What do Disney, USAA, Campbell Soup, H.E.B., Southwest Airlines and dozens more like them share in common that Wells Fargo, Volkswagen, Facebook, UBER, United Airlines and unfortunately many others do not?
Leading organizations in the United States and elsewhere share traits which have earned them the loyalty of their stakeholders, employees, customers, shareholders and the public.
The key ingredient? It’s an organizational culture that values employees, the customer, shareholder profits, and their reputation. They have the necessary discipline and take the necessary steps to ensure that the culture permeates the entire organization and is reflected in everything they do and say.
They put their money where their mouth is, not in platitudes and slogans and ads. It is a culture that is embraced and lived. A company’s culture is public. It is congruent and transparent.
Their ethical principles and commitment to their values and doing the right thing can be seen and felt. It is part of their foundation and is not compromised for the sake of a buck.
The continuing issues with the companies I have been writing about, who have violated the public trust and abused their internal and external customers, have caused me to ask more questions and research even more thoroughly what the issues are.
In my presentations, I talk about how to build a responsible, ethical organization. I ask what makes for a sound organizational culture? What are the drivers? Why do some companies hit it out of the park time and time again, and some, well are abysmal in earning respect and trust.?
Surely we all want to do good? Surely we all want respect and to be considered a top-tier company? Yet- read the news! Several components consistently win… integrity, financial stability, accounting conservativeness, sound corporate governance, transparency and sustainability are the foundation all great companies share.
This is not rocket science! Taken all together, honesty, integrity, and being trustable are huge issues with consumers. According to Brad Hecht, senior managing director of the Americas at the Reputation Institute, “The U.S. is at the epicenter of the loss of trust and reputation toward corporations globally.”
Sad but true. The Reputation Institute surveyed over 50,000 individuals and overall found a three-point decline in the reputation of USRT 100 companies. Conclusion- “overall there is an erosion of trust.”
Their surveys show that driving the reputation disruption is a lack of confidence in big business. 49% of those surveyed said, “they don’t have faith that companies will do the right thing.” Overall a growing erosion of trust.
A culture which does not embrace ethics and caring for its constituents is doomed. It’s no coincidence that the best companies to work for do the right thing for all concerned even at the expense of the highest profit return. Ironically the best companies also make more money!
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In Deloitte’s Directors alert 2017: Courage Under Fire: Embracing Disruption, Veronica Melion says “Culture is in fact the basis of an organization and it absolutely influences people’s day to day behavior.” Directors’ Alert 2017: Courage Under Fire: Embracing Disruption
Culture must be managed. The 2017 Great Place To Work Institute report noted the stock price growth of the 100 firms with the most ethical cultures outperformed the S & P 500 index by over 50 %! It appears that a firm’s culture is the strongest predictor of how much market value that a firm will create for shareholder investments.
No surprise that the most admired and trusted companies have record profits. Lapses in ethics are costly, and not in just a loss of trust.
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As William Klepper, a Columbia Business School management professor stated, “There’s no question that Wells Fargo’s scandals are responsible for seriously eroding shareholder value.” It’s stock, by the way, is badly behind its competitors, increasing only 16% since the scandals broke two years ago, lagging behind Citigroup’s rise of 47%, JPMorgan Chase’s 70%, with Bank of America’s stock having doubled.
Trust is the cornerstone of an organization’s culture. And no, it’s not rocket science. As Stephen R. Covey, the best selling author of The Seven Habits of Highly Effective People said “If you want to be trusted, be trustworthy”… focus on primary greatness of character.
Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.
