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Title: Trust Matters - Restoring Confidence in a Time of Crisis
Date: 20-May-2009
Category: Opinion Essays
Source/Author: John Dalla Costa
Description: When the leaders of the world’s biggest economies met in London for the G-20 summit in April, they pledged to work together on six priorities to deal with the global economic crisis. Acknowledging “the greatest challenge to the world economy in modern times,” the official communiqué specifies cooperation among nations to “restore confidence” and “rebuild trust.” Such are the forces of this economic catastrophe that no country or company can escape the black hole of suspicion.

John Dalla Costa at http://www.CauxRoundTable.org
John Dalla Costa
When the leaders of the world’s biggest economies met in London for the G-20 summit in April, they pledged to work together on six priorities to deal with the global economic crisis. Acknowledging “the greatest challenge to the world economy in modern times,” the official communiqué specifies cooperation among nations to “restore confidence” and “rebuild trust.” Such are the forces of this economic catastrophe that no country or company can escape the black hole of suspicion. Some of the proposed measures are obvious, including more transparency, better regulation in financial markets, and greater accountability for outcomes. But these in fact are remedies very similar to what was adopted after the “dot-com bust” seven short years ago. The laws and reforms put in place to reverse the widespread mistrust failed miserably in preventing the excesses that led to the current crash in credit and credibility. No wonder that experts believe that the suspicion unleashed at this time is far deeper, and of more lasting consequence, than disappointments in the past.

The way to start renewing trust is to take public suspicions much more seriously. This is the ‘wisdom of crowds’ in reverse. Technology places so much more information at our disposal. That we all know more makes us more selective. At the same time, with the plethora of bloggers and on-line news communities, there is not a corner of the world that can escape critical scrutiny. Even Swiss banks with centuries of tradition for absolute secrecy were forced into greater transparency to satisfy public demands for justice about ill-gotten Holocaust-era assets. Suspicion is at root why we demand more accountability, so some degrees of mistrust are actually healthy, and need to be respected as smart.

Another factor worth remembering is that suspicion and trust are in asymmetrical relationship. We know from our own personal experience that trust, which has taken a long time to build, can be lost with a single infraction or betrayal. Marketing researchers have taken some steps to quantify this scale, with some studies showing that it may in fact take over six positive interactions to recover the goodwill lost with customers from one bad service experience. US automotive company CEOs evoked considerable anger when they flew their separate corporate jets to Washington, D.C. to plead with lawmakers for a public bailout. As outrageous as this was, their mistake was not so much misreading the new public mood as proving that they were still out of touch with long simmering feelings of betrayal. Years of poor quality, mediocre design, and so-so service had depleted the reputations of the ‘big three’ long before these particular executives stepped out of their winged-cocoons and into disgrace. Chastened, they returned several weeks later, this time traveling by car to present their plans for restructuring to Congress. Although the “road trip” did not redeem their credibility, it symbolized a shift to ground level, with trustworthiness determined by the concerns of people on the street rather than by assurances from on high.

To be fair, public credibility towards these companies had been on the wane for years before these particular executives stepped out of their jets and into ignominy. What has been happening, and what must be recognized is that suspicion is driven much more by everyday experience than by scandal. While researching this topic, people reported that their withdrawal of confidence had mostly been a response to poor service, or some diminishment in customer care. Usually these were but inconveniences – longer wait times for service, labyrinthine automated call answering systems, or frustrating complexity in accessing or using a product. Over time these discourtesies came assume ethical significance for normalizing disrespect. This loss of trust by a thousand cuts has been the phenomenon plaguing the embarrassed car companies, as well as airlines, banks, retailers, churches, schools, governments and charities. Scandals are deplorable, and excesses are still shocking, but these irruptions have not so much caused the environment of suspicion as affirmed the validity of skepticism.

This distinction is important for two reasons. First, business leaders, regulators and lawmakers tend to focus their reforms on preventing the egregious behaviour that precipitated the most recent crisis. Inevitably, they miss the everyday dysfunctions that serve as the Petri dish growing such scandals in the first place. In its 2006 report, the Ethics Resource Center (U.S.) found that levels of corporate misconduct had reverted to pre-Enron levels. Imposing even the most onerous laws for accountability had not changed the existing culture of irresponsibility. We cannot make this same mistake again of trying to regulate conduct without attending to the more basic issues of competence and character.

The second reason for paying attention to the loss of civility in our interactions is that we all play some role in them. Whether as employees, customers, citizens or managers, we all have choices regarding the tone we bring to interactions. And we all have a basic preference for how we would like to be treated. So even though it is appropriate to blame business leaders or politicians for their taking trust for granted, we need to retain our own responsibility as citizens and consumers for how much we each affect the sense of dignity experienced by others. Our sense of confidence as a society is derived from how safe we feel driving on our streets, or walking on our sidewalks; how welcome we feel on sports fields; and how often someone says “thank you” or “I’m sorry.”

Organizations that appreciate trust as an asset have paid close attention to these small human moments of encounter and experience. During the dark early months of this recession, the Canadian hotelier Four Season’s was cited in the international business press for continuing to earn the loyalty of customers with exemplary service. Studied by business schools, and now the subject of several books, Four Seasons owes its resilient culture and spirit of innovation to its founder’s insistence on elevating the art of care. All of the company’s procedures and strategies are reducible to the Golden Rule. Employees are hired based on their attitude toward care. They are trained carefully, and rewarded for performance in living up to the company’s ethical principles. With respectfulness so ingrained in its history and operations, employees in turn take personal accountability for the care of guests. Many organizations have systems and technology for delivering customer service. Many espouse similar commitments. What distinguishes the Four Seasons is the understanding that trust is not a productivity value, but rather the outcome generated by living up to the company’s ethical values.

Political economists refer to trust as ‘social capital.’ It does indeed serve as a relational currency, smoothing transactions and exchange. But another feature implied by this description is that because we all have a share in its worth we also have a mutual stake in the development of what is trustworthy. Michael Porter of the Harvard Business School observed several years ago that effective strategy requires companies to adopt more and more of the skills and virtues from the not-for-profit sector. Indeed, for several years we have watched some progressive companies evolve more serious commitments to corporate social responsibility. Since the credit meltdown, the lines between sectors have become that much blurrier, as even economists who ideologically opposed corporate social investments came to acknowledge the necessity for public funds to prop-up the banking pillars in the private sector. Social responsibility for corporations has likely now cost much more than all companies have ever spent in corporate social responsibility. Perhaps the silver lining in this economic maelstrom is that we learning how to manage with intensity and imagination the profound collaboration required to effectively tackle shared problems, such as growing fair trade, or reducing greenhouse gas emissions.

As well as taking care and inviting openness, it is also necessary to not let fear determine the horizon of our possibilities. To update Franklin Delano Roosevelt’s caution from the Great Depression, “the greatest fear is losing the capacity to dream.” We need to remember that social capital is the return we make on investments in community. History teaches that the catalysts for this opportunity-trust included unique ventures undertaken as a common cause – building national railroads, electrifying whole countries, making telephony universal, creating trans-national and international air carriers, and establishing health care for all.

No one in the private or public sectors alone could have made the investments to generate these historical assets. They succeeded as projects for the same reason that they generated social capital; which is, leveraging partnership based on shared risks, needs, rewards and benefits. None of these ideas, which we now take for granted, were seen as obvious in their time. Each venture was fiercely contested as foolishly idealistic, or opposed as fiscally impractical. Nevertheless, vision prevailed, and public spirit persisted, so much so that these civic works became not only distinctive features of modern society, but also critical factors in the economic vibrancy.

The threats to our immediate future, such as global warming, are once again of a scale beyond any one group, country, or sector to address on their own. Right now most countries are on the defensive on this issue. Since this dilemma is the focus or global concern and scrutiny, the credibility of all leaders has taken a hit. And since the problem has consequences for our children, public confidence in being able to make a difference drains away by our inactivity. Audacity provides the needed antidote for fear and despair. We might imagine new, multi-national, multi-lateral twenty-first century utilities for dealing with carbon capture. Or, building on the rich creative possibilities from authentic diversity, we might instigate cross-national private and public joint ventures for scaling up promising green technologies. Whatever form this aggressive collaboration takes, recognizing the shared stakes in these issues, and strengthening the common commitment to resolve them, is indispensable for generating both trust and optimism. 

28-April-2009

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John Dalla Costa is the Founding Director of the Centre for Ethical Orientation, a Toronto-based consultancy working with private and public sector organizations on governance, ethics and trust programs. He is the author of six books, including “The Ethical Imperative” which advocates and gives practical dimension to a ‘global ethic for the global economy.’ He is the ethics instructor at the Director’s College, and is currently working on a doctorate exploring inter-religious dialogue as a resource for sustainable development. 

 



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