Loss of Confidence

Public trust in Institutions have, by many measures been in decline for more than a decade. Part of the reason for this decline concerns public faith in honest and transparent leadership in today's climate. Knapp describes this development as the "Institutional Trust Deficit" (1) and quotes Amartya Sen the Nobel Peace Laureate who compares ethics to oxygen; "We notice only when it seems to be in short supply". (2) Subsequently across many sectors including Government departments, the private sector, the public sector, the police, armed forces and even the church great efforts are being made to raise standards as research points to a widely held perception of a shortage of ethics.

A country survey of the World Economic Forum 2004 (3) found that the majority of those surveyed had no trust in important institutions to act in the best interests of society. Quite worryingly an earlier study by the same organization found that leaders of institutes enjoyed even less trust than the institutions themselves. Some of the reasons put forward for this loss of trust included corporate scandals, sexual misconduct and non-profit malfeasance. (4)

Interestingly there is substantial evidence that ethical failures by institutions or leaders within those institutions are occurring no more frequently today than in the past decade. However because of twenty four-hour broadcast news via multiple outlets and the vast global pipeline of information opened up by the “Internet” people are much better-informed and local scandals are quickly transferred into national and sometimes international news.

It is against this backdrop of a seemingly insatiable appetite for public news that those with senior responsibility in such organizations must calculate the damage that can be caused either to their own integrity, or the reputation of the organization they represent, if they choose to act inappropriately. Therefore the challenge is to maintain high corporate and personal standards whilst coming to terms with institutional change as traditional institutions try to cope with a post modern Western Society where people are becoming increasingly mobile and are frequently changing jobs, homes and other affiliations.

However what remains certain is that trust remains essential to democracy and free enterprise and a loss of trust is potentially damaging to the effectiveness of both institutions and leaders. Indeed the ethics connection is seen most clearly in the World Economic Forum's finding that ethics is deemed by respondents to be the most important factor in establishing and maintaining trust. Asked to name the attributes necessary for them to trust leaders respondents in fifteen countries overwhelmingly selected-Honesty (49%). Other important attributes were Vision (15%), Experience (12%) Intellect (10%) and Compassion (5%). Conversely the characteristics or behaviour most damaging to trust were-Not doing what they said (45%) Self Interest (28%), Secrecy (11%), Arrogance (8%) and Character flaws. (5)

We can therefore safely conclude that there is a strong link between trust and the ethical conduct of leaders, specifically truth telling and promise keeping. Furthermore the “Ethics Resource Centre National Study of Ethics in the Workplace” found that employees who trust employers are significantly more likely:
A.To believe management has integrity and is fair, honest and
concerned about people.
B.To be committed to ethical practices in the workplace.
C.To share ethical concerns and report misconduct to management
D.To conduct themselves in an ethical manner in relationships with
co workers (6)

These recent findings have clear implications for leaders and research by Nahavandi has concluded that leadership failures can very often be attributed to a loss of trust. (7) This view is consistent with other thinkers who see trust as essential to leadership effectiveness. Rhodes and Wilson, for example, present a two dimensional model of trust comprising both intra follower (horizontal trust) and leader follower (vertical trust) both of which are produced by the leaders actions and his reputation for competence and ethics. They draw a simple but pointed conclusion,” This means that a leader lives or dies by his reputation" (8)

De-pree also cautions that reputation and trust are not automatic. He says, "It cannot be bought or commanded, inherited or enforced" Rather he contends, "It grows as a result of translating personal integrity into institutional fidelity and at the heart of fidelity lies an uncompromising virtue of truth telling and promise keeping that is enshrined into the character." (9) Subsequently the most effective and ethical leaders must therefore translate this understanding into action by the hard work of building reputation by consistently demonstrating trust whether in his/her personal or professional life.

There is growing evidence that social trust is giving way to distrust and previously trusted institutions are proving not to be as trustworthy as before. It therefore follows that public figures who compromise the integrity or the ethical standards of their respective organizations not only run the risk undermining their own reputations, but may also cause serious and long-term damage to carefully crafted corporate brands.


References


1. Knapp, J C. 'Leadership and the Crisis of Public Trust'. PhD thesis, Southern Institute for Business and Professional Ethics (US) undated.

2. Sen, A. Quoted in 'Business Ethics. A Matter of Good Conduct and Good Conscience'. Presented at Conference of the European Business Ethic Network, Budapest, August 2003.

3. Quoted in World Economic Forum Global Survey on Trust, updated 1 April 04

4. Quoted in World Economic Forum Global Survey on Trust, November 2002.

5. Ibid.

6. Ethics Resource Centre- National Business Ethics Survey. 'How Employees view Ethic in their Organization'. Quoted in Washington DC (2003).

7. Narvandi, A. 'The Art and Science of Leadership'. Upper Saddle River, New Jersey (2000).


8. Rhodes, C and Wilson, R. 'Leaders, Followers and The Institutional Problem of Trust'. Paper presented to the Trust Working Group Meeting. Russell Sage Foundation (1999).

9. De-Pree, M. 'Leading without Power'. Holland / Shepherd Foundation (1999).