In yesterday’s blogpost, we critiqued the performance of a CNBC-selected all-star business panel. Their assigned subject matter was “Restoring Trust in Business.”
We said their answers were largely non-responsive, and mainly boiled down to two: jobs and tax cuts. Make that one, actually, because the panel’s preferred route to jobs appeared to be tax cuts.
Suppose someone asked you, “How should we go about restoring a decades-long decline in confidence in business and the markets?” How many of you think the obvious answer is “tax cuts?” That’s not what first occurred to us.
Of course, it’s easy to criticize, hard to be constructive. So here’s our attempt to answer the very serious question that CNBC posed: How can trust and confidence in business and the markets be improved?
1. Communications. Let’s start by suggesting how you should behave when facing the public: for example, if you’re invited to speak on CNBC.
Years ago, Robert McNamara gave this advice to dealing with reporters: “Never answer the question they asked you; answer the question you wanted them to ask you.” That may or may not be good advice for politicians, but it’s 100% wrong for businesspeople that want to increase long term trust in business.
Instead, give a direct, responsive and thorough answer to the question asked. Then, if you think the question is off-point, say so directly and quickly—and resist the inclination to speechify.
How does this help build confidence in business? Because business is often seen as lacking integrity. You don’t regain integrity by spinning people; you get it by behaving with integrity.
Let’s define integrity as being integrated, or whole; in short form, being the same person to all people at all times. If you’re going to treat the press antagonistically, we can only assume you do the same with employees and customers. If you tell truth to one party and lie to another, you aren’t a 50% truth-teller; you’re a 100% liar.
Role model the trustworthy leaders you want us to see—don’t emulate Sunday morning politicians doing the spin thing. (Remember, they rate even lower than you do in the confidence ratings).
2. Leadership: Why not step out from the crowd and acknowledge that business success is dependent on the quality of goods and services you deliver and not the difference in the marginal tax rate paid by corporations or highly compensated individuals?
Are you delivering the value you promise to customers and honoring the deal you make with employees? Are you treating your employees as ends in themselves, fellow-human-citizens to be treated with dignity? Or are you treating them merely as “human capital,” evaluating them via return-on calculations that can be monetized and compared financially with other asset classes?
3. Incomes. Here’s what perhaps the leading academic student of trust, Dr. Eric Uslaner, has to say: “[taking] steps to reduce the gap between the rich and the poor is the single biggest factor in whether societies are more or less trusting.” Another key driver, Uslaner says, is education. Education leads to greater acceptance of others, more income equality, and a lessening in corruption. All of which help business’s reputation.
We in the US like to think we live in a meritocracy. But the data say otherwise. One survey concludes, “In the U.S., 50% of a boy’s chance of climbing the ladder is the result of his father’s income. In Denmark, it’s only 15%.”
Do the few billions extra paid to top executives for beating the street justify the health care cutbacks, layoffs or pay freezes imposed on average workers? Will your executives truly put forth less effort or will you sacrifice the quality of your leadership? Will your employees’ greater purchasing power and loyalty outweigh any difference?
4. Time. It’s time to break the back of our epidemic of short-term thinking. Don Peppers and Martha Rogers say, “The Crisis of Short-Termism is the Mother of All Problems.“ Business people need to apply a systematic focus on longer time frames across all aspects of business: Why not pay for performance over the longer term, recognizing that “long term selfish” provides an equal if not greater reward than beating the quarterly expectations?
Are you building a one-season team or creating a dynasty? Short-termism needs to be attacked in pension fund management, securities analysis, accounting policy, and in the curriculum of MBA programs. No one supports short-termism in theory—yet so many support it in their actions. It’s time to unveil the curtains and act on principles.
5. Strategy. For decades now business’s focus has been on Competitive Strategy. We are now living in an age that demands Collaborative Strategy. From outsourcing to global capital flows to global terrorism to environmental issues—we are integrally connected for better or worse at this point. The critical issue is no longer how to beat one’s competitor, but how to thrive in a world of inter-dependencies.
Treat your customers as allies, not as guardians of their wallet or as your competitors. Treat your suppliers as part of your team, not competitors to be dealt with through sharp contracts. Treat your industry association as a force for better quality and customer relations, not as a lobbying tool to gain competitive advantage. Stop going to leadership programs on competitive advantage, and start going to ones on collaboration.
6. Motivation. Reduce extrinsic incentives, increase intrinsic incentives: An HBR study recently pointed out that the top motivational factor is the one rated dead last by participants in a major survey on motivation: the number one factor is progress. This is astonishingly simple and obvious: people want to succeed at their work. Yet business insists on perpetuating the carrot/stick rats-and-cheese models of behavioralism from Pavlov and Skinner.
Why not recognize that most employees (including leadership) take their greatest rewards from achievement and recognition, and that compensation beyond what it takes to meet primary needs is about scorekeeping rather than true reward? We all have mirrors in our homes…think how good it is to look in them and feel good about what we have contributed? No one’s epitaph says, “I should’ve spent more time at the office.” Stop treating workers otherwise.
So there you have it: our answers to “How can trust and confidence be restored to business and the markets.”
But, what do you think? Is it better, or worse, than “tax cuts?”