Search

Editors

Richard L. Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Elizabeth K. Spahn Editor Emeritus

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor


Connect
FCPA Blog Daily News

« Martin Kenney: Put your own tax havens in order, America | Main | Alexandra Wrage: Compliance and Enforcement Trends from the 2017 TRACE Forum »
Tuesday
Apr042017

Barbara Brooks Kimmel: When There’s No Budget for Trust….

When a company doesn't budget for organizational trust, how can it be elevated?

Most public company CEOs, with the support of their Board, operate under the misconception that they and their organization are trustworthy. They believe the trust “obligation” has been met through the corporate credo emblazoned on the lobby wall, or by meeting shareholder expectations. In their eyes, trust is a soft skill that is taken for granted. Yet Trust Across America’s (TAA) research paints a very different picture.

For eight years, and through its FACTS® Framework (an acronym,) TAA has been measuring the holistic trust “worthiness” or cultural integrity of almost 2,000 U.S. based public companies on five indicators of trust (Financial stability, Accounting conservativeness, Corporate governance, Transparency and Sustainability), and it’s rare to find even 25 in this sample who score above 80 percent in any given year.

That grade would earn the CEO a B- in trust. Think about what that says about the rest of the “class.”

If companies are as trustworthy as their CEOs believe, then explain why:

1.  Innovation is stalled

2.  Decisions come slowly

3.  Engagement is low

4.  Turnover is high

5.  Fires/crises are frequent

6.  Profits are declining

7.  Glassdoor reviews are poor

Elevating organizational trust is the primary driver for reversing the outcomes listed above. With high trust comes long-term sustainability and profitability, meeting the desired outcome of every CEO and their Board, even though they may choose to ignore the role trust plays.

Where does that leave the trust “orphan?” My suggestion is for the Chief Ethics (Compliance) Officer to step forward and adopt trust as an intentional business strategy Why? As Michael Volkov explains in this article: 

More companies are starting to realize that investing in a company’s culture is an important priority for company growth and sustainability. The new focus is on values and ethical behaviors, as opposed to compliance policies, procedures and guidelines. One goes hand-in-hand with the other -- ethics means nothing without compliance, and compliance means nothing without an ethical culture.

A Chief Ethics Officer has an important function in every company -- they have to ask the question of whether a company should act in a certain way, as opposed to whether the company can act in a certain way.

Trust Across America’s website contains a vast number of resources that won’t bust any departmental budget since many of them are free. For those who choose to budget a few cents per day, a Trust Alliance exists for you and your colleagues. This will provide you with several immediate resources and the ability to network with others who share your interest in elevating organizational trust.

Let the CEO continue to ignore the business case for trust while the Chief Ethics Officer steps up to the plate and takes the reign. Finding a small budget for trust may not only be a business game changer but an opportunity for your department to play a significant role in the future direction of the organization.

____

Barbara Brooks Kimmel is the CEO and Cofounder of Trust Across America-Trust Around the World whose mission is to help organizations build trust. She also runs the world's largest global Trust Alliance and is the editor of the award winning TRUST INC. book series and a Managing Member at FACTS® Asset Management, a New Jersey registered investment advisor. In 2012 she was named one of “25 Women who are Changing the World” by Good Business International.

Reader Comments (2)

Very good article, but it fails to look at the reason for the change which in part may be do to the change in corporate ownership and the impact of activist shareholders with the tendency to "strip & flip" the companies or leverage them up for personal benefit and then abandon the employees. This has seriously undermined the culture in an organization.
April 5, 2017 | Unregistered CommenterAnne
Great idea to make the Chief Ethics/Compliance Officer the focal point for building and maintaining a high-level of trust with all stakeholders. While the board and CEO must embrace building trust as an essential strategy to the success of the firm, having a point person, who is constantly thinking about trust and following up to ensure it is being paid attention to, is essential.
Yes, some activist investors just want to strip and flip, but that is still a minority group of people and companies. Financial results improve when trust is elevated. Let's make the Chief Ethics/Compliance Officer the point of the trust building spear.
April 6, 2017 | Unregistered CommenterBob Vanourek
Comments for this entry have been disabled. Additional comments may not be added to this entry at this time.