The Dyad of Trust and Culture – inextricably linked
It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.
– Warren Buffet
In the latest in a long line of large corporations falling from grace, Toshiba’s CEO and president Hisao Tanaka resigned after it was discovered that since 2008 the company had intentionally overstated its profits by £780m.
Where did it all go wrong? According to the investigator’s report: "Toshiba had a pressurised corporate culture in which management decisions could not be challenged."
Ah. We’re beginning to get the picture. Organisations that are overly bureaucratic, secretive and suspicious tend to inhibit the level of trust (Perry and Mankin 2004), and we know that bigger organisations tend to have lower trust levels among employees.
Let's be clear: in all things trust and culture related, the responsibility starts and ends with the CEO. They set the 'tone from the top'.
The CEO's behaviour and attitudes affect their organisation’s ability to build trust; they are the standard bearer for the rest of the organisation. As such, they need to be willing to admit mistakes, be transparent, share information, seek out information from a range of sources (not just a close group of advisers) and TELL THE TRUTH. The key characteristics of trust have been identified as:
Ability – demonstrable competence at doing their job
Benevolence – a concern for others beyond their own needs and having benign motives
Integrity – adherence to a set of principles acceptable to others encompassing fairness and honesty
Predictability – a regularity of behaviour over time
(Source: 'Where Has All the Trust Gone', Sustainable Organisation Performance, CIPD 2012)
Why is trust in organisations at an all time low? It's partly due to information being immediate, global and in the public domain - so when something goes wrong, when there's a disconnect between an organisation's stated values and what they do in practice, we all know about it straightaway. Public confidence in big business has been severely dented by a series of high profile cases, and they just keep on coming.
So what? If you don't get the culture and trust fundamentals right in your organisations, there is a price to pay:
Financial - consequences (profit, value, regulatory penalties). Investment professionals (potential M&As for example) are increasingly looking for greater insight to an organisation’s company culture, as it impacts reputational risk and its ability to execute its strategy
Reputation - trust and transparency are now seen as important to corporate reputation as quality of products and services
Loss of focus on delivering strategy - increased scrutiny of regulators focuses resources internally
Talent - your future talent pipeline. Increasingly, Gen Y employees are demanding to know the organisation’s purpose – and they are prepared to leave if they are not aligned
Next steps? Review your culture and understand what trust really means in your organisation now, outside the glare of any adverse publicity. Start by asking yourself ‘What leadership qualities am I demonstrating?’ 'What behaviours are valued in our organisation?' 'What checks and balances do we have in place to encourage challenge?'
I am the founder of The Executive Coaching Partnership based in London. I am an Executive Coach and Leadership Consultant. My experience in the professional services sector informs my approach, helping leaders and organisations understand their culture and set the appropriate 'tone from the top'.