Dr. Robert Hurley is a professor of Management and director of the Consortium for Trustworthy Organizations at Fordham University. He consults with organizations on leadership development, top team development, coaching, managing transformational change, developing and implementing strategies to maximize customer value. He has published over 30 articles or book chapters. His work has appeared in the Wall Street Journal, Financial Times, California Management Review, and Harvard Business Review. Click here to read full bio. 
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  • Thu, December 06, 2012 8:45 AM | Deleted user

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    The SEC has charged the world’s top five accounting firms with securities violations because they have refused to supply audit papers for examinations of U.S. listed firms operating in China. These firms are suspected of wrongdoing by the SEC. The audit firms say that Chinese state secrecy laws prevent them from releasing the documents and they are calling for the U.S. and China to reach a diplomatic resolution. They say that U.S. and Chinese laws relating to this matter are in conflict.

    There are a few larger issues at play here. First, to what extent is transparency essential to trust? Second, what is the role of governments and regulators in creating the infrastructure of trust within an economic system? Finally, can trust and exchange be facilitated on a global basis if we have major conflicts among trading nations concerning core values related to sharing information and the rule of law?

    Transparency ensures that trustors deciding to trust or distrust can get accurate information to assess trustworthiness and risk. Goldman Sachs paid one of the largest fines in SEC history for inadequate disclosure in the Abacus deal in which the firm created an instrument to sell that was designed to fail by Goldman Sachs and its client (Paulson) one side of deal. There are some scholars who believe that transparency is overrated because trustors often do not pay adequate attention and miss even transparent disclosures and because in many business settings, there is a buyer beware approach where people expect a degree of spin rather than truth. Do people in a used car lot expect the salesman to tell them what is wrong with the car or if they are a CFO of a company being acquired to describe where the hidden bodies or time bombs might be located?

    But the SEC is not your typical trustor. They are an expert agent of trust who must have access to information to catch fraudsters and hold them accountable. U.S. trustors with limited time and expertise rely on them enforcing certain standards that make a system more trustworthy. In this sense the SEC cannot do their jobs without requiring some transparency. Trust and exchange will break down if they cannot get the accounting firms to comply with their information request. The Chinese secrecy laws must be a deal breaker for the SEC. It will be interesting to see if the U.S. government has their back (trust) or throws them under the bus (distrust).

    The accounting firms and the SEC are caught in a conflict of laws and values between the U.S. and Chinese systems of governance. Underpinning this conflict is distrust between these two governments. This is the problem when there is a lack of trust. Without trust we cannot exchange freely and quickly. We must be careful and adopt self protective measures to limit our vulnerability. How this conflict gets resolved will tell us a great deal about the future of both the U.S. and Chinese economy. Research shows that low trust countries have slower GDP growth in part because money is not invested and sits on the sidelines. Trust requires the creation of trustworthy systems. The SEC and the accounting firms are part of a trustworthy system. Let’s hope the governments help them do their job.

  • Fri, November 30, 2012 2:38 PM | Deleted user

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    There was an odd narrative going on in the past six months concerning BP that has just been resolved. After the environmental, reputational, and economic disaster of the Deep Water Gulf oil spill, BP replaced their CEO Tony Hayward, spent billions on fines, penalties, and advertising to try to make things right. Recently, BP executives were charged criminally for their roles in the disaster. As all this was happening, there were stories surfacing that BP was expanding their oil exploration activities in the Gulf. It seemed for a time rather incongruous.


    This week, that changed. The EPA blocked BP from new leases in the Gulf because it judged that they had not sufficiently resolved “integrity” issues. This recent development reminds me of a question that I often get asked when I speak on trust: Is it possible to have a high trust organization where there is not accountability? Interestingly, this question is often asked when people feel like they are working in a dysfunctional or low performing organization.


    My answer, which is relevant to the EPA action in the BP case, is that it is not possible to have a high trust firm where there is not accountability. This relates to an aspect of trustworthiness that some call “competence,” “ability” or in my work I call it “capability.” We should not trust agents who are not capable of delivering on their promises. High trust firms have their act together. They are experts and reliable in the methods of delivering on their commitments, and this can only happen in firms that are great at execution. Larry Bossidy and Ram Charam have written about this. At firms that are great at execution, there is clarity and accountability that you will not find at low performing firms, many of whom can talk a good game but have not demonstrated that they can deliver.

    BP in 2005, after the Texas oil refinery explosion, talked about reforming its safety culture. This week, the EPA said, prove it! Demonstrate that you are reliable and competent in the areas that are critical to earning our trust and then we will let you drill again. This was an important message. Too often fines and slaps on the wrist by regulators are seen as just a cost of doing business, which are easily paid when firms are extremely profitable. It is true that trust repair cannot be done with words or smoke and mirrors. It requires substantial changes, monitoring and then more changes to see what works, what has taken, and what else is needed. This takes time and follow up which is why the most successful trust repair efforts appoint external monitors to review progress (Siemens, Mattel, and BAE Systems). It seems that BP is making good strides so far. Let them keep at it and prove they deserve the public trust. Thank you EPA for making a stand for integrity and trust!

  • Thu, November 22, 2012 9:17 AM | Deleted user
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    Senator Rudman in 1990
    George Tames/
    The New York Times
          Warren Rudman died this week at the age of 82. His obituary appeared in the Wednesday issue of the New York Times which also featured stories of insider trading (SAC Capital), manslaughter charges due to an explosion and environmental disaster (BP), mortgage fraud charges and fines (JP Morgan and Credit Suisse), conviction of a so-called rogue trader (UBS), charges of failure to disclose safety information (St. Jude Medical), bribery charges in a hacking scandal (News Corp executives) and two generals implicated in sex scandals (Petraeus and Allen). Rudman’s example offers hope amidst the crumbling foundation of trust. We would have more trust if we had more leaders like Warren Rudman. His behavior manifested some important things that made him trustworthy: he acted based on a set of clear values; he manifested integrity by living according to his word; he took up the role of benevolent steward, and he was an honest and transparent communicator.

    As a value-based leader, Rudman stood for: doing the people’s work through the arts of dialogue and compromise, avoiding the corruption of money in politics, and managing our finances so as to not bankrupt of children. He acted according to these values even when it made him enemies and was inconvenient.

    Rudman was a man of integrity who left the Senate after two terms because he felt that the federal government was not functioning and as he said in his 1996 memoir, he doubted “the glory of being a senator meant much if we were bankrupting America.” He could not stomach the idea of living the prestigious and cozy life of a senator if he was not making a difference. Leaving was the high integrity choice for Rudman because he internalized his role of caring for and being a steward of the interests of citizens. He was out for their interests not his own and he formed the Concord Coalition to try to make a difference from outside the dysfunctional system.

    Finally, he was described as the “blunt senator” who would tell it like it is and cut through the spin machine with clear common sense language. As a Republican he sided with Democrats in the Iran Contra hearings telling Oliver North who had deliberately violated a law passed by Congress that “the American people deserve the right to be wrong.” When senator Alan Cranston tried to explain his unethical behavior in the Keating 5 scandal by saying he was only doing what everyone was doing, Rudman took to the floor of the senate to say that Cranston’s comment was “unrepentant” and “arrogant” and that “not everyone does it.” You could always count on Rudman to be a breath of fresh air to halt the Washington spin cycle.

    It was evident that Rudman worked very hard to earn the trust of those who elected him. There is hope that we can restore trust in government if we elect more people like Warren Rudman. He will be missed.

  • Tue, November 13, 2012 1:06 PM | Deleted user

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    Former CIA Director David Petraeus testifies on Capitol Hill in February. Petraeus has resigned because of an extramarital affair.

    Cliff Owen/AP


    Much has been written about the resignation of David Petraeus from the CIA due to revelations of an extramarital affair and the possibility that he exposed the Nation to security risks in the process.  Had Petraueus been a French or an Italian General, there would have not been nearly the media storm.  In the United States we expect moral rectitude in not only a leader’s professional life but his or her private life as well.  Americans see the General’s behavior as a trust breach due to an integrity violation – he was “unfaithful” to his wife, and he deceived her in hiding the affair.  To put the issue in context, from a trust repair perspective, Petraeus is well ahead of President Clinton because his offense was somewhat less egregious (Broadwell was not in his employ or an intern).  Rather than deny the charges, or redefine the word “sex,” he admitted the transgression and acknowledged that his behavior was “unacceptable, both as a husband and as the leader.”

    If anyone had suggested in 1998, at the height of the Monica Lewinsky scandal, that Bill Clinton would emerge as a political rock star again in 2012, they would have been laughed off the pundit circuit.  How did Clinton repair his reputation so well?  First, he had no further betrayals of trust made public for over 10 years.  Second, he demonstrated two positive signs of trustworthiness (benevolent concern for others and competence) through his work after the Katrina and Haiti disasters and on an ongoing basis with the Clinton Global Initiative.  I suspect that David Petraeus will also repair his reputation, but there are deeper trust issues that are being glossed over in the media frenzy over Petraeus.

    First, notice how much more attention is being paid in the media to Petraeus’s moral failing than was paid to his good works.  This happens with companies also.  Ask Jamie Dimon at JP Morgan Chase. Good works barely get covered but the failings make the front page.  Bill Bradley once said, “If it bleeds it leads, if it thinks it stinks.”  In a media age of intense competition for audience and clicks, a scandal is much more helpful than catching someone doing the right thing.  No wonder trust scores in leaders and institutions have been declining for decades.

    Second, there are some major questions about human nature and the male species that are not being addressed in the conversation about Petraeus.  For example, how can a man whose career is filled with honors and careful and prudent decision-making, exercise such bad judgment?  Are men more susceptible than women to sexual temptations that lead to a betrayal of trust?  Are men in power presented with more temptations or is it that their feelings of being powerful make them think they can get away with more?  I think the answer to all of these questions is YES, but obviously each situation has unique elements.  What is not being said is that to maintain trust and standards of high integrity, men and women must have a regular discernment process to assess the degree to which they are living their values. Maintaining one’s integrity must be a daily exercise.  This is especially true for men in powerful positions.  There is a reason that all major religions emphasize the examination of conscience as an ongoing practice (Christian penance, Judaic atonement, and Islamic recollectedness).  Without an ongoing practice of discernment about whether we are living a virtuous life, we are likely to lose our way. This is no doubt a sentiment that David Petraeus is now feeling.

    Finally, the Petraeus resignation is playing out in Washington where there has been a major loss of trust in the government.  Early on there was the suggestion that the White House had somehow put a lid on the story until after the election.  Then there was a strategic leak that Eric Cantor, the House Majority Leader, had known about the investigation months before it came out.  It seems some see this as an opportunity to weaken the White House post election.  As this drama unfolds, we march steadily toward the fiscal cliff.  In the end, trust requires manifesting benevolent concern for others’ welfare, integrity and competence.  The Washington spin machine that Petraeus is now in has a deficit of all three of these elements of trustworthiness.

    David Petraeus did a dishonorable thing by cheating on his wife.  He admitted this and is now suffering great pain.  Fortunately, in the end, trust and integrity are judged over the long haul not on the basis of one event or action.  Perhaps if all of our leaders considered how they will be judged by history, when the media frenzy is no longer a factor, we would all have more faith in them.  General Petraeus seems to understand this.



  • Wed, October 31, 2012 11:56 AM | Robert Hurley (Administrator)

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    Former UBS trader Kweku Adoboli,

    originally from Ghana, is accused of

    fraud and false accounting for a $2.3

    billion trading loss.


    Simon Dawson/Bloomberg 


    Bloomberg reports that in the trial of the UBS "rogue trader" Kweku Adoboli who lost 2.3 billion dollars that Adoboli's defense is presenting evidence that the deceptions and trust violations were systemic at UBS not simply the actions of an evil character. Bloomberg reports Adoboli's testimony supporting this: "In the end, the reason I’m most sad is because these losses weren’t the result of dishonest or fraudulent behavior,” he said. “These losses were the result of a group of traders who were asked to do too much with too little resources in a market that was too volatile.” The jury, through a note passed to the judge, asked for Adoboli to explain why the desk didn’t tell managers what they were doing. Adoboli said his bosses didn’t care what they did, as long as they made money. The desk’s manager until April 2011, Ron Greenidge, “really didn’t understand the complexity of our products,” so the importance of Hughes was heightened, Adoboli said. His next supervisor, John DiBacco, was based in New York “so unable to manage us real-time.”

    This presents only one side of the case, but this testimony supports what our research has shown from studying more than 20 major trust violations. The root causes of failures of trustworthiness are not in the character flaws of one or two people but in the leadership, culture, incentives and other aspects of the organization that promote or condone unethical behavior that violates stakeholder trust. It is the depth and pervasiveness of the embedding of trustworthiness of the firm that matters most. All of the firms that have had major trust violations (Toyota, Goldman Sachs, Lehman Brothers, BP, etc.) had some aspects of trustworthiness (codes of ethics, etc.), but they also had subcultures that promoted distrust. At Toyota, it was the Tokyo centric recall system that failed to get word to the US about unintended acceleration problems. At BP, it was a culture of driving profit that overrode safety concerns. Similarly, UBS appears not to have gone far enough in changing its culture and organizational systems to make the whole company truly trustworthy. What we call a "trust crisis" is really a crisis of "trustworthiness" in organizations that allows weak links to exist in the chain that connects them with stakeholders.


  • Sun, October 28, 2012 4:05 PM | Deleted user

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    The New York Times' superb investigative journalism about corruption and duplicity among the Chinese government has helped the world move one step closer to trust and transparency. We are reminded of Thomas Jefferson’s view of the press and trust in government. Jefferson said, "The functionaries of every government have propensities to command at will the liberty and property of their constituents. There is no safe deposit for these but with the people themselves, nor can they be safe with them without information. Where the press is free, and every man able to read, all is safe," to Charles Yancey in 1816.

    Jefferson understood that power without accountability leads to corruption. The New York Times has done for China what it did for the US during Watergate – increased transparency. Transparency is essential for any government, or for that matter, any company or institution, to maintain trust and legitimacy. While things can get done quickly in secret, there is no means to ensure fairness in decisions and resource allocation. When the interests of the elite begin to be served (unfairly), it is only a matter of time before trust erodes and with it the cooperation of the people. Kudos to the New York Times for offering the Chinese people a path forward to reforming the system and restoring trust.

  • Thu, October 25, 2012 8:13 PM | Deleted user

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    Lance Armstrong has recently been stripped of his seven Tour de France titles due to doping charges brought on by the United States Anti-Doping Agency. Armstrong has also lost his sponsors and chairmanship of Livestrong, his cancer awareness charity. Dr. Bob Hurley weighs in on columnist Daryl Travis' opinion in the New York Times.

    Travis believes that customers are adept at assessing trustworthiness. Hurley disagrees and argues that the science concerning the decision to trust suggests that we are anything but adept. The real story about Armstrong is how incredibly gullible we are. For years, Armstrong was a prominent spokesperson, even for a Pharma company (Bristol), while he was leading a double life - doping and lying about it. Consumers, employees, investors - all stakeholders - need to advance in withholding trust from untrustworthy people and companies. Lance Armstrong is not the only one. Trustors who were not adept at the trust decision invested with Bernie Madoff, MF Global, Galleon - it goes on and on. One of the key solutions to the crisis of trust is to get much better at discerning trustworthiness! Until we do, we create a large and profitable market for the untrustworthy.

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