Archive for the ‘Trust’ category

The Week in Ethics: Corporate Citizenship in a Trump Administration

January 26, 2017

trump_white-house-photo-2017-featureCircumstances have caused an increasing number of companies and CEOs to speak out in recent years on hot-button social issues that previously weren’t part of traditional corporate citizenship. For example, nearly 400 companies filed an amicus brief on marriage equity with the Supreme Court, and employers and organizations banded together using economic leverage to fight legislation discriminating on the basis of sexual-orientation in IndianaNorth Carolina and Georgia. CEOs also weighed in against policies that exacerbated racial tension, like flying the Confederate flag and excessive use of force by local police.

This experience will serve corporate leaders well in navigating the challenges ahead. Issues of gender, race, sexual-orientation, pay equity, gun control and climate change are among the many hot-button social issues not going away – and likely to become more divisive — under the administration  of U.S. President Donald J. Trump. Corporate citizenship may be entering its greatest test.

Will a Trump presidency have the effect of muting CEO voices for fear of reprisals and Twitter attacks in a government now controlled by one political party? Or will corporate citizenship, acting out of a bigger sense of purpose, gain increased public trust and support?

The new landscape offers unknowns, perils and opportunity even as the administration’s agenda isn’t finalized. As president, Trump wields enormous power and a low tolerance for criticism which makes dissent tactically sensitive. Companies have a full plate keeping up with economic policies impacting their business. However, the hot-button social and environmental issues will create defining moments for leadership and corporate citizenship.

Three of my observations from recent corporate citizenship challenges: 1) how a company defines its purpose fosters momentum; 2) using economic leverage isn’t corporate bullying; and 3) it’s critical to speak up collectively for what’s right.

How a company defines its purpose fosters momentum

When company leaders see the purpose of business as delivering value to society and the environment in tandem with delivering financial results, things change. They create stakeholders, shifting into a more authentic and aware relationship with employees, customers and all those impacted by the business. It makes “community” personal and shapes values and behaviors around what enables the community to flourish or be harmed. If everyone has a stake in its success as stakeholders then what everyone does matters more. If a law or action discriminates against anyone in the community, for example, it is a catalyst in seeking out like-minded leaders to join in addressing the problem.

Using economic leverage isn’t corporate bullying

Under pressure from many business leaders, Indiana, former Governor Michael Pence, now Vice President Pence, backed down on provisions in the Religious Freedom Restoration Act that invited sexual-orientation discrimination. If the provisions weren’t dropped, Salesforce.com CEO Marc Benioff was the first to threaten economic sanctions  (like reducing investment in the state and offering employees a relocation option). Economic leverage, used in other states to address discriminatory legislation was called “corporate bullying”  by critics. As discrimination is illegal, how is it bullying for companies not to want their employees put at risk?

It’s critical to speak up collectively for what’s right 

Corporate Citizenship is an individual and collective act. It involves working continuously to reinforce ethical behavior in one’s own company and working collectively with other CEOs and like-minded organizations to address social and environmental concerns important to you and your stakeholders. There is strength in numbers, especially in uncertain and volatile times. Commenting  on corporate social activismBank of America’s  Chairman and CEO Brian Moynihan  said, “Our jobs as CEOs now include driving what we think is right. It’s not exactly political activism, but it is action on issues beyond business.”

Climate change is just one example of the persistence needed for progress. Climate action to create a low-carbon economy and support the Paris Climate Agreement faces a challenge getting President Trump’s commitment as he has called global warming a hoax. The most recent Gallup Poll on the subject, found 64 percent of Americans surveyed expressed some to great concern over global warming.

It is unclear how, if at all, dissenting popular opinion will impact the Trump presidency and social and environmental issues. He lost the election’s popular vote by an unprecedented 2.9 million ballots. The day after the Inauguration over 600 peaceful marches  – 400 in the U.S. cities and more than 200 around the world –  put the president on notice regarding grassroots support for human rights issues. The president’s popularity (and how it impacts members of Congress) will be a bellwether of his ability to get his agenda through. Likewise, a company’s continued strong financial performance creates latitude to address controversial social issues.

Those companies whose business purpose is more than just profit are likely to avoid ethical problems longer if federal regulations and enforcement are relaxed. According to the 2017 Edelman Trust Barometer, 75 percent of respondents agree that “a company can take specific actions that both increase profits and improve the economic and social conditions in the community where it operates.” While 53 percent believe the current overall system has failed them, many continue to have faith in business as an institution. “Among those who are uncertain about whether the system is working for them,” the survey found, “it is business (58 percent) that they trust the most.”

Whether or not progress can be made on hot-button social issues in a Trump administration, acting out of a bigger sense of purpose and drawing strength from collective voices will likely gain increased public trust and support of corporate citizenship.

Photo via Whitehouse.gov.

Gael O’Brien, a Business Ethics Magazine columnist, is an executive coach and presenter focused on building leadership, trust, and reputation. She publishes The Week in Ethics.

Reprinted with permission: This column was originally published January 23, 2017 entitled “Corporate Citizenship in an Age of Uncertainty” in Business Ethics Magazine.

Gael O’Brien, January 26, 2017, The Week in Ethics

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The Week in Ethics: Wells Fargo’s Next Move? 10 Suggestions

September 22, 2016

Update: See my 12/10/16 Business Ethics column on Where Wells Fargo Goes From Here .

Update: In October 2016 Timothy Sloan replaced Chairman/CEO John Stumpf, becoming CEO and President. The chairman role was split and given to independent lead director Stephen Sanger.

Update: September 27, 2016: Wells Fargo Independent directors issued a statement  they will lead an investigation into “the bank’s retail sales practices and related matters” with the Board’s HR Committee and independent counsel. Chairman/CEO John Stumpf to forfeit $41 million unvested equity awards and “will forgo salary during the investigation.” The U.S. House Financial Services Committee will hold a hearing on bank’s “unauthorized customer accounts” on 12/29/16.

How will Wells Fargo resolve the ethical and culture issues it faces? And, how will it move beyond a poor showing at the Senate Banking Committee hearing and start to rebuild trust? First some background. Then 10 suggestions.

The best thing a CEO with strong convictions about the “rightness” of his/her own position can do when embroiled in a crisis is to spend time with trusted sources (inside or outside their company) who see things very differently. Being open to these viewpoints and questions iphone-pictures2-222and multiple perspectives raised make it harder for  CEOs to stay wedded to their position. However, once a CEO is under fire the temptation to stick with like-minded people can increase. What’s lost then is stimulation to think deeply about different aspects of an issue to gain new insights and awareness that enable developing alternatives legitimately aligned with values. Being stuck in “rightness” can lead to error blindness, a term popularized by Kathryn Schulz  who points out, “Trusting too much in feeling you are on the right side of anything is dangerous.”

It can lead to decisions that put a CEO on the defensive in front of a U.S. Senate hearing, as John Stumpf Chairman and CEO of Wells Fargo experienced September 20, 2016 testifying before the U.S. Senate Committee on Banking, Housing & Urban Affairs.

Stumpf was questioned about the bank’s unauthorized accounts and allegations of a pressure-cooker sales culture which became public in 2013 (Los Angeles Times story) and continued. Wells Fargo has fired 5,300 employees, paid a fine, faces an investigation into its sales practices by New York and California federal prosecutors and can anticipate an upcoming hearing by the U.S. House Financial Services Committee in addition to follow up from the Senate Banking Committee. Earlier this month The U.S. Consumer Financial Protection Bureau filed a consent order outlining findings of the bank’s “improper sales practices”from 2011 to 2016.

A few days before the Senate hearing Stumpf, in an interview, disputed Wells Fargo has a culture problem. He maintained that stance with Senate committee members, while indicating changes the Bank planned to make. However, the bipartisan committee was united in criticism that Stumpf, the Board and senior leadership hadn’t gone far enough, fast enough and weren’t showing accountability. From the Republican Committee chair to Democratic challengers, Senators didn’t buy that the bank’s culture isn’t an issue.

Where does this leave Wells Fargo? Anyone who has been through corporate crises — as I and many others have — knows that criticism from outsiders is hard to take. However, there are huge pitfalls if Mr. Stumpf stays locked in the “rightness”of his position (in spite of his 30 plus years service at Wells Fargo, presiding over several of its acquisitions and knowing his industry and company better than outsiders).

His performance at the Senate hearing this week indicates his time has been spent with legal and public relations teams and like-minded insiders. Getting out of a crisis, turning around a culture and re-earning political and public trust, doesn’t happen by working harder with the same mindset. (The much touted definition of insanity is doing the same thing over and over and expecting different results.)

I’ve limited myself to 10 suggestions for Wells Fargo to support the start of a turnaround:

  1. The board should appoint a new chairman — an independent director — separating the role from the CEO for many reasons including signaling stronger board governance.
  2. The board should immediately decide about claw backs related to compensation of former head of community banking Carrie Tolstedt, Stumpf and any others. As part of re-earning trust, all their actions should be transparent and well communicated.
  3. The board should direct Stumpf and his team to meet with Wells Fargo’s ethics and compliance teams and risk officers to discuss/evaluate ethics, compliance and risk operations for strengths, weaknesses and safeguards to better integrate sales and all business strategies with corporate values and prepare a report for the board.
  4. The compliance and ethics leaders (and C-suite leader to whom they ultimately report) should initiate meetings with leaders of the Ethics & Compliance Initiative and the Society of Corporate Compliance and Ethics to address best practices, implementation challenges and examples where ethics and compliance leaders weigh in on business strategy discussions in sales and all areas.
  5. The board and senior management should identify outside experts to discuss how to  realign authentically culture around values. A place to start is the nearby Markkula Center for Applied Ethics.
  6. Stumpf and his management team should become acquainted with Margaret Wheatley’s concept of self seal (the rightness of one’s position), Kathryn Schulz’ TED Talk (error blindness) and Margaret Heffernan’s  Willful Blindness for starters. These are lenses that encourage conscious and unconscious unethical behavior.
  7.  A cross-functional team of senior leaders with ethics and compliance leaders should review the company’s five primary values; for each, identify five or six specific expected behaviors to be incorporated into company policy and discussed in ethics training and performance reviews. Currently, the values are too abstract.
  8. Under the value “Ethics” the company says “We strive to be recognized by our stakeholders as setting the standard among the world’s great companies for integrity and principled performance. “This should become a business objective with Board and CEO focus to keep this commitment at the center of the turnaround’s activities.
  9. At the upcoming House Financial Services Committee hearing, Stumpf and those testifying can start rebuilding trust by being fully prepared to answer questions directly and completely, having with them information relevant to committee questions. Stumpf should also make himself available to Senate Banking Committee leadership to make sure information provided since that hearing addressed open questions.
  10. Trust is a relationship where “integrity” and “principled performance” are realities, not marketing slogans. In relationships with employees, customers, customers affected by unethical actions, employees pressured by aggressive sales tactics, Wells Fargo leaders have to admit what went wrong and make systemic changes. A start is to amend the vision statement that says “We want to satisfy our customers’ financial needs and help them succeed financially” and add “in ways that build lasting relationships of trust and integrity.”The Week in EthicsGael O’Brien, September 22, 2016Gael O’Brien is The Ethics Coach columnist  for Entrepreneur Magazine. She is also a columnist for Business Ethics Magazine where her September column is “One man’s Leadership Toward a Goal: ‘The Great Mission of Business Ethics.'”

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The Week in Ethics: The Way Forward from Public Shaming

July 15, 2015

iPhone April 11, 2014 272 Students in a middle school painted words important to them on rocks placed under a tree. “Patience,” “courage,” “strength,” and “peace” were scattered under the limbs. However the lineup of a yellow heart, “tolerance” and “healing” held my eye during a walk in 2013; they were an antidote to the lack of humanity words as weapons cause.

I thought of those rocks this week after reading So You’ve Been Publicly Shamed, a new book by journalist Jon Ronson. He recounts recent examples of how far an online posse of righteous shamers can go condemning others’ ethical failings, judgment errors or offensive attempts at humor. Among the stories of social media shaming that Ronson includes are journalist Jonah Lehrer’s plagiarism, the racist-interpreted “joke” tweet of PR executive Justine Sacco and the obscene gesture in a photograph in Arlington National Cemetery Lindsey Stone posted of herself on Facebook.

Social media has a piranha capacity to feed off self-sabotage. Rationally, authors know plagiarism is an ethical time bomb, just as news anchors understand lying and distorting facts destroy credibility (the problems of Brian Williams erupted after the book was written). And no one should be surprised that Twitter and Facebook accounts don’t guarantee quiet repositories for acting out unfiltered attempts at humor.

However, not understanding the consequences of enraged social media is to be in denial over the potential consequences of losses — in jobs, trust, reputation, safety (as attacks cut more deeply personal) and even one’s life. It is a double-sided ignorance: Not seeing the piranha waits or recognizing if you and the piranha have become one.

Ronson, writing about the impact of the public shaming on Lehrer, explained:

“People were very keen to imagine Jonah as shameless, as lacking in that quality, like he was something not quite human that had adopted human form. I suppose it’s no surprise we feel the need to dehumanize the people we hurt — before, during, or after the hurting occurs….In psychology it’s known as cognitive dissonance. It’s the idea that it feels stressful and painful for us to hold two contradictory ideas at the same time (like the idea that we’re kind people and the idea that we’ve just destroyed someone.)”

Ultimately, shaming, Ronson writes, dehumanizes the onlooker as well as the person being shamed.

Shamers get trapped in feedback reinforcement says documentary filmmaker Adam Curtis , whom Ronson quotes. That process, Curtis points out: “… locks people off in the world they started with and prevents them from finding out anything different.”

A world of instant reaction means what we put out on social media stands alone without context or qualification. And rather than our comments accepted as random orphans of thought by people who know us and make allowances, strangers not in our circle can weigh in. To them, whatever we say or do is seen as a representation of who we are. It creates an accountability we dodge at our peril. Ideally, knowing this allows us to operate with more attention to our emotional intelligence — particularly our self-awareness, self-regulation and empathy.

As for viewers, instant reaction triggers instant judgments, often building off the tone of comments that have gone before. If reaction becomes outrage, are we even aware when it crosses over into shaming, bullying, threatening and deconstructing… fueled by assuming the other person “deserves” whatever we volley at them from behind the net of our anonymity? The irony is that our own thoughtlessness, insensitivity and capacity to injure can occur with the greatest frequency when we are convinced of the rightness of our own point of view.

In Dignity: Its Essential Role in Resolving Conflict, author Donna Hicks writes that while people have to earn respect through behaviors and actions, “dignity is a birthright” that everyone deserves. “Treating people badly because they have done something wrong only perpetuates the cycle of indignity,”she writes. “What is worse,” she continues, “we violate our own dignity in the process. Others’ bad behavior doesn’t give us license to treat them badly in return.”

“Dignity” — honoring one’s own and others –an enduring antidote to support diversity of opinion and our humanity.

The Week in Ethics

Gael O’Brien, July 15, 2015

Gael O’Brien is The Ethics Coach columnist for Entrepreneur Magazine. She is also a columnist for Business Ethics Magazine where her July column is “Why More Companies Are Speaking Out on Social Issues.”

 

 

 

The Week in Ethics: How Market Basket’s Board Misread Employee Engagement

July 26, 2014

In a battle of cousin against cousin, how important is the culture of a family owned business?  Thousands of voices among the 25,000 employees and the customers who shop at the 71 New England locations of Market Basket (a supermarket chain with $4 billion in annual sales) have made clear in their rallies and online petitions that culture does trump everything.

They are demanding the reinstatement of former CEO Arthur T. Demoulas ousted last month by his cousin Arthur S. Demoulas and a majority of the board now controlled by him.

It is hard to imagine employees of Goldman Sachs, or most other companies for that matter, taking to the streets and putting their jobs on the line in support of an ousted leader. Or that customers would also stand up to fight for the value they received.

However, employees on a Save Market Basket Facebook page align with customers and vendors saying “Together We are Market Basket.” They took to Facebook to make clear they will refuse to work for anyone beside the ousted Demoulas. While the impact of the protests has huge business implications (reports indicate business was down 70 percent this week), it also demonstrates what employees are willing to risk for jobs they love and a leader who inspired the culture behind it.

As a result of protests this month, store shelves are depleted, deliveries aren’t made, and customers are staying away at the request of employees to put pressure on the board to rehire Arthur T. Demoulas. The drama continues to escalate as the board already hired two co-CEOs to replace him, the new leadership team has fired some employees for their role in the protest, and the ousted CEO made an offer to buy out his cousin and other family members. The board said in a statement July 25, 2014 that it will review Arthur T. Demoulas’ bid and others they receive, but they expect all employees to return to work (promising there will be no retaliation for the protests).

Current and former Massachusetts and New Hampshire state and local elected officials praised the company as a leading corporate citizen with most announcing support for the employees’ position:  The Lowell Sun reported that a statement by a number of officials said in part: “…the leadership of Arthur T. Demoulas is the reason Market Basket has been able to keep prices low while delivering quality products to mainly under served areas. The current actions of the board and officers is one motivated by greed and will only serve to destroy the legacy the Demoulas family has worked generations to establish.”

The “good guy” stories that employees have shared about the former CEO reaffirm what they say it felt like to work for a company where they felt respected — paid more than industry average — and part of a culture where they were seen, heard and cared about. Employees give Arthur T. Demoulas high marks for walking the talk about what it means to be a family business.

Interviewed at rallies, employees gave examples of things Arthur T. Demoulas had said or done that mattered: he remembered employee names, knew who had a child or spouse with a health crisis and would seek that employee out in store visits to see how things were going and then remember the conversation the next time.

Customer and employee loyalty is in short supply in most businesses, especially where relationships are simply transactional. When a leader makes it more than that, he or she can inspire trust, allegiance and transform how those who work and shop there experience a business. It can feel like community.

Market Basket under Arthur T. Demoulas apparently demonstrated it was a business that had soul.

In a tug of war of competing visions, Market Basket’s new board majority misread how compelling soul was to employees and customers. Or without it just what it is they will have to sell.

The Week in Ethics

Gael O’Brien, July 26, 2014

Gael O’Brien is The Ethics Coach columnist for Entrepreneur Magazine. She is also a columnist for Business Ethics Magazine where her July column is “American Apparel: Sex, Power and Terrible Corporate Governance.”

The Week in Ethics: Why Purpose Matters to Leaders

January 24, 2014

Leaders who unite their teams around a purpose beyond creating profit redefine what is possible. They show a road map for how collectively each person can have a positive impact on customers, an industry, community, and society. The lens these leaders hold up allows individuals to see how they can make a difference, a key element in employee engagement.

We don’t hear a lot about companies that are focused on a bigger purpose because they are far less likely to derail and become headlines in scandals or crises. They are grounded by company values which creates a common language and sense of “we,” which is a ballast in the constant change of our unpredictable world. Unilever and its Sustainable Living Plan is an illustration of purpose in action that is part of a business strategy. It sets out a plan that expects the company to double in size while also decreasing its environmental footprint and increasing the company’s positive social impact.

Business can no longer afford to be a bystander,” according to Unilever’s CEO Paul Polman, “content to sit on the sidelines doing the minimum necessary to acquire its ‘license to operate.'” Polman is also one of the founding leaders of the B Team, a global initiative calling for a new kind of leadership — more inclusive and driven by a moral compass. The B Team seeks to redefine obligations to stakeholders — replacing maximizing profit with a focus on people, planet and profit.

The “business as usual” short-term profit lens has spewed out all kinds of red flags morphing into the recent financial meltdown among other problems. Last fall, a Washington Post column “How the cult of shareholder value wrecked American business” addressed the “self-reinforcing cycle in which corporate horizons have become shorter and shorter” with reduced CEO tenures and patience for the long-term, as well as the decreased average time stocks are held (now less than six months).

The irony, columnist Steven Pearlstein wrote, is that the focus on maximizing shareholder value hasn’t actually done that much for shareholders.  “My guess,” he said, “is that it will be a new generation of employees that finally frees the American corporation from the ­shareholder-value straightjacket. Young people — particularly those with skills that are in high demand — today are drawn to work that not only pays well but also has meaning and social value.”

The push for purpose has many advocates in addition to Gen Y employees. The impact social entrepreneurs are having on creating positive social change as well as global giants like Unilever demonstrate that innovation, financial gain and societal benefit can fuel each other. Research also supports that purpose is as great a motivator as profit as Daniel Pink pointed out in Drive.

Purpose matters.

Inspired leaders know, says Simon Sinek, that “people don’t buy what you do, they buy why you do it.”

The Week in Ethics

Gael O’Brien, January 23, 2014

Gael O’Brien is The Ethics Coach columnist for Entrepreneur Magazine. She is also a columnist for Business Ethics Magazine; her December 2013 column is “Why Do Good People Do Bad Things? The Role of Spiritual Intelligence.”