Recognizing Leaders: Barbara Kimmel, Trust Across America

Barbara Brooks Kimmel is the CEO and Cofounder of Trust Across America-Trust Around the World whose mission is to help organizations build trust. Barbara also runs the world’s largest global Trust Alliance, is the editor of the award winning TRUST INC. book series and a Managing Member at FACTS® Asset Management, a NJ registered investment advisor. In 2012 was named one of “25 Women who are Changing the World” by Good Business International.

GlobeScan co-CEO Chris Coulter recently interviewed Barbara to discuss the value of trust and it’s current and future affects on organizations’ social license to operate.

What is trust and why is it valuable for companies?

I have to say that’s one tough question! A big challenge with trust is the various ways in which it can be defined and interpreted. Trust can be a verb, noun or adjective, and we see this confusion all the time when discussing organizational trust, and when stories about trust breaches are reported by the media. When we talk about trust, we need to be sure we are speaking the same language.
Trust Across America likes to define trust as “the outcome of promises kept.” Our work focuses on organizational trustworthiness or the level of integrity displayed by corporate leaders in relation to all their stakeholders, not just shareholders.

What if an organization’s promises are not enough and don’t meet people’s expectations?

It’s true, keeping your promises doesn’t make you completely trustworthy. While our new President is keeping the promises he made during his campaign, many claim that his values don’t align with their own, and therefore he is not trustworthy. So trust is more than doing what you say you will do.
The same is true for companies. Many CEOs believe that profitability and meeting shareholder expectations builds all the trust that’s necessary. Alternatively, ask a class of college kids what companies they trust, and most point to Apple or Google. If you dig deeper as I have, the students will say things like “Well, with Apple they deliver good products.” Then if I push a little harder and ask if they trust Apple’s CEO, Tim Cook, to treat employees well and pay the company’s share of US taxes, they gain a better understanding of the many dimensions of trust. Students will say they trust Google because they have a great search engine. But what about their data security, or the company’s overall commitment to society? All are parts of the trust “equation.”
According to our research, in order to be successful, CEOs must meet the needs of broader stakeholder groups. We have taken a holistic, multi-factor/multi-stakeholder approach to evaluating and assessing trust in public companies. We created a framework to quantitatively measure corporate trust “worthiness” called FACTS®, an acronym which has five indicators: Financial stability, Accounting conservativeness, Corporate integrity, Transparency and Sustainability. Companies that rank high in all five indicators of trust are not only more profitable but also face less risk of corporate blowups.

What is the value of trust to companies?

Over the years there have been hundreds of academic studies that correlate high trust to profitability, yet organizations continue to take trust for granted. It is viewed as a soft intangible or ignored altogether until a crisis hits the organization. Then leaders talk about rebuilding trust when it never really existed in the first place. Trust is a measurable asset. After eight years of collecting data in a systematic way, we are seeing that the most trustworthy companies are also the most profitable.
In low-trust companies, decisions take longer, innovation is slower, employee engagement is low and turnover is higher. All of these “costs” impede profitability in the long term. Being untrustworthy means that resources are being wasted and squandered. Sometimes companies that are less trustworthy are successful in the short term, but this success may be short lived.
Despite proof that trust is a tangible and measurable key performance indicator, it is rare for companies to practice it as an intentional business strategy. But there are exceptions. Instead of trying to build trust, some leaders live it. An example would be Howard Schultz. Is Starbucks perfect? No, but it’s one of the most trustworthy companies in our FACTS Framework. Howard not only talks about the value of trust, but almost every leadership action reflects his own values and the corporate culture he has created.

It seems there is always a company in the news that is going through a crisis and is clearly in need of rebuilding trust. What advice do you have for companies in those situations?

In many cases, companies that have broken trust with stakeholders in a significant way – think of Wells Fargo or Volkswagen – require a massive culture overhaul that should begin, but rarely does, with some senior-level house cleaning. Instead, fingers are usually pointed at “rogue employees” or fall guys and a new leader takes the helm, usually an insider. The media’s reporting of the crisis dies down, and it is business as usual – and usually nothing is done to protect against the next one. Alternatively, after Target’s credit card breach, a new CEO was brought in from outside the company. And it looks like he is on the right track to building a more trustworthy organization. Ironically, it is much more expensive to recover from a crisis than it is to proactively put measures in place to avoid one. In all fairness, our current flawed system places many constraints on corporate leadership – CEO tenure is short, executive compensation packages are tied to quarterly earnings, Wall Street analysts have high expectations, etc. It’s hard to play the balancing act between a long-term trustworthy culture and short-term demands.
Corporate leadership might want to think of trust like a bank account. You build up your credits in good times and occasionally need to draw down your account when things go wrong. But if the starting balance is large, the account takes less of a long-term hit.

What is the future of trust going forward?

I’m not sure what will drive the change. In most companies, leadership has not taken ownership of trust so it is an orphaned hot potato passed around to different silos in different organizations – Legal, Communications, HR and CSR. Imagine if every company had a Chief Trust Officer whose office was adjacent to the CEO, with a budget to engage all functions across the company in building and practicing trust. That might work!
The heart of this trust conversation is about building a holistic and system-wide approach to trust – having the leadership and institutional infrastructure to make sure trust-building is happening as an intentional business strategy. This requires CEOs and Boards to view trust as a strategic asset and something they invest in, like any other corporate asset or profit center.