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It’s been a sorry six months for spin. The Hutton inquiry is shining a light on the government and communications profession like never before. Meanwhile, redundancies, falling profits and the so-called creative accounting scams that precipitated the downfalls of Enron and WorldCom are adding to our growing lack of trust in public figures and business leaders. While we learn to believe less in what we are told, this growing lack of trust in public figures is a worrying trend.

This trend is not a recent phenomenon, but current events are throwing issues about trust into stark relief. At one extreme, the British Social Attitudes survey indicates that levels of trust have fallen by only 10 per cent over the last 40 years or so. A MORI poll shows that people in uniforms – nurses, doctors, firemen, the police – still tend to be the most trusted groups, with an approval rate of between 60-80 per cent.

However, trust in business in general is definitely declining. Those shoring up the bottom of both the British Social Attitudes and MORI polls, and the World Values Survey are business leaders, journalists and politicians. In the US, where businesses have traditionally been better received, trust has fallen to record lows. And across the EU, 54 per cent of people don’t trust big companies. In the UK, only one in four people say that they generally trust business leaders to tell the truth.

This is serious. Trust is social glue and a key element of high performance businesses – those that provide the environment where people can reach their potential, and where this shows positively on indices ranging from innovation rates to profitability.

The conclusions of research into 160 manufacturing companies by Aston University’s Professor Michael West accents the relationship between trust and the bottom line. Yet the same research also shows that only 5 per cent of the tracked organisations have created a high trust environment.

Small wonder then that NOP found recently that 80 per cent of British workers lacks any real commitment to their job. The consequence is that organisations slow down. A distrusting environment means it is harder to agree and implement decisions. People wait for directions and a blame culture inhibits individual initiative, making it harder for people to delegate and act with autonomy. But what does this all mean for finance directors?

The leader’s role in this current period of uncertainty is extremely important and subtly different to other economic periods. If profits are to be squeezed from falling sales and the business is to keep moving forward, then the standard advice is for leaders in the finance sector to actively listen to feedback from staff at all levels. Perhaps this has been the strategy before, and it is likely that for reasons including lack of trust, it won’t be the turnkey that is needed.

This is the problem. While the need for trust is increasing, people are unwilling to cede it. The example of Ka, the snake in Walt Disney’s Jungle Book, sings about trust in order to make Mowgli fall asleep so he can eat him later. Every child watching knows that Ka is lying. Like Ka, particularly in the US, successive high-profile business leaders have lied to their workers, investors and customers about how well they were running their businesses. Enron’s annual report for 2000 is a case in point.

To turn this round, we need to do something different. The solution is to take a more fundamental look at leadership, and not simply pay lip service to it.

It is clear that convincing stakeholders to trust you is probably the most important achievement for any leader. Leaders therefore need to introduce extrinsic, rather than intrinsic reasons for themselves and their firms to be trusted. Extrinsic reasons for trusting someone include what other relationships they are embedded in; why they honour their promises, and what other people have said about them.

From interviews and focus groups conducted recently by The Campaign for Leadership, one of the main changing roles of the leader was found to be their greater need for awareness of their organisation’s external environment, and the implications for the organisation. These changes can disturb the organisation’s ability to adapt and focus, as well as hinder communication and innovation, ultimately eroding confidence in the management team.

Leaders must also be aware of their trust relationship with other stakeholders, like consumers and organisations with whom they have a strategic alliance. But this is more than CSR, of which many people are dubious. Too many leaders fail to recognise others’ ability to show leadership at all levels in our communities and organisations. They don’t support individuals who want to take responsibility for leading differently, and they do not act as role models.

The issue then is one of expressing your values and ethics – the principles that drive you, and by which you stand and fall. Arguably where Enron, Ka and others failed is that their words didn’t match up to their actions. A leader’s beliefs – their ‘being’ – have to be aligned demonstrably to their actions – their ‘doing’ – whether talking to colleagues or engaging with local community leaders or strategic partners. The end results are relationships based on trust. But where to start?

A good point at which to begin building the foundations of a trusting relationship is to articulate your beliefs. And in so doing, to inspire and give hope to the people you are relying on to help drive your organisation through continuous change.

The next stage is to constantly back your beliefs with actions. One element of this is challenging those ‘traditional’ leaders who have stood centre stage and watched while trust has been eroded. They should be pressurised to change their leadership behaviour, or else step aside for leaders who demonstrate a more appropriate way of leading that embraces belief, action and ultimately trust. If traditional leaders decide to stay, they should lead the way in setting and maintaining ethical and visionary standards, and help encourage and identify more of the same in other and future leaders.

From the scorched earth of the past decade, new leaders will have to grow and flourish if our organisations are to be high performing. They need suitable conditions and support to do this. It is up to each of us to encourage and create the right environments for this to happen in the workplace; and to say what we believe, and do what we say. 

(This article was originally published in Director of Finance 2004 edition)