May 8, 2002 The Credibility Crisis

Something is just not right when you are surrounded by one example after another of a breach of trust, broken ethics or a sleazy deal. It seems to be happening everywhere, including of all places, the Catholic Church. Which at this moment in time seems to be at the top of the list of offenders. Its situation is particularly distasteful for many because of the high expectations people have of the clergy to be role models of a greater good.

But the Church is not alone. For several months all of us have been bombarded by the trust and credibility violations that have recently occurred in business institutions as well. Although the news is waning about Enron, Andersen, Global Crossing and the few other well-publicized culprits, there are similar examples popping up all too frequently.

As we have followed this Credibility Crisis, we have read about a number of blue chip companies facing charges of "questionable" accounting practices to sweeten the look of their earnings, or reputable brokerage houses who have allegedly been recommending dubious stocks to customers. We have even seen small business owners breaking promises and commitments, leaving their betrayed employees, bankers, customers and suppliers paying a heavy price.

Pause for just a minute and think about this. Do you believe the events that happened at Enron and others of that magnitude are symptoms of a systemic problem? That is, do you believe that across the business landscape, lower standards and deceitful business practices are now the new, accepted means of conducting business? Or are they more likely the results of a few bad players? What do you think?

Although there continues to be plenty of examples of poor behavior, we have not found any evidence that indicates it is systemic. Rather, it does appear to be attributed more to a few people doing some very bad things. And although some of these violators may actually be rotten to the core, our presumption is most of them are not. They are likely good people, who for varying reasons did not follow the guidance of their normally reliable compasses.

In light of all this, we have a couple of questions that we encourage you, as leaders, to address. Think about them yourself and discuss them with others in your organization. You will find they will stimulate some very interesting and valuable dialogue during these times of suspicion and mistrust.

1. What are the pressures occurring in your organization that could cause some of your good people to start looking the other way, ignoring your own internal standards of conduct or worse yet, consciously breaking the law?
    
2. How would you respond if your CEO or immediate boss were to ask, "Where are we most vulnerable to a severe erosion of credibility?"
    

Let us leave you with a very important, final thought that will benefit you as you go forward. When you are confronted with issues that seem to pit profitability against credibility, you are better off choosing credibility. Although it can be financially painful for a time, a loss in profit is usually easier to recover from than a comparable loss in credibility. Enron, Andersen and Global Crossings have literally gone from billions to bust in less than a year. Should they ever make it out of bankruptcy or re-structuring, their image and market value will be tainted for a long, long time.