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The Core of a Trustworthy Organization

Last week I had the great honor to be a guest speaker at the Consortium for Trustworthy Organizations at Fordham University.  A key question for anyone thinking of joining a company, especially in positions of trust is ‘How can I tell in concrete ways that an organization is trustworthy?’  Most members of the Board, C-level Executives, Auditors and Compliance Officers especially need to know this. The price paid by any of these for being in the hot seat when a Company breaches its duty of trust to the outside world can be a career ending matter.

A typical approach is to take a ‘pulse’ survey of the organization.  These ask employees confidentially to rate the organization in terms of its commitment to ethical behavior, leadership standards and so on.  I have both answered these surveys and received the results from my department.  I find them enlightening, but sometimes hard to interpret.  For example, at one company a question was asked about whether the employee was inclined to leave. In my business unit, we scored a massive “yes” response.  Most people, including the C-level executives interpreting the results, concluded this is a bad thing. But consider for a moment a model where you commit so much to your people that you expect and encourage them to grow their skills and develop onwards to positions of higher responsibility.  Outside their own business unit.  You do all you can to enlarge the universe of career opportunities available to them.  They feel confident in their ability to move and they consider moving out to be a positive career step. The leaders are not selfish because they have put their people’s interests ahead of their own. I would argue that this is more trustworthy than doing all I can as a leader to make my people loyal to “my” business unit. So, this is one real-life example of how these surveys can be dangerous if not properly administered or understood.

You should still have the courage to ask, though.  So, here are three questions I believe are worth asking:

  1. Do we manage by results?  Presentations to the Board are telling. Test how much is opinion and how much is data, reconciled to the financials, for example. I am surprised at how often people believe operational and strategic initiatives never need to flow into a financial result.
  2. How does the incentive system actually operate? If you test this, you will find how people actually treat others in the organization and what is truly valued. I will never forget the description of Enron’s performance review process for executives. It has been reported that each department head spoke for his or her own people only and there was no cross-assessment. Then the senior people in the room decided between departments which ones ‘contributed’ most. I have seen entire departments subjectively self-evaluate their performance without regard to actual data. Of course, at some level, you need to break down this exercise in order to operate it, but how does your organization guard against self-assessment and how far removed are these from actual data?  Perhaps your auditor should test this, objectively.
  3. Where and why do special rules apply? Be careful here. Of course there are special rules to deal with different expectations.  For example, we may allow some people to travel in first class or business class while others have to take a seat at the back. The question is, on what basis do we distinguish?  It could be to make a short-lived trip productive because I expect someone to be one day in Europe, followed by two in Asia, then back to the US, and it does not matter whether it is the CEO or a junior staffer, we apply the rule for a business purpose, not for a type of person. This is a simple, though common, example but you will be surprised how often this same question of “different rules” has come up in my auditing career and it can be very telling once you understand the reasons for it.

Back to the conference.  As I listened to the case studies from companies such as General Electric and IBM, the following question absurdly formed in my mind: ‘What is a fair price to pay to belong to a trustworthy organization?’ So, I asked it out loud. What followed was an interesting discussion that focused not on the organization’s responsibility, but on our own, personal responsibility. If I wish to belong to a trustworthy organization then I must be willing to contribute. After all, I have spent time preaching to others that corporate culture has little to do with a leader’s statements and everything to do with how people treat each other.  In the trenches.  Where nobody can see. Before I ask how does the organization behave, I should consider how I act, especially if I am a leader. Do I believe customers are ignorant and should be shaken down for every last penny no matter what?  If they make a mistake and overpay me, how should I respond? Do I believe that suppliers are out to shake us down and need to be treated with contempt? Would I help a peer advance him or herself or do I worry that it might reduce my chances of advancement?  How many times have I offered someone else my best employee or do I believe my success lies in grabbing and keeping the top people for my own benefit?

Don’t get me wrong, I do believe that success is best gained through finding quality people to come and work with you, and I do believe in being competitive and business-like.  Frankly, people feel proud to be in a well-run, successful business. The question is, if I want to be part of a trustworthy organization, how much am I willing to contribute to it?

About anthonyoreilly

I believe that organizations fail to get adequate assurance from their auditors and can both reduce cost while improving quality. As the Head of Professional Practices at Siemens, AG I played a leadership role in a major Corporate re-construction of a global audit function, from inside the engine room. After 10 years as a Partner in a Big Four firm, I was attracted by the opportunity of a turnaround challenge in one of the world's leading industrial companies. I moved my family to Germany and spent 4 years re-building this 450-person global audit organization back to health following a spectacular failure. I am attracted by challenge, cultural diversity and companies who are willing to put effort into it and get to the next level. I am not dismayed by resistance to change and seek to work with companies willing to invest in skilled people who want to advance their own careers while bringing the organization to new heights and reducing the total cost of operations. All of these things were accomplished in my time at Siemens. Prior to the role at Siemens, AG, I was a Partner at PricewaterhouseCoopers LLP, where I learned all I knew from the many challenging and professional clients I worked with. I am a published author and sought after speaker on Audit and Governance practices.

Discussion

One thought on “The Core of a Trustworthy Organization

  1. Anthony:

    Another ‘right on’ piece! You’re definitely working into this new model very well. I’ve forwarded this to one of my board chairs.

    Bill R.

    Posted by Bill Reardon | November 5, 2013, 11:37 am

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