Organizational Trust Is in a Perilous Place Right Now

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The global communications firm Edelman published their annual Edelman Trust Barometer in January. As usual, the report gave ethics and compliance officers much to consider, not all of it good. 

The Edelman report is a survey of people’s trust in various institutions, from government to business to non-governmental organizations. For 2020, it polled more than 34,000 people across 28 countries. The report itself has been published every year since 2000, making this is a deep, telling look at how much trust people place in organizations.

Globally, people are marginally more trusting than not: overall trust in institutions stands at 54, on a scale of 1 to 100. That’s up a measly one point from 2019, and two points from 2017. So we are moving toward greater trust, albeit in the smallest steps possible. 

Businesses Are Most Trusted by Their Own Employees

More relevant for ethics and compliance professionals is people’s trust in business. 

Globally, trust in business stands at 58%, up 1 point from last year. In the United States, however, trust in business fell by 4 points to 50% – which means business is teetering on the brink of being largely distrusted. In Britain, Japan, Germany, and South Korea, trust in business is already below that 50% threshold.

Everywhere you look, people fear that large organizations are either uninterested in or incapable of helping society to be better, except for their employer 

The one bit of good news is that people’s trust in their own employer is quite high: 76%, up 1 point from last year. That’s nearly 20 points higher than their trust in any other type of organization.

This is an opportunity for ethics and compliance officers. Your employees are deeply suspicious of just about every organization they encounter, but not your specific one. So your goal isn’t necessarily to increase trust with your employees; it’s to keep it. 

How, exactly? That brings us to more findings in the Edelman report, which might be less comforting. 

Trust Is Built on Competence and Ethics

That’s one of the headlines from the Edelman report, and it captures things nicely. People need to see that the organization’s ethical values are in step with their own, and that the organization upholds those values while it does business. 

The bad news: nobody sees any organization, of any type, as both competent and ethical. 

Businesses come close. According to the Edelman survey, people do believe businesses are competent (as opposed to NGOs, the media, and the government). However, a majority of respondents also consider them to be unethical. This has serious consequences for businesses seeking to build trust, as ethical drivers such as integrity, purpose and dependability were three times as important to respondents as competency in assessing an organization’s trustworthiness.

People Want to See Their CEOs Lead on Ethical Issues 

So how does a company dissuade people from that belief? The Edelman survey offers several possible answers: serve the interest of all stakeholders; include your employees in planning decisions; partner across institutions; pay fair wages; focus on retraining and education.

Above all else, CEOs must take the lead on ethical issues. That is what’s going to maintain your employees’ trust in your company. Employees want to see their CEOs lead on specific issues — climate change, income inequality, job security, immigration, and more — in part because they don’t believe that any other organization can. 

For example, 92% of Edelman survey respondents said it was important to them that their CEO speak out on social issues. Seventy-four percent said CEOs should take the lead on change rather than waiting for government to direct something. 

That puts a lot of burden on CEOs, who might not relish the prospect of picking sides in our deeply polarized society. But when we use phrases like “tone at the top” or talk about the need for CEOs to embody the company’s ethical standards — this is one example of what that really means. The CEO will need to define the company’s ethical priorities, and then work with other executives (including the compliance officer) to create policies and procedures that demonstrate those values in tangible ways.

And what happens if CEOs don’t do this? 

Well, employees are in a perilous place right now. Worldwide, only 47% of Edelman respondents believe they and their families will be better off in five years; in the United States, only 43% do. In 21 of the 28 countries surveyed (including the United States), a majority of respondents fear the future will leave them economically and politically behind. 

Everywhere you look, people fear that large organizations are either uninterested in or incapable of helping society to be better, except for their employer — where solid majorities do want their employers to lead, starting with the CEO.

Now imagine what happens if your company ignores that.

Imagine the training programs and executive messages employees will ignore. Consider the maddeningly exacting policies and controls you’ll need to implement to keep cynical, self-interested employees in line. Picture the blowback your company could face on social media from stakeholders that assume the worst about the company’s conduct (because assuming the worst is what people do when they don’t trust). 

That’s why thinking about organizational trust matters. That’s why it needs to be talked about in the C-suite and boardroom regularly. That’s why senior leaders need to work hard to assure everyone, inside the company and out, knows “the type of company we are.” Because without trust, everything else starts to unravel.


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