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The Official Baldrige Blog

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.

About the author

Harry Hertz “The Baldrige Cheermudgeon”

I am Harry Hertz, the Baldrige Cheermudgeon, and Director Emeritus of the Baldrige Program. I joined the Program in 1992 after a decade in management in the analytical chemistry and chemical sciences laboratories at the National Institute of Standards and Technology (NIST), the home of the Baldrige Program. I started my career at NIST (NBS) as a bench analytical chemist.

My favorite aspects of the Baldrige Program are: (1) the opportunity to interact with leading thinkers from all sectors of the U.S. economy who serve as volunteers in the Baldrige Program, who participate in the Baldrige Executive Fellows Program, and who represent Award applicants at the forefront of the continuous journey to performance excellence, and (2) the intellectual challenge of synthesizing ideas from leading thinkers and from personal research into Insights on the Road to Performance Excellence and other blogs that tackle challenges at the “leading edge of validated leadership and performance practice,” and contribute to the continuous revision of the Baldrige Performance Excellence Framework.

Outside of work I spend my time with family (including three beautiful granddaughters), exercising, baking bread, traveling, educating tomorrow’s leaders, and participating on various boards and board committees.

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Brennan, Thanks for the comment.I agree that business (and other institutions) should treat everyone fairly. I was not saying that business should subsume other sectors, rather I was hoping that with its higher trust rating among "skepticals", business would strive to serve as a role model and a springboard for building ethics in all sectors and organizations. Harry
I agree that there is a lack of trust in not only the real world but also in the business world. In order to have a successful business you need to have trust. If your running the business you should trust that your employees will do good and get their job done the right way, and if your an employee you should trust that your boss knows your best interest and would do anything to make sure you are going to be a successful employee by giving you the appropriate training and tools to be successful. Although I do believe everyone should be treated fairly, I would agree that you earn your spot by working hard, being efficient, and having initiative. Doing so and getting higher up in your business changes things and could possibly lead into getting treated more professionally than others.
While I believe that business ethics are very important, I would not agree that they should be the basis to put all ethics under. Rather, I believe that businesses should treat everyone fairly, from their lowest employee to their highest customer. However I would agree with the author in the clear lack of trust among people in the both the business and actual world. When people cut corners, things need to be given up, often it is ethics and then in turn trust.
Thanks for the comments on the Baldrige Program and on the circumstantial nature and interpretation of ethics. I hope that we can eventually come to agreement on fundamental standards on a global basis. For me, right now, the most disturbing point is not the lack of those agreed to standards, but the decline in trust around the globe.
I think this blog has extremely positive points about the trust and values. business is the world of competition. people try their best to get on the higher level by their hard work but there's some other business use right path to get through it but others uses wrong. I guess that why we call it business. and if we talk about ethics and trust on others in business is very important we should work as a team to make our business grow. I also work at a retail store and I love the atmosphere there. They treat everybody equal and respect their importance their.
I truly believe that ethics and morals should be the foundation of not only a business but the foundation of everybody because without morals or ethics nothing really defines you as a person or a company. In a business environment, isn't having trust one of the most important values to obtain? I 100% believe that! How is a company going to get investors or customers if they aren't trustworthy? As an investor, if there was any doubt that I can trust this company, there is no way that I am investing my money. All of this starts with the CEOs, if they build their business environment around having good morals and principles then those characteristics are going to carry over to the managers and the floor workers.
I thought that this blog had very good intel about the ways that the world trust social media and how much the trust the government. In many ways the Edelman Trust Barometer Global Report is a way to get a lot of information from different places around the world, and how much they trust different people and organizations. I do think it is a good idea to do surveys over the business era because it lets us see how much people trust CEOs and different types of businesses. Overall I think it is a good idea for people to survey about businesses.
For what it's worth . . . as a management consultant and organizational behavior professor I have valued the work of the Baldrige Performance Excellence Program for many decades as valid, reliable, and comprehensive. On my own "trust barometer," your program ranks at the top of my "trust list." And now as a professor of doctoral research methods, I recommend its use to my students in the doctoral programs of Education, Psychology, Business, and Nursing. Thank you for your continued service. Timme A. Helzer, Ph.D. Professor and Consultant in Systems Thinking, Learning, and Research Portland, Oregon
Great insight into the challenges not only for businesses, but also government and the "fourth estate". It seems that ethics and moral standards are vital to credibility, but those terms are relative based on background and affiliation. Ethical standards seem elusive in contemporary society and seem to be dependent on the societal subgroup fostering the definition. At some point, cultures around the world will come to consensus on some fundamental standards, but for now, it seems to me that the relative nature of ethics and morals will continue to challenge our institutions.

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