Monday, May 21, 2007

Trust

I have recently been reading Trust or Consequences by Al Golin (2004). The basic thrust of the book so far has been the need for organizations to build trust with their stakeholders or face negative consequences for not doing so. One concept Golin introduces in this book is a "trust bank." Golin developed this term (trust bank) to "describe how deposits of goodwill can serve a company well when it faces a crisis or other negative news" (Golin, 2). The book then outlines various reasons why organizations need to establish a trust bank and how to do it.

It is important to note that "trust directly impacts an organization's success and profits" (Public Relations Practices: Managerial Case Studies and Practices. Center, Allen & Jackson, Patrick. Upper Saddle River, NJ, 2003).

While I agree completely with the above statements, I have to wonder if actively working to establish a trust bank for the purpose of increased profits and success is ethical. Perhaps I'm too altruistic or naive, but I believe an organization should want to build trust simply for the sake of building trust. Having ulterior motives in building trust is, in my opinion, not trustworthy (for lack of a better term). Imagine how a group of stakeholders might react if they found out their organization has embarked on an active trust-building campaign (as Golin suggests doing in this book) simply to increase revenue. I don't imagine it would go over too well.

I believe organizations should work to maintain and increase the trust of its stakeholders, but only for altruistic purposes. Organizations should be a good corporate citizen simply because that is the right thing to do. That, in my opinion, is the best way to build trust.

5 comments:

Nate said...

How bizzare that increasing profits is being called an ulterior motive for a business.

Companies that go public make a promise to shareholders, not "stakeholders," to increase profits. I'm not sure what specific activities you are referring to when you say "building trust." You mention altruism, so i guess it has something to do with that.

It's unethical for companies to take shareholder's money for altruistic purposes. If executives like a charity, they are free to contribute their own time and money. Please read "The Social Responsibility of Businesses is to Increase its Profits" by Milton Friedman.

The word "stakeholders" enrages me. It and the phrase "social responsibility" have been developed over the past 30 years to obfuscate the concept of business responsibility. George Orwell wrote about how proponents of new ideologies have to twist language and even create new words in order to further their agenda. Read his "Politics and the English Language." http://www.mtholyoke.edu/acad/intrel/orwell46.htm

Again, executives don't have a "social responsibility" or even the right to take shareholders money and give it to other people or causes. They are free to persuade shareholders to give if they feel like. But if you're going to be altruistic, do it with your own money.

Nate said...

sorry for the sass. Ha.

maverick9465 said...

Nate,

I think you are a little mistaken with what I am saying here. I am not saying that increasing profits is an ulterior motive. What I am saying is that pursuing trust-building activities solely to increase profits is unethical in my opinion.

We disagree in it being unethical to use "shareholder's money" to be good corporate citizens. I would hope that most shareholders would like to see the company they've invested in working to give something back to the community. Businesses often more resources to serve the needs of a community more so than individuals. I truly believe this is a responsibility businesses have.

I guess we'll agree to disagree. Thanks for reading!

Nate said...

I didn't mean to cuss

johnEIEIO said...

As an employee of GM in the PR field, I think our corporation has an obligation to better the communities in which we do business. However, we can't just 'take money from stakeholders and give it to charities' for the sake of welfare. We must, however, use our corporation's assets (employee time as well as money and in-kind contributions) in some responsible measure to better the communities in which our customers and employees and their families live and work. That is the definition of business responsibility. Our customers expect it of us, and if we are perceived as not pulling our weight, customers will buy products from companies they perceive to meet the test.

Corporations are 'people' in the societal sense, and have specific legal rights and obligations just like people do. We often address and react to companies as if they were living beings ... calling companies "evil" or "outrageous" or "blind."

Regardless, we all, as members of society, have an obligation to help those around us -- to take time to better our collective neighborhood -- and mitigate damage whenever possible. As responsible corporate citizens, public companies hold these rights and responsibilities too.

I believe that PR practitioners are the 'conscience' of any large corporation. It is up to us to point out the responsibilities, risks, opportunities and partnerships that make our work and living communities better for us all. I sincerely believe we do it at GM ... probably as good as most and better than a few, and for that I am proud.

Thanks for the dialogue. It's a great, high-value topic.

John M. McDonald
Manager, GM Communications
Detroit, MI