Responsible business through crisis
Insight from senior leaders on how they have maintained trust and resilience during the COVID-19 pandemic
Episode 186: As scandals and failed leadership continue to make daily headlines, it is little wonder that trust in organisations may be at an all-time low. Is this something that can be fixed, especially if there have been mistakes?
Date: 09/08/2022 | Duration 00:33:22
Trust is critical for functional relationships and not least when it comes to the case of organisational leaders and their people. With scandals and examples of failed leadership making daily headlines, it is little wonder that trust in organisations may already be at an all-time low. Throw in cases of actual leadership mistakes – does the situation then become unsalvageable? Or can you repair broken trust?
Join Nigel Cassidy, and this month’s guests – Veronica Hope Hailey, Emeritus Professor at the University of Bath and Richard Nolan, Chief People Officer at Epos Now – as they debate the impact of external influences on state trust in today’s organisations and how senior leaders can begin repairing and regaining trust from their people.
You can hear more from Veronica Hope Hailey on the subject of trust and leadership in a post pandemic world at CIPD Scotland Annual Conference, 14 September, Edinburgh (Session A3).
Nigel Cassidy: When the trust has gone, ideas to repair and rebuild relationships when people have been let down. I'm, Nigel Cassidy and this is the CIPD podcast.
Trust is the essence of good leadership. It's essential for workplace relationships to survive and deliver results, but let's face it, trust isn't really what it was in many places. Take our national politics here in the UK, we rightly despair at the leadership tone set from the top by the outgoing UK prime minister no less caught lying and presenting selective facts to Parliament. Would you believe, more than half the CEOs poll by PWC thought a lack of trust was a threat to growth? Yet they've done little to boost it. Maybe that's because they don't know how to do that, which is where this podcast comes in with us. With us, Richard Nolan, Chief People Officer at the cloud based software provider EPOS. Now he's set up and grown people centric cultures for a string of successful brands. Hello Richard.
Richard Nolan: Hi Nigel, great to be with you today.
NC: And Veronica Hope Hailey HR, thought leader and Emeritus Professor at University of Bath and frequent CIPD collaborator. She says trust is the new leadership test. Hello, Veronica.
Veronica Hope Hailey: Hello everybody.
NC: So Veronica, I'll start with you. Lost trust, it's a big issue for organisations externally, public scandals, being caught profiteering, lack of transparency and all that, but within organisations, well people experience it every day and it's a lot harder to pin down, isn't it? If you take the whole spectrum of complaints from broken promises to nobody addressing problems or giving feedback. So taking all this into account, I wonder what are the sort of trust deficits in organisations that really matter?
VHH: So I think right at the moment, we're in a good place and a bad place with organisational trust. The good place is that actually, through the pandemic CEOs and senior teams and my research shows this, have actually demonstrated themselves to be highly trustworthy. They have shown themselves capable of taking organisations through transition. They've been in very, very empathetic and caring, and they've actually used their moral codes as north stars and compasses to drive the organisation, decide how it should see itself through this kind of fog of uncertainty that Covid's been. I think the issue is now, is how much they've managed to take people with them through the crisis Nigel, by trading on some of the reservoirs of trust that were built up before the crisis. And that varies from organisations to organisations.
NC: I just wonder if we could just bring this slightly more down to earth. What are the real issues that upset people within organisations, where they just no longer trust their leaders and their managers?
VHH: Well, let's just be careful with the evidence here. I think what you will find is there are problems in the public sector right now, because there is a feeling that the front line workers in the public sector, and that wasn't just the medical staff that was water authorities, railway workers, people who stayed on the front line during Covid, as one CEO put to me, a pharmacy CEO said to me, my people were the people that were coughed on. There's a feeling that a lot of those front line workers took risks on behalf of the rest of us. And whilst in the first year of the pandemic, we all got on the doorsteps and clapped our saucepan lids, there is frankly a feeling that their risk taking has not really been appreciated by the great British public. And it's not being shown with realistic pay rises to deal with the cost of living increases caused by the rampant inflation at the moment. So they feel --
NC: So essentially they're being taken for granted.
VHH: They feel as though they're being taken for granted.
NC: Richard Nolan we are talking here about broken trust and how to fix it, in your experience, what sort of issues arise most frequently, where you've tried to recast organisations to get around this?
RN: I think the first challenge that I see on a frequent basis during my tenure in HR and leadership, is lack of clarity, lack of vision, lack of purpose and an ethical, sustainable why, as to why the business exists. I think you could break this down into different sectors in the working environment, i.e, if you've got a high growth corporate environment versus an entrepreneurial high growth business, I think both of them have very different challenges and both of them are trying to address them very differently. High growth tends to have a very clear vision and has to buy people in based on that clarity of vision. Large corporate environments have the ability and the flexibility to probably waiver their vision a little bit but have the ability to remunerate staff much more to engage them. I think getting the clarity of vision, purpose and strong emphasis on ethical purpose, is probably one of the biggest challenges, but one of the most successful outputs you can do is you get it right and implement it consistently and become credible and reliable in delivery.
NC: I want to really talk about the practicalities of fixing broken trust, but just before we do that Richard, do you think this problem we've got in public life with behaviour of politicians, those external factors have actually added to a climate of distrust within organisations, has it somehow set a bad tone, are there any consequences?
RN: In my opinion, absolutely yes.
RN: I think you've seen public scrutiny having a greater implication on brand purpose, and an organisation, how it operates. I think you've seen leaders of organisations being looked to, to make political stances on certain events that are happening in society. And you've seen this happen with things like Black Lives Matter, organisations, brands, businesses are starting to stand up and launch strategies and initiatives, that doesn't just align with their brand and the intention of the organisation but stands up for social injustice and stands up for representation of the workforce that they work with.
NC: But what are you saying here? Are you saying that these people should be able to be trustworthy without having to do all that?
RN: Oh no, no, I'm saying it's becoming more important for, leaders in organisations to become a pivotal, I would say figurehead, as well as the PM, as well as leaders in society, as well as role models, to stand up and be accountable for what is happening in society. And if they disagree with something, they're being held accountable by their employees to stand up and act and deliver and hold their own views accordingly.
NC: So Veronica, Richard seems to be saying that expectations of trust levels have changed. It's almost like organisations are on the back foot. And of course we've got this rising generation, Generation Z, who themselves have different expectations.
VHH: Well, there are two different things that are being talked about here. So there's trust in an organisation and what you might expect from an organisation in terms of purpose and values and its engagement with critical social issues. And then there is the issue of an individual leader's trustworthiness. Really, really simple people decide whether or not to trust an individual leader, based on the fact, are they able and competent, are they bothered about other people and thirdly, do they have some kind of integrity or character that they admire? And all the research on trust breakdowns and repairs shows this, people will forgive an individual CEO, prime minister, permanent secretary, where they make mistakes. It is possible to not be 100% perfect and still be trusted. What is much more difficult to mend, is something where people see that there has been a lack of integrity and there are questions over the characters of individual leaders. And at that point, you can get what we call the Humpty Dumpty syndrome, which is the idea that Humpty Dumpty sat on a wall, Humpty Dumpty had a great fall, all the King's horses and all the King's men couldn't put Humpty together again.
NC: OK, so I'm going to put you on the spot here, Veronica. How can you tell if your organisation has a trust issue, probably arising from leadership mistakes, that cannot be fixed? You're saying that there are times when you just have to do something very drastic, you can't repair.
VHH: OK, so the issue facing some organisations at the moment and luckily and let's be really clear about this Nigel, we're talking often about quite small proportions of organisations, small percentages. It's not that the whole of the business or the public sector is untrustworthy, that would be unnecessarily dramatic.
NC: Well I was thinking, what about for example, the police might be an example might it --
NC: With these persistent problem, institutional problems with misogyny and bullying and all that?
VHH: So, OK, so if you take the case of the Met Police and the way that they are handling, the Met Police inquiry is classic textbook, what we would say to people you should do, which is that they've exited some of those people tainted by the scandal and they are now asking Dame Louise Casey to do an independent investigation. Now, to answer your original question Nigel, the question that Louise Casey and the Met Police and the new commissioner will have to ask themselves, is, was this an individual bad apple, or is it a cultural issue? And if it is a cultural issue, then you are into major transformational change and you will, in HR terms, have to reconsider every single aspect of HR. How you recruit people, how you select them, how you promote them, how you train and develop them. It may be in some cases elsewhere, the organisation is broken up into different units and in effect, it starts again and tries to rebuild trust that way. And that's exactly what's happening with the Met Police at the moment. Those are the questions that Dame Louise Casey, very experienced person, will be asking.
NC: Well Richard, Veronica's set out pretty clearly some of the things you have to do, can we turn that a bit more into a strategy? Can you just fill in some of the detail, on how you would approach a big change in an organisation, to try and deal with a trust issue?
RN: Yeah. Look, if I start with the biggest mistake, in my experience, that people make when entering, how you identify it Veronica already articulated, but you see it through observation, you see it through high levels of churn, low levels of engagement, your default measures are there, the data will typically do the talking, if you speak to the right people they will tend to tell you the right answers. I think the challenge you have, especially for people going into an organisation, they always use the textbook activity around understanding and learning culture. And that tends to be, let's run a workshop, you speak to the CEO, run a workshop and tell us what's wrong with our culture. OK. And they'll go, right, they'll send out a survey to everyone and the survey will be populated by employees, or they'll run a seminar and invite everyone to come to the seminar. And then you'll sit around that conversation and you've identified some of the problems and you'll go, right guys, can you help and work with me to make this executionable and make it deliverable? Low and behold it fails. Why does it fail? Because when you look at most of all, most organisations, you can break up the, the makeup of the employee base can be split into categories. You've got your super highly engaged employees, that you can tell them to run through walls and they'll probably do it for you. That is probably your top 5% to 10% of employees, not necessarily best performers, but ones that are highly bought into your vision and your purpose. And they'll be the ones that if you send out the survey, they'll complete it immediately and they'll be highly engaged. Opposite end of the scale you've probably got your five to ten highly disengaged, highly critical, they're the hardest ones that you'll be able to take through any culture migration at all. Now everyone in the middle, you've got 70% of the organisation I would classify as, a bit cynical, so probably yes, you can take them on the change, but can you actually change them overnight? Probably not. And the worst thing leaders tend to do, is they'll go to the workshop, they'll go to the seminar, they'll do the surveys, guess who completes it? The top 10%. So they go away from that meeting and go, actually, there's nothing wrong with our culture, we need to do these activities, they'll launch a strategy of execution and it falls flat on its face. And why does it fall flat on its face? Because the cynical people in the middle haven't been engaged, because you've got to work to engage them. So the best way you could do that is, cut out the leadership team from the initial discussions, get straight to the base of the employee population and make them work to attend. So if you get them to work, do an exercise, make sure the people are bought into why they are going to participate, then lead with their delivery, get them to build it with you, build a framework off the back of it and execute consistently, doing that will give you much stronger results as part of it.
NC: And Veronica, does your research back up this kind of approach?
VHH: I think, interestingly I would say that my research shows that if you want to high trust culture, one of the things you've got to have are employees that understand that trust is a two way relationship. And actually it's not just about, what an HOD or a CEO does, but it's actually how the employees act within an organisation.
NC: Yes, I saw some interesting findings on this, some research by the Workforce Institute UKG, suggesting that three quarters of chiefs think it's up to the employees to earn trust. So their default position is, they don't trust them. I wonder, should they change their attitude?
VHH: Well, I think what Covid has done, as I said, is actually shift things, because the CEOs and the leaders in Covid had no choice, particularly in the first six to nine months of the pandemic, but to trust downwards and decentralise decision making. So glory, glory, actually, unlike your survey from 2020, what they then discovered is that they could trust people extremely well. The majority, let's always talk about the majority, of people could be trusted. And when I'm interviewing them right now about what they've learnt about Covid, is that actually one of the things is, they don't want to lose that empowerment that they gave the workforce because they trusted them more. But my point back Nigel is this, is that followers have also got, employees have got some responsibilities as well and we have got really judgmental on senior leaders. Leaders are put on a pedestal and they're meant to be practically perfect in every way, as Mary Poppins would've said, and they're not, they're human, they're going to make a mistake. Now if you make a horrendous mistake, that really questions your integrity, or really, really questions how able you are to actually do your job, OK, fair enough, you may not be forgiven. But I think, one of the things I would say about society and about employees is, that we've become much more suspicious as a society.
NC: So how do you fix that? If the boss has got an undeserved bad reputation?
VHH: Well, what they've done, what they've done during Covid has actually done a lot to repair that, it may not have been deliberate at the beginning, but this whole extra accessibility and visibility of human resource directors, CEOs, CFOs, PP being beaned into each other's sitting rooms, has actually increased trust, because they can see them as people. And they're much, it's much more able to trust somebody that you have more access to that is closer to you, that's in greater proximity. We know that line, local managers are always trusted more than senior managers before Covid, because people saw them more regularly. In Covid what's happened through this amazing tech transition, is that actually people have had much more access to senior leaders. And one of the key things, to maintain trust going forwards Nigel, is that, that access and that extra visibility that the senior teams gave to the workforces, all around the world, I think needs to be maintained.
NC: So you do need this feedback loop? You need to have that set up --
NC: So that you don't, if you do put things right, you don't slip back. I just want to pass this over to Richard, because you used a phrase there, I blanch slightly, you talked about, a high trust organisation. Richard, do you think such a thing exists?
RN: Look, I do think they exist, but what's the benefit of trust in an organisation? The benefit is you have a super, highly engaged workforce that deliver great results. Really, really simply. Now the problem you've, that I see here, is trust is one element associated with creating that highly engaged workforce and it's a super important one, but it's not the only one. So yes, you may have circumstances where a leader becomes, or makes a mistake, absolutely agree, they can make a mistake and they can recover the situation and we're all human, so that happens. But I think as an organisation, to create a high trust environment, a highly engaged workforce, they have to do more than just build trust. And if I pivot back to the question you asked about 75% of leaders saying that trust must be earned. I do think trust is a two way street, it's a deal, you're going into employment, it's a deal. The business upholds their half, the employer upholds theirs. But I also think the onus should be considered, if I cast this back, keeping it really simple, if I go all the way back quite a long time, but to my first day at school. I'm going into an, into a situation into an environment that promised me betterment. It was going to be an education. I was really nervous going in there, I take my kids now they're very nervous, that school has to create an environment that enables the children there to flourish. An organisation's no different, but the problem you have in my perspective around individuals going into employment, is I actually believe legislation typically hinders that, because people going into a new job has probationary periods, they've got much higher risk, they've got legislation that works against them, the inability, unless it's certain discriminatory acts, they've got the inability to make employment claims. You're already going into that job thinking, what if it goes wrong? I'm putting everything on the line to make this a success and I want it to be a success, but safety is a big aspect around creating a hugely, a high, highly engaged workforce and it hinders trust. So if you can't necessarily create that environment, the leaders can't create an environment for people to be safe, how can they create high trusting environment?
NC: And of course, Veronica, a lot of organisations, particularly for people at the lower end of the pay scale, everything is set up to monitor and control what they do within an inch of their lives. And it doesn't seem that they are trusted to do the job.
VHH: No I think that has honestly been a problem over the last 20, 25 years, as we've got cleverer and cleverer systems for monitoring people, as you say, Nigel, within an inch of their lives.
NC: But I mean, can people managers change that, they don't run the businesses?
VHH: Well, they can change the systems that they use to monitor and measure performance. Yes. I would say 10, 20 organisations that we've talked to, would be talking about the shift to performance management, being much more about coaching, about checking in, not checking up and one HRD said to me, you know what I realised through Covid? That the majority of our policies are designed to catch the 3% that are possibly doing something wrong, or poor performers, rather than celebrating the 97% that are actually delivering really, really well. And I think you'll see one of the lasting effects of the last two and a half years of leading through this pandemic, will be a shift in how HR sees its role in measuring performance. You're right, there will have to be other areas of the business where that is also adjusted. And you're absolutely right, Nigel, that the more you measure and monitor, the less trusted people feel. Einstein's got a great quote, which is, it goes something like, just because you can count it, doesn't mean it counts. Which I think is brilliant. You know, just because you can measure something, doesn't mean you should measure it. There's something Onora O'Neill, who's a really famous commentator on trust, calls intelligent accountability. So let's be intelligent about what we hold people accountable for, let's not take a sledgehammer to break a nut and not, let's not design a policy that is all about catching the bad apple rather than celebrating the good orchard that we've got in this workforce.
RN: The thing that I'll be pretty critical here, organisations for many generations have seen chief people or people officers, HRDs, are second fiddles to other leadership roles within in an organisation. And I think the last two to three years, due to challenges regarding talent acquisition, Covid the pandemic, CEOs are starting to stand up and actually re-evaluate the importance of people within their organisation.
VHH: Yeah. I agree with that.
RN: And I think we have to change that. But I do think there's an onus on CPOs or HRDs to become commercially savvy. One of the things that I've always done in every role I've been in is, learn the P&L and the commercials of that organisation, as well as the CFO, because we need to be able to articulate the benefit and the value of people, from an ethical sustainability perspective and a cultural perspective and a commercial perspective. And you need to bridge the three of them in a way that helps drive the right culture and the culture of trust.
NC: I get that Richard, but isn't the danger that instead of being a guardian of fairness and doing things the right way, the people manager, the human resources people, in that model, become an extension of the commercial business? The employees who feel they've been unfairly treated, who feel they don't trust the management, might not feel that, those are the best people to solve their problems or at least understand them.
RN: I think you may have a risk of that if you've not articulated the purpose, the vision, the principles, the culture, the values, in a way that the business understands. I think there is a risk of that. But I also think there's an ability, through understanding the commercials to navigate and migrate a business through strong commercial, but positive ethical change, that drives the right performance. And Veronica was absolutely right, we don't measure everything. What you want to understand is, how do you maximise the benefit of an individual? You have to realise that an individual coming into an organisation, they only have a finite amount of time, we all have one life, we have one finite amount of time and individuals are investing the one indispensable quality, and that's time, to your organisation. And organisations need to take accountability to maximise the experience, the quality, the journey, to drive results, but to drive a good experience at the same time. I think getting that right with staff in a commercial way that drives the business and you're able to articulate in a way that is also reflected the numbers, I think you should be in a good space.
NC: Richard, it's always good to learn lessons from examples of where trust has broken down. Are there any that particularly speak to you?
RN: I think the most frequent thing that I see generally day to day, especially speaking to peers across the HR network, is when times get to tough, organisations tend to pivot back to type. So if you've got a, an organisation that's gone through cultural change, you've defined the culture, you've defined the values, defined the behaviours and you've gone through a real great exercising in mapping all this out and communicating it effectively to staff. What you tend to find is if performance dips, you can find organisations start to struggle to maintain that level of value and commitment to them behaviours. And that can sometimes lead to things like micromanagement, that can lead to things around, probably operating contrary to probably what they've defined and they've committed to. And I think the biggest area that I see these challenges happening is around things like, organisations when they're publicly promoting what their performance has been. So they build a, they'll build a commission scheme, commission scheme articulated to staff will say, right, this is our target and then what will happen is, they get to the end of the performance window and they communicate externally to manage their brand and their PR, their performance is amazing. So everything's fantastic, we've grown x%, performance is phenomenal, however, internally they've missed their targets. And then you're trying to articulate and balance an external message with an internal message, saying we're not able to pay bonus. And you've automatically started to degrade that and erode that trust barrier. Now the simple wins and we've already articulated some of them, around how you can avoid this and mitigate this and make it a success, but that to me, is probably the most frequent areas where I see that the trust tends to be broken within organisations across the spectrum
NC: And what crops up for you a lot, Veronica?
VHH: So if you, for me, if you look back at the big corporate scandals that have gone on, that have really contributed to a breakdown of trust in society, I think they fall into again, three categories. The banking crisis was about people questioning, how the heck did we end up with people leading banks, that didn't seem to understand the interconnectedness of the global financial system? That was their ability and competence. And secondly, seemed to be excessively greedy about their own rewards and not sufficiently bothered about the long term impact on their customers and their savings and society in general. If you take the VW issue, of the carbon emission scandal in the States, that was much more of a, an issue about moral codes and integrity, because VW was found to be being economical with the truth with both customers and the US government. So, the breaches normally are either around, actually this is a really important public institution, like a bank or like the Met Police and actually are you able to lead this mate? And in the way you lead it, are you actually mindful of others and the rest of the impact on society? And what does it say about your integrity and character, if in some cases you've got people actually lying to either customers or regulatory authorities? That's where these corporate scandals come from and the problem is --
NC: So that would be an example of where you would say, it can't be fixed, that's a lost trust issue, you have to be much more (inaudible)
VHH: You go and talk to RBS about how long it's taken them to repair the trust from the financial crisis. This is why trust really matters. And, Richard was talking earlier about its one of the ingredients, for me, it's the building block. We know high trust delivers engagement, innovation, problem solving, commitment to change. It's the foundation from which all the other good things come. And that is why those who have had the unfortunate disaster of losing it as a business, will never ever take it for granted again. BAE Systems CFO, BAE Systems is a wonderful organisation, Brad Greve is their chief finance officer, he said to me, BAE Systems believes that trust is the essential magic for an organisation and it needs to be worked on every single day.
NC: Great. So bringing this together then, let's have just a few top tips from each of you, or maybe slightly quicker wins to fix a lack of trust.
VHH: If you make a mistake, if you do a breach of trust, main thing is, to first of all apologise, take responsibility and explain how you know that something went wrong and what you're going to do to make it better. And the explanation of what went wrong, is really, really important, people need to hear that. And then you actually, literally ask for forgiveness and you spend the next two years, whether you are an individual or an organisation, turning up the volume on your sources of trustworthiness. I call it, when I'm working with organisations I call it, turn up the volume on showing they can trust you, because you're capable, you're bothered about other people and you have a good character and a sense of integrity that they can trust in. You're not perfect, you've apologised and you will do your best not to make a mistake again, but, if it's a really, really bad flaw in integrity and character Nigel, as I've said, it may be difficult to move on and we've seen that played out in public life recently.
NC: And of course, Richard, final thoughts from you. Some people find it difficult to apologise, that it becomes like a child saying sorry.
RN: I, look the simple advice from my side, echo's Veronica's to a degree, recognise the problem and own it. Every leader needs to recognise the problem, own the problem. The second thing for me would be, work with staff to build the utopia. This is not a leader, steering, driving the boat forward, you work with staff to define where they want to get to in a collaborative way and go on the journey with them, get them all driving the bus. Then the next thing would be, repeated delivery. Keep telling them what you're going to do and deliver and frequent positive communication underpinning the delivery is key. The one recommendation to all leaders, I would say, be flexible. At the end of the day, if you're going into that conversation with no willingness to change, don't do it, you're wasting your time. You have to be flexible, willing to change, or if not, it will block your ability of cultural change and the success off the back of it.
NC: Great advice. Richard Nolan, chief people officer at EPOS Now and thank you also to the other half of our dynamic duo today, Veronica Hope Hailey, Emeritus Professor from University of Bath. Lots to look forward to from this CIPD podcast series in the next couple of months, for example, we'll be getting stuck into learning from life outside the workplace, be it from hobbies or other outside pursuits, if anybody has time for them at the moment. And discussing the pros and cons of that crazy idea for happier employees, that bring some chiefs out in a cold sweat, a four day week. So do subscribe wherever you, get your podcast, but for now from me Nigel Cassidy until next time from all of us here at the CIPD, it's goodbye.
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