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How to Lead When Global Trust Is Plummeting

Eric McNulty

Eric J. McNulty is the director of research at the National Preparedness Leadership Initiative and writes frequently about leadership and resilience.

 

After the 2016 Brexit vote and presidential election in the U.S., the fact that many people are unhappy with the current state of the world and want change shouldn’t be a surprise, and a widely followed annual survey shows just how deep and widespread that discontent has become. With this in mind, every corporate executive and elected official should not only be on notice, but be pacing the floor late into the night.

Edelman’s 2017 Trust Barometer, which surveyed more than 33,000 people in 28 countries, shows the largest-ever drop in trust in “the system” — made up of business, government, NGOs, and the media. Among the most troubling data: Globally, 53 percent of those surveyed felt that the system is not working for them, while another 32 percent were unsure. CEO credibility dropped 12 points globally to an all-time low of 37 percent, falling in every country surveyed. What’s more, the survey found that unhappy populations were concentrated in countries with capitalist democracies.

The survey also documents the collapse of trust in officialdom and experts: Asked to choose whether an individual or an institution is more believable, respondents favored individuals over institutions 55 to 45 percent. By an even greater margin, respondents trust search-engine results more than the curation of human editors. They believe leaked information over official company statements by almost two to one. “A person like you” is tied with technical or academic experts for most-credible spokesperson — and either option tops a CEO or board by about 40 percent. And the bias against information that runs counter to respondents’ current beliefs is significant. People are harder than ever to sway — and authority and influence both now rest with the masses.

There are a lot of customers and employees in that unhappy 85 percent who reported being skeptical, at best, that the system is working for them. Their dissatisfaction is not good for business or government. If we had the ability to step back and view the deterioration of trust dispassionately, I think we’d judge it a system heading toward significant reorganization and even possible collapse. The findings suggest we are in a situation where those who aspire to lead need to fundamentally rethink what they do and why they do it.

One group taking action on that front is the World Economic Forum. It has put forth a Compact for Responsive and Responsible Leadership (pdf), which asserts that the sustainability of corporations and society at large are interdependent. In the compact, the traditionally microeconomic activities of executives are inextricably linked to the macroeconomic and social needs of the larger system in which companies operate.

To further explore this topic, I use a simple frame to determine a leader’s position relative to the system. This approach helps illuminate both the challenges and opportunities ahead.

With this level of anxiety and distrust the status quo isn’t sustainable.

The traditional way to view a CEO is as the leader of a system. Here, the system is narrowly defined as one hierarchical organization. Success is measured at the level of firm performance. Leadership is seen as an endeavor largely dependent on a single individual.

A broader view is to see the CEO as a leader in a system. Companies and executives active in multi-stakeholder initiatives such as the Roundtable on Sustainable Palm Oil work to lead in a more complex system made up of suppliers, customers, communities, and even competitors. Rather than a solitary leader, the executive is part of a connected community of leaders allied by values and interests. Although each leader is evaluated on their achievements at the firm level, the leader sees part of that success linked to the performance of his or her industry or sector in addressing larger issues.

Finally, a leader may place the needs of the system above their self-interest in leading with a system. This is most often seen in social movements that are free of investors and other financial considerations. Nelson Mandela is a classic example of someone who put himself in the service of where he felt the system wanted, and needed, to go.

Having explored this topic over several years of research and writing, I see more and more executives — people such as Unilever CEO Paul Polman and Henry Schein’s Stanley Bergman to name two — seem to see themselves as leading in a system. This shift may be a natural outgrowth of extended supply chains and greater global connectivity that multiply choices and amplify consequences. However, the Edelman survey, showing that only 15 percent of respondents see the system as working for them, indicates that far more change is needed. Fifty-three percent see the pace of change in business as too fast and more than half worry about losing their jobs to a range of threats such as a lack of training, immigration, global competition, and automation. Seventy-two percent prioritize preserving jobs over overall economic growth.

With this level of anxiety and distrust, the status quo isn’t sustainable. It’s time for more people to step up and lead with the system.

The good news is that the data provide glimpses of potential systemic solutions: Treating employees well was the top selection of ways that companies can build trust, according to the survey. Investing in training and skills building can both make a firm more competitive and offset anxiety, according to research by MIT’s Zeynep Ton. A company paying its fair share of taxes ranked high in trust-building, whereas moving profits to tax havens was a top trust-buster in the Edelman survey. Advocating for an equitable and transparent tax environment that benefits business, government, and citizens is leading with the system. High-quality products and services were also seen as critical to establishing trust. The total quality movement long ago demonstrated how such a focus could drive efficiency, improve employee and customer satisfaction, and foster market differentiation — all hallmarks of a well-functioning system.

Leading with the system is not only about a benevolent CEO with a long-term vision. It requires dispersed leadership cultivated throughout the organization. The Edelman survey indicates that people value social media, peer reviews, and word-of-mouth sources over polished speeches and glossy advertising. Your employees, customers, suppliers, and neighbors grade your contribution to the system. They are the source of the evidence that matters.

The survey said that 75 percent of respondents agreed that business “can take specific actions that both increase profits and improve the economic and social conditions in the community where it operates.” They want the system to work. The responsibility of government and private-sector executives is to embrace where the people want the system to go — and lead in a way that will catalyze getting there.

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How to Lead When Global Trust Is Plummeting