Para Mullan, 19 October 2010
The 1987 Oliver Stone movie Wall Street highlights the darker side of the American finance industry. It’s best known for exposing the more parasitic aspects of financial engineering to many in the 1980s. But it’s also said to have encouraged others to join the ‘greed is good’ financial sector.
The sequel, Money Never Sleeps, comes out this October. It’s released as numerous surveys inform us that trust in big business - especially financial and banking corporations - is at a low ebb. The renowned Edelman Trust Barometer reported in its 2010 tenth anniversary issue that although trust in business is up compared to 2009, the rise is tenuous (1). This fragile level of trust is most pronounced in the banking sector.
According to an Ipsos MORI survey for the Institute of Business Ethics and Centrica, ‘half of British adults say the conduct of banks in the financial crisis has damaged their trust in all businesses.’(2) The BP oil spill in the Gulf of Mexico has further encouraged the idea that business can’t behave responsibly.
This lack of trust in big business exists alongside the continual introduction of corporate legislation, regulation and controls. There seem always new protocols to be obeyed and extensive reporting to be produced. Since the last decade of the previous century, business institutions are expected to meet higher standards in their accounting practice. They’re supposed to operate under more comprehensive corporate governance codes, and are subject to increased auditing. It seems paradoxical that with greater transparency and accountability comes a mood of general distrust.
Of course, it’s not surprising that people’s trust in their own employers might fall when recession hits and employees are made redundant. This has been experienced over the past couple of years. Neither is it odd for people to speak in disparaging terms about bankers and their untrustworthiness given the repercussions of the banking crisis. And trust can also be undermined when a company’s products are of inadequate quality. For example, the Japanese automobile giant Toyota recently suffered a blow because some of its car parts were malfunctioning and allegedly were unsafe. However, whilst cyclical reasons and particular mishaps are expected to knock trust in business from time to time, neither explain the pervasiveness of low business trust over the past decade.
For this, it‘s more fruitful to look beyond the boundaries of the business world itself. Taking a step away from the corporate world, we can identify a more widespread decay of relationships across society. For example, the latest Edelman Trust Barometer shows that trust in government is also low. Scandals over MPs’ expenses and the apparent lack of ministerial honesty about Saddam’s weapons of mass destruction have contributed to a demise of trust in government and politicians in general. The long-term decline in membership of trade unions and religious organisations is also part of the same pattern. It corresponds to falling trust levels in these institutions too.
Even professional sectors such as medicine and education are affected. People no longer trust doctors and teachers to do the right thing. Panics about child abuse and fears for children’s safety have turned neighbourhoods from friendly community areas to zones of potential risk. Far from trust in big business being an exception, we can see that trust in society has broken down at almost every level: parliament and politicians, medical and teaching professions, unions, religious bodies and communities. There’s a stark lack of confidence that society can work properly from the local to the national. This general absence of confidence is also manifested in business.
At least since the 1980s – and films like Wall Street – certain business sectors have tried to shed the image of upholding an evil and corrupted capitalism. Non-governmental organisations joined the ‘clean up business’ campaign. They tried to make businesses behave responsibly. In the 1990s, their attempts gathered nominal backing from certain members of society. People supported international voluntary agreements and public policy initiatives as a way for companies to become responsible corporate citizens. Demands for corporate social responsibility (CSR) and ethical codes became the order of the day. Prominent companies strived to be known as anything other than ‘greedy capitalists’.
But unfortunately for some pioneers, the adoption of socially responsible behaviour sometimes backfires. For example, BP spent millions on CSR activities after 2000. This included rebranding. The meaning of ‘BP’ shifted from the original ‘British Petroleum’ to the new ‘Beyond Petroleum’. This was supposed to suggest new environmental credentials. Sales continued to rise from $192 billion in 2004 to $240 billion the year after and $266 billion in 2006. More directly attributable to investment in CSR, one survey found 21% of consumers thought BP was the greenest oil company, followed by Shell at 15% and Chevron at 13%. BP’s green brand awareness rose from 4% to 67% (3).
Yet all this stood for little. It actually buttressed charges of hypocrisy and ‘greenwash’ following every accident with adverse environmental consequences. The biggest was the Macondo Well incident this year in the Gulf of Mexico. This killed 11 people. More prominently, it led to reputedly the world’s largest oil spill. It was heralded as an ‘environmental, political and financial catastrophe’ that could’ve been avoided had BP stuck honestly to its CSR pledges (4). Consequently, BP has the enormous task of winning back trust. In promoting themselves as ‘good’ corporate citizens, businesses can set themselves up for bigger falls when things go wrong. But this is an ever present possibility in the life of any business. Accidents do sometimes just happen. Moreover, businesses in market economies are about making a profit. Nobody should be too surprised that capitalism sometimes takes short cuts in the pursuit of those profits.
Businesses’ own internal ways of working in response to the long-term atrophy of productive activity in the West have not helped their standing in society. Business leaders for years have emphasised the extreme uncertainty of the market environment and the constraints this imposes on strategic planning. Whether the market really is more rapidly changing than previous eras is a moot point. But this perception does express itself in less confidence in longer term goals. In awe of this more uncertain world we are believed to inhabit, short term solutions appear the best answer. Furthermore, modern chief executives appear to lack the confidence to make their own decisions, meaning over the past 15 to 20 years businesses have been more likely to call in management consultants to help them shape how their businesses are run.
This points to the crux of the problem in the breakdown of trust: we don’t seem to trust ourselves to make decisions, to take control of problems and solve them. This lack of trust in ourselves is also apparent when you look at any sector in society. The call for peer review, the need to have rules and codes of conduct about how we should live our lives, the call for counselling when we experience any trauma, and even parents looking to someone else for guidance in bringing up their children, all contribute to a society where we are looking somewhere else for the answers rather than to ourselves as individuals who can solve problems.
Historically, one can see there’s always been some lack of trust in big business. But what we’re seeing today has a very different character. For example, the 1960s and 1970s (along with previous eras of capitalism) witnessed employees taking disruptive industrial action against their employers over working conditions and pay. Withdrawing labour in long strikes was not uncommon. This could be seen as indicating a distinct absence of trust in business, between employers and employees. Yet the latter were often supported by the wider working public. There was enormous solidarity between different groups. Employers were united in seeking to crush the workers’ actions. Working people were united in fighting back. Both groups had the confidence to stick to their own guns.
That collective confidence and solidarity doesn’t exist in the same way today. Instead, we live in quite an atomised society. There’s a widespread sense of fragmentation. We live and operate in an individuated way. We have the perception that society is much more complex than in the past, and as a result it’s much more difficult to take control of our lives. People feel quite alone, which leads us to see others more as strangers to be feared and mistrusted rather than fellow people joined by common causes.
This is why no amount of regulation, transparency and codes of conduct, courses and articles on ‘how to build trust’ are going to create a society of individuals that trust each other, and therefore can trust business. Those who call for curbing executive bonuses and squashing vulgar consumerism are also missing the point. We need to address those wider social trends which keep us living in such an individuated society. Relationships of trust need to be rebuilt from the bottom up. As Cardinal De Retz, the Parisian churchman, said back in the seventeenth century:
A man who does not trust himself can never really trust anyone else.
Para Mullan, operations director, cScape; fellow member, Chartered Institute of Personnel and Development
(1) Edelman trust barometer 2010
(2) Bank crisis hits public’s trust in business, Financial times, Brian Groom, 5 January, 2010
(3) Beyond Petroleum’ Pays off for BP, Environmentalleader.com, 15 January, 2008
(4) The Black Hole, Sunday Times Magazine, Ed Caesar, 12 September 2010
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