Trust the Cost When Company Values, Ethics Sacrificed
Passion for customers. Integrity, innovation, commitment. Accountability to shareholders, partners, and employees for commitments, results and quality.
Statements like those are typical of the values U.S. businesses cite in their eclectic mix of mass communication vehicles, from annual reports to Internet sites to new employee orientation video presentations. The values companies espouse tend to have common themes such as integrity, adherence to honest practices, and respectful treatment of employees and external target publics.
Nevertheless, living up to those noble attributes in today’s global marketplace often is easier said than done to the point that ethical challenges emerge frequently. When organizations attempt to do the right thing, consistent with their publicized values, or opt for the low road, one outcome is complex case studies ripe for examination by business and public relations practitioners. For business pros, the cases are vital to a lessons-learned process. And for the PR pros, they become much desired homework that helps them prepare sufficiently to counsel individual and organizational clients.
One such example is illustrated vividly by Michael Hackworth, Cirrus Logic’s board chairman, and Thomas Shanks, associate professor of communications at Santa Clara University. When developing their “Case of the Million-Dollar Decision,” Shanks was executive director of the university’s Markkula Center for Applied Ethics, a highly regarded forum for research and dialogue on ethical issues in America. Hackworth serves on the center’s advisory board. “Million-Dollar Decision” recounted Pegasus International’s crossroad in deciding whether to venture into a China, where accepting bribes was deemed business-as-usual. Tom Oswald, CEO of this engineering project and construction management consulting company, conceded that many organizations now conduct business there but questioned how they circumvent the problematic issue -- from an ethical and public relations stance.
"We believe most other companies contract with agents to represent them in the country and to get the licenses,” explained Oswald’s managers. “What these contractors do is their own business, but apparently it works pretty well because the CEOs of all those companies are able to sign the disclosure statement required by law saying that they know of no instance where they bribed for their business."
Another scenario that is not unfamiliar to U.S.-based global enterprises can be summarized as the conflict of “Henry Smith,” the manager who oversees the development of a new technology by an engineering team located at a site outside the U.S. When faced with a problem that seemed unsolvable, Henry contacted an engineer from his U.S. facility who had worked similar issues successfully.
Henry asked the woman to serve on the engineering team for six months, and she enthusiastically accepted the assignment. Upon her arrival, however, the other engineers refused to work with her. The local supervisor called Henry and explained that in their culture it is insulting for men to work with women. Henry and company decided to forgo the opportunity, standing on principle, understanding the negative ramifications of compromising company values.
In the first case, the CEO, uncomfortable with the idea of “payoffs,” pondered whether paying someone else to do the “crime” equates self-committal. In both situations, the companies considered how much business they could lose by not complying with the customs of foreign nations.
Despite such considerations, U.S. businesses must weigh the mandates of the Foreign Corrupt Practices Act, which prohibits payments or offers of anything of value made corruptly to influence foreign officials or secure any improper advantage to develop or retain business for a company. “To this end, these situations can pit an organization’s internal culture against federal law,” said Debra Palmer, vice president of Business Development & Advanced Programs for Lockheed Martin Corporation’s simulation and training business. “In essence, their moral and ethical values are up against legal requirements.”
With these challenges underlying the notoriety of recent corporate scandals – e.g., Enron, Martha Stewart, Walmart, etc. -- public relations practitioners are emphasizing trust as a critical issue facing U.S. businesses. Trust, despite the altruistic values they are promoting.
“Trust is the key objective for global companies today because it underpins corporate reputation and gives them license to operate,” said Monica Glukstad of Edelman, an independent global PR firm. “To build trust, companies need to localize communications, be transparent, and engage multiple stakeholders continuously as advocates across a broad array of communications channels.”
The Most Trusted Global Company> On an unaided basis, Microsoft was named most often across all countries as the most trusted global company
> There is strong trust in leading national companies in their home market with companies such as Haier (China), Toyota (Japan), and Petrobras (Brazil) receiving many mentions in their countries of origin.
> Despite the survey asking for only trusted global companies, many respondents volunteered NGOs (non government organizations). NGOs such as the Red Cross in France and the United Kingdom and Greenpeace in Germany were also frequently mentioned.
Source: Edelman Public Relations
“Edelman Trust Barometer January 2006”
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Stuart Doyle, ABC is Manager of Internal Communications for Lockheed Martin.
Visitor Comments
Trust is built through sharing. This includes shared information (given and received) and shared experiences. In simple terms, public relations professionals are responsible for coordinating and managing this sharing. The more we share with our publics, the more trust we build. Without sharing, trust is not possible. And without trust, successful relationships cannot exist. Unethical behavior is the opposite of sharing. And while such behavior may lead to short-term gains, in the long run it undermines successful relationships.
On a related note, trust will become increasingly important in a flat world as companies will no longer be able to count on the automatic loyalty/trust from their hometown customers.
Posted by: Bob | April 10, 2006 02:20 PM
It's been said that the relationship between a company and its stakeholders is like a bank account. On good days you are making invisible deposits with your customers; on bad days you are making withdrawals. The point being that a lot of good experiences will carry your company or organization through the bad times.
History shows us that this is not always the case. The trust between a company and its stakeholders is only as good as the last transaction... i.e. What have you done for me LATELY?
We've all had bad experiences with good companies. Sometimes its a product issue. Other times it's simply poor employee training.
A good company accepts responsibility for the mistake or problem and uses the incident as a training opportunity for its employees. The customer leaves with a higher level of trust for the organization and a renewed sense of loyalty to the brand.
Lakeland, Fla-based Publix Super Markets (http://www.publix.com/) is a great example of a company that, despite rapid expansion, continues to build trust among its customer base.
Can anyone identify some other companies like this?
Posted by: Chris Gent | April 10, 2006 03:14 PM
Trust is a tough pitch for those in "government PR". Working in municipal public relations for 15 years, I have seen too many times the guilt by association factor. Poor decisions by federal and state government agencies shedding a fair image upon those at the local level. We in government all get painted with the same broad brush. Add to the mix, politicians tossing around political footballs – and it’s a steep climb for us in city PR.
That is why consistent, integrated approaches to communicating the city’s mission and services help rebuild any lost trust that may have occurred due to the missteps of others. Not to say the cities are immune to mistakes, but it certainly does not help when the nation as a whole has a questionable eye towards government – at all levels.
Posted by: Wayne Larson, APR | April 10, 2006 03:29 PM
Having been a corporate ombudsman for two Fortune 500 firms, I fully concur with Mr. Doyle's assertion that trust is the essential element of doing business. Integrity, once lost, cannot be regained. It is a tough challenge for PR reps to bear the burden of counsel for clients who don't recognize the long-term cost for short-term gain. There are going to be times when it is better to walk away from a potential client in order to preserve your firm's trust quotient.
Posted by: Mike Mulleavey | April 10, 2006 03:37 PM
Great feedback!
What I find interesting, and rather intriguing, is how "trust" is perceived and defined by different industries as well as different nations. How does a business or organization fulfill its mission and goals when growth and opportunity may depend on a host of potential compromises that, to some degree, is considered normal business practice in today's marketplace? Are businesses/organizations today really standing on those stated values? If so, where are the "good news" anecdotes to show it? We're inundated with Enron-like scenarios but there's not much public communication about businesses doing the right thing ethically with positive outcomes.
What was Publix's situation?
Posted by: Stuart Doyle, ABC | April 10, 2006 04:10 PM
From product recalls involving ground beef and milk to products that were mislabeled, Publix has always been effective in addressing the situation, communicating with the consumer and taking immediate steps to prevent a repeat of the incident.
I'm sure with the sale of food (persishable and nonperishable) comes considerable public health risk.
Through regular and effective communication, Publix has developed a core value of trust that I believe is their strongest corporate asset.
Posted by: Chris Gent | April 10, 2006 04:57 PM
In reference to Wayne's comments, I don't even consider working for the public sector as "PR," per se. I'm in my 14th year in state government and the focus is moreso on public information and education instead of image building. Trust me, you'll never win if you work on taxpayer dollar and try to secure a "good image." You may be trusted one month and despised the next. All you can do is opt for information sharing and efforts to secure an understanding of public policy and procedure. I think the trust factor comes into play if you or your agency is open and responsive to constituent and press inquiry and needs. I find that individuals more than public agencies can build trust and stand of values. Doyle shows how the private sector can pull strings and hide behind walls and mega deals while probably successfully presenting itself as ethical. That scenario wouldn't play out in my public world.
Posted by: Peyton Heath | April 11, 2006 01:30 AM
Trust is like love or hate. It is hard to describe, but you know it when you see it. You can love or hate a company because of the people that work for the company. Likewise you can trust a company because of the people that work for it. So I don't believe in the long-run we trust because of what a company says it does - as in annual reports, advertising, etc. We trust, over time, based on the amount of earned respect we give something. Can I count on you when it counts? Today's business world doesn't offer much in the way of earned respect. We have had too many examples of "me first", over-paid execs, bottom-line driven decisions that result in take-aways to earn respect. Who can you trust?
Posted by: Larry | April 11, 2006 08:06 AM
How is the newer workforce -- recent college grads, the 18-24-year-old demographic -- responding to this? Because they've grown up with the corporate scandals, featured in films since 1987's "Wall Street," and now regular evening news content, do they not have an expectation that businesses would be forthright and trustworthy? Is public relations only "image-building" to them, the creation of a facade to sell more product or win public support? Are only Babyboomers, and maybe GenXers, seeing trust and values as an ethical issue whereas all younger see our current questionable corporate and political arena as merely normal? If so, what's the prognosis for the future?
Posted by: Stuart Doyle, ABC | April 11, 2006 10:15 AM
To Stuart's last comment, I think that many 'young' people have an built-in distrust of corporations. I'm trying not to bring blogging into this.... :-) but companies that put forth an actual human and truly relate to their customers are reaping the rewards.
Trust is not about never making mistakes, it's about owning up to them and learning from them in a public way. Numerous tech companies have made mistakes and quickly blogged about it, sometimes saying "yep, we screwed up on this one, but here's what we're going to do about it"
Posted by: Josh Hallett | April 11, 2006 10:56 AM
I have worked in communications for the private and public sector.
In today's 24/7 savvy media market and educated publics, trust or lack of it is everything. From a company gaining trust with their employees to motivate performance, to a PR Professional building media relations it is all about trust and communication.
As PR Professionals we must do our job to the best of our ability and if someone we represent "screws up" it is not a personal reflection on us - it is our job to be as truthful as possible, soften the blow, and retain our integrity. Stephanopolus was in the Clinton mix and now he has a national reporting job because he retained his composure and eloquence when his boss was telling "falsehoods".
In its basic form, communication is sharing information, but if you can't trust a company (public or private) and the media can't trust you as a PR Professional then we all lose. We can have all the plans in the world and write the greatest media releases, but it is our responsibility to be the keepers of the trust whenever possible and remind those who aren't so forthcoming (and sometimes that means standing up to your boss) that it goes up or down with honesty.
We must be trustworthy as a partner to the media so they can do their job every day.
The media must be trustworthy to tell the story correctly and truthfully or the public will be blogging about it the next day.
Employers, public or private, must be open and honest to tell the truth no matter how painful.
And, in reality, this last one...is what makes our jobs the most challenging, and sometimes the most interesting. If it were always easy, we would be so bored.
Posted by: Monte Martin | April 11, 2006 11:40 AM
Responding to Stuart’s last post, I am a recent college grad (2004) and rapidly approaching graduation with my master’s degree in May. The corporate scandals and corporate mistrust I have seen throughout my lifetime has allowed me to become more of a healthy skeptic. It never hurts to question corporations. In my opinion, I am sure most companies withhold some information from the public for one reason or another. Does that make them less trusting? Of course not. I know better than to assume a company tells the public everything, but it does not mean I mistrust the company either.
However, I think the role of the media further sets the agenda for scandal and mistrust. Reporters sell newspapers—headlines that scream scandal tend to sell more newspapers. Therefore, I mistrust the media more than the company. I think the media needs to build more trusting relationships with the public. When I watch a news report, the first thing I wonder is if that was the entire story—what are they not telling me?
I am certain there are corporation that are not ethical, but the media makes it seem all corporations are the same. As far as the future goes, I hope my generation starts to instill a good work ethic and morals into the business world.
Posted by: Bree Straub | April 11, 2006 12:14 PM
Bravo. I'm glad you said it. Most of our perceptions are based on media depictions, and many times they are unwitting misperceptions because of slanted, biased reporting. Values should extend beyond the corporate sector to news media organizations as well. They set the agenda and have a bigger responsibility to be trustworthy and ethical, at least in my humble opinion. Bree mentions 'media,' which is on point because true journalism is dead, at least in this day and age.
Posted by: Sandra Sechrest | April 11, 2006 09:42 PM