal (but appropriate!) stories, talk about your struggles and challenges, let them see your fallible, human side. Allowing yourself to be a bit vulnerable is a great way to project warmth.

#3 Show Empathy

As a leader it's easy to have a laser-like focus on the tasks at hand. But take the time to mentally put yourself in your employees' shoes, to really try to grasp their perspective. Use phrases like "I imagine you must have felt..." to convey that empathy directly.

All that said, if you just aren't the warm-and-fuzzy type, and maybe talking about "feelings" makes you uncomfortable, fear not. Evidence suggests that the moral character aspects of warmth—the sense that you are fair, principled, courageous, and honest—are also highly effective for establishing trust. In other words, to get your employees to trust you, be someone they can always count on to do the right thing.

My learning from this, combined with personal observations of leaders and teams over the last 16 years, is that in truth it is easy to spot leaders who are not sincere in their care for others and personal mindfulness and to really 'do it right', honest reflection on your leadership style and skills is critical.

In using the learning from this article the key issue is not to apply each and all these strategies, but more to work to infuse this thinking and practice into your personal 'norm'.

I will be returning to this theme over the autumn and in the meantime, How about you? How have great leaders earned your trust?

While the whole area of codes and maxims in ethics is fraught with difficulty and interpretation, it is refreshing to think students today debate the same issues and come up with some really refreshing insights.

Below and some insight into ideas and thoughts collated by John Paul Rollert from Harvard students – I found them to be both profound and sound. Indeed, very thought provoking. I hope you feel the same.

Help others without hurting their sense of dignity

An ethical workplace is one where employees help each other. But as anyone who has ever had an overbearing boss can attest, no matter how good the intention, such offers can sometimes seem patronizing. Respecting individuals sense of independence will make the members of any team more likely to ask for, and accept help, especially when they face difficult moral decisions.

Self-control is not at odds with ambition

..it is essential to it. "Ambition is to be admired," It is a driving force behind capitalism, yet there are certain "boundaries that shouldn't be crossed." Pure ambition is not synonymous with personal success so much as with ruthlessness. To be successful, one's personal ambition must ultimately be guided by self-control and an eye toward broader social benefit.

Business may lionize individual achievement

...but responsibility to others is key. "No one person, no matter how ambitious or creative, can exist in isolation or complete independence from others". This is particularly true "in a technologically and economically complex society." The liberties we enjoy in a free society allow us to pursue our personal interests, but they are not without responsibility. One needs to balance them with the outcomes they produce, "lest someone else does the balancing for you."

Your gut is a great moral philosopher.

The feeling one gets in your gut when confronted with a moral conundrum not only precedes reasoned conclusions, it often indicates the best possible decision. "In the end, we have to be satisfied with what we do and not be forced to do certain things to please others". The mind can provide an excuse to do just about anything, but "the actual feeling that one gets when taking action" is not only morally reliable, it is not easily overruled.

A strong supporter of this perspective can be found in the father of the free market, Adam Smith. For him, morality was not some obscure science. Whenever someone tried to convince us of a moral matter, they aimed "to give an account, not only of the affairs of the very parish that we live in, but of our own domestic concerns." Certainly, we could reason away the wise counsel of the heart — human beings, Smith believed, were very skilled at making the expedient appear the just — but if we listened to the voice of our best instincts, our own and those of other people, we would rarely be led astray.

How would you define your ‘middle space’? As a space where personal and interpersonal issues collide with business realities? But, does this interface work? How can we make our organisations tessellate with employees and clients alike? It’s in the DNA.

Cloud, H (nd) The Four Strands: Greeting Companies Aligned With Human DNA.



The Three Gaps Between Goals and Greatness

Are you setting goals that you can’t quite obtain? Why is this? If the goals are realistic, then where are the preventative gaps in your organisation? How can you aim to fill these in and execute greatness?

Ugboajah, P.R. (n.d)The Three Gaps Between Goals and Greatness. Change this.



Changing companies’ minds about women

Diversity is the key to driving change in any organisation. As the wage gap slowly decreases, the need to break down invisible barriers for women in the workforce is still prevalent. How do we overcome these and manage these challenges?

Brash, J and Yee, L. (2011) Organisation Practice: Changing companies’ minds about women. McKinsey Quarterly.



Do you ever challenge your own leadership style? When was the last time you assessed an issue from a fresh perspective? This simple A-Z from Roffey Park aims to get you thinking about your personal approach, how can you improve?

Roffey Park (n.d) A guide to developing an enlightened leadership- 26 lessons from A to Z.



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