Gap In Trust

August 29, 2016

Since I am in the trust business, I pay attention to the Edelman Trust Barometer when it comes out in February each year. Richard Edelman and his associates have been publishing a compendium of statistics on trust each year for more than 15 years.

Using online surveys, they measure the level of trust in 28 countries and categorize it into four sectors: Business, Government, Non-Government Organizations, and Media. For example, in the Business sector the question they ask is “Do you trust Business to do what is right?” Note: they intentionally leave the specific definition of what is “right” up to the person who is responding.

The sampling is also split between what they call “informed publics” (college educated populations with incomes in the top 25% and who follow the news daily) and they also survey the mass population who are less educated and often do not follow international trends closely.

I usually spend a couple days absorbing the latest information each year and updating my summary charts. It is good to keep abreast of the trends in trust around the world. There is an interesting trend in the worldwide information on trust that is particularly evident in the USA.

If you are a manager or leader, at any level, you will want to know about this trend so you can use it to improve your culture at work.

Ever since the recession of 2009, the gap in trust between what the informed publics report and what the mass populations report has been widening with the informed publics reporting higher trust.

In 2016, the gap has reached 12% worldwide, and that gap was greatest in the USA at 19%. The gap is evident in all four sectors measured in the survey.

A specific percentage of how people respond in a particular country or segment may not have second-decimal-place accuracy, but I believe the major trends give an accurate description of valid movement within the major groups.

The reason is that the Edelman Group has been using the same methodology each year for over a decade, and the sample size is large enough to produce valid information.

There is some speculation in the Edleman analysis about the cause of the gap, but they leave plenty of room for readers to interpret the cause of this widening gap for their own situation.

Their main hypothesis is that all four of the following forces are at work:

1. The rising income inequality
2. High profile revelations of greed and misbehavior
3. Democratization of the media
4. Growing schism between the “haves” and the “have-nots”

I believe there is another factor at work in addition to the ones they mention that would be of particular interest to organizational leaders or managers.

There are several movements toward a more balanced and ethical way of doing business springing up. One that I am involved with is “Conscious Capitalism,” which seeks to have organizations serve all stakeholders at the same time rather than just maximizing shareholder return.

Other trends are the “Green Movement,” “100 Best Companies to Work For,” and Measures like the “Ethics Bowl.”

The activity to accomplish movement within organizations is mostly driven by the “informed publics” population, and the mass population has significantly less visibility to the trends and the good work that is going on in numerous organizations.

Hence, it seems logical that more people in the higher echelons are seeing at least some forward progress and attention given to running more principle-centered organizations.

The trend also means that the greater mass of people working in organizations will be more skeptical about the level of trust than their managers.

It is necessary to communicate information more times in different ways in order to have people believe it to be true. Edelman has measured that most people working in organizations need to hear something three to five times before they believe it is likely to be true. Ten years ago hearing something once or twice would suffice.

That statistic represents a major challenge for any manager or leader.

No longer is a Town Hall Meeting sufficient to communicate vital information. Rather, you need to have several methods of communicating points and use them all when trying to convey important information.

The consequences of the trust gap have significance for us all, from how we elect our leaders, to how we keep the peace in our cities, to how we conduct business in each sector.

We need to pay attention and seek to broaden awareness of some of the good trends to combat the fear being promulgated by groups who want to ignore or reverse the progress that is being made.

Bob Whipple, MBA, CPLP, is a consultant, trainer, speaker, and author in the areas of leadership and trust. He is the author of: The Trust Factor: Advanced Leadership for Professionals, Understanding E-Body Language: Building Trust Online, Leading with Trust is Like Sailing Downwind, and Trust in Transition: Navigating Organizational Change . Bob has many years as a senior executive with a Fortune 500 Company and with non-profit organizations. For more information, or to bring Bob in to speak at your next event, contact him at http://www.Leadergrow.com, bwhipple@leadergrow.com or 585.392.7763


Trading Off Long and Short Term

August 25, 2013

360 DegreeA conundrum for most leaders is the issue of long term versus short term results. Most western cultures reward executives based on the short term result. Eastern cultures tend to have a longer view of performance, but even there, patience for short term problems wears thin.

It is easy to say, “Well, you need to do both,” which is a kind of cop out statement. Of course both are needed. If you fail to do right by the long term there is no future for the entity, but if you fail in the short term, there may be no future for you.

Compensation plans for most senior leaders have tended to favor the short term focus. Ethical or legal problems crop up when the pressure for quarterly numbers becomes too great. There are hundreds of stories where companies have pulled material from inventory and called them “sales.” This is an example of an unethical behavior that ultimately causes a crash. Reason: When accounts are juggled in an effort to maximize the short term, the organization is already on a slippery slope. The difference has to be made up sometime, so the long term is in jeopardy.

When you recognize the temptation to “shade” earnings to look most favorable is like a drug, it is easy to see how large corporations get caught in a whirlpool that eventually pulls them under. The Sarbanes Oxley Act was one attempt to make it more difficult to cheat on short term results. In fact, SOX worked! It is more difficult to cheat, but it is also much more expensive to operate, and cheating is still possible. It simply requires more creativity. We should not depend on legislative band-aids to save our corporations.

There is ample evidence that doing business in an ethical manner with a balance of emphasis between long and short term goals is not only more comfortable, it is much more profitable. The Conscious Capitalism Movement is one example of how organizations are finding ways to become more secure, more profitable, and more ethical at the same time. By working to satisfy the needs of all stakeholders rather than just the shareholders, a kind of self-balancing situation arises that is clearly good for business both short term and long term.

John Mackey and Raj Sisodia wrote a book entitled Conscious Capitalism that has started an entire movement. They stress the balance of having all decisions work to satisfy all six stakeholders: 1) Stockholders, 2) Customers, 3) Employees, 4) Suppliers, 5) Community, and 6) Environment. Balancing the needs of all stakeholders gives a better chance at making rational decisions that balance the short and long term benefits to not only the corporation but to society as a whole.

The entire Conscious Capitalism model includes much more than just considering the six stakeholders in decision making. The full model includes:

1. Developing core values and a higher purpose
2. Instilling higher leadership
3. Integrating the needs of all stakeholders
4. Developing a conscious culture of management

The Conscious Capitalism Model is a great way to view business, and I recommend the book to any leader who feels habitually caught between the long term and short term decisions that drive them crazy. It is a very good read that makes a convincing case that doing things the right way from the start is not only less stressful, but far more profitable and sustainable.