Thursday, August 3, 2017


Talk to Relationships seminar, Sydney, Thursday, August 3, 2017

There’s little reason to doubt the assessment of the Edelman report and other sources that trust in organisations is diminishing in Australia, as it is many other developed economies. My job is to offer specific examples of that decline in trust and the problems it’s causing. Unfortunately, that’s all too easy.

What do we mean by trust in organisations? Edelman defines it very simply: trust to do what is right. What organisations are we thinking of? Most of those you could name. Edelman finds that, across many countries, trust is least in government – which I taken to refer mainly to elected politicians and less so to government departments and agencies. Trust in the news media is only a fraction greater. It’s quite a bit higher for business, though falling and still far from what it ought to be. Edelman’s country-wide assessment is that business is “on the brink” of distrust, but I fear that, here in Australia, it’s already over the brink. Not surprisingly, non-government organisations are the least distrusted in Edelman’s survey, but even these outfits aren’t as trusted as they were, and as they should be.

Why might so many of the different categories of organisation now be less trusted to “do what is right”? Because they’ve yielded to the ever-present temptation to put the interests of the organisation ahead of the interests of the citizens and customers and clients it professes to serve. Too often, the reputations of institutions have suffered mightily when finally it’s been revealed that those institutions put the preservation of their public reputations ahead of their duty by attempting to cover up, rather than acknowledge and correct, egregious instances of bad conduct.

But to get down to cases, let’s start with government. The public reputation of politicians has suffered from many categories of bad behaviour – the decades of election promises lightly made and just as lightly broken; the resort to spin doctoring and careful crafting of statements which, though true in some narrow, technical sense, are calculated to mislead; the way, during election campaigns, politicians on both side professor to be able to solve our problems and shower us with goodies, only to reveal a much harsher reality after the votes have been countered. These days politicians seem much more anxious than they used to be to tell us what’s wrong with their opponents’ policies than to explain the benefits of their own policies. But most voters are unimpressed by the claims and counterclaims, usually falling to the easy conclusion that both sides are lying. Politicians complain – no doubt correctly – that the public has “stopped listening” to the prime minister or the government. The public is turning away from the established parties (even including the Greens) with John Daley, of the Grattan Institute, calculating that 26 per cent of first preference votes in the Senate in last year’s election went to minor parties, up from 11 per cent in 2004.

Trust in government departments was diminished by the “robo debt debacle” in which vulnerable social welfare recipients were caused great distress by being sent demands for repayment generated by a deficient computer program, without adequate review of their accuracy. This seems to have occurred at the insistence of ministers, but Centrelink officials did their institution great reputational damage by their obfuscation and attempt to claim there was no great problem. Similarly, the Tax Office has significant problems with its both telephone system and its online system for many months, the severity of which it has been most reluctant to admit.

Much of the loss of trust in our institutions has occurred as a result of the enthusiasm and detail with which the news media have informed us of their various failings. But, with the notable exception of the ABC, this has done nothing to stop a decline of trust in the media itself. As a journo, I think I know exactly why this has occurred. It’s because, in our enthusiasm to bring our readers the most frightening news possible, we’ve been willing to convey to our readers sensational claims we don’t actually believe, but make no attempt to discredit for fear of spoiling a good story. Eventually, however, readers learn that the news we bring them isn’t necessarily to be believed. Our readers’ trust is lost.

No part of business has suffered greater loss of trust than our banks. Today the loss of reputation has been so great that there’s wide support for a royal commission into their conduct. But the damage began soon after the banks’ deregulation in the mid-1980s, when they began trying to win market share by offering new deposit and borrowing customers better deals than they were offering their existing customers, while failing to alert their customers to the better deals now on offer. When eventually customers realised their bank had been taking advantage of them, they were angry. Loss of trust is often the consequence of the failure to reciprocate loyalty.

In the years since the global financial crisis, however, the list of highly publicised instances of the banks’ negligent investment advice has multiplied. The most recent case is of a bank insurance arm finding excuses to reject legitimate claims under life insurance policies. The banks have often been reluctant to acknowledge these failures, or have portrayed them as a few rotten apples rather than systemic failure – often arising, I suspect, from misdirected performance indicators and monetary incentive schemes.

Turning to business in general, I imagine many of us have been shocked by media revelations of the extent of illegal underpayment of workers – sometimes by public companies claiming to have no control over the behaviour of franchisees. Another instance of lost trust is most people’s refusal to believe assurances from politicians and business lobby groups that workers would be the ultimate beneficiaries of a cut in the rate of company tax. And why are big businesses so desperate for a tax cut when so many of them already seem so successful at minimising how much tax they pay? Chief executives who demand restraint from their employees while subjecting their own remuneration to a quite different standard should not be surprised if they’re not trusted.

Finally, when we turn to the loss of trust in non-government organisations, it’s hard to ignore the damage various churches and other religious organisations – including the one I grew up in - have suffered from the shocking revelations of the Royal Commission into Institutional Responses to Child Sexual Abuse. As for the union movement – which has had its share of scandals in recent years – the loss of trust in employers has led to no surge in union membership.