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Trusting Business Leaders is at a Low – a LONG Post!

By on September 14, 2011 in Executive Excellence, Leadership Books, Perspectives, strategy, Trust, Uncategorized, Values

I have spent considerable time speaking with business friends about trust in leaders.  These conversations were prompted by the 10-year annual Edelman Trust Barometer survey in 2009.  They sampled 4,475 opinion leaders in two age groups (25-34 and 35-64) in 20 countries, a 30-minute telephone survey of “informed publics.”  (www.edelman.com/trust/2009/)

One disturbing finding that led to these conversations is that only 17 percent of the 35-64 year old “informed publics” trust information given by a CEO about his or her company.  This was six-year low.

For better or for worse, my understanding is that, in terms of influence, it only takes about 15% of people agreeing to anything (a philosophy, a code of behavior, a belief) to change the tide and move the masses.  Robert Porter Lynch, who has done considerable research in the area of trust and leaders, posits that trust is the bedrock of democracy, and when our trust is damaged, we are doing damage to the very principles upon which this country is founded.  We are precipitously close to that tipping point.

Since I coach CEOs and their executive teams, I was personally appalled.  But more appalling than the sense that our business leaders have behaved badly and deserve this reputation — some do and most don’t — is my concern that all CEOs have been painted with the same brush as those who deserve to be penalized and put away for a very long time, damaging others’ reputations by association.  There are leaders who do wrong intentionally, and others who are simply careless.  In a Financial Times some months ago, for example, BP’s CEO Tony Hayward admitted that they were not prepared for a category disaster he called “low probability, high risk.” Indeed.

BP, after an estimated $20 bn leak with costs to our environment and the human psyche that are unconscionable and immeasurable finally began looking into their strategy and tools to resolve such risks.  Tony Hayward is not a bad person, but inadequate thinking and planning has exacted an extraordinarily high toll.  Regardless, whether they make a mistake of wrongful thinking, or they are out to get us as was the case with Bernie Madoff, bad decisions of those in power cost us trust in leaders inclusively.

A MUST READ for every executive is Herb Baum’s The Transparent Leader, in which Baum said, “A lot of executives who made headlines (because of a scandal) were just plain white-collar thieves who deserved to do time.  And there were others who were basically good people who made compromises when they shouldn’t have.  They stretched the truth because they thought they had to, and they made some business decisions that were short on integrity. They had risen to leadership positions, but they failed because they didn’t understand how to be open with various constituents and they were unable to build a culture base on trust in the organizations they led.”

Let’s assume leaders should do more to warrant our trust.  BP’s Hayward has admitted the criticism of the oil spill and subsequent inability to stop the damage was ‘entirely fair.”  Ok, it was an event, a mishap.  Let’s look at an ordinary, reoccurring factor.  Who is culpable, for instance, for extraordinarily high CEO wages?   Considerable finger wagging has been going on in the press at CEOs about this.  It isn’t the CEO who sets his or her own salary; it is the board of directors.  Yet they are invisible to the press in these stories.  So often our assumptions lead us to conclusions that malign others without full consideration for the facts.  This disturbs me greatly but I know I have done it, too.  Why is that?

Walking with a friend, I mentioned a situation that was just this kind of wrongful maligning, and she asked me, “How long does it take to find a witch?”  She was alluding to the days in Europe from 1480 to 1700 when legally sanctioned and official witchcraft trials resulted in from 40,000 to 100,000 executions. It was decided someone was a witch, and next thing you know that person was burned at the stake.

While we’ve moved beyond flagrantly burning people at the stake, we still do character assassinations every day, in the form of judgment and gossip.   Some of these finger wagging and witch-hunting and broad-brush painting are projections — making someone else responsible for what we, ourselves, don’t want to be responsible.

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Investor Trust in Equity Markets may not be Saved by the Dodd-Frank Bill

By on January 24, 2011 in Leadership Books, Perspectives, Trust


At a pre-conference session of the Corporate Governance Conference held annually by the Corporate Director’s Forum in San Diego I attended a panel discussion on the regulatory landscape. Here, Lynn E. Turner, Senior Advisor to LECG, an international forensics and economic consulting firm, and former SEC Chief Accountant, shares an informative perspective of what American investors see. My observation is that regulators think they can fix this view with regulation.

If investors do not invest in equities — and they are not — it is not good for the country. They are not investing because we have a real problem with trust. According to Turner, “They are not going to read the Dodd- Frank bill, but they know what they see and they see a rigged system because offenders are not prosecuted.” Enforcement has been non-existent.

Why, you might ask, is that so? Because US District Court Judges are political appointees and it is not good for their political career to offend the politicians who appointed them, so they throw these cases out of court.

One that did make its way to court was the trial the SEC brought before Judge Rakoff to penalize Bank of America. Rakoff resonated with the sentiment of the public in his view of the SEC’s case — why bring the case against the bank and not the executives? Why should the buying public have to pay AGAIN for potentially scandalous behavior of individuals?

Judge Rakoff refused to approve a $33 million deal that would have settled a lawsuit filed by the Securities and Exchange Commission against the Bank of America. The lawsuit alleged that the bank failed to adequately disclose the bonuses that were paid by Merrill before the merger, which was completed in January at regulators’ behest as Merrill foundered. He accused the S.E.C. of failing in its role as Wall Street’s top cop by going too easy on one of the biggest banks it regulates. And he accused executives of the Bank of America of failing to take responsibility for actions that blindsided its shareholders and the taxpayers who bailed out the bank at the height of the crisis.

You can read more about Rakoff’s treatment of the Bank of America case, which was thrown out of court (New York Times).

Two last comments and a question before sharing the last video clip of Turner’s comments. Many people believe that the Dodd-Frank bill was created by the same men who caused the financial melt-down in the first place, and that the players in Washington DC haven’t changed, so we’re still commandeered as a nation by the same thinking that got us here in the first place. What do you think?

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Trust in Leaders is at an All-Time Low

By on December 9, 2010 in Business, business planning, Leadership Books, Perspectives, strategic planning, strategy, Trust, Values

I have spent considerable time speaking with business friends about trust in leaders.  These conversations were prompted by last year’s results of the 10-year annual Edelman Trust Barometer survey.  They sampled 4,475 opinion leaders in two age groups (25-34 and 35-64) in 20 countries, a 30-minute telephone survey of “informed publics.”  (www.edelman.com/trust/2009/)

One disturbing finding that led to these conversations is that only 17 percent of the 35-64 year old “informed publics” trust information given by a CEO about his or her company.  This is six-year low.

For better or for worse, my understanding is that, in terms of influence, it only takes about 15% of people agreeing to anything (a philosophy, a code of behavior, a belief) to change the tide and move the masses.  Robert Porter Lynch, who has done considerable research in the area of trust and leaders, posits that trust is the bedrock of democracy, and when our trust is damaged, we are doing damage to the very principles upon which this country is founded.  We are precipitously close to that tipping point.

Since I coach CEOs and their executive teams, I am personally appalled.  But more appalling than the sense that our business leaders have behaved badly and deserve this reputation — some do and most don’t — is my concern that all CEOs have been painted with the same brush as those who deserve to be penalized and put away for a very long time, damaging others’ reputations by association.  There are leaders who do wrong intentionally, and others who are simply careless.  In a Financial Times some months ago, for example, BP’s CEO Tony Hayward admitted that they were not prepared for a category disaster he called “low probability, high risk.” Indeed.

BP, after an estimated $20 bn leak with costs to our environment and the human psyche that are unconscionable and immeasurable finally began looking into their strategy and tools to resolve such risks.  Tony Hayward is not a bad person, but inadequate thinking and planning has exacted an extraordinarily high toll.  Regardless, whether they make a mistake of wrongful thinking, or they are out to get us as was the case with Bernie Madoff, bad decisions of those in power cost us trust in leaders inclusively.

A recent release that should be a MUST READ for every executive in the world is Herb Baum’s The Transparent Leader, in which Baum said, “A lot of executives who made headlines (because of a scandal) were just plain white-collar thieves who deserved to do time.  And there were others who were basically good people who made compromises when they shouldn’t have.  They stretched the truth because they thought they had to, and they made some business decisions that were short on integrity. They had risen to leadership positions, but they failed because they didn’t understand how to be open with various constituents and they were unable to build a culture base on trust in the organizations they led.”

Let’s assume leaders should do more to warrant our trust.  BP’s Hayward has admitted the criticism of the oil spill and subsequent inability to stop the damage was ‘entirely fair.”  Ok, it was an event, a mishap.  Let’s look at an ordinary, reoccurring factor.  Who is culpable, for instance, for extraordinarily high CEO wages?   Considerable finger wagging has been going on in the press at CEOs about this.  It isn’t the CEO who sets his or her own salary; it is the board of directors.  Yet they are invisible to the press in these stories.  So often our assumptions lead us to conclusions that malign others without full consideration for the facts.  This disturbs me greatly but I know I have done it, too.  Why is that?

Walking with a friend, I mentioned a situation that was just this kind of wrongful maligning, and she asked me, “How long does it take to find a witch?”  She was alluding to the days in Europe from 1480 to 1700 when legally sanctioned and official witchcraft trials resulted in from 40,000 to 100,000 executions. It was decided someone was a witch, and next thing you know that person was burned at the stake.

While we’ve moved beyond flagrantly burning people at the stake, we still do character assassinations every day, in the form of judgment and gossip.   Some of this finger wagging and witch-hunting and broad-brush painting is projection — making someone else responsible for what we, ourselves, don’t want to be responsible.

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