Tags:
Ahead of our event on 06 March, Professor Paul Fiorelli shares his thoughts about trust.
“Trust in me in all you do. Have the faith I have in you.” These are the opening lyrics of the 1960 song “Trust in Me” by R&B singer Etta James and they underscore the special relationship surrounding trust.
Warren Buffett said, “Trust is like the air we breathe – when it's present nobody really notices; when it's absent everybody notices.” In order to trust, the trusting party (Trustor) has to believe in the trustworthiness of the party being trusted (Trustee). According to research, the factors contributing to this trustworthiness are “Ability”, “Benevolence” and “Integrity”. The Trustor has to have faith that the Trustee is able to carry out the task, is acting in the interest of the Trustor, and keeps their promises.
Let’s travel back in time to September of 1982 when one of the world's most trusted brands – Tylenol, manufactured by Johnson & Johnson (J&J) suffered the largest crisis in its history. Seven Chicagoans died after taking cyanide infused Tylenol capsules. J&J’s CEO – Jim Burke – made the decision to withdraw Tylenol worldwide, costing the company $100 million. This was at a time when national recalls were unheard of, and Burke did it against the wishes of the FBI and FDA, not to recall. Within 6 weeks J&J reinvented how Tylenol was packaged and sold, now with a triple seal to show if tampering had occurred. Sceptics believed the brand Tylenol was dead, but Burke made a substantial withdrawal from its “Trust Bank” to weather the storm. This “Trust Bank” was developed through generations of leaders acting with integrity, each positive act adding to its account. Fast forward 40 plus years and J&J is still a respected company but has had a number of challenges and “trust withdrawals” over the recent past.
Other organizations took a different approach to their “Trust Ledger”. News of the World, was a UK Sunday tabloid published from 1843 until 2011, focusing on celebrity gossip and sex scandals. In 2011 evidence surfaced that its reporters illegally hacked the phones of British soldiers killed in action, and a missing teenager – Milly Dowler – later found dead. The public was outraged, and advertisers withdrew their support, forcing Rupert Murdoch to shut the paper down. Their “Trust Account” was closed in July 2011.
What happens when someone within the company observes misconduct? Roger Boisjoly, the engineer whistleblower from the 1986 Space Shuttle Challenger disaster, offered three suggestions: Exit, Voice and Loyalty. Some observers will just pack up their office and leave the company (exit). Others will rationalize the behaviour, internalize the dilemma, and follow the company line (loyalty). Boisjoly represented that third category – voice. These courageous observers will speak truth to power and try to change the system, first internally, but then externally if they’re not satisfied with the company’s response.
Two of the biggest fears whistleblowers have are retaliation and inaction. Organizations must create an environment in which people can report problems, management will listen, and action will be taken. But what happens after a whistleblower files a complaint, and doesn’t see anything being done? This creates a “Trust Vacuum”. In order to protect the privacy rights of the accused, an organization may not be able to publicize its actions. Can this vacuum be filled with the belief that a whistleblower can report misconduct, an investigation confirmed the concerns, and action was taken (e.g. the party involved in the misconduct will never be promoted and may be forced out of the company in the near future), but it’s not readily apparent? Trust can fill this void.
How can we improve trust? President Ronald Reagan was famous for quoting a Russian proverb to Makhail Gorbachev: “doveryay, no proveryay”, which loosely translates into “Trust: But Verify”. Bernie Madoff, Elizabeth Holmes (Theranos) and Sam Bankman Fried (FTX) all seemed to have a cult following of investors who trusted them. Unfortunately, it took years and billions of lost dollars to detect the problems within their companies. Two procedures that can be used to find and fix fraud are: (1) having a good system of internal controls, and (2) conducting a root cause analysis about why problems happened and how to remediate them.
Motivational speaker – Simon Sinek – discusses how Navy Seals approach these issues. In a matrix with performance on one axis and trust on the other, they break actors into 4 categories. High trust and high performance – these are your best people that everyone respects. Low performance and low trust – get rid of them right away. Low performance and high trust – determine if you can help improve their outcomes. High performance and low trust – the person “crushing the numbers” but is a cancer in the workplace. While organizations may love these high-potential workers, companies need to change or eliminate this toxic behaviour. If they don’t, they’re really saying that all that counts is “making the numbers” - performance. Trust is irrelevant.
One final way of building trust is through a call to action regarding integrity. This is demonstrated by the West Point, U.S. Military Academy’s Cadet’s Prayer – Choosing the hard right, over the easy wrong.
Author
Paul E. Fiorelli, J.D./M.B.A.
Director, Cintas Institute for Business Ethics at Xavier University
Professor Paul Fiorelli is the Director of the Cintas Institute for Business Ethics at Xavier University. He was also selected to become part of an Ad Hoc Advisory Group to the United States Sentencing Commission, which reviewed Chapter 8 of the Federal Sentencing Guidelines regarding organizations. The Ad Hoc Advisory Group reported its recommendations to the United States Sentencing Commission on October 7, 2003. After minor revisions, these recommendations were sent to Congress on May 1, 2004, and became law on November 1, 2004.
Each year the Supreme Court, through the Supreme Court Fellows Commission, selects four individuals to come to Washington, D.C., and work in different branches of the judiciary. Paul Fiorelli was selected as one of the 1998-1999 Supreme Court Fellows and was assigned to the United States Sentencing Commission. During his fellowship year, he researched and lectured on compliance and ethics issues, employee confidentiality questions, and how internal auditors can play a major role in compliance programs. He also received the “Thomas Clark Fellow Award” from Chief Justice William Rehnquist, and the 2007 International Compliance Award from the Society of Corporate Compliance and Ethics. In May of 2000, he was selected as a Senior Fellow for the Ethics Resource Center’s (now the Ethics and Compliance Initiative) Fellow’s Program.
Professor Fiorelli received both his law and M.B.A. degrees in 1981, has taught at Xavier University since 1983 and has been a tenured, Full Professor since 1994. He has also taught a course on Ethics and Compliance at the CY Cergy Paris University, since 2014. At Xavier, he has received numerous teaching awards. He actively consults on areas of ethics, compliance, corporate culture, integrity and whistleblowers and has written a book entitled, “The Value of Values: Leading with Purpose”.