It’s a matter of trust

A recent sentiment survey of Australian financial services executives found ethics, being in sync with customers’ interests, and capability and competence to deliver are the three most important factors influencing trust.

As the backwash of the global financial crisis finally hits Australia, the Hayne Royal Commission into financial services is examining a sense of distrust and highlighting the absolute need to act. In fact, trust, is in many ways, entirely predictable.

The industry therefore has no choice but to realise, that it is only when an organisation’s behaviours and practices deliver fair and suitable outcomes for customers, employees, suppliers and markets, that leaders can begin to rebuild and manage trust to achieve customer loyalty and resilience.

But you cannot build and manage what you cannot measure. And currently most measures of trust describe the past. While the results may be insightful, it is difficult to use them to inform sustainable organisational responses.

Measurement must enable both design and management

Step 1: Develop a working definition of trust. Our definition is that trust is the result of promises made, and only accrues when we consistently keep those promises. This gives us a clear focus with simple, workable assessment methods.

Step 2: Know what promises you make. Without doubt an organisation can’t avoid making promises, whether implicit or explicit, as all products and services represent a promise of suitability, value and fairness. The question is then whether you can keep your promises and leads on to the following.

Step 3: Identify what interferes with your ability to keep your promises.

1. Ethics: An organisation must be led and managed by people who want to keep their promises. Products and services must not be fraudulent or misrepresentative. Ethical outcomes are good, right and fair. So the first condition to trust and so trustworthiness is ethics.

2. Capability: Years of research and consulting in the field of organisational ethics have led me to understand that ethics in itself, is not enough. Most organisational leaders have ethical intent, but their organisation can lack capability. The systems, processes and even people may be inadequate to keep your promises. The second condition of trustworthiness is capability.

3. Alignment: When considering commercial trustworthiness, ethics and capability aren’t enough. Becoming the conduct risk officer for a major banking group drove home the message that in a commercial context, there is a third piece of the ethics and capability puzzle. That is that ensuring the company’s and its customers’ goals are aligned.

Did you know?

Trustworthy organisations are better equipped to be agile and responsive to opportunities. And that high-trust companies are more than two and a half times more likely to be high performing revenue organisations than low-trust companies? (Harvard Business Review, 2016).

Trustworthy organisations also have the values, platforms and products to help them be better at surviving shocks compared with those organisations without them. Employees at high-trust companies report: 74% less stress, 106% more energy at work, 50% higher productivity, 13% fewer sick days, 76% more engagement, 29% more satisfaction with their lives, 40% less burnout than employees at low-trust companies (Harvard Business Review, 2017 – The neuroscience of trust).

Five key questions for every organisation to ask

#1 How do you prioritise your customers and their experience?
  • Do you give someone senior in your organisation the role or mandate to advocate for the customer?• Do you understand the outcomes for customer when your services are rendered, and products are sold?
  • Do you ensure customer complaints are adequately captured and analysed with root causes in mind?• Are you making the most of digital technology to empower customers and generate good transactional records and other important data?
#2 How do you value employee behaviour?
  • Have you properly defined what good behaviour should look like for your employees?
  • Do you measure how your employees live their values and contribute to your organisation’s culture?
  • Do you provide employees with safe and effective whistle-blowing facilities?
  • Do you ensure that all rewards and incentives encourage ethical conduct and avoid conflicts of interest?
#3 How do you build and maintain good business partnerships?
  • Have you defined what good should look like for your business partners and 3rd parties that distribute your products and provide your services?
  • Have you enhanced your monitoring and supervision practices to assess conduct risks and opportunities in your partner network?
  • Do you hold your partners accountable for their business and market conduct?
  • Have you invested in digital tools to make it convenient for your partners to do business with you?
#4 How do you connect the dots for your executive team and board?
  • Have you developed accurate and relevant dashboards for oversight and reporting on conduct?
  • Have you created dedicated conduct management, governance capability and focus in your organisation?
  • Have you analysed and optimised your processes and controls to reduce their cost and improve their effectiveness?
  • Do you apply analytics to better understand customer outcomes and proactively discover conduct risks and opportunities?
#5 How do you demonstrate that you are a good corporate citizen?
  • How do you demonstrate respect and care for your social licence – your access to, and use of markets, labour and natural resources when conducting your business?
  • Have you taken active steps to proactively search for conduct vulnerabilities across your entire organisation?
  • Where vulnerabilities are found, do you fix issues in a timely fashion with root causes in mind?
  • Do you pursue proactive relationship with regulators?

 

By understanding the opportunity, asking the right questions around ethics, capability, and alignment organisations can measure, design for and manage trust to build a high performing, trustworthy organisation.

This article was first published in Asia Pacific Banking & Finance.


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