Ethics: Is the Onus on Business?

I recently read the 2017 Edelman Trust Barometer Global Report. This study, in its 17th cycle in 2017,  consisted of an online survey of over 33,000 respondents in 28 countries  during the months of November and December, 2016. The study findings, summarized as "an implosion of trust," found that two-thirds of the countries surveyed are now "distrusters" of key institutions, up from just over half in 2016. Let me share some of the underlying data with you.

Global trust in business is now at 52%, with the U.S. general population's trust in business at 58%. CEO credibility is at 37% globally and 38% in the U.S. The global value for CEO credibility declined 12 points in the most recent study. Trust in government is at 41% globally and declined by one point in this study. NGOs were less trusted than business in 11 of the 28 countries, with the trust in business and NGOs being equal (58%) in the U.S. Trust in the media was at 43% globally, with it being distrusted in 82% of the countries, including the U.S.

Globally, people rated a person like themselves equally credible to technical and academic experts (each at 60%) and more credible than business leaders (37%, as previously stated) and government officials (29%). Among those uncertain about whether the system is failing, business was more trusted than NGOs, media, and government. This led the study's authors to conclude that business, as the one institution that retains some trust among the skeptical, needs to play the role of filling the void in global governance and acting in the best interest of both shareholders and society.

Among the attributes that build trust in a company, people rated integrity and engagement with customers and employees the most important (at 56% each), with current performance at 39% and 40% , respectively. Most important for integrity was ethical business practices.

These trust data are in agreement with a study published in Harvard Business Review in 2016, Sunnie Giles studied 195 leaders in over 30 global organizations, asking participants to identify the 15 most important leadership competencies from a list of 74 competencies. The top leadership  competency was "has high ethical and moral standards."

In my recent Insights column, I noted the disappearance of ethics and social responsibility as a top CEO issue from my 2015 analysis to my 2017 analysis.  I speculated that these past two years may have seen a growing operational focus on ensuring ethics and social responsibility as good business practice, so that the strategic focus for CEOs has declined. Given the global decline of 12 points in CEO credibility from 2016 to 2017 in the Edelman study. I wonder now if this decline parallels the lack of CEO focus on this important topic based on the studies summarized in my Insights column, rendering my initial speculation unduly optimistic.

The results of all these studies strengthened my belief in the strength of the Baldrige Excellence Framework. There are 11 questions total in the Leadership category of the Baldrige Excellence Builder. Six of those 11 questions are:

1.  How do your senior leaders set the organization's vision and values?
2. How do senior leaders' actions demonstrate their commitment to legal and ethical behavior?
3. How does your organization ensure responsible governance?
4. How do you address and anticipate legal, regulatory, and community concerns with your products and services?
5. How do you ensure ethical behavior in all interactions?
6. How do you consider societal well-being and benefit as part of your strategy and daily operations?

These questions provide compelling evidence of the important role leaders in all sectors play in guiding and ensuring ethical behavior locally and globally. We all have a role in encouraging and supporting that behavior.