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Trust is a leadership issue

News, 15 January 2016

LONDON: Volkswagen is but the latest in a long line of companies to enter the "Trust Hall of Shame", having wrongly persuaded itself that the crisis it created when it rigged emissions tests could be managed by communications, according to a reformed PR man.

Writing in the current issue of Market Leader, Robert Phillips, formerly a top executive at Edelman, said that trust in major institutions and individual companies is in a state of flux.

"Today's crisis of trust … is actually a crisis of leadership," he asserted – a failure of those at the top to make the right judgements and to do the right thing.

A risk-averse and compliance-focused business culture, he suggested, has produced too much "management", which has been mistaken for leadership.

He cited an instructive instance from his own experience, where the CEO of a major European bank had asked him what it would take to become "a good and trusted bank".

Phillips offered him ten principles – ranging from scrapping free banking in the name of transparency to ending huge bonuses in the name of proportionality – all of which the CEO agreed with, but for every one he also had a reason not to act.

"There is no point in adopting principles if you are not willing to implement the behaviours," said Phillips. "It is just PR nonsense. It has to be about what we do, not what we say.

"The successful, more trusted organisations of the future are open, empathetic and relational," he added.

And PR as still widely practised – "crafting narratives, managing messages or spinning meaningless platitudes" – has no role to play in that.

What is ultimately at issue is a clash of economic belief systems. Phillips described business and politics as being "infected" by the spirit Milton Friedman, the Chicago economist who maintained the social purpose of business is simply to maximise profit.

But leaders ought rather to think in terms of "profit optimisation", said Phillips, which "speaks to the long-term interests of citizens and society and to the common good"; and it is employees, customers and stakeholders who understand what the common good really looks like.

Data sourced from Market Leader