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Archive for January, 2009

Restore Stakeholder Trust

Restore Stakeholder Trust

There has never been a more critical time in our history to be concerned about the trust stakeholders place in institutions. As has been stated here by Tim Hartford, “Trust enables people to do business with one another. Doing business is what creates wealth.” Yet, each day, we hear more stories of trusted executives who betray stakeholder trust. Despite the best intentions of some organizational leaders, public exposure and scrutiny of corporate greed and fraud are so prevalent that stakeholder skepticism is commonplace. In fact, the potential for perceived breaches of trust also presents a risk to corporate leaders. So, what is to be done? What can executives do to right the ship – to exude values that establish, maintain, and maximize stakeholder trust?

In a recent qualitative study of three U.S. institutions, including a Fortune 500 corporation, a government entity, and a nonprofit organization, the author found that there are seven critical elements of a comprehensive trust repair agenda. The first, and most important finding is that when trust has been violated, stakeholders are motivated to understand why the violation occurred. Findings show that stakeholders first want to understand the circumstances surrounding the violation. Managers and executives should provide an open account of key features of the transgression. Explanations which are authentic, reasoned, open and relevant to the transgression in question enhance fairness judgments, and can increase trustworthiness perceptions. Our findings have been supported by scholars (see Barclay 2008; Greenberg, 1993), and practitioners. (more…)

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The U.S. is facing a crisis of trust in organizations, institutions, and our leaders. Today, we witnessed what we hope is the very beginning of a long, slow restoration of trust with the new administration. But we must do more.

I am currently writing an article based on a qualitative study conducted on organizational trust and trust repair, which will provide insight into how organizational leaders can establish, maintain, and maximize stakeholder trust… and why it matters more than every other asset in an organization. I will post excerpts from the article throughout the week and would love to hear your thoughts.

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