Why Boards Need to Show Respect

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Trust and confidence in a business takes years to build and can be squandered in seconds. That’s nothing new. What’s changed is that board members need to work harder to maintain trust than they have before. They have to show they respect their customers and stakeholders and are able to communicate with both transparency and authenticity. Silence and aloofness will just leave a business vulnerable to attack.

Sir Michael Lyons, Chairman of The English Cities Fund, a Criticaleye Associate and formerly Chairman of the BBC Trust, comments: “Anyone who understands the value of their brand will also recognise that maintaining public trust is a core business issue. Whether a Plc, a public body or even an individual, your brand determines who buys from you; how much they are willing to pay and their future loyalty… Putting a proper value on maintaining public trust is a job for both the CEO and particularly the board. It’s not a job to leave until difficult times are upon you.”

It’s certainly vital for someone like Jane Furniss, CEO at the Independent Police Complaints Commission. “Public confidence and trust is a real challenge for an organisation like ours,” she says. “One of the things we spend a lot of time on is the different audiences who need to have confidence that we’re doing our job without fear of favour to any one party and are relentlessly focused on the evidence and not on people’s personal interests.

“It’s more acceptable if our work is not liked by some people because of what we’ve found or not found, but what’s not good is if people think the way we’ve done our job isn’t fair or isn’t based on the evidence. It’s not just how we communicate the message but how we help people understand why we’ve come to those conclusions.”

Questions of perception, duty and responsibility have to be weighed up and failures are going to get punished. Michael says: “A company’s behaviour eventually determines the regulatory framework they live within, and nowhere is that clearer at the moment than for the newspapers following the [Leveson Inquiry]. Whether or not there is statutory regulation, they will be facing a tougher regulatory regime in the future as a result of abusing the trust that was given them.”

A catastrophic breakdown of trust, as witnessed in parts of the media sector and financial services industries, will take years to rebuild. Alison Carnwath, Chairman of commercial property company Land Securities Group and a Criticaleye Associate, says: “Banks are not trusted as they have treated customers and shareholders badly. They have sold unsuitable products and cost taxpayers money. No business wants to end up where they have been. Watch how they rebuild trust and ensure you never have to be in that place.”

So it is incumbent on CEOs to keep standards high. For Jane, this is especially important given the very human tragedies that often lead to IPCC investigations. “We’re currently doing a serious review with an independent panel of experts on how we investigate cases where people have died in custody,” she explains. “Because of the sensitivity of this issue and in response to the criticism that we and the police have received, we decided to launch this study. We’re consulting academics, politicians, lawyers, campaigners and, crucially, families of those who’ve suffered, and are seeking their views to help us understand what’s gone well and not so well and how we can improve the system, and we’ll publish that report.

“If you aren’t convinced that you are getting things right or if people believe you’re not getting things right, it’s really important to be transparent and not hide away. You need to engage with people and be non-defensive, even if you are being criticised from every corner.”

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The CEO cannot work in isolation when it comes to fostering trust. The tone at the top, as set by the executive team, must be consistent and authentic, but the non-executive directors also have a massive role to play here.

Alison says: “NEDs are witnessing at close hand in board meetings how a CEO behaves and talks about staff, shareholders and customers and his attitude to certain issues, and if they feel he is being neglectful or intolerant of certain people or issues then they have to try and steer him in the right direction.

“If you’re an experienced NED and you’re used to being in different business environments, you can see those companies that are prepared to modernise and those that are not prepared to embrace it and the new, more open society that we live in… You really can feel the culture of an organisation.”

Some of those businesses which haven’t taken this seriously, which see it as a distraction or some form of political correctness, are the ones which have ended up in trouble. Gary Kildare, Chief HR Officer at IBM’s Global Technology Services in New York, says: “It is more prominent today because of the significant economic, financial and social issues around the world which are negatively impacting citizens and employees.

“Businesses are very focused on maintaining, building or regaining trust. They are endeavouring to be more open; introducing or publishing codes of practice and conduct; aligning business strategies with leadership behaviour; getting more interested in client satisfaction studies and measurements; investing in corporate citizenship and appointing ‘chief trust officers’.

“It’s too late to think about what you should do when you are the headline in the news. It’s all much more than publishing annual reports, marketing, the AGM or having a website – business in general is becoming much more transparent.”

There’s no use trying to avoid this or think it doesn’t apply to you as a leader, although maintaining such openness can be arduous. Bruce Cox, Managing Director of Rio Tinto Diamonds, which is set to be sold by Rio Tinto, argues that trust is easier to achieve if there is ‘two-way communication’. Even though the exact future direction of the business he runs may not be clear, Bruce sticks to his view that it’s essential to keep talking with people and to be as transparent as possible.

“There’s a huge amount of change and uncertainty, so it’s more important that we do everything possible to maintain the relationship with our [employees] to keep that communication up,” he says. “If you’re not continually interfacing with various stakeholders they will begin to believe their own concerns are true rather than being rational about those concerns… [it’s important] there’s more human contact or more social interaction through… meetings where the stakeholders have an equal opportunity to talk and to contribute, rather than the manager or director communicating down.”

As ever, the organisations which have leaders who appreciate this will be better placed to succeed and make it through challenging periods of change. Peter Cheese, Chief Executive of The Chartered Institute of Personnel and Development (CIPD), says: “We need to be able to demonstrate to the wider public what is going on and how businesses are responding. We’re looking for more open, transparent leadership and moving on from old models of the past which were more about top-down control and management.”

Gary agrees: “Leaders should be concerned if the business feels too comfortable, routine or complacent. The role that they play is to ensure that there is robust professional challenge and no-one and no subject should be out of bounds to scrutiny on a regular basis.”

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