MANY annual reports, my own included (embarrassingly), contain mission-like statements in their CSR blurb and elsewhere on ‘trust’ and ‘trustworthiness’. Many FDs accept this as normal, but do we give sufficient consideration to what this really means? I have my doubts. The FD must look at trust both as a projection of the organisation’s trustworthiness externally and as the processes of managing trust and ethics within the organisation.
Our natural leaning as professionals and as accountants is to focus on integrity, honesty and trustworthiness, and we demand the same from everyone else. But our appetite for strong financial controls must have a certain undermining effect on cooperation and collaboration, and causes some mistrust among our colleagues.
Some organisations are inherently mistrustful of themselves. For instance, I was once a divisional FD and my responsibilities covered African and Eastern European businesses where the cultural differences and an occasional propensity towards dishonesty called for stringent financial and management controls. To have relied upon trust in this case would have been illogical.
However, as the FD role has evolved and we have become more open, transparent, enabling and deeply embedded in our organisations, we have imposed our high ethical standards accordingly. Furthermore, we have led and encouraged our staff to do the same and to set good examples at all levels. Truthfulness and a no-surprises culture have become the norm.
Therefore, an improvement to the internal trust environment should be expected. Cost reductions and practices such as lean thinking and empowerment have led to a greater emphasis on trust. Unless the organisation is confident that its own internal culture for trust is robust, there is no real prospect for a convincing projection to the outside world that it is trustworthy.
The Guardian newspaper reported that public trust in business hit a five-year low in 2015, and questioned the banking and charity sectors. Trust in a particular brand is perceived by the public as relating to a trust of the entire responsibility chain from farmers to retailers, and not only to the retailer organisation. We can all quote examples of epic fails on the corporate trust front: Thomas Cook, BP and Starbucks come easily to mind.
Trust has to be earned and it is an outcome, not a message. Some have gone as far as to say that trust earned is inversely proportional to trust spoken. A crisis in trust can lead to a crisis in leadership, and the publication of ‘trust scores’ are irrelevant to the reader. Trust is so fragile that a single event can have a very damaging effect, but it takes significant sustained efforts to restore and rebuild it. The consequences can be severe.
The FD must focus on issues such as profit optimisation and maximisation, tax policies, remuneration and creating shareholder value in ethical ways. Certain organisations are obliged to consider purpose against profits, putting society and public benefit first and exercising a duty of candour. Accountability for their trustworthiness is the norm, and this is becoming increasingly applicable to all organisations in all sectors.
Considering a third aspect of trust, many FDs firmly believe that the public assumes that we are all trustworthy individual professionals and that the organised accountancy profession, with its strong regulatory structure, underpins this virtue. Sure, we are not on a par with estate agents or politicians, but I believe trust can be ascribed to us only as individuals. Our institutional membership (and cover) is insufficient for this purpose and should never be taken for granted as a substitute for exemplary behaviour.
Ultimately, though, trust is based on good faith. It is no coincidence that the US government sees fit to underpin the trustworthiness of its currency by including the mission-like statement ‘In God We Trust’ on all of its dollar bills. ?
The SFD wrote this after attending the annual PwC ‘Building Public Trust’ awards dinner, and visiting New York on business with his wife who rigorously tested the validity of the aforementioned statement about ‘trust’ on dollar bills