Reformed PR professional Robert Phillips has become jaundiced at the behaviour of such companies and the traditional PR approach to managing crises.
Martin Winterkorn, former Volkswagen CEO, has joined an ever-expanding Trust Hall of Shame – a global cast from Enron to RBS, BP to Toshiba.
VW thought it could beat the system on its own terms but instead proved, once again, that any organisation fails to tell the truth at its peril. Even in monetary terms, the cost of VW’s criminal breach of trust is incalculable. It may exceed $20 billion set aside for fines and claims, not to mention 40% wiped off VW’s stock price in the month after the story broke.
Some, of course, might be wary of trusting me. I used to work in PR. Management Today dubbed me a 'repentant spinner'.
PR – PART OF THE PROBLEM
My firm belief – and one of the reasons I quit my job as EMEA CEO of Edelman – is that, for decades now, public relations has been part of the trust problem. It is not part of the trust solution. Spinning to success died with the last century.
I also quit Edelman because I felt the large consultancy business model was broken and because of a failure to address a number of existential threats to the PR industry, not least around data and talent. But it was the boss of one of the UK’s ‘big six’ energy companies who inspired me to write a book about trust and communications.
I heard Vincent de Rivaz, CEO of EDF and now a nuclear business partner to the Chinese government, give a truly dreadful speech on trust. It was the 2013–14 winter, when EDF was under considerable pressure for its pricing policies – accused of forcing people to choose between ‘heating and eating’.
Chances are that Vincent didn’t write his own material. He churned out the usual banalities about the importance of EDF trusting the customer and the customer trusting EDF. He did not acknowledge the crisis – nor even seem to believe his own script. Yet Vincent’s speech was unintentionally rich in trust myths.
The first myth he exposed was that leaders can demand, command or assume trust. They can’t. Trust is not a message. It is an outcome. It is deeply behavioural. However many times Vincent spoke the T-word, I don’t think anyone actually believed him. You cannot tell people to trust you.
The second myth is that anyone can wave a magic wand to restore broken trust. You can’t. In a chaotic, complex and globalised world, there is no single action that can restore, build or maintain trust. Trust is now forever fragile. Trust has to be hard-fought, hard-earned, and hard-won every day.
Fragility helps us better understand the third myth: that we can return to ‘old’ trust. We can’t. Disruption is permanent. We have to come to terms with the world as it is now and accept that change is never going to be this slow again.
COMPLIANCE IS NOT ENOUGH
Having spent a decade thinking and writing about trust, I’m now more convinced than ever that trust scores – even the famed Edelman Trust Barometer – are mostly irrelevant. Trust in major institutions, not just individual companies, is in permanent flux. Today’s crisis of trust, as some like to call it, is actually a crisis of leadership.
This crisis of leadership is a failure to make the right judgements and, put simply, to do the right thing. The trustworthy organisation needs to add an ethical dimension to what is legal. Compliance alone is not enough.
The problem is that we have become compliance freaks. As Professor John Kotter points out: 'In today’s business world there is too much management and not enough leadership.' Yet frequently we confuse the two.
Too many organisations are trapped within a managerial, compliance culture that appears permanently risk-averse, terrified of litigation and propped up by lawyers and public relations people. This is probably how UK tour operator Thomas Cook ended up where it did in May 2015. It thought it could spin its way out of trouble, manage the message and avoid saying it was sorry.
In terms of communications, the new and the old normals are neatly symbolised by two men called Edward. Whistleblower extraordinaire Edward Snowden captures the new normal. The old is personified by (Sigmund Freud’s nephew) Edward Bernays.
According to popular legend, Bernays created PR in the US in the first half of the 20th century. PR was a means of control over the masses, whose judgement he did not trust.
Bernays’ legacy is another reason why PR is no longer fit for purpose. No one is in control any longer. Anyone who thinks they are – and can impose, rather than negotiate, trusted relationships – is living in the wrong century.
Add to this the mega-trend of individual empowerment: the power shift from state to citizen; employer to employee; corporation to citizen-consumer. It is fuelled and accelerated by technology, costless communications and the rise of networks. It is why old institutions – from the UN to the EU, trade associations, businesses, political parties and the medical profession – struggle to be as trusted as they once were.
The result is a normal that is chaotic and complex. Networks are interdependent and global. We may trust others within our own networks but will not trust those who think they can impose external control. To be trusted, leaders will have to embrace, understand and negotiate this complexity.
ACTIONS NOT WORDS
Three years ago, I attended a session of the European Roundtable in Berlin, talking trust with 44 of the 50 CEOs of the largest companies in Europe. At the end of my talk – entitled ‘You are no longer in control’ – there was silence. One of the CEOs then spoke. 'What you do not understand,' he said, 'is that people like me pay people like you to keep us in control.'
Before I could answer, another CEO jumped in: 'You can pay Robert as much as you like, but the truth is we are no longer in control. The game is up.'
Leaders who fail to put the citizen at the centre of their business are unlikely to earn trust. A bank CEO asked me to advise him on what it would take to be 'a good and trusted' bank. I offered 10 principles and behaviours. None of them were rocket science.
The first principle was transparency. The CEO agreed with transparency. I suggested he abolish free banking, given that it is not free – someone always pays – and therefore not transparent. We cannot do that, he countered. We make too much money from it.
The second principle was ‘proportionality’. He agreed with proportionality, too, so I suggested abandoning the crazy bonuses that have haunted the banking industry for years. 'We cannot do that,' he said, 'flight of talent and all that.'
‘Mutuality’ was dismissed because he was not prepared to consider wider share ownership for all employees. Yet here was a man who frequently cited John Lewis as his model organisation.
In the end, he agreed with 10 principles and failed to commit to a single behaviour. He asked me to work with him anyway. I politely declined.
There is no point in adopting principles if you are not willing to implement the behaviours. It is just PR nonsense. It has to be about what we do, not what we say.
Technology, networks and activism are flattening old hierarchies and elites. Whistleblowers, social media campaigns and citizen journalists will get you. The days of controlling anything, especially media, are receding fast. In a world where ‘people see what you see’, resistance is increasingly futile.
Most organisations keep their heads firmly in the sand. Maybe they think they can ignore the paradigm shift – or that their PR people can make it go away.
But some are looking to change, in tune with revolutionary times. The successful, more trusted organisations of the future are open, empathetic and relational. In an interconnected world, all of us are smarter than any one of us: organisations that embrace these beliefs will be more resilient, adaptive and creative. They will attract the most – and keep the best.
A NEW MODEL IS NEEDED
I believe we need a new model of Public Leadership to replace the broken model of public relations. Public Leadership is activist, co-produced, citizen-centric and society-first. Public Leadership recognises purpose, not profit, at the heart of organisations. It asks bigger questions about the nature of society and the importance of common good, as defined by Aristotle and Thomas Aquinas.
The more trusted organisation of the future looks more like a social movement than a traditional hierarchy. Leaders – business and civic – need to think and behave like social activists. They need to communicate in tune with this.
Public Leadership is based on the simple principle of ‘doing the right thing’ – not least in understanding the difference between profit optimisation and profit maximisation.
Profit optimisation speaks to the long-term interests of citizens and society and to the common good. Profit maximisation, as we saw from the hideous excesses of the financial services sector, or even Volkswagen, speaks instead to the culture of ‘Who do we fuck today?’ This was the stock phrase with which a FTSE 100 CEO famously used to open board meetings.
In addressing the crisis of trust, we need to focus on accountability and not obsess about measurement. We therefore need to take a more radical approach to honesty and transparency.
The Public Leadership model is made accountable through Public Value, rooted in the common good. Every organisation will have its unique version – its own manifesto – because Public Value is better co-produced with wise crowds of employees, customers and stakeholders. This ensures its accountability to the many, not the few – to the 99 per cent. A bank that thinks in terms of Public Value outcomes, for example, quickly addresses the challenge of being ‘socially useless’.
I would encourage all ‘new normal’ leaders to think in terms of manifestos and crowds, not focus groups. Better decisions are made by wise crowds of real people. Employees, customers, and stakeholders understand what the common good really looks like.
A WAY FORWARD
Some major corporations are slowly but better addressing issues and behaviours around trust. There are the usual suspects – Patagonia in the US, Ben & Jerry’s and other ‘B Corps’; John Lewis Partnership in the UK; Unilever – with its Sustainable Living Plan – almost everywhere.
There are other global examples. HCL Technologies in India co-produces its business strategies with employees. Porto Alegre – Brazil’s second largest municipality – has enjoyed participatory budgeting for many years. The workers’ councils of Spain’s co-operative Mondragon demonstrate the John Lewis Partnership model writ large.
John Lewis’s Patrick Lewis has said: 'The real heart of business is purpose… which is more than making money or creating financial value.' Patrick is now group finance director.
Yet business and politics are still infected by the spirit of Chicago economist Milton Friedman, who argued that the social purpose of business was to generate profit. Many leaders, those at Volkswagen obviously included, have yet to lay his ghost to rest. Unless we come to terms with better profit, we may never come to terms with better trust.'
The aim to have more trust is a stupid aim,' argued moral philosopher Onora O’Neill in 2013. 'Intelligently placed and intelligently refused trust should be the proper aim.' Trustworthiness – therefore better judgement – matters more to O’Neill than trust. Better judgement is based on a combination of competence, honesty and reliability.
O’Neill points out that no one would ever seek 'more trust' from con-men like Bernie Madoff, nor would she trust a friend even to post a letter if she knew they were unreliable and forgetful.
Trustworthiness is personal and reciprocal. It is not for brands, corporations, CEOs or politicians to own. Reciprocal vulnerability makes accountability mutual. It means organisations are as exposed to their employees and customers as their employees and customers have traditionally been to them.
The genuinely trusted organisation is therefore one that recognises this and creates safe spaces in which dissenting voices are welcomed; where challenging conversations can flourish; and where there may be no single correct answer. It is where, metaphorically, the leadership stands naked before those whom it serves.
This, of course, sets alarm bells ringing for PR traditionalists, who have always set out to know all the answers and ensure only happy endings. PR traditionalists don’t like their leaders naked. And leaders are rarely comfortable standing naked.
A PROMISING EXAMPLE
This process is already beginning in places we might least expect. Tax, of all issues, is now being openly debated within crowds. KPMG (disclosure: a client), under the courageous leadership of European head of tax Jane McCormick, has convened an open and public debate on responsible tax for the common good. KPMG has created a safe space for a wide range of voices to be heard.
We have brought together KPMG clients, global corporations, NGOs and activists, including Tax Research, Action Aid and Christian Aid. We have welcomed faith leaders and industry groups, regulators, administrators, government and the UK Public Accounts Committee. Margaret Hodge MP – vocal critic of Big Four accounting firms and many global corporates – has been transparently involved.
In September 2015, more than 120 participants convened in the ‘Responsible Tax Big Tent’. Distinctive, contrasting voices from across the spectrum spent five hours in workshops and debates on the various aspects of tax. It was a remarkable (un)convention.
We have deliberately created something KPMG cannot control. It would be pointless if it tried to. Instead it is a space where everyone holds everyone else to account, however scary that may be. No one can learn if they do not listen. Trustworthiness can be better built by embracing vulnerability – and by being honest and transparent, together.
As part of the KPMG project, former Archbishop of Canterbury Rowan Williams spoke wisely about apology. 'We’re all familiar with how we feel,' he remarked, 'when someone says only ‘I’m sorry that you feel like that’, rather than apologising outright.' We all know what he means.
Sometimes, only a proper ‘sorry’ will do. When it comes to how organisations can communicate honestly and genuinely earn trust, the ability to say a ‘proper sorry’ is possibly the most important insight of all.
STRATEGIES FOR EARNING TRUST
Seven strategies can help us better frame communications in this fragile, new normal.
- Accept chaos as reality.
- Radicalise honesty and transparency.
- Build coalitions – sometimes unexpected ones.
- Take to the social dance floor.
- Be the media.
- Love the citizen crowd.
- Communicate through actions, not words. If we want to address the crisis of trust and therefore the crisis of leadership, the answer certainly does not lie with PR as many still practise it – crafting narratives, managing messages or spinning meaningless platitudes.
Earning genuine trust demands we stand naked: reciprocal vulnerability alongside product and service excellence and Public Leadership. Making the right decisions and doing the right thing have never been more important.
Just ask the bankers or the energy companies. Or Volkswagen.
Robert Phillips is co-founder of Jericho Chambers and the author of Trust Me, PR is Dead (Unbound, 2015) [email protected]
This article, was taken from the January 2016 issue of Market Leader. Browse the archive here.