April 23, 2003      



Hello, and welcome to the first issue of our Trust and Leadership newsletter. We plan to publish issues every couple of months. You've received this because your name is on our opt-in mailing list. If for any reason you wish to unsubscribe, please see the link at the bottom of this message or just send us a note.

In this first issue we examine the Sarbanes-Oxley Act as it approaches its first anniversary. This is an op-ed piece that appeared in the Boston Globe on Sunday, March 2. What are your thoughts on Sarbanes-Oxley? Let us know.

In future issues we'll discuss creating communities of trusted leaders, fostering vitality in your organization, appropriate personal attributes and behaviors, and a series of articles that a certain food fanatic who shall remain nameless has dubbed "A Leadership Dim Sum.'

Please forward this newsletter to your colleagues and friends who are interested in organizational and leadership issues.
-Rob and Anne-




The authors


Chief Executive Magazine: Build Trust within Your Own Walls

Entrepreneur Magazine: Trust Me?

HR.com interviews with
- Rob Galford
- Anne Drapeau
(registration required)

NEHRA Annual Awards Dinner
Keynote Address by Robert Galford
May 15, 2003, Waltham, MA


It will take courage to restore investors' faith

By Robert Galford and Anne Seibold Drapeau, published in the Boston Globe, 3/2/2003

Would a universal code of ethics make any difference in the behavior of our corporate leaders? Would placing employee representatives on corporate board audit committees make financial information more honest and accurate? These are some of the latest recommendations for addressing our crisis of trust in corporations. But will they work? In the first instance, forcing executives to pledge good behavior is not likely to protect us from evil-doers. In the second case, mandating employee representation on board audit committees won't do much more than add a layer of bureaucracy to a reporting process that is newly burdened by the provisions of the Sarbanes-Oxley Act.

Sarbanes-Oxley mandates that companies put in place a new level of auditing and boardroom assurance procedures. The intended result is to provide greater confidence in the validity of the financial reporting that these companies provide, and thus protect and reassure investors and the investing public. It's not a bad goal.

However, in focusing so much of the time and energy of corporate executives on solving the problem of ''making Wall Street investments safe for Main Street investors,'' it significantly distracts these executives from the time and energy required to work on something even more critical to their survival. That something is the building or restoration of trust in their leadership -- in the marketplace, with customers, and among their employees. Employees wonder whether their leaders are giving them the straight scoop, and if their organizations are telling them the straight story.

So while the legislation is designed to restore trust in accounting, what we really need is an effort to restore trust in leadership. The Sarbanes-Oxley remedy merely addresses the symptoms of trust destruction (that is, bad reporting, or bad acting), rather than its causes. What is required of chief executives is not committee members or codes, but courage. So where does one start?

It starts with the courage to talk about trust explicitly and to make it part of one's vocabulary, not just for investors but for customers and employees. It comes from the actions of CEOs such as Procter & Gamble's Alan Lafley, who walks around the company talking to everyone from assistants to managers, and inspires descriptions such as ''a leader that many of us would walk across hot coals for.''

It means the courage to take clear stands when behavior might look dodgy to those on the outside, and to look closely at what they as organizational leaders must do to defend trust. Look at Diebold chairman and CEO Walden O'Dell, who opened what would have been a routine quarterly earnings conference call by offering to lay bare Diebold's policies on disclosure, generally accepted accounting principles procedures, corporate governance policies, and ethical standards. There had been no accusations or dissent. It was simply a proactive gesture to instill trust.

As organizational managers and leaders, we must be explicit about trust. We have to talk about it more, ask our people about it, make it a stated value and not just assume it. Give people ways to ask about it or question it, know how to repair it when it is damaged or lost, work on building it when it is missing. It may mean lots more listening than we'd rather do, and lots more apologizing, affirming, or acknowledging than we might feel is necessary. Our job is not to reward it when we see it, but to expect it, to build it in, to make it the default.

It's courage, not more regulation, that will give trust a better chance.


You may have seen some of our references to the following two reports from Watson Wyatt and Mercer. Both legitimize the argument for the importance of organizational trust. We thought you might want to see them.
Mercer: US workers feel pride in jobs, organizations, but don’t trust managers
Watson Wyatt: WorkUSA® 2002 - Weathering the Storm: A Study of Employee Attitudes and Opinions

Do you know of an article or report that would be of interest to our readers? Please let us know.


Please contact us at info@thetrustedleader.com for more information.

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