Trust Digest 75 (December 2, 2014)

Trust Can Seem Risky but its Absence is Perilous
Without trust, business is a dangerous undertaking. For some years I have been a substantial but passive investor in a smallish company. Unfortunately it went into administration in June – obviously reducing my shareholding to a negligible value. The founder promptly bought it back on his own in a “pre-pack” procedure – and is about to sell it for at least 10 times that amount, just six months later. He claims the whole sequence of events could not have been predicted. But I do wonder.
Key Words: Entrepreneurship, Trust Decisions
Trust Issues: Integrity, Capability

Engaging Far-Flung Managers and Employees in a Compliance Culture
Compliance professionals -- especially at global companies with managers and employees from many locations, time zones and cultures -- always face the tough task of plugging those persons into the compliance culture. According to a recent NYSE Governance Services thought leadership roundtable discussion held at AECOM’s headquarters in Los Angeles, which featured Eric Morehead, senior compliance counsel, NYSE Governance Services, and Paul Gennaro, senior vice president and chief communications officer, AECOM, the return on investment on an effective ethics and compliance program can be seen when employees understand and are actively involved in promoting a culture of integrity.
Key Words: Compliance, Management
Trust Issues: Leadership, Communication

Why Reputational Risk Is a Strategic Risk                                
In today’s risk-filled business environment, it can be hard for executives to have confidence that their plans and strategies will play out as expected. A big reason is that strategic risks—those that either affect or are created by business strategy decisions—can strike more quickly than ever before, hastened by rapid-fire business trends and technological innovations such as social media, mobile and big data. And reputational risks can damage the most well-crafted business strategies.
Key Words: Reputation, Deloitte, Risk
Trust Issues: Communication, Capability

Tattletales Embraced as Whistle-Blower Programs Gain Support
When we were children, one of the worst things to be known as was a tattletale. But as grown-ups, disclosing secrets that get others in trouble goes by a more favorable nickname: whistle-blower. Whistle-blowing as a means to police corporate misconduct is gaining support. The federal government has trumpeted its accomplishments in recovering money based on tips, and Congress seems poised to extend the incentives provided to those with information about wrongdoing.
Key Words: Whistle-Blowers, SEC, Dodd-Frank
Trust Issues: Transparency, Accountability

What Airbnb Gets About Culture that Uber Doesn’t
Last week, as Uber battled a media firestorm after a senior executive talked of investigating unfriendly journalists and a company manager actually used its “God View” feature to track the comings and goings of a reporter, Airbnb welcomed more than 1,500 of its most productive providers to its first-ever host convention, an immersive celebration one expert attendee likened to a Mary Kay event. The happy #AirbnbOpen sentiment of gift-wrapped programs, food drives, and a new company logo that doubles as a swing filled my Twitter stream, painting a stark contrast to the cynicism of the dystopian #ubergate tweets.
Key Words: Airbnb, Uber, Culture
Trust Issues: Benevolence, Communication, Alignment of Interests

Brazil’s One-Time Richest Man, Oil Tycoon Eike Batista Goes on Trial
Brazil’s one-time richest man, whose meteoric rise to No. 7 on the Forbes billionaires list and equally spectacular bust came to symbolize the country’s economic fortunes, went on trial Tuesday in a historic insider trading case seen as a blow against an ingrained culture of impunity.
Key Words: Brazil, Batista, Insider Trading
Trust Issues: Regulation, Accountability

When Corruption is ‘Just Part of Doing Business’
When managing employees overseas, a balance must be struck between supporting a commitment to business ethics and legal compliance on the one hand and supporting effective international business practices while avoiding ethnocentricism on the other. The truth is cultural values vary significantly and what is considered to be ethically sound in one country may be frowned upon elsewhere. Business practices in particular vary according to the legal and regulatory environment and national culture that is prevalent in the country in question.
Key Words: HR, International Business, Culture, Corruption
Trust Issues: Integrity, Similarity

Bribery and Conflicting Messages
“Take risks” and “Don’t expose the company to bad press.” So begins a Harvard Business Review article “When Your Boss Gives You Conflicting Messages,” (link here) and “Prevent Conflicting Messages from Confusing Your Team,” (link here) by Len Schlesinger and Charlie Kiefer. As they ask “what if you’re the employee and your manager doesn’t recognize the impossible position he’s put you in?” Thank you Mr. Schlesinger and Kiefer elevating this dynamic. As I have shared before, when front-line international business personnel ponder, “What does management really want?” as they reconcile their bonus structures and forecasts to the messages of anti-bribery compliance, it is peril for all involved. Indeed, when international field personnel take compliance decisions into their own hand at the front lines, it is often due to a “double bind” where they confront conflicting messages from management regarding fiscal success and anti-bribery ethics.
Key Words: Bribery and Conflicting Messages
Trust Issues: Communication, Integrity

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