The three steps to rebuilding reputation and trust

Insight

Reputation and trust deficits have been talked about a lot recently.

Much has been written and said about what organisations and senior individuals have to face up to following a crisis, a regulatory inquiry or a Royal Commission. Recently, even more has been written about fixing the culture of these organisations, yet no one seems to know how.

I, along with many other commentators, was very critical of AMP when it came out with the line: “…it is inevitable and appropriate we charge the dead…”. We will probably never know if this was a legal argument to avoid liability, or a poor attempt to protect the reputation of the business through legal semantics. Either way, the reputational backlash and damage was swift and brutal.

Since then we have seen big changes at AMP and the tendrils of a trust rebuild are starting to emerge. I recently received an email from the new CEO, Francesco De Ferrari, in which, among others, he said: “I know that we have made mistakes and I want to share some of the steps we’ve already taken to set things right,” and… “we're working hard, we're improving every day, and regaining your trust and respect remains my top priority.”

I reckon Mr De Ferrari is off to a really good start. But herein lies the challenge – trust is founded on doing what you say you are going to do time and time again – Mr De Ferrari’s challenge will be to ensure everyone at AMP lives up to those words.  Reputation and trust only follow when actions match words.  The first federal court class action has been filed against AMP on behalf of superannuation fund members who allege the bank eroded more than two million accounts with ‘unreasonable fees’, so De Ferrari has his work cut out for him.

There are other CEOs who are demonstrating how to kick-start their brand reputation renewal. Matt Comyn, CEO of Commonwealth Bank of Australia said, a few months ago: “our customers and the community rightly expect that we always do the right thing. But we have seen far too many instances of unacceptable customer outcomes. As the Royal Commission hearings have shown, there have been failures of judgement, failures of process, failures of leadership and, in some instances, greed. We became complacent.” And in a recent talk to the trans-Tasman Business Circle he said: “…what we are really going to be measured on over time is going to be our consistency: of intent, our consistency of actions, and importantly our consistency of outcomes.”

And Andrew Thorburn, (ex National Australia Bank CEO) said, post the Royal Commission: “In so many cases, we have not had the care and respect for our customers that we should have and for that I am sorry.”

All three are examples of the first step to rebuilding reputation. Publicly admitting fault is the essential foundation for rebuilding trust and reputation, however, reputation does not rest on words alone.

The second step to rebuilding reputation 

Culture is mentioned 56 times in the Haynes preliminary report (I haven’t counted how many times it is mentioned in his final report). The question is: how does a board or executive team a) get the culture right, b) ensure it is not corrupted down the line, and c) check it is working the way it is meant to work every day to underpin the right outcomes?

In this regard I have serious concerns around the recent flurry of commentary by APRA and ASIC about monitoring culture.  After all, how does a regulator truly measure culture? Instead, I suspect what we will see is a compliance-style, tick box, exercise on the outcome of culture as it relates to the delivery of a product or service, and contraventions of the laws governing that entity or sector.

The only true regulators of culture are management, the people who work at the company every day, their customers and stakeholders.

Organisations need to be in touch with what their customers and stakeholders are feeling and thinking. If trust has been broken, you need to understand their pain, loss, disappointment, anger and fear. Without this the organisation runs the risk of never truly understanding the road to recovery.   

So the second step to rebuilding reputation is reassessing and realigning the organisation’s purpose and its values with what gets done and the way it gets done.

Culture is what you are prepared to walk past – in my 30 years’ experience, almost every crisis in which I have been involved has been a result of a poor or a failing culture.

One of the most recent, high profile examples of an organisational crisis is the Boeing Air Max disasters and how resulting commentary strongly suggests that a stronger and more open culture could have prevented many of the problems now being addressed. 

I’ll be the first to acknowledge that aligning behaviours consistently with purpose and values is easier said than done. Fundamentally it is the will and integrity of those who work there every day and what they allow to slip by. It’s how organisations and senior executives hire, induct and train people, how they review performance, how managers enable teams to take decisions, and the levels of trust that exist between teams and management, and what they do day-in and day-out aligns 100% with the purpose or values of the business.

These things directly impact on the openness and transparency of an organisation.

Initially it requires courage to call out behaviours which don’t align with the purpose, or values, but a good culture means you should feel safe and supported to do so. It is incumbent for those with the implicit and explicit power in the business to welcome and protect these actions so real changes can be made, even if this is at the expense of commercial gain.

The third and final step to rebuilding reputation

In our Reputation Reality Report 2019 the majority of directors, chief executives and other senior managers who responded nominated integrity as the number one driver of reputation. Integrity means doing what you say you are going to do. More importantly, as Stephen M.R. Covey says in his book ‘The Speed of Trust’: “a person has integrity when there is no gap between intent and behaviour…when he or she is whole, seamless, the same – inside and out. This kind of authenticity is what I call ‘congruence’. And it is congruence – not compliance – that will ultimately create credibility and trust.”

This is why I believe Mr De Ferrari has made the right start to AMP’s reputation recovery. However, for him to truly shift the trust dial with stakeholders and customers, AMP’s actions across every area of its business will have to match its CEO’s words – every time. It’s why many of the same respondents in the Reputation Reality survey said reputation was harder to manage than other forms of risk.

Credibility is the currency of every other CEO who is making the same play in building, maintaining or rebuilding reputation. Their organisation’s reputation currency will fall, or rise, in value depending on whether they can align their teams behind their purpose each and every day. And it has a very real financial impact; according to Cap Gemini research 80-85% of the market value of the S&P500 comprises intangible assets such as brand and reputation. In other research, Aon, in its Reputation Risk in the Cyber Age report, found companies who handle a crisis badly can end up experiencing a sustained fall in value in the first year by 15% on average, while those who handle it well can gain up to 10% within value within the first year.   

Irrespective of regulations and active regulators, it all comes back to what the former head of the US Federal Reserve, Alan Greenspan said: “rules cannot take the place of character.”

Greenspan is right and it is why leadership jumped from eighth to third place as a top driver of good reputation in Australia in this year’s Reputation Reality Report. This finding is indicative that in an era of declining reputation and trust in so many large corporations, people are looking to courageous leaders to lead the way up the reputation and trust ladder.