Friday, March 30, 2012

"Chunk" With Care



 

“Is trust all you’re ever gonna write about?”  

“Pretty much,” I rather curtly answered Sally and began to explain that my comments would hardly exhaust the subject.  She gave me “the look” turned, walked away and left me with the question still clamoring for a valid response.

I then dove quickly into reading Charles Duhigg’s book, The Power of Habit, where I discovered in the first few chapters a more satisfying response to Sally’s question.

Duhigg strongly asserts that one part of our brain—the basal ganglia—stores patterns and in effect causes habitual responses.  “The process in which the brain converts a sequence of actions into an automatic routine is known as ‘chunking,’ and it’s at the root of how habits form.  There are dozens—if not hundreds—of behavioral chunks that we rely on every day.  Some are simple:  You automatically put toothpaste on your toothbrush before sticking it in your mouth.  Some, such as getting dressed or making the kids’ lunch, are a little more complex.”

Recently Sally and I experienced “chunking” as we habitually pushed the garage door opener, jumped in the car, turned on the ignition, engaged reverse and, without looking, backed out.  It always works—door goes up, car goes out--habitually.  But not that day.  Garage door stuck at the top, I caved it in and damaged my car.  Habit.

Duhigg calls our unthinking habitual responses an “intricate ballet” akin to auto pilot which we experience every day.

If behavior patterns and responses can in fact be stored in the basal ganglia area awaiting a cue, then it seems to me that such traits as trustworthiness, truthfulness, and transparency might become habitual for an individual, a company, a firm.  What would a company look like if its leadership emphasized in classroom settings, on line interactivity and company retreats its strong stand on integrity, accountability, truth telling, and trustworthiness.   

I’ve often wondered how failed and disgraced companies and  audit firms would’ve fared had they spent more time on developing ethics and integrity as habitual attributes and qualities.  Incentives for increased business and profitability are certainly part of our economic model but shouldn’t the incentives include a focus on first and foremost the principal sustainability factor of the public trust? 
 
Is all this habitual ethics practice some feel good theory, some warm and fuzzy notion, some nice idea that loses its authenticity in the dog-eat-dog world of reality?  Not according to Pinnacle Financial Partners, headquarted in Nashville, and not according to 99 other companies recently named by Forbes magazine as “America’s Most Trustworthy Companies.”  I know the Pinnacle story.  Several years ago, we in NASBA researched banks to try to find a bank that met our high standards for service, community involvement, reputation and ethical emphasis.  Pinnacle is purposeful about ethics and integrity.  Its employees buy into what the bank’s leaders model—truthfulness and transparency.  Pinnacle has been consistently year after year named one of Nashville’s “Best Places to Work.”  Trustworthiness has become a habit with Pinnacle.  Isn’t that refreshing?

So, I’ll keep on writing about trust trying in my drip-drip-drip fashion to help individual, professional firms and companies pursue programs and practices which lead to clients and customers believing, trusting, and having confidence in their products and services.  

Your basal ganglia sits there preparing to chunk.  Time to get “chunking” with habits that matter to the public—truth, transparency, trustworthiness.

Ad astra per aspera                                       

Wednesday, March 21, 2012

What About Some Trust Insurance?








A few years back, meeting in its London headquarters, Clowns International issued a strong advisory to its membership that each should strongly consider buying pie insurance.  Pie insurance would protect against the risk of being sued by spectators who after being smashed in the face with the creamy concoction might not appreciate the joke.  Although no clown had been sued for such an incident, Clowns International believed it “just a matter of time” before some pie-face instigated a suit.

Of course there are many other forms of insurance which to the average person seems a bit strange.  We all know about people’s noses, legs, arms and other body parts being insured.  I read about a famous Australian cricketer named Merv Hughes who insured his moustache for $400,000.  And today’s fascination with vampires has produced a demand for vampire and werewolf bite insurance.

In the wake of our country’s budget problems, ever increasing deficits, Wall Street lies and misrepresentations, and some corporate officers and financial professionals’ greed, the thought occurred to me that we the investing and consuming public need some trust insurance.  It follows that if we are completely dependent on trusting these companies, officers, and professionals, then they ought to at least fortify our trust with insurance that would help to assure us that they are serious about integrity and straight dealing. 

There are some companies which are striving to provide a type of insurance to all their stakeholders that they indeed are serious about corporate social responsibility (CSR) and adhering to their codes of conduct.  An excellent article appearing in the March/April 2012 edition of the Washington CPA coauthored by Laurie Tish, CPA, Partner, Moss Adams, member of board of directors of NASBA and Bob Bunting, CPA, former CEO of Moss Adams, summarizes well efforts being made by about 50% of large U.S. publicly traded companies to provide to the public CSR and Code of Conduct reports.  These reports give us an assessment of these companies’ performance in environmentally sensitive and other social responsibility areas as well as how they and their employees are behaving under ethical guidelines and internal controls. 

Companies such as Adidas, McDonalds, Apple, Nike, Aviva, Coca Cola, Pepsi, Sony and many others are proactively and positively striving to give us more confidence, more trust in what they do and how they conduct themselves.  I think that’s pretty good trust insurance and I believe that any company, professional firm, government agency or other institution or organization should give the public similar assurance as to their actions and conduct.

Perhaps Wall Street and Main Street should take a lesson from the clowns.  If pie-throwing needs insurance then certainly peddling products and services under an integrity banner requires assurance to a trusting public.

Ad astra per aspera


Monday, March 12, 2012

Trusting More Than "Eight Feet"

One of Charles Schultz's Peanuts cartoons has Lucy saying to Linus that she doesn't trust anybody.  Linus replies, "You don't even trust me?"  "I trust you about as far as you can throw your blanket," says Lucy.  Linus then heaves his blanket, looks at Charlie Brown and says, "My sister trusts me eight feet."

Linus communicates what many of us feel about those with whom we do business.  We may buy their products and services but our trust in them is not very high--maybe only about "eight feet."   We don't easily dismiss the hundreds of billions in losses in our 401Ks, our homes, and jobs that has been experienced in our country because of others' greed, corruption, lying, misrepresentation, exaggerated financial reporting...and the list goes on and on.  "Eight feet"?  Why should we trust them at all?

And yet we want to believe, we want to trust, we want to have confidence in what companies tell us about their products, their services and about themselves.  How much do you trust the following representations made in the form of mission statements, logos or taglines?
  • All the News That's Fit to Print (New York Times)
  • Fair and Balanced (Fox News)
  • Commitment Runs Deep (Devon Energy)
  • Bettering the Human Condition (Hospital Corporation of America)
  • We Make Home Possible (Freddie Mac)
  • We Are Creating Value--We're Committed To Doing Even More (Fannie Mae)
  • High Performance.  Delivered.  (Accenture)
  • Spirit to Serve  (Marriott International)
  • You're Going to Like the Way You Look.  I Guarantee It.  (Men's Warehouse)
  • Always Do The Right Thing (The Scooter Store)
I must admit that I have a little of Lucy in me when I read some of the assertions above.  But what does it take for me, for you, for the public to really believe, rely upon and trust what a company says about itself?  Certainly not perfection.  We don't expect even the most trusted and ethical companies and firms to be free of errors, occasional lapses of judgement and some bad decisions.  That's part of being human.  What we would like to see in a company is the antithesis of what Jim Collins in his book, How The Mighty Fall, describes as five stages of decline:  hubris (excessive pride); undisciplined pursuit of more; denial of risk; grasping for salvation (drastic measures to save the company); capitulation to irrelevance or death (simply giving up).

We all have learned a few things about companies/firms coming out of the scandals of 2000 and the lies, misrepresentations, and exaggerated financial valuations of 2008.  Among my principal take-a-ways is that I now look for some semblance of humility by corporate officers, a disciplined and methodical approach to growth and profitability, and risk taking that is reasonable, measured, and communicated. 

After college, as I prepared to be an auditor for Ernst & Ernst (now Ernst & Young), my Dad sent me off with one of his memorable aphorisms:  "A lie stands on one leg; truth on two."  I'm sure I laughed a bit at his advice rolled up in that statement, but now, years later, I realize my Dad had a doctorate in the elements of human trust.  We all need to mean what we say and live up to the trust statements we dare proclaim.

"Eight feet" is far too short for trust!

Ad astra, per aspera



Friday, March 2, 2012

Moral Muscle


Moral Muscle

The Ass and His Purchaser, an Aesop Fable, concludes with this moral principle:  “A person is known by the company he keeps.”  During my busy teen years, I was often reminded by Mom and Dad of hanging around with the right crowd.  One Bible verse ground into my memory at home and church was “evil companionships corrupt good morals.” 

While “a person is known by the company he keeps” is an apt caution for any individual, perhaps the corollary, “a company is known by the people it keeps,” is more applicable in our business and institutional culture.  It is after all an elementary and foundational truth that people create and perpetuate a culture of ethics and conduct, that people shoulder responsibility and accountability for actions or inaction inside any organization and that people ultimately give companies, firms and all organizations their face, their image, their reputation and their standing.  A company’s mission statement is a statement of collective commitment by its officers and employees, not just a group of words strung together by slick promotion having no attachment to those breathing and living souls inside the company. 

“Can I trust you?” begins with “you.”  You, the company must be made up of people committed to truth, transparency, accountability, honesty and integrity.  Sounds like motherhood and apple pie, huh?  It’s simply elementary, foundational—“a company is known by the people it keeps.”

I can tell you about one company—and there are many-- which is committed to having the right people…the kind of people who simply want to serve passionately and provide the public with quality products-- Pitney Bowes.  PB is certainly known for its competitive edge in mail delivery and processing technology but less known perhaps is their global leadership in portrait software, electronic discovery services, mail-based marketing services, customer intelligence software and a host of other customer communications applications.  

PB was recognized four consecutive years by Ethisphere, a leading ethics rating organization, as one of the “World’s Most Ethical Companies.”  The framework of measurement employed by Ethisphere included:  ethics and compliance program; reputation, leadership and innovation; governance; corporate citizenship and responsibility; and culture of ethics.

What a great company!  Yes.  But let’s keep in mind that “a company is known by the people it keeps.”  

Now, let me tell you about a person inside the giant six billion dollar company who gives a representative and exemplary face to PB.  Her name is Robbie E.B. Narcisse, Vice President, Global Ethics and Business Practices.  In short, Robbie’s responsibilities include managing the company’s efforts to ensure that its worldwide business operations are conducted in full compliance with all applicable laws and regulations, company policies and procedures, and with the highest ethical standards.  Robbie’s rich background and experience in corporate law provides a meaningful complement to her passion to serve employees, stockholders, suppliers and the public in the right way.  

Recently, Robbie was awarded the prestigious “Being a Difference Award” by the NASBA Center for the Public Trust.  Johnna Torsone, PB’s Executive Vice President and Chief Human Resources Officer, who nominated Robbie for the Award said it best:  “Robbie is able to combine her legal analysis with a view of how the law applies when she is dealing with internal issues and she relies on her “moral muscles” and gut intuition to ask:  “does this feel right?  Is this issue in keeping with the spirit and ethos of PB?”  

How many situations like AIG, HealthSouth, Arthur Andersen, Bernard L. Madoff Investment Securities, Lehman Bros, Fannie Mae/Mac, Satyam, Parmalat, etc. would have been avoided had certain individuals exercised “moral muscle” and simply considered as Robbie has, “does this feel right?, is this in keeping with the spirit and ethos of the company?”

PB is highly regarded and recognized as a world leader in ethics compliance and conduct.  And we only need to look at its people like Robbie E.B. Narcisse to understand why.  A company is known for this type person!

Ad astra per aspera

Tuesday, February 21, 2012

The Bases

I remember the Yankees' Casey Stengel, the legendary manager who with the likes of Mickey Mantle, Whitey Ford and Yogi Berra won five straight world championships and added two others.   But there was also the Mets' Casey Stengel, the highly frustrated manager who took a collection of ball players who in their first year lost 120 ball games.  In spring training of 1962 perhaps sensing what was about to unfold during this inaugural pathetic year, Stengel took his players for a stroll around the diamond.  "Them are the bases!" Casey explained.

Ignoring, abusing or simply not recognizing the power and dynamic influence of the public trust whether we're in business, government, academia, the professions or any other pursuit is tantamount to futility and failure.  Yes,  we can fake it for a while but treading on trust, scorning what enabled us to succeed and behaving badly will ultimately lead to our downfall.

There are "bases" to consider and the most important base begins at "home plate"--TRUST!

The Chicago Booth/Kellogg School publishes quarterly the Financial Trust Index which measures confidence Americans have in the private institutions in which they invest their money.  The Index is calculated on a sample of 1,000 American adults.  The most recent results published for the quarter ended December 2011 reflects that less than 25% of Americans trust our overall financial systems and the institutions operating within.  The stock market is trusted by 16%, large corporations by 17%, banks and mutual funds by 30%.  Folks, this is absurd--the low degree of trustworthiness in the fundamental and integral parts of our financial and economic lifeblood.  Can I trust you?  No! is our resounding response. 

Another respected measure of trust in institutions is the Edelman Trust Barometer.  The 2012 published report gives some insight into the appropriate focus companies must have to engender trust.  Edelman based on a survey of over 5,000 individuals in 23 countries in the age group of 25-64 found that corporate reputation and credibility is based on quality products/services (69%), transparent and honest business practices (65%), simple trust in a company (65%) and how a company treats its employees (63%).  This information is not really a revelation to us--we've known this for as long as people have bartered, traded or sold anything.  But we apparently are in need of constant reminding--"them are the bases."

The good news is that there are many companies and firms--the vast majority in my opinion--who get it right and know the bases of delivering quality producs/services, behaving well and treating customers, suppliers and employees as treasured relationships.  I'm sure you know of some.  I invite you to share them with us.  Tell me about companies and firms which "get it" and conduct their business honorably.  These are the companies which recognize the "bases" and know the game begins and ends at "home plate"--TRUST!

Ad astra, per aspera

Thursday, February 9, 2012

The Question

In flight from New York to Los Angeles, the plane made an unexpected stop in Chicago.  The head attendant announced the approximate hour delay and upon landing passengers could deplane if they'd like.  Everyone did except for a blind gentleman who periodically took this flight and was well known to the pilots and attendants.

"John," said the pilot to the blind man, "would you like to stretch your legs as well?"

"No, but I would like for someone to walk my dog Charley who is getting a bit restless."

As the pilot, donning his sunglasses, came into the gate area with Charley the seeing-eye dog, you can imagine the startled look on the faces of those watching.  Many changed planes and some changed airlines.

"The Question" we all face numerous times a day and to which we all expect a clear answer or resolution is "Can I trust you?"  It might be restated or rephrased to "can I trust it?" or "can I trust the situation?" or other like queries.  And "the question" is not always asked and in fact more times than not is simply raised or processed in our thoughts and in our mental assessment of a person, situation, or circumstance.  Passengers observing an apparent blind pilot need not ask the question but most certainly will process the issue of trust.

Whether republican, independent or democrat there is one thing we can all agree on with President Obama as a part of his 2010 State of the Union address:  "...we have to recognize that we face more than a deficit of dollars right now.  We face a deficit of trust--deep and corrosive doubts about how Washington works that have been growing for years."   And it's not only Washington, it's Fannie Mae, Freddie Mac, insider trading by public officials, tax dollars thrown away on Solyndra, falsification and misrepresentation of company performance, sloppy/incompetent/prejudicial work by auditors and the list seems endless.

Trust drives markets, sustains relationships and nourishes confidence in business and government.  Where there is little or no trust, nations go to war, economic systems falter, homes are broken, and lives are shattered.  

Companies receive from us the ultimate and best we have to give--our trust, our confidence, and our belief in them.  All we ask in return is that they be trustworthy.  Trust begins with the simple belief in the representations made to us.  It's the kind of reliance we had in our parents, our grade school teachers and our friends.  We really want to trust.  Most of us are wired that way from infancy--which is when we learn that the world is a safe place and that others can be relied upon.  We simply want companies to do what they advertise; live up to their optimistic press releases, annual reports and 10-Ks, and behave properly in the marketplace.  We buy their products and services, they earn a fair and reasonable return on their investment and employees, management, stockholders, and the public are rewarded and go on happily.

We want to trust.  But what each of us wants to know is:  Can I trust you?  Are you worthy of my trust?

My commentary on "The Question" will be ongoing and will seek to hold companies, firms, and entities accountable for their representations to us the public.  When Ernst & Young (I'm an alum) boldly proclaims as part of their firm logo, "quality in everything we do," then we the public have the right, the obligation to test that representation.  And it's a great thing if I can really trust that statement based on appropriate firm behavior.  I just believe it's time for companies and firms to stand behind their statements which they want all of us to accept, believe and rely upon. 

Being a frequent flier I appreciate passengers not trusting an apparent blind pilot to safely get them to their destination.  As consumers and citizens we also must be vigilant and confirm our trust in companies, firms and in government through filters which measure actions against words.