Aug 11, 2019

If bosses let trust die, there’ll be no way to prove the doubters wrong

written by Lisa Eason

Business is impossible without trust. Organisations cannot function if every action must be based on a legal contract, accompanied by suspicion of intent. There needs to be a presumption of trust and a sense of responsibility among management and staff towards customers, suppliers, investors, lenders and other stakeholders. However, commerce is ever more litigious and regulated, so maintaining a culture of trust is hard.

Who can we trust to inform us about the world? After all, we consume more news than ever. The media has more comment and opinion pretending to be factual reporting than in the past. I can remember when various publications were described as “journals of record”. It would be harder to call them that now.

Ferocious competition for eyeballs and advertising means that mainstream media must shout louder to gain attention. Social media and the rise of fake news add to the confusion.

Confidence and trust in the police and the criminal justice system is fragile. Even though overall crime rates appear to be stable in England and Wales, a sharp rise in online offences means that fewer crimes are being solved.

The cyber-security firm Norton claimed that 17m British citizens were victims of phishing, ransomware, online fraud and hacking in 2017 — costing us £130bn. A trivial proportion of these are solved by the police. Too much of their resources appears to be absorbed by identity politics. I think the issue is less about police honesty and more about effectiveness and an ability to adapt to 21st-century criminality. Also, unfortunately, an ever-larger proportion of the police budget is swallowed by pension obligations.

If you get ripped off or cheated, you inevitably behave more cautiously. It is easy to become mistrustful and shut down opportunities. It has been suggested that America became prosperous in the 19th and 20th centuries because entrepreneurs trusted strangers and did business far and wide across the country.

Southern European economies did not expand in the same way because individuals traded only with people from their local community, so restricting their markets. In my experience, corruption levels in countries such as Italy are significantly higher than in Britain, which feeds a mindset of scepticism and wariness, unless you are dealing with known parties.

I used to trust accountants and auditors implicitly. The fabled letters after a name — ACA, FCA, CA — always reassured me. I believed I was dealing with experts, but those qualifications can be a cover for misbehaviour of various sorts — embezzlement, laziness, incompetence. A sobering reminder that you need to scrutinise every individual and take nothing for granted.

I struggle to know who to trust when it comes to climate change. Do we trust politicians who call it a climate emergency, or activists such as Extinction Rebellion who would like to destroy the economy? All sorts of virtue-signalling environmentalists argue that we must stop using fossil fuels, give up meat and even refuse to have children.

I worry that the climate alarmists are unduly pessimistic and anti-business, and that global warming is used by some as a convenient stick with which to beat capitalism for purely political reasons.

The world will spend $162bn (£133bn) this year on subsidising renewable energy, while the Paris agreement on climate change will cost the world between $1 trillion and $2 trillion a year by 2030. Yet some say that neither of these policies will have a material impact on temperatures this century. Is this a wise use of money?

Ipsos Mori publishes an annual Veracity Index. The latest found that just 41% of people trust bankers, a mere 16% trust advertising executives — and only 34% trust business leaders. Compared with scientists, doctors and nurses, engineers and people in the armed forces, those in business are widely seen as pretty untruthful. Although this mistrust is not new, it should still prompt concern. If the public does not trust senior corporate figures, they may support policies that punish business.

Citizens are better informed about institutions, but at the same time they are mistrustful. There is more data and information freely available, but that very transparency — together with empowered consumers — means the public are increasingly demanding. For business, gaining and keeping trust is more of a challenge than ever.