Here’s how lack of trust can destroy a company (Part 1)
When I think of the culture of a company, the first thing that comes to mind is the picture inside the walls of that organization. Do they value each employee? Is leadership honest? Are goals transparent? What culture - good or bad - has an organization created for itself? Sometimes I wonder: Is it like The Office or Mad Men in there? Are we dealing with Michael Scott or Don Draper? Maybe it’s 30 Rock and no one is in charge.
But the truth is, the culture of a company is driven largely on one key factor: TRUST. And trust goes far beyond the walls of an organization. For a business to build an aura of trust and transparency, those values must extend past its own employees. Trust -- and to a degree transparency -- needs to reach employees, customers, suppliers, shareholders, and the community at large. When a company communicates fully and honestly with all stakeholders, it forms a relationship culture, not just an employer/employee culture.
How do I know that trust is such a vital ingredient in a global market? Just take a look at some of the successful organizations that have struggled to maintain trust and goodwill in the eyes of the public. In this two-part article, I’ll share a few examples of companies who have lost trust and what that has meant for their status, staff, and bottom line. In the next post, I’ll dig into the amazing feats a company that values transparency, trust and vulnerability can accomplish.
1) I’ll start with the giant of giants. The company that’s constantly in the news, for better and for worse, is Facebook. Facebook and its leadership have enormous influence on our daily lives, whether we use Facebook or its subsidiary Instagram or not. Every day, more than 2 billion people use Facebook and Instagram. If you don’t use either, chances are good many of your co-workers, friends, family, and strangers around you do. Despite the constant engagement people have with these two companies, the degree of trust people have in the enterprises is waning.
Allow me to pull from a 2019 Harvard Business Review article regarding trust:
In April 2018, CEO Mark Zuckerberg came before Congress and was questioned about Facebook’s commitment to data privacy after it came to light that the company had exposed the personal data of 87 million users to the political consultant Cambridge Analytica, which used it to target voters during the 2016 U.S. presidential election. Then, in September, Facebook admitted that hackers had gained access to the log-in information of 50 million of its users. The year closed out with a New York Times investigation revealing that Facebook had given Netflix, Spotify, Microsoft, Yahoo, and Amazon access to its users’ personal data, including in some cases their private messages.
87 million customers had their information used for Facebook’s gain. It’s hard to regain trust from that self-interested use (or depending how you see it...abuse). When a company tells its users that a message is private or their activity is safe and then goes against that promise, they are choosing profits over trust. It might look like an opportunity for a company to silently increase its influence, but Facebook is a perfect example of what happens when information is leaked and compromises the trust its customers have.
Just how many jumped ship away from Facebook? Data collected in 2019 indicated that Facebook lost an estimated 15 million U.S. users as a result. While that might seem like a drop in the bucket, given how many people still use the service, since then, Facebook has been at the center of significant additional drama. Election interference, constant arguments over free speech and misinformation, and their responsibility with regard to peoples’ well-being when using social media, Facebook oscillates between doing the right thing in the minds of its customers and doing the right thing in the minds of its shareholders.
The bottom line is: the trouble for Facebook all started in 2017 when it lost the trust of long-time users. Zuckerburg is one of his generation’s most revered entrepreneurs and - no doubt - an innovative genius, but he took a misstep when he failed to consider what would happen when he was cryptic and misleading about privacy within his own walls.
2) Bigger than Facebook? Amazon. Rather than look at some of the well-known complaints about Amazon’s culture, I’d like to hone in on Whole Foods, the high-end market that Amazon acquired just over three years ago. This is a good example of what happens when a company merges and - unavoidably - loses what made it unique in terms of company culture.
In 2017, Whole Foods celebrated being on the Fortune 100 Best Companies to Work For for twenty years. It’s really interesting to read the summary of what the reward entails:
Through the Trust Index©, employees anonymously assess their workplace, including the honesty and quality of communication by managers, degree of support for employees' personal and professional lives and the authenticity of relationships with colleagues. Results from the survey are highly reliable, having a 95% confidence level and a margin of error of 5% or less.
In 2018, after the combination with Amazon, Whole Foods no longer made the Best 100 list. The word is that new systems, a focus on online orders, and less staff had sacrificed a culture that was renowned for its open policies, individuality, and unique products. Whole Foods may not have lost profits, but it lost something that made it special. I think it’s safe to speculate that when a company the size of Amazon took over, staff may have lost trust in the direction of the company. They asked questions about support and authenticity and thought: No, those aren’t prized values here any longer, or at least not to the extent they were once valued. When trust doesn't exist, people are less likely to be transparent, and all of those good-culture qualities get challenged.
3) What happens when transparency evaporates? Several of the world’s leading car companies provide the perfect case study. Toyota and GM have both been guilty of a lack of transparency in the past, but the most recent and possibly most memorable is that of Volkswagen. In a nutshell, Volkswagen installed emissions software on over 10 million cars that allowed them to cheat emissions testing. The company was found guilty of directly lying to consumers and putting profits over environmental regulations. A handful of executives were charged with their role in the scandal and the U.S. Department of Justice sued Volkswagen on behalf of the Environmental Protection Agency (EPA).
What was going on in those offices? Surely, not everyone was on board with that level of dishonesty. No, likely it was a total lack of transparency among a handful of leadership that ultimately led the entire organization to suffer. Volkswagen had to pay $14.7 billion - the highest settlement ever seen under the Clean Air Act. Talk about a hit to a company’s bottom line.
What does the public think? Personally, I think the result of multiple manufacturers being found guilty of dishonesty and poor ethics creates a domino effect across the entire industry. VW, Toyota, and GM have all broken the rules? Well, are any car companies honest? Do any car companies respect regulations or their customers? Trust is lost. Period. The next time an individual is in the market for a new car, they look at their options and remember the headlines from a few years back. A car is a major purchase and people don’t want their dollars going to a company that didn’t care enough to be forthright in their business practices.
When auto execs made closed-door decisions without taking transparency into consideration it rocked the industry, their employees, and the public.
That’s the moral of this lack-of-morality story...most regular consumers aren’t influential executives and they’ll never be privy to what goes on in the leadership suite, but they do get to control (to a degree) where they spend their money and who they give their trust to. More and more individuals are choosing to carefully take their dollars and information elsewhere. Facebook’s fall from grace has led millions to question who has their personal information. That concern has permeated well beyond Facebook and is now a concern of consumers toward all tech companies.
Many shoppers might drive by a Whole Foods thinking they don’t want to give more money to its parent company that ‘corporatized’ the grocery store that just isn’t what it used to be.
Drivers that value the environment want to be sure that the miles they drive are as safe as possible for themselves, their families, and the environment.
Privacy, experience, safety - these are factors of enormous importance in public opinion. Companies can lose it all after one misjudgement or poor decision. Once they lose the respect and trust earned from decade of effort and billions spent, it’s hard to get that back.