Over the past year, the brand called capitalism has sunk to unfathomable lows. There’s near universal disgust over the bank and insurance industry bailouts; gnawing fear over the accelerating global recession; outrage over all those Ponzi-scheming fraudsters; and a sickening sense that too many bankers and financiers are still driven by unquenchable greed. Earlier this year, the entertainment Web site TMZ reported that Northern Trust of Chicago, which snagged $1.5 billion in bailout money, flew hundreds of employees and clients to Los Angeles for a golf tournament and four days of five-star partying.
No wonder Edelman’s 2009 Trust Barometer — its tenth survey of “global-opinion leaders” — found that trust in US business, “is the lowest in the Barometer’s tracking history…even lower than in the wake of Enron and the dot-com bust.” The business community, feeling the heat from the public’s fury, is taking steps to rebuild trust. But I fear that the efforts to date are far too timid.
Take, for example, an initiative from the Ethisphere Institute think tank. Launched in December, the Business Ethics Leadership Alliance is a move by some of the country’s largest companies — including General Electric, Dell, and PepsiCo — to commit to Ethisphere’s code of good-business conduct. On its Web site, Ethisphere proclaims that with the, “collective effort of leading ethical companies, we will plan and implement the recovery of confidence…in the business community.”
It’s not that Ethisphere’s efforts aren’t needed. As the recession bites into nearly every bottom line, business units will come under immense pressure to hit financial targets, and some people will undoubtedly cheat. A recent online survey by Deloitte Financial Advisory Services found that, because of the recession, “63% of executives expect accounting fraud to increase during the next two years.” If the Leadership Alliance helps to keep companies honest when so many are hurting, it will have performed a valuable service.
The problem is that Ethisphere seems to have set a pretty low bar for what constitutes good-company behavior. Its code of conduct is built around four “ethical principles,” the first of which is “legal compliance” — companies will commit to, “follow the letter and the spirit of the law.” You know we’re living in ethically challenged times when companies feel compelled to announce that they will obey the law.
Then there’s the public relations factor. The Financial Times reported that the Alliance’s “organizers admit that the initiative…is partly driven by companies’ desires to burnish ethical credentials and curry favor with Barack Obama’s Democratic administration.” In other words, these companies believe that by awarding themselves a badge for good behavior, they will inspire confidence in themselves and perhaps even the rest of the global business community. I wonder.
Ultimately, consumers — not consultancies, think tanks, or PR pros — will force companies to pivot to an ethical gold standard. According to the Edelman Barometer, in the past year, 77% of adults aged 25 to 64 “refused to buy a product or service from a distrusted company.” That figure will probably increase, as the deepening recession exposes more corruption. The report concludes that consumers expect business to “partner with governments and NGOs to address…the world’s most pressing problems [my emphasis].”
Given all of the corporate malfeasance that has spread like a virus over the past year, it’s unlikely that consumers will ever again be satisfied with any company’s uninspiring promise to simply play by the rules. Something far more substantive is required. It’s an organization’s demonstrable desire to operate according to a deeper purpose of serving society — not some public pledge to merely do the right thing — that now makes for a truly trustworthy company.
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