Trust, Communication, and the Science of Well-Being
This phrase became a company motto at O’Reilly Media in 2008, largely in response to the tremendous amount of value that left our economy during the financial crisis. Five years later, Tim O’Reilly advocates for this principle every chance he gets while applying it to emergent trends, such as the Sharing Economy.
Since 2011, I’ve been chipping away at my own understanding of trust, particularly from an organizational communication standpoint. After all that I’ve read and studied, however, it seems that the questions still outnumber the answers. Psychological researchers disagree about how to define trust and the business community rarely speaks about it from an evidence-based standpoint.
In short, it is easy to preach the heroic attributes of trust but surprisingly difficult to make a foolproof case for trust in a business context. Therefore, it might be more fruitful to define the ideal productivity experience of a high-trust organization instead of defining trust itself. Create more value than you capture instructs how we make decisions, trustworthy decisions, and it applies to all levels of organizational leadership.
When we create more value than we capture, essentially, we focus less on short-term gain and more on the enduring qualities of our work. To me, the most important aspect of this phrase is that it reminds us of what it means to create value. Inside an organization, it’s natural to feel a sense of accomplishment from a well-crafted presentation or a well-executed plan, but did that work truly lead to more value creation for customers and society?
I often hear business leaders express frustration over their employees’ focus on processes and tasks. It’s the looking down instead of looking up that aggravates leaders. Processes are important, sometimes, and tasks are essential, sometimes. But, the context has to be one of meaningful value creation, and individuals need a concrete assessment tool to evaluate and prioritize their activities.
Therefore, the real challenge is to determine whether workplace activities create lasting value for customers or simply achieve short-term gains for an individual, a team, or a department. The second part of this principle clarifies the type of value that is created. Activities that create personal gain are less important than those that produce meaningful benefit to others.
For example, in a one hour team meeting, which tasks should you share with the group? Some of your accomplishments highlight your personal skills, while other activities may produce greater value to the company and its customers. In this scenario, clearly the second set of activities should be given more attention in a team meeting.
Create more value than you capture is an effective decision-making tool for small, everyday activities and for big-picture corporate strategy.In the hands of an employee, this principle can guide improved self-awareness and task prioritization. In the hands of a manager, this principle becomes an effective performance evaluation tool. And in the hands of senior leaders, this principle can serve Mr. OReilly’s larger goals of building business models that strive for more than short-term profits.
The most successful companies treat success as a byproduct of achieving their real goal, which is always something bigger and more important than they are.
When Mr. O’Reilly (who probably prefers to be called Tim) talks about this motto, he often references the open source projects that enabled the web to become a remarkable source of value for all of us.
According to Mr. O’Reilly, the early architects of the web were not self-serving. They engineered an environment that would generate value for decades to come. These early innovators and pioneers developed tools for widespread engagement, giving individuals and small businesses a powerful voice.
Here’s how Mr. O’Reilly explains his principle:
Focusing on big goals rather than on making money, and on creating more value than you capture are closely related principles. The first one is a test that applies to those starting something new; the second is the harder test that you must pass in order to create something enduring.
Take Microsoft. They started out with a big goal, “a computer on every desk and in every home,” and for many years unquestionably created more value than they captured. They helped grow the PC industry as a whole; they built a platform that helped many small software vendors to flourish. But over time, they began to capture more value than they created: as the cost of PCs plummeted, hardware vendors had to survive on the slimmest of margins while Microsoft collected monopoly rents; bit by bit, Microsoft consumed its own developer ecosystem by building the features of successful startups into their own products, and using their operating system dominance to crush the early movers. As I’ve written elsewhere, I believe that Microsoft must re-commit itself to big goals beyond its own profitability, and to creating more value than it captures if it is to succeed. (Danny Sullivan wrote a great piece about the strategic relevance of this very idea just last week, Tough Love for Microsoft Search.)
When we examine value creation and value capture as distinct activities, it becomes possible to create a new model for workplace engagement. While businesses unquestionably need to clarify and communicate their core culture, mission, and values (beliefs), these attributes are not directly tied to daily business decisions.
A company’s culture and values should guide employee decisions, but in most instances, they cannot instruct decision-making. Mr. O’Reilly’s motto focuses on how decisions are made. Therefore, employees can readily determine whether their decisions will create value for the company’s customers, or conversely, capture value for their personal or team benefit.
This straightforward litmus test is congruent with activities in both service and manufacturing organizations and has the power to influence greater levels of collaboration, innovation, and organizational trust.
Employees who work collaboratively to create value are more likely to consider the long-term interests of their customers. The process is measurable, sustainable, and highly conducive to trust.
A credo is a statement of personal belief.
In a world of competing perspectives, we each represent something distinct that is born from our values and communicated through our actions.
If we’re not careful, the push and pull of others’ opinions and divergent motives can impede our ability to listen to the voice inside. Over time, our decisions can drift away from what we believe.
By writing a personal credo, we’re forced to clarify our beliefs in the context of our lives.
A credo externalizes our innermost thoughts in a way that readily translates to the types of decisions we face every day. This crystallized representation of our principles acts as a compass in our noisy world, helping us align our actions with our beliefs.
Contrary to what business schools profess, the real decisions of leadership do not conform to a list of rules. These defining choices are governed by an individual’s own values, sense of judgment, and self-knowledge. A leader’s credo, therefore, should address three essential categories of values-based decision making: balancing priorities, overcoming adversity, and inspiring others.
“Rank does not confer privilege or give power. It imposes responsibility.” Peter F. Drucker
The responsibility of leadership is often the hard work of balancing priorities. This imperfect process is one of the most human business experiences that exist.
On one hand, leaders balance their own goals and desires with the best interests of the organization, placing business needs above oneself and one’s team, until the moment when ethics are at risk. This fine line of moral-based decision making is as crucial as anything a leader will face, and it often arrives without warning.
Another critical balancing act occurs when internal competition challenges a sense of workplace fairness. Once again, no guide or list of rules can encompass every instance of workplace injustice, and each instance is highly relevant for at least one employee.
Then there’s the balance between helping an employee and enabling, the balance between promoting camaraderie and individual growth, and the balance of challenging someone without harming their confidence. In each case, the leader weighs a manager’s detailed knowledge of others’ abilities with the long-term growth and leadership needs of the organization. It is simply impossible to excel at every decision, which is the lesson of humility in leadership.
How do we respond when things do not go our way? Can we face a significant loss and return to pursue progress with joy, or do we become cynical?
Cynicism and bitterness are signals of a sinking ship; one that enterprising and productive friends and employees will eventually abandon.
Overcoming adversity is the single greatest test of leadership. In truth, winning is easy. Success breeds happiness, which attracts others and creates a virtuous cycle of productive engagement. Adversity enters and throws everything into question. That uncertainty is almost as lethal for a leader as bitterness, and the only way to reduce uncertainty is to accelerate our response to adversity.
Every leader should cultivate an intimate and productive relationship with adversity. We cannot wait for the test of failure to decide how we handle disappointment. When things do not go our way, we have to channel that energy into something powerful and positive–quickly. Whitney Johnson eloquently describes it as a battle between our Better Self and our Bitter Self.
In moments of success, we shine. In moments of defeat, we are defined.
Two fundamental values guide a leader’s approach to working with others: gratitude and generosity.
After all, the way we treat ourselves and others comes largely from within. No groundbreaking business book or strong corporate culture defines our commitment to helping others like the power of our guiding principles.
Leadership is about giving more than taking. We acquire things intentionally, through hard work and determination. However, leaders give much more readily and unconsciously than they seek to gain, without measuring or seeking acknowledgement. Giving is inherent in leading because it demonstrates empathy and respect for others. Giving also demonstrates gratitude for a leader’s most sacred reward: the trust of those they lead.
The spirit of a leader is always striving to grow beyond today’s capabilities. It is a constant pursuit of improvement to become sharper, stronger, and wiser tomorrow. This constant pursuit, and belief in one’s own potential to improve must be generously applied to others. Without that generosity of spirit, there is a risk of becoming dangerously self-focused. The great potential for growth cannot be for one’s self alone. It has to be shared generously, given freely, and indiscriminately.
Balancing priorities, overcoming adversity, and inspiring others are three indispensable traits of strong leaders that derive from personal values. To find our way in the sea of noise around us, where others voice opinions that do not reflect our own moral fiber, we must learn to listen intently to the voice inside. We must seek solutions to external problems by looking inside ourselves. After all, our legacy should be defined by contributions that make us proud. Establishing a crystallized view of who we want to be and how we want to lead is a reliable and soul-fulfilling process.
Contact Kellie to discuss how she can help you or your team create your own personal leadership credo(s).
Email Kellie at: firstname.lastname@example.org for more information.
This Q & A with Jay Daughtry illuminates the powerful role of trust in online communities. As a society, we often spend more time nurturing relationships online than with the person living next door. Consequently, online communities have become central hubs for sharing ideas, aspirations, and values.
I met Jay on Twitter, and through a few 140-character exchanges quickly identified him as a trusted resource. When I decided to interview an expert in online engagement, I intuitively thought of Jay because of the positive and earnest impression he made with so few words.
Through this interview, I learned the subtleties and purposefulness of his approach, and it has shifted my own online engagement. Instead of meeting new people online by assessing their vanity statistics, such as number of followers or friends, I assess their propensity to engage based on re-tweets and comments on others’ ideas. I discover people who engage in my work by engaging in theirs. The net result feels an awful lot like a community, to which I say, “Thanks, Jay.”
1. Why is engagement essential in online communities?
Gone are the days when companies and brands can simply broadcast their messages through ads in newspapers, magazines, radio, and TV. Using social media as a broadcasting tool is missing the point, and it’s missing opportunities. There are two purposes of social media (1) to give people a sense of belonging and engagement and, (2) to receive input and feedback from your community of supporters. Sometimes there are ideas out there that will improve your offerings if you take the time to listen.
Follow up question: What motivates you personally? A sense of online community is what drew me (and many others) to social media in the first place. Now I no longer have to be in the same physical space with contacts to have a shared experience. I no longer have to meet face-to-face to learn from industry peers on a given topic. I no longer have to read journalists or other writers who are merely a byline; I can read the posts of those I’ve grown to know and respect. I take that sense of online community to what I do. If I like what someone says and think it is worthwhile, I’ll share it with my community.
That’s why content curation is so influential. People prefer to receive information from a trusted and personal source. Those who are most engaged with what I have to say are generally going to get more referrals and recommendations on what they have to say. It’s not always equal, but it’s this concept of social currency. I’m more willing to engage with and help those who have engaged with me.
2. What sort of impression do you want to make when you encounter someone online?
I want people to realize right away that I’m a real person; that it’s not some automated feed. This comes across in a couple of ways: 1) by making comments on what others post and 2) by providing timely responses to their engagement with me. A thank you goes a long way. I want people to trust the content I’m giving them.
My Twitter profile shows that I have varied interests and read numerous sources. If people take the time to ask me a question or to comment, I want them to see a response to know I’m listening. I’ve made connections with people around the world, and I want them to come away from our encounter knowing that I’m interested in them, their business, their goals, etc., and that I remember them from previous conversations.
3. So, you want people to perceive you as genuine and credible; how do you achieve that?
First of all, I try to address people by name- not every time, but frequently. It’s been said that the sweetest sound is that of one’s own name. I think there’s some truth to this. Our communications are getting shorter and shorter (Twitter, text messages, etc.), and taking the time to use someone’s name shows that you care and that you’re paying attention.
Second, I try to give information by curating content, contributing to discussions, etc. I also ask questions–genuine questions that encourage feedback and input. Most people find great value and connectedness in being able to contribute in this way.
Third, I take an interest in the interests of others. As a former teacher and a student at heart, I find curiosity goes a long way to establishing community. There are many things to learn from others who have different interests, come from different disciplines, or work in different industries than yours. I’ll also proactively reach back out to people I have not contacted in a while. It is a powerful moment when they realize they have not been forgotten.
4. How do online communities foster a sense of trust?
When you’re new to a community, you may not know who to trust. The indicators of activity levels or numbers for connections, friends, followers, etc., have nothing to do with trust. New members enter cautiously, looking for signs, such as: Do members lead you to reputable sources? Are they engaged in dialogue or merely talking about their business, their agenda, and their goals? How do people respond when I comment? In order to build trust, there has to be some give and take.
Their initial interactions are likely to predict, to a certain extent, future engagement. In other words, their willingness to engage is going to encourage or discourage a commitment to the community. We’re back to social currency. Communities foster trust in this sense. Let’s say I’m trusting these two or three people, and then a person comes along who is new to me but not new to the community. I look to those I trust for social cues about the value I should place on this new member until I can make my own determination.
5. What advice can you offer to businesses that wish to establish greater rapport and trust through online engagement?
Businesses need to be real. Real people must represent the voice of the organization. Business leaders need to approach online engagement as they approach in-person interactions. Let’s take a retail store as an example. When a customer walks in, are they greeted by a member of the staff? Are employees friendly and helpful? Do they come across as knowledgeable about the brand and individual products or offerings?
Businesses should always (1) listen for references to your brand or organization, (2) encourage and nurture the slightest interest in your offerings, and (3) act as a reliable resource—for your solutions or those of a partner or another entity. The online voice of the business can, and should occasionally show some personal interests, but only in moderation. Make sure the focus stays primarily on customers and their interests. If businesses fail to meet the basic needs of customers, their competitors will be there with more authenticity and more influence.
Finally, the voice of the company should be the voice of a person. Enabling employees to retain their personalities while at work—and not merely acting as corporate drones—makes organizations more authentic, human, and likeable, and ultimately wins more customers.
Jay Daughtry started ChatterBachs in 2010 as a social media and communications consulting firm focused on social media, content, technology, and online communities. He has worked with numerous online communities to foster a sense of identity and belonging as well as to highlight the benefits to a community’s members. Jay understands that engaging with an individual’s professional and personal interests is vital for building trust. He believes that everyone has a story, and getting to that story motivates his personal and professional interest in online engagement. Follow him on Twitter @ChatterBachs and visit his blog www.chatterbachs.wordpress.com.
“As a student of history, I am always fascinated by how we arrived where we are. It is both a discovery and a lesson to study the events, the circumstances, and the external and internal factors that created wherever it is we find ourselves today.” Mark Emmert, NCAA President
When it comes to the financial crisis, shouldn’t we all be avid students of history? As business leaders, who experienced the trauma first hand, we can uniformly confess that no one among us had prepared for such a catastrophe. Even if history proves it to have been a once-in-a-lifetime event, the financial crisis revealed shortcomings in nearly every business model and permanently altered the direction of consumer preferences.
In the role of leader, it is not enough to survive a crisis, we must learn from events that challenge our worldview. Leaders are responsible for others, and therefore, must always know the way to higher ground, identifying where the flood waters rose in the past, and anticipating their possible return. That is the role; these are the tools:
Lesson #1: Build confidence during a crisis. Cultivate trust during uncertainty.
Although the financial crisis is referred to as a single event, it comprised two distinct periods of business abnormality. The first, beginning in early September 2008 and lasting through the fall, was an acute period of fear and urgency, correctly referred to as a crisis. By early 2009, however, the crisis had evolved into a period of prolonged uncertainty that was less traumatic but deeply unsettling.
During a crisis, people are in a state of shock and fear. Something has gone wrong, and until all the facts are sorted out, that fear can turn to anger quickly. Therefore, the primary objectives of crisis communications are to demonstrate competence while prioritizing human needs over business needs. Messaging is particularly pertinent during a crisis. People hang on every word and expect a company to “tell” them how critical the situation is, how to protect themselves and their families, and how the problem will be resolved.
Uncertainty is different. In the absence of urgency, people don’t want to be told what to do; they want to be understood. Although customers are less frightened during uncertainty, they feel extremely vulnerable, which heightens distrust. The primary communication objective is to reduce anxiety while strengthening the customer relationship. Importantly, trust is established through non-verbal communication. Therefore, leaders are challenged to demonstrate trustworthiness, actively listen to stakeholders, and connect with people on the issues that matter most to them.
Lesson #2: Know the mindset of your customers
Mindsets reveal a person’s motivations, values, and attitudes about a product or company. With this information, it’s reasonable to anticipate customers’ reactions to change, thereby creating a more accurate and proactive communication strategy.
Thanks to the work of behavioral economists, it’s now widely understood that people are not rational maximizers of their own self-interests. Emotions impede decision-making under normal circumstances and are intensified by uncertainty.
Mindset segmentation, the process of identifying people based on their desires and attitudes brings customers to life within an organization. Internal teams, inundated with product and service knowledge, may never meet a customer in person. Mindset personas fill this void and enable communicators to develop personal and emotional messages for audience segments. Consequently, communications become more meaningful, which can sustain goodwill even through uncontrollable business environments.
It’s never more essential to understand what your customers are thinking than during a crisis, when focus groups and analytics are useless. Business leaders cannot afford to guess what customers are thinking during a traumatic event. That lack of understanding exposes a risk of inflaming the situation, or a paralysis when leaders effectively say nothing. To comprehend how this affects trust, imagine walking by an injured person without communicating. Yes, that’s how customers feel about silence during a crisis.
Lesson #3: Develop rigor in your communications practice
A crisis is the ultimate litmus test for preparation. Core competencies and systematic processes must be established during periods of stability. These fundamental practices provide a foundation for consistent, high quality, and brand-aligned messaging in unpredictable business conditions.
Business interruptions are an acknowledged inevitability. Therefore, planning strategies that seek to maintain customer goodwill during these periods should be commonplace.
Specific customer segments with known sensitivities create ideal targets for scenario planning. For example, in the financial services industry, the market regularly cycles through rough periods, which create investor anxiety. Knowing ahead of time that a particular customer segment reacts more emotionally to market swings can inform communication strategy months, if not years, in advance of the actual event. Through empirical study, this expertise can develop into a new core competency and competitive advantage.
Traditionally, we’ve been trained to manage a crisis. However, one of the biggest societal changes from the financial crisis is the dearth of societal trust. Because a crisis is a time of vulnerability for customers, it is a remarkable opportunity for businesses to build trust. During Hurricane Sandy, that’s just what the banking industry did, and it’s described in this article.
According to Gallup’s polls, Americans have never been less trusting of institutions. Although the culprits are too vast to name, today’s bleak environment for trust has a direct impact on leaders. Events outside the workplace shape employees’ mindsets and influence their propensity to trust co-workers and managers.
Because the social and political events that form a person’s worldview lie outside a manager’s control; it is all the more crucial to understand these shifting attitudes, their ability to affect corporate culture, and ultimately, customer experiences.
Trust in media (fair, balanced, and accurate reporting): 40% (9/21/2012)
Confidence in church or organized religion: 44% (6/20/2012)
Confidence in public schools: 29% (6/20/2012)
Confidence in banks: 21% (6/20/2012)
Confidence in Congress: 13% (6/20/2012)
More impressively, for the first time since 2009, unemployment no longer held the first or second position in Gallup’s “most important problem” list. As of January 14, 2013, those slots went to the federal budget deficit and government dysfunction, reflecting public fatigue with uncertainty.
In response to Gallup’s polling results from last summer, Thomas J. Leeper tried to make sense of plummeting societal sentiment in his article for Psychology Today entitled, In Nothing We Trust. Mr. Leeper wisely avoided the pitfall of identifying a singular cause for these high levels of distrust.
The patterns of declining trust appear to be too widespread and too consistent across institutions to be explained by the particular behavior of any given institution.
The manager’s dilemma
Potentially the most sobering aspect of declining societal trust is its impact on well-meaning and trustworthy individuals, especially those in a position of leadership. As it turns out, when people are deeply cynical, they are more likely to doubt information, particularly when that information is provided by a source that can benefit from persuasion.
Dan Ariely, the James B. Duke Professor of Psychology and Behavioral Economics at Duke University, explained this phenomenon in his book, Predictably Irrational. In one experiment, Mr. Ariely asked people if a series of straightforward statements, such as “the sun is yellow” and “a camel is bigger than a dog” were true or false. One hundred percent of the participants answered these basic questions correctly.
Next, the researchers conducted the experiment with a new group but attributed the simple statements to either a large corporation or a political party (institutions people mistrust). This time, participants were more skeptical of a simple statement like “the sun is yellow,” and hedged their answers accordingly: “Sure, it’s yellow, but it also has red spots on the surface and sometimes it looks white so it’s not just yellow.”
Ariely and his team conducted these experiments to assess American’s distrust of information associated with a brand. The results confirmed their suspicions. Ariely explained,
By starting from a highly suspicious point of view, owing to the origin of the statement, the level of distrust was so high that it even influenced our participants’ ability to identify obviously correct statements.
Implications for business leaders
These test results, paired with extremely high levels of public cynicism, are a valuable wake-up call for business leaders who underestimate the changing mindset of their employee population. While employees may look the same on the outside, their biases and perceptions are changing along with societal attitudes. Those changes affect how they interpret a leader’s messages, and how they relay that information back to customers.
Understanding societal distrust will help leaders connect more effectively with their employees and build high-performing teams.
Ever since oil spewed out of a well at the bottom of the Gulf of Mexico and insensitivity poured out of a CEO, business leaders have learned what not to say in a crisis. Two years earlier, when the stock market hit rock bottom during the financial crisis, communications were equally ineffective. The great investment sages calmed and inspired their traumatized customers with these words of compassion: “Stay the course.”
Against the backdrop of mistakes and stumbles, these success stories are all the more meaningful. Each example reflects a competent and compassionate leadership style that hits all the high notes of effective communication: direct and candid delivery, a thorough command of information, and a clear understanding of the audience’s state of mind. Although many of these communications were born during terrible circumstances, each leader managed to restore calm and give people a reason to believe.
Leading Through a Storm
In late October, Hurricane Sandy barreled into the east coast and two strikingly different leaders rose to the occasion. New York City Mayor Michael Bloomberg, a cool-headed command-and-control manager and New Jersey Governor Chris Christie, an emotional man-of-the-people faced daunting challenges with courage.
In New York City, decisiveness saved lives when the Metropolitan Transit Authority shut down all subway, bus, and railroad lines almost 24 hours before the storm hit. Closing the city’s main arteries was worth a thousand speeches telling people to stay home.
During a crisis, transparency and candor build confidence. Mayor Bloomberg’s direct style and frequent press conferences kept people informed and secure in his command of the situation. Additionally, his team consistently accompanied him behind the podium, signifying the extensive teamwork involved in the city’s crisis management.
In New Jersey, the morning after devastation deeply affected Governor Christie as he demonstrated another tenet of crisis communication: show people that you care. The Governor shared emotional stories of growing up on the Jersey Shore and embraced grief-stricken homeowners, which conveyed character while eliciting support for his badly wounded state.
Both leaders vigorously employed social media channels to reach a diverse audience. When New Yorkers asked if city water were safe to drink, Mayor Bloomberg didn’t wait for the next press conference, he answered them instantly on Twitter. In addition to Twitter, these modern day leaders updated Facebook pages, sent text messages, and distributed press conferences online.
The one memorable stumble was Mayor Bloomberg’s insistence on holding the city’s annual marathon. In the recovery phase of a crisis, people want their leaders to convey compassion and empathy. Across the Hudson River, these were the very traits Governor Christie displayed, and he won the hearts and minds of voters across the country as a result.
Clinton Strikes Again
The scene was the Democratic National Convention, two months before Election Day. Across the country, dollars and patience had been stretched too far for too long and Romney was moving in the polls. Then, the orator of our generation took the stage.
President Obama started with a much weaker economy than I did. No president—not me or any of my predecessors—could have repaired all the damage in just four years.
With that one line, former President Bill Clinton evoked the credibility of his personal experience, spoke authoritatively about the economy, and created a sense of empathy for The President. Instead of conveying a simple message of support, Clinton sought to change Americans’ perspectives about the last four years.
During his speech, Clinton cut to the core of the ideological divide and effectively connected with all voters when he echoed universal frustrations over bipartisan warfare. He championed rational thinking, cast a vision of hope for the future, and overwhelmed the audience with his remarkable command of policy, history, and the challenge of leadership.
Here’s the challenge he faces, and the challenge all of you who support him face. I did it, I know it, I’ve been there.
After building enormous credibility, Clinton implored the audience to judge the President’s actions through a very different lens.
“He inherited a deeply damaged economy, put a floor under the crash, began the long hard road to recovery and laid the foundation for a more modern, more well-balanced economy that will produce millions of good new jobs.”
For a brief moment, Clinton rose above the laws of partisanship and represented a vision the country craved. It wasn’t his words that brought people to their feet; it was the promise of leadership, which is far more powerful than the cynicism of an empty chair.
Scandal at Penn State
On July 12, 2012 when Louis Freeh released his infamous report, the public had waited eight months since Jerry Sandusky’s indictment to learn the full story.
Exactly 11 days later, the National Collegiate and Athletic Association (NCAA) announced unprecedented sanctions against the university: Penn State was fined $60 million, banned from four seasons of postseason football and forced to vacate 111 victories during a 14-year span.
The NCAA’s swift and resolute response gave Penn State athletes and students a sense of closure and set a foundation for restoring trust and confidence in the university. Chair of the NCAA executive committee Ed Ray said that in the executive committee and the division 1 board, there was a
unanimous sense that we needed to act, and we needed to act quickly and effectively.
While some felt the sanctions were too lenient, NCAA president Mark Emmert explained their objective was to punish the institution without causing unnecessary harm to students. Actions always speak louder than words and they represent courage, which puts people at ease.
During the press conference Emmert said institutions have a responsibility to ensure that the values of honesty and integrity are not subverted by a winning-at-all-costs mentality. He said,
One of the grave dangers stemming from our love of sports is that the sports themselves can become too big to fail, or even too big to challenge.
On a final note, we lost two great communicators in 2012: Stephen Covey and Zig Ziglar. Although known for work in different fields, their communications lessons were impressively similar because they taught people how to listen. As Covey was fond of saying, we must first understand, and then be understood.
A friend of mine recently mentioned how we’ve moved from a front-porch society to a back-deck culture. Where people once shared and related with neighbors as a course of life, interactions have become less common and more intentional. As a result, communities have fewer opportunities to influence moral standards through gentle corrections and role models.
As I study the financial crisis, and the hubris of the housing bubble, I often wonder why it was so easy for an industry of bankers and mortgage brokers to cast common sense aside. Greed is easy to understand. Destructive greed, however, is concerning. And it should be. For answers, I turn to academics and business people to understand the psychology and the reality of how good people make poor decisions.
Allan D. Grody, president of Financial InterGroup Holdings Ltd., has over four decades of experience in financial services spanning from global brands to start-ups. In his recent article for American Banker entitled, How to Risk-Adjust the Culture of Global Finance, Grody shared his own experience and observations of how small, internal communities foster values. In fact, this line stopped me in my tracks:
Globalization removed the intimacy in which culture is best transmitted.”
The more I thought it about it, the more it became clear that he’s right. Culture is most effectively cultivated in highly connected and trusting groups. Large companies with large distances between employees and company leadership risk deterioration of values and ethical standards.
Dan Ariely, a behavioral economist and author of the book The Honest Truth about Dishonesty, studied how our peers shape our assessment of right and wrong, which he says is distinct from legality.
We know what the laws are in principle, but what really shapes our decisions is what we see around us.
It’s an infection. If everyone around us is cheating, then we’re going to cheat.
Ariely’s research also confirms that distance matters when it comes to financial decisions. Each step that separates a person from money deteriorates honesty, whether it is credit cards, stock options, or collateralized debt obligations. According to Ariely,
These extra steps allow us to avoid seeing the consequence of our actions.
As a behavioral economist, Ariely studies how emotions affect decision-making. Increasingly, however, his research seeks to understand how communities or more specifically, peer pressure, influence moral standards.
Our peers shape our understanding of what is ok and not ok, which is distinct from what is legal and not legal.”
These insights from Ariely illustrate how his academic research dovetails with my observations during the financial crisis and with Grody’s extensive business experience.
In his article, Grody reflected on the culture of investment banks before they became global and while they were still privately held.
There was a feeling of closeness in professional firms back then – a sense of intimacy felt both culturally and physically. The personal mentoring was easier in this environment. Culture was transmitted almost effortlessly. In seeing a transgression, it could easily be remedied.”
The thing that impressed me most about Grody’s insights is precisely his decades of context, his knowledge of the financial services industry’s evolution, and his personal leadership experience. I recommend reading the article in its entirety and highlighted five additional observations, below.
Insights on corporate culture and changes in the financial industry– from Allan D. Grody
Culture is a product of shared beliefs that gets played out every day in one’s life, whether privately or professionally. The optimal state of a culture is to be common in both of those lives.
What skews culture in the financial industry is a widely held belief that winning is all that matters.
Globalization removed the intimacy in which culture is best transmitted.
Partners taking their own capital out of the business through public sale of its shares removed the tie to their best risk control.
The final nail in the coffin was the anonymity permitted by the evolving technological complexity, black box culture and pseudoscience of risk management that grew up in the now “too big to fail” giant financial institutions.
I invite your thoughts and perspectives on this subject and will respond to all comments.
Trust is poorly understood in business because it is also poorly understood in psychological and philosophical research. In fact, psychologists directly cite the dearth of research in this area as a handicap to applied learning in the field of interpersonal relationships.
I have researched this topic for over a year and I shudder at blog posts that aspire to teach leaders how to develop a trust message. There is, in fact, no such thing as a trust message. That’s because trust is principally established through non-verbal communication.
Imagine telling someone to trust you. It sounds ridiculous, doesn’t it? Did you ever watch a leader speak on television, and despite their clear and direct style, you still didn’t believe a word that person said? Unfortunately, telling the truth is not synonymous with instilling trust. Trust me.
Trust is far more emotional and elusive than confidence. Confidence is similar to competence, and we have many methods for assessing a person’s competency in any number of fields. Trust, however, has less certitude. Trust means that when we are most vulnerable, the other person (or institution), will not take advantage of us. However, since we can’t easily replicate the conditions of vulnerability, the trustor is never really certain of what the trustee will do in a moment of need.
In business, trust has always been essential for companies with intangible products, such as insurance and investments. Convincing a prospect to trust an insurance salesman is one of the hardest jobs there is.
To be certain, salespeople do not rely on a trust message. In fact, salespeople are oftentimes the only ones in business who accurately understand that trust is established through listening. The only way an insurance salesperson makes a living is by becoming a highly effective listener. You might not think that salespeople listen, but they do.
As Zig Ziglar, the master questioner, taught so many of us, the bridge of trust is built through understanding. He passed away recently and like so many others, I can hear his voice in my head and vividly recall his stories, his humor, and his warmth. He genuinely loved getting to know other people, and that’s what he was trying to teach all of us.
A discussion on the topic of trust is incomplete without mentioning Stephen Covey, who taught these essential lessons before they became vogue. Trust, he said, is established through listening and demonstrating empathy. He called it “empathetic listening,” you can read my blog post about that here.
And that is why trust will never be a message.
To improve business’ understanding of trust, we have to improve an institution’s ability to listen to its customers and employees. It’s not easy, which is why I’m writing a book about it.
Please share your insights about trust, institutional trust, and communicating trust. I will respond to all comments and look forward to the conversation.
Following are summaries of three articles I published about leadership achievements, and missteps, during Hurricane Sandy. Each article address a different aspect of crisis communications, including: internal communications, public relations, and customer communications.
Prioritizing employee concerns
A crisis does not affect everyone equally, and when businesses reopened after the storm, many employees were still coping with stressful situations. This article, published in Simply Communicate, highlights the unique challenges employers faced as they coped with supply chain disruptions, technology breakdowns, and distressed employees.
Internal communicators and business leaders are well-schooled in crisis communications, knowing all too well that a crisis is a turning point and a time of tremendous change in an organization. Strong leadership brings people together, fosters a sense of unity, and sets a course for growth when the crisis is over.
This article, published with the International Association of Business Communicators, highlights several of Mayor Michael Bloomberg’s communication and leadership decisions to protect New York City. While many people are aware of his stumbles regarding the city’s annual marathon, those mistakes should not overshadow the extraordinary planning and coordination efforts that kept millions of people safe. As Mayor Bloomberg learned, managing a crisis can seem relatively easy compared with the challenges of a recovery effort.
An important, and under-analyzed, aspect of crisis communication planning is the approach to Day 2 scenarios and corresponding communications. When the crisis subsides, people want very different things from their leaders to guide them through additional anxiety, frustration, and fatigue
Restoring trust is an imperative in the banking sector. A wave of scandals over the past year only intensified Americans’ disdain for the industry and their resentment over the lack of indictments from the financial crisis.
This time, however, the bankers did something right. When Hurricane Sandy struck the east coast, banks almost uniformly offered to help their customers. Most waived fees for late payments, some offered emergency services, and the vast majority donated to relief efforts. Perhaps their fear of the CFPB triggered their actions, or maybe the banks have tired of negative headlines. Regardless, in this crisis, banks successfully demonstrated trustworthiness through action.
Few people, even in business, truly understand the types of decisions and actions that create trust. Importantly, trust is established almost entirely through non-verbal communication. This presents a challenge for many leaders who think about communications from the standpoint of a messaging strategy. Trust isn’t a message; it’s a series of actions that demonstrate character.
During the financial crisis when institutions fell, credit markets froze, and the Dow Jones Industrial Average routinely dropped 600-700 points in a single day, the financial sector became obsessed with confidence.
Although confidence is central to healthy and efficient markets, this single elixir for all things financial has been over-prescribed. As a result, we have overlooked the essential role of trust in business and society. While confidence and trust are closely related, they should not be used interchangeably. There is a remarkably subtle, yet significant difference between these terms.
The difference between confidence and trust
A good parallel for confidence is competence. When you are confident in someone, you believe that person is competent at the task at hand. Trust, however, is like integrity, defining character and civility in a single word. When you trust someone, you believe in that person’s loyalty to you and ability to be truthful in the task at hand.
For example, it is possible to have confidence in a person’s ability to count all the money in the register, but that does not mean you trust them with the money.
Another way to tease out these closely related terms is to consider how they affect outcomes in other areas of society. In sports, for example, we can have confidence in an athlete’s ability to win a race, but that does not mean we trust him to compete fairly. In this scenario, consider how a lack of trust in one winning athlete can erode confidence in the entire event. To restore confidence, it’s necessary to restore trust first by removing the dishonest competitor.
Restoring trust is easier said than done
The financial services sector has made many efforts to restore confidence since the financial crisis. Institutions have improved balance sheets and adjusted compensation structures. However, as chief executive of HSBC USA, Irene Dorner, points out, banks have not restored their reputations as successfully as they have restored capital can liquidity reserves.
Our standing has not recovered in step with better balance sheets.
In his October 17th speech at the British Banker’s Association’s annual conference, Financial Secretary to the Treasury, Greg Clark MP elaborated on the essential role of trust in financial services.
The foundation of this industry, probably more than any other, is trust. Think about it this way: how many people in your life would you trust with all of your money?
At the same conference, KPMG’s UK head of financial services, Bill Michael explained a crucial aspect of trust.
You can’t regulate good behavior.
Step-changes to rules and regulations will not be enough to rebuild trust,” Michael explained. “The industry is in need of a ground breaking shift in culture and behavior. It is up to the banks to lead by example by developing and implementing a Bankers’ Code – that is real and has the backing of regulators and other industry stakeholders. After all, we have ‘tone from the top’ and ‘three lines of defense’ yet no real principles-based foundation.
Requiring more from our leaders
Although confidence will always be essential to a strong economy, we are not currently in a crisis of confidence. Confident people abound and new ones exit preeminent universities each year. There is no shortage of sharp people in our country. Trust, however, means that those smart people will act with integrity and civility.
Trust means that investors don’t have to fear being stuck with the short end of the stick. It means that when our guard is down, and we haven’t read every line of the fine print, we’re not left feeling vulnerable.
Today, business leaders are promoted based on competence, not integrity. Yet, while we need confidence in the systems of business and government, we also need to trust the people who run these organizations. To restore trust, we must hold highly competent people to a higher moral and ethical standard. A leader’s skills and capabilities are important. However, a leader’s character and integrity should define his or her value to an organization, its customers, and the general public.
On October 17, 2012, the British Bankers Association (BBA) held its annual conference for the banking and financial services sector, and the theme of the conference was Restoring Trust.
The new chief executive of the BBA, Anthony Browne, came into office shortly after the Libor scandal erupted this summer, and that event influenced his perspective on industry priorities. In his welcome address, Browne explained his point of view,
I chose the overall theme Restoring Trust because it is quite simply the biggest challenge facing the industry.
One of the joys of this job is pollsters [who] keep sending me reports about what the public thinks of us. It is not pleasant reading.
And the reaction to my appointment has been interesting. My Mum said she was shocked. I don’t know why. I’d been a journalist and a politician. Surely banking was a step up?
Like all conferences, the day was filled with speeches, which are not the best tools for building trust. However, each speaker was very purposeful in his or her approach to this topic. Almost uniformly, speakers talked about a British reputation for credibility, and many cast themselves as stewards of that reputation, responsible for its care until the next generation comes along.
Additionally, the speakers offered multi-dimensional solutions to restore Britain’s reputation in the global banking community, and all of their solutions included some form of regulation and punishment for destructive behavior. In their perspective, behavior can be improved through the establishment and enforcement of a higher moral code, which is something they recall from their youth.
Finally, there is a remarkably lofty, historical, and visionary aspect to some of their messages. Reflecting back on England’s leadership role in the economies of prior centuries, these bankers expressed a desire to set a new moral tone for the global banking community.
Following are selections from three speeches. Instead of editorializing this content, I decided to let their words stand for themselves. Links to the full speeches are at the end.
1) Rt Hon Greg Clark MP, Financial Secretary to the Treasury
Restoring the Bonds of Trust
One of my abiding memories from childhood was on a trip from Middlesbrough to London when I went to see the Stock Exchange. Looking down on the trading floor – this was before Big Bang – I was struck by the force of that great motto Dictum meum pactum ‐ my word is my bond.
Trust remains the essential condition for the functioning, let alone the prosperity, of the financial services industry today. Ordinary working people rely on you to help them negotiate every stage of their lives. Businesses depend on you for their very growth and survival.
In a world where trust is in retreat, it is incumbent on this country to provide a haven of confidence and security. But this won’t happen unless we merit higher standards of trust than apply elsewhere
Trust is not secured by any single contributory factor, but by the interaction of several, including effective regulation; meaningful sanctions; clarity of structures; well‐aligned incentives between principal and agent and, most of all, an all‐pervading culture of integrity.
 The system of regulation that we’ve had for the last decade was found wanting. It missed the risks to the financial system as a whole by concentrating on the individual sources of risk in isolation. . .
Second, sanctions. If someone breaks the law, they should be punished. When the crime is serious, they should be locked up. This should be as true for criminals who steal through financial manipulation as it is for those who break‐and‐enter. Indeed, just as sentences handed down to those who were convicted in last year’s riots reflected their contribution to the breakdown in the confidence and security enjoyed by ordinary working people, so must a similar premium apply to those crimes which destroy trust that so many people depend on.
 Simplicity goes hand in hand with transparency. The more people who see and understand what is going on, the more they can have confidence that they are not being bilked.
Fourth, incentives. – 80% of bonuses must be paid in shares
 culture It outrages me that the millions of people who have lived and breathed those values throughout long and devoted careers should have to endure the injustice of the damage to their reputation by being linked inadvertently to a reckless few.
2) Bill Michael, KPMG
The Future of Banking: Challenges and Opportunities
You cannot regulate virtue.
I firmly believe what is required is a ground breaking shift in culture and behaviour. And it is up to banks to lead by example. It’s time to turn rhetoric into reality.
It’s time for a new Banker’s code, one that is relevant for today; A Code that is not a substitute for regulation, but works alongside it; A code that can be used to evidence change and where there is consequence.
I think a Code needs to enshrine three core principles.
First, act in the best interest of the customer.
Second, put reputation before profits.
Third, live by the principle of prudence.
In banking, as in life, reputation is everything. As we all know it takes years to build a reputation but moments to ruin it. Now all banks have had reputation risk committees for years. However, they didn’t work because reputation is not about adhering to rules alone.
We need to rediscover prudence. Prudence is about decision‐making with a degree of circumspection
At a practical level a Banker’s Code could:
create a common language to discuss what our banking culture is seeking to achieve.
articulate clear measures, making it easier for our peers and public to hold us to account.
frame the behaviours that should be rewarded through incentives structures.
But it’s not just banks that need to change; we all have our part to play – shareholders, customers and regulators.
Shareholders need to behave more like owners.
Next, the bank customer. We as customers have to change our behaviours by taking greater responsibility for our own balance sheets. It’s about financial literacy and personal accountability.
I would like to talk about the importance of regulators in helping change culture and behaviour. It is five years since the financial crisis and yet we are still working out the rules with no end in sight.
It’s time to make a public commitment to govern and manage UK financial institutions through a set of guiding principles. It wouldn’t be the first time that an idea developed in this country was adopted by others. We all have an important part to play and we must all have the humility to work together and achieve a better outcome for society as a whole.
3) Steven Maijoor
Restoring investors’ trust in Europe’s markets
As we are all aware, trust is the cornerstone of financial markets. Those of you who have an interest in the history of financial markets know very well that trust lies at the root of the development of our securities markets. Public companies and stock markets, which have been so important for the development of our economies and the generation of our wealth, cannot exist without trust. In essence, the level of trust needs to be at such a high level that savers are willing to transfer some of their carefully saved income to another person, who they do not know personally, and who will use it to undertake a productive activity. Considering the many potential risks involved, it is remarkable that we have been able to achieve the level of trust needed for the functioning of large and complex financial markets.
Investor trust or investor protection is not a sufficient condition on its own to support well-functioning securities markets. There are at least two other elements which are also needed and which are central to ESMA’s activities: financial stability and a single rule book for the European Union.
It is my hope that the combined efforts of regulators, in the shape of ESMA and national authorities such as the FSA, and a financial industry seeking to rebuild relations with their clients will ultimately restore investors’ trust in our financial markets.
Banking News (A video news channel for the BBA)
Includes conference videos and man-on-the-street interviews
Months ago, I posted an essay to this blog about the plight of demoralized employees. Surprisingly, that one essay generated more organic traffic than any other article, even though this site is not optimized for those search terms.
Curious to know whether this phenomenon was unique to my blog or part of a broader trend, I decided to do a little research. Using Google Trends, a research tool that shows search popularity for a specific keyword, I looked at trends from 2004 to today. First I searched for the term “demoralized employee,” but Google Trends didn’t have data on that term, so I started more broadly and then drilled down to examine root issues.
Search term: Demoralized
As you see below, search volume for the term “demoralized” has increased steadily over a long period of time. This trend line is especially interesting for employers and HR professionals because it reflects changing consumer and employee sentiment. Here we see why Google Trends is such a tremendously valuable tool to understand evolving societal attitudes.
Search term: Boss Bully
Digging deeper, I explored possible causes for an increase in demoralized workplace sentiment because my popular essay was about a demoralized employee. As you see below, in March of 2008, Google’s search volume for the term “Boss Bully” was 52 on a scale of 100. In January of 2012, that same term peaked at 100. This should raise a red flag for employers.
However, additional research shows workplace bullying is more of a consistent trend. The Workplace Bullying Institute conducted national surveys in 2007 and 2010 in which 35% of the adult Americans (an estimated 54 million workers) reported being bullied at work.
Furthermore, 15% of respondents said they witnessed bullying and were upset by it. This second number is concerning because it demonstrates erosion to corporate culture. When cultural values are ignored by a powerful manager, employee morale and trust suffers.
Female bullies in the workplace
As a graduate of an all-women’s college, it pains me to say that my own career has been largely supported by men, not by women. Peggy Klaus, a leadership coach explained the plight of female workplace competition in her 2009 New York Times Article, A Sisterhood of Workplace Infighting. In it, Peggy said,
A pink elephant is lurking in the room, and we pretend it’s not there. For years, I have heard behind closed doors from women — young and old, up and down the ladder — that we can be our own worst enemies at work.
Instead of helping to build one another’s careers, they sometimes derail them — for example, by limiting access to important meetings and committees; withholding information, assignments and promotions; or blocking the way to mentors and higher-ups.
A recent study by the Workplace Bullying Institute examining office behaviors — like verbal abuse, job sabotage, misuse of authority and destroying of relationships — found that female bullies aim at other women more than 70 percent of the time.”
Girls are taught to be critical about each other from adolescence, and it’s particularly vicious among working women; from playing favourites to badmouthing colleagues.”
The article cites Debra Falzoi, a communications coordinator who was bullied out of her job by a female boss at Boston University. Falzoi said,
‘My female bully lied and gossiped about me and others. She used all indirect tactics. I have seen men also use indirect bullying tactics, but they’re much less frequent, and they have seemed solely to protect their ego rather than proactive moves to sabotage.’
According to the article, Falzoi reported incidents directly to her manager who did nothing to help, despite the fact that others had also complained about the same women.
The article also cites a 2010 survey by the Workplace Bullying Institute which found that workplace bullying is four times more common than sexual harassment and racial discrimination. When the bully is a manager, there’s no limit to the destruction she can inflict. The Workplace Bullying Institute says that bullies choose targets who threaten them, and forty percent of targets never report the bullying.
Interestingly, the Forbes article cited above recently became the topic of a LinkedIn discussion in the Professional Women’s Network. So far, more than 430 women have commented in this discussion.
Bullying costs millions in lost productivity
An article in the American Sociological Review, cited in a 2008 Washington Post article entitled, Most Diversity Training Ineffective, Study Finds, said that U.S. companies spend $200 to $300 million per year on diversity training. These substantial investments in diversity training are specifically intended to improve business performance. Additionally these investments are an indirect confirmation that CEOs know bullies prevent new ideas from surfacing in the organization.
To encourage a culture where better ideas are supported, instead of thwarted, companies invest millions of dollars each year to encourage an openness to new ideas and new ways of thinking. However, according to the study cited in this article, which was based on 31 years of data from 830 mid-size to large U.S. companies, the money was not well spent.
Psychologist Michael H. Harrison, Ph.D., of Harrison Psychological Associates, quotes a recent survey of 9,000 federal employees indicating that 42 percent of female and 15 percent of male employees reported being harassed within a two-year period, resulting in a cost of more than $180 million in lost time and productivity.”
The Healthy Workplace Bill
Whenever businesses fail to resolve challenges proactively, regulation is sure to follow. Since 2003, 21 states have introduced Healthy Workplace Bills. To date, the bills have not passed, however in Massachusetts lawmakers believe they are close. Suffolk University Law Professor David Yamada explained,
We’re looking at the covert sabotaging and undermining to literally try to rub someone out of the workplace. . .
Our hope is that this piece of legislation, when enacted, will not only encourage employers to act preventively when it comes to workplace bullying, but also will give those individuals who have been severely bullied a claim for damages and compensation that the law just doesn’t provide to them right now.”
Thoughts from Jack Welch
To cite the ever-quotable former CEO of GE, “You [business leaders] have to pay close attention to your culture.” Welch explained his point of view on CNBC’s Squawkbox on March 29, 2012 in response to Greg Smith’s now infamous Op-Ed article about the culture at Goldman Sachs. Welch said,
This isn’t about Greg Smith. This is about Greg Smith management and manager. . . Everybody knows the kid didn’t make it up. There are some people who got away with doing bad things.”
Welch advocates teaching moments inside organizations to enforce corporate values. He said, “A teaching moment is worth a thousand CEO speeches. CEOs can talk all day about culture. The employees know who the jerks are. Every employee can name the jerks for you.”
He also said that people should be measured based on how they treat others. “When you measure people, for example, have a set of behaviors and measure whether they treat people like you would like to be treated yourself,” said Welch.
These are very simple principles; we all learned them when we were young. These are the very principles a company’s culture relies on to build integrity. When managers are allowed to break the rules, integrity suffers, employee morale suffers, and eventually a business’ brand and performance decline.
How HR Departments Fail Victims
Though the problems seem simple to fix, this YouTube video explains how organizations, and particularly HR departments, fail to address these issues, even when the bully’s victim seeks help through appropriate channels.
I find I’m talking about this in small Facebook groups and wonder if we can move the dialog here for everyone’s benefit? It seems that everyone has a unique perspective on this topic, and many have encountered bullying or other demoralizing situations. One person asked if office bullies were also childhood bullies, which is a great question. Please share your thoughts and reactions or suggest areas for further research. Thanks!