by Gael O’Brien

In a society with low trust in leaders and institutions, increasing transparency to increase trust is logical. However, it generally doesn’t occur in a sustained way. Often, the fear of the perceived risks – others’ over reaction, bad publicity or inviting litigation – wins out.

I am often reminded of the line Jack Nicholson’s character made famous in the 1992 film A Few Good Men when, to justify a cover-up, he bellows from the witness stand, “You can’t handle the truth.”

The fact is that we can – we just aren’t given a chance often enough to prove it. Figuring out how leaders and institutions can sustain transparency offers far better long-term results than where we find ourselves now.

Globally, 18 percent of respondents surveyed in Edelman’s 2013 Trust Barometer Study don’t trust business leaders “to tell the truth when confronted with a difficult issue.” In the United States, 15 percent believe leaders lie in that circumstance.  Gallup’s 2012 confidence in institutions survey indicates that in the U.S. the four with the lowest score in public confidence are big business and banks (with only 21 percent of respondents having a great deal/quite a lot of confidence in them) health maintenance organizations (at 19 percent) and congress (at 13 percent).

Rebuilding trust and increasing transparency are go-to items in a crisis recovery playbook. In that pressing imperative, leaders invest the time to get things back on track.  However, it is in the day-to-day of ordinary events where credibility is sustained. Several years ago, James O’Toole wrote in his essay in Transparency: How Leaders Create a Culture of Candor, “trust is an outcome of a leader’s accumulated actions and behaviors. When leaders are candid, open, consistent, and predictable in their dealings with followers, the result will almost always be a condition of trust.”

Willingness To Be Vulnerable

In an email exchange with Brian Moriarty,  Director of the Business Roundtable Institute for Corporate Ethics, about how a society low in trust can be prepared to handle more transparency, he referred to actions Toro took several years ago when customers were hurt using their  landscaping machines. “Instead of treating the injured parties like a potential threat,” Moriarty explained, “they apologized for the injury (even if the cause was misuse of the product) and sent a team of engineers to review the case with an eye toward improving product safety.” Toro did this, he continued, “over objections from legal counsel who feared this would be viewed as admitting culpability and would drive up litigation costs. Their litigation costs did not go up—instead they went down by 78%.” Sometimes the best way to be more trusted, Moriarty added, is to be trusting, pointing out that research backs this up.

There are many stories about companies’ increased internal transparency sharing broadly detailed financial information, safety statistics, ethical issues, and proprietary information with employees (and sometimes suppliers) that haven’t resulted in leaks or lawsuits. In these cases, the company and its leaders are building trust and strong stakeholders.

“Most definitions of trust include something about the willingness to be vulnerable to the other party,” Moriarty said. “Trust is a factor in all relationships that involve risk.” He indicated that the type of stakeholder relationship that exists shapes the respective vulnerability of each party. “For example,” he continued, “companies trust their employees to speak in the best interest of the organization when posting things online: Zappos encourages their employees to tweet, viewing this as an opportunity to build great relationships with customers. Other organizations view employee posting on social media sites to be very risky.”

The Public As Stakeholder

While leaders whose consistent actions and behaviors are building trust and transparency within their organizations, Edelman’s survey is just one indication there is work to be done where that isn’t happening.  Gallup’s poll indicates that institutions have a significant opportunity – particularly those identified as ranking at the bottom of public confidence – to commit to the work of building trust with the public as a stakeholder. Clearly, increased transparency is a route to accomplish this.

In that spirit, last month, in an open letter to President Obama former treasury secretary Paul H. O’Neill  addressed the public as stakeholder in receiving quality health care driven by increased transparency and accountability. His proposal included the requirement that providers individually post their statistics on the internet each day by 8 AM for “every hospital-acquired infection, every patient fall, every medication error and every injury to a care giver that occurred in the previous 24 hours.” (Aggregate industry numbers O’Neill cited indicated on average as many as 800,000 medication errors every 24 hours.) He wrote that the proposal’s intent was to enable consumers to make choices based on best performers, and encourage providers’ actionable performance improvement and reduction of costs while protecting them from penalty or criticism as they improve together.

The merits of the proposal will be addressed in other forums, but what is significant here is that it seeks to create radical change through transparency. I asked James O’Toole, Daniels Professor of Business Ethics at University of Denver’s Daniels College of Business, for his take on how a low trust society can be prepared to handle any idea – O’Neill’s or anyone else’s – that requires high transparency.

“I would prefer to run some risks in order to promote transparency,” said O’Toole in an email. “I am willing to trust the public to adjust to the complications inherent to conditions of greater virtue than to tolerate bad behavior until they are ‘ready’ for the alternative.”

As leaders and their companies – as well as industries – genuinely accept the implications and responsibilities of having society as a stakeholder, operating with transparency will be easier to sustain. In that environment, low societal trust becomes a relic of the past.

Gael O’Brien, a Business Ethics Magazine columnist, is a consultant, executive coach, and presenter focused on building leadership, trust, and reputation. She publishes the The Week in Ethics and is The Ethics Coach columnist for Entrepreneur Magazine.


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