As a consequence of well-publicized frauds of the Enron, WorldCom and Tyco circa 2002 and 2001, there were important efforts in America to re-establish trust and enforce corporate conformity. Yet despite these reform efforts, corporate trust violations continue. The truth is, some of the very most insidious practices from the Enron age (notably, disguising fiscal weakness with off-balance-sheet debt) were front and center again throughout the worldwide financial calamity of 2008.
Do trust failures continue to happen with such occurrence, and how can they be faithfully prevented? The authors found that constructing and sustaining organizational trust is different from constructing and sustaining interpersonal trust, and that important organizational trust violations are almost never the end result of "bad apples" or "rogue employees." Instead, these violations are foreseeable in organizations that allow dysfunctional, inconsistent or incongruent components to take root. Given the worldwide prevalence of on-line newsgroups that are global, the latest social networking and 24-hour news cycles, a breach of trust with any one stakeholder group can quickly undermine an organization's reputation in its broader stakeholder community for trust. Paradoxically, the authors note, trust failures can act as drivers for creating a high-trust organization.
Much can be learned about the best way to establish and support organizational trustworthiness by analyzing how organizations restore trust after a major violation. In analyzing cases of businesses which have attempted to fix trust, the authors identified three essential phases: organizational reform, investigation and assessment. Reforms should be assessed to ensure they're working as intended, and shortfalls should be addressed. Successful trust repair requires taking a systems view reform and to accurately diagnose the true faults in the organizational system.
PUBLICATION DATE: July 01, 2013 PRODUCT #: SMR460-HCB-ENG
This is just an excerpt. This case is about LEADERSHIP & MANAGING PEOPLE
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