Building an Building an Environment of TrustEnvironment of Trust

Frank C. Bucaro, CSP, CPAEFrank C. Bucaro, CSP, CPAE

www.frankbucaro.com

800-784-4476800-784-4476

““Culture, more than rule books,Culture, more than rule books,

determines how an organizationdetermines how an organization

behaves.”behaves.”

--Warren BuffetWarren Buffet

“ “ Business is a partnership Business is a partnership of people creating, of people creating,

in many ways, in many ways,

a better life for others as a better life for others as well as ourselves. well as ourselves.

If Aristotle Ran General MotorsIf Aristotle Ran General Motors

-Tom Morris-Tom Morris

The Environment of The Environment of OrganizationsOrganizations

1. Determines how people act, make 1. Determines how people act, make decisions, and govern their affairs.decisions, and govern their affairs.

2. Directs the promises made to 2. Directs the promises made to shareholders, customers, employees, shareholders, customers, employees, partners, environment, and partners, environment, and communities.communities.

Jack Lowe Jr. of Jack Lowe Jr. of TDIndustries, LTDTDIndustries, LTD

““Our relationships with our customers,Our relationships with our customers,

our suppliers and our internalour suppliers and our internal

relationships cannot adapt quickly relationships cannot adapt quickly

enough to the demands of continuousenough to the demands of continuous

change and continuous improvementchange and continuous improvement

unless we have a high trust culture.”unless we have a high trust culture.”

Reputation then the BrandReputation then the Brand

Brand = your name is synonymousBrand = your name is synonymous

with a certain idea.with a certain idea.

= it’s about an emotional = it’s about an emotional

connection with theconnection with the

customer.customer.

Reputation is Based on the Reputation is Based on the Answers to These Questions:Answers to These Questions:

What do you want to be known for?What do you want to be known for?

Where are you in the process now?Where are you in the process now?

What else do you need to learn/do?What else do you need to learn/do?

How will you know when you get there?How will you know when you get there?

Challenges to TrustChallenges to Trust

1. It is hard work.1. It is hard work.

2. It cannot be attained through slick 2. It cannot be attained through slick management skills, not management skills, not manipulation, etc.manipulation, etc.

3. The building of trust is an 3. The building of trust is an essentially ethical activity.essentially ethical activity.

People get in trouble at People get in trouble at work for work for fourfour reasons reasons

1.1. Abuse of power.Abuse of power.

2.2. Abuse of knowledge.Abuse of knowledge.

3.3. Abuse of access.Abuse of access.

4.4. Abuse of relationships.Abuse of relationships.

Customers Need:Customers Need:

OpennessOpenness

CSR programs, i.e. high quality CSR programs, i.e. high quality products/services, volunteer activities, products/services, volunteer activities, environmental issues, etc.environmental issues, etc.

Ethics surveys, to employees and Ethics surveys, to employees and customerscustomers

Access to the business’s hotlineAccess to the business’s hotline

You Need to Ask:You Need to Ask:

How Will This Help Them…How Will This Help Them…

1. Feel like they belong1. Feel like they belong

2. Feel significant2. Feel significant

3. Develop a unique identity3. Develop a unique identity

Social Significance Social Significance QuestionQuestion

How do I fit in here?How do I fit in here?

Four “C”s of getting it rightFour “C”s of getting it right

Conscience = intuition, moral code, “gut”Conscience = intuition, moral code, “gut”

Choice = pros and cons of choosingChoice = pros and cons of choosing

Culture = beliefs and practices Culture = beliefs and practices

Compliance = What does the law sayCompliance = What does the law say

Siemens CEO Peter Siemens CEO Peter LoescherLoescher

““You have to have your personal valuesYou have to have your personal values

and then you build from there. Ethicaland then you build from there. Ethical

people are guided by a moral compass.people are guided by a moral compass.

My father taught me that there is noMy father taught me that there is no

conflict between success and ethics,conflict between success and ethics,

indeed the only guarantee for a good lifeindeed the only guarantee for a good life

is to live as a good person.”is to live as a good person.”USA Today – 2/15/2010USA Today – 2/15/2010

Americans’ outlook for U.S. Americans’ outlook for U.S. Morality remains bleakMorality remains bleak

Gallup Poll on 5/1/2010 found:Gallup Poll on 5/1/2010 found:

76% of Americans say moral values in76% of Americans say moral values in

the U.S. are getting worse.the U.S. are getting worse.

14% of Americans say moral values are14% of Americans say moral values are

getting better.getting better.

Ten top reasons for the moral Ten top reasons for the moral decline: Gallup poll- 5/17/2010decline: Gallup poll- 5/17/2010

1.1. Declining moral valuesDeclining moral values

2.2. Disrespect of othersDisrespect of others

3.3. Parents not instilling values in their Parents not instilling values in their childrenchildren

4.4. Dishonesty in government/businessDishonesty in government/business

5.5. Rising crime/violenceRising crime/violence

Gallup poll- cont’Gallup poll- cont’

6.6. Moving away from religion Moving away from religion

77. Breakdown of the family. Breakdown of the family

88. People not accountable for their . People not accountable for their

behavior.behavior.

99. People don’t care.. People don’t care.

1010. TV content. TV content

Cowboy EthicsCowboy Ethics

1. Live each day with courage.1. Live each day with courage.

2. Take pride in your work.2. Take pride in your work.

3. Always finish what you start.3. Always finish what you start.

4. Do what has to be done.4. Do what has to be done.

Cowboy ethics-2Cowboy ethics-2

5. Be tough, but fair.5. Be tough, but fair.

6. When you make a promise, keep it.6. When you make a promise, keep it.

7. Ride for the Brand.7. Ride for the Brand.

8. Talk less and say more.8. Talk less and say more.

Cowboy Ethics -3Cowboy Ethics -3

9. Remember that some things are not 9. Remember that some things are not for sale.for sale.

10. Know where to draw the line.10. Know where to draw the line.

The ProblemThe Problem

Disconnect

Values weValues we

ProfessProfess

Behavior we Behavior we DemonstrateDemonstrate

There are only four There are only four dilemmas for humanitydilemmas for humanity

1.1. Truth vs. LoyaltyTruth vs. Loyalty

2.2. Individual vs. CommunityIndividual vs. Community

3.3. Short Term vs. Long TermShort Term vs. Long Term

4.4. Justice vs. MercyJustice vs. Mercy

Institute for Global EthicsInstitute for Global Ethics

Norman R. AugustineNorman R. Augustine Former CEO of Former CEO of

Lockheed Martin CorporationLockheed Martin Corporation

“ “I can think of no commitment more I can think of no commitment more important to a corporation or its survival important to a corporation or its survival than its commitment to ethics.than its commitment to ethics.

That means not only conducting our That means not only conducting our business affairs within the letter of the law, business affairs within the letter of the law, but also in the spirit of the law.”but also in the spirit of the law.”

Leaders Must:Leaders Must:• Carry moral authority, because without it,Carry moral authority, because without it, leadership is bland.leadership is bland.

• Balance the demands of the market, Balance the demands of the market, owners, employees, customers and owners, employees, customers and community at large.community at large.

• View ethics as one of their top View ethics as one of their top responsibilities and as an integral part of responsibilities and as an integral part of their stewardship and service to their stewardship and service to shareholders and customers.shareholders and customers.

Challenges for LeadersChallenges for Leaders

1. Become involved in the culture, i.e. 1. Become involved in the culture, i.e. managing the culture and assess if it managing the culture and assess if it is properly serving the long term is properly serving the long term goals.goals.

2. Stop asking “2. Stop asking “CANCAN we do this” but we do this” but rather “rather “SHOULDSHOULD we do this?” we do this?”

Challenges,Challenges, cont’d 2 cont’d 2

3. Focus on 3. Focus on howhow your organization does your organization does business, not just business, not just whatwhat it does. it does.

““The high standards and valuesThe high standards and values

embedded in how you do business areembedded in how you do business are

more powerful differentiators tomore powerful differentiators to

distinguish you in the marketplace.”distinguish you in the marketplace.”

““Corporate Culture: The Ultimate Driver of BusinessCorporate Culture: The Ultimate Driver of Business

Performance” by Dov L. SeidmanPerformance” by Dov L. Seidman

Challenges, Challenges, cont’d 3cont’d 3

4. Reward ethical leadership, even when 4. Reward ethical leadership, even when it hurts and punish unethical behavior it hurts and punish unethical behavior whenever you see it.whenever you see it.

““If you lose dollars for the firm, I will beIf you lose dollars for the firm, I will be

understanding; if you lose reputation, Iunderstanding; if you lose reputation, I

will be ruthless.” -Warren Buffetwill be ruthless.” -Warren Buffet

Challenges, Challenges, cont’d 4cont’d 4

5. Make your decision in the light of the 5. Make your decision in the light of the broader ecosystem. broader ecosystem.

Do the right thing, any time and all the Do the right thing, any time and all the

time.time.

Mahatma Gandhi’s Seven Mahatma Gandhi’s Seven deadly “sins”deadly “sins”

1.1. Wealth without WorkWealth without Work

2.2. Pleasure without ConsciencePleasure without Conscience

3.3. Knowledge without CharacterKnowledge without Character

4.4. Business without EthicsBusiness without Ethics

5.5. Science without HumanityScience without Humanity

6.6. Religion without sacrificeReligion without sacrifice

7.7. Politics without principlesPolitics without principles

Business Should Business Should Focus on:Focus on:

PURPOSE: Why are we here?PURPOSE: Why are we here?

MISSION: What do we do to fulfill our MISSION: What do we do to fulfill our

purpose?purpose?

VALUES: How do we work togetherVALUES: How do we work together

to fulfill our mission and to fulfill our mission and

accomplish our purpose? accomplish our purpose?

Ethical ConsiderationsEthical Considerations

o On what foundation do we base our On what foundation do we base our ethical decisions?ethical decisions?

o People make decisions based on the People make decisions based on the values they hold dear.values they hold dear.

o Ethical principles are not concerned Ethical principles are not concerned with how things with how things dodo operate, but with operate, but with how they how they shouldshould operate! operate!

Ethical ConsiderationsEthical Considerations (continued)(continued)

o The most difficult decisions to make, The most difficult decisions to make, are those in which there is a conflict are those in which there is a conflict between two or more principles of between two or more principles of which you deeply believe in.which you deeply believe in.

o It is important that we determine in It is important that we determine in advance what our priorities are, advance what our priorities are, realizing that a lot will depend on the realizing that a lot will depend on the situation.situation.

Two Questions to AskTwo Questions to Ask

1.1. Is this in line with our company’s Is this in line with our company’s objectives?objectives?

2.2. Will the decision result in the right Will the decision result in the right thing being done for the customer?thing being done for the customer?

Realities of LifeRealities of Life

1.1. Life is tough.Life is tough.

2.2. You’re not in control.You’re not in control.

3.3. You’re not that important.You’re not that important.

4.4. You’re going to die.You’re going to die.

5.5. Your life is not about you.Your life is not about you.

GIFTGIFT

Each Each DayDay

Each Each PersoPersonn