Despite these reform efforts continue corporate trust violations. In fact, some of the insidious practices of the Enron era (particularly financial obfuscation weakness with offbalance-sheet liabilities) front and center again during the global financial crisis of 2008. Why trust failures continue to occur so frequently, and how they can be reliably prevented? The authors found that building and maintaining organizational trust is different from building and maintaining international persona … Read more »

Despite these reform efforts continue corporate trust violations. In fact, some of the insidious practices of the Enron era (particularly financial obfuscation weakness with offbalance-sheet liabilities) front and center again during the global financial crisis of 2008. Why trust failures continue to occur so frequently, and how they can be reliably prevented? The authors found that building and maintaining organizational trust is different from building and maintaining interpersonal trust, and trust that the major organizational injuries are almost never the result of “bad apples” or “rogue employee.” Rather, these violations are predictable in organizations with which dysfunctional to grab contradictory or incongruous elements. Trust betrayal occur, the authors note, if the organization actively directed to a group (or groups) gives the cost of the damage, and even in a different group. Given the global spread of social media, online forums worldwide 24-hour news cycles can be a breach of trust with a stakeholder group quickly undermine a company’s reputation for trust in its broader stakeholder community. Ironically, the authors note, trust failures can act as catalysts for the creation of a high-trust organization. Much can, how to create and organizational trustworthiness by examining how companies are upright learned successfully restore confidence after a major injury. In analyzing the cases of companies that have tried to repair trust, the authors identified three critical phases: investigation, evaluation and organizational reform. Reforms need to be evaluated to ensure that they will function as intended, and deficits must be addressed. Successful repair requires trust to diagnose accurately and in a systemic perspective to reform, the true error in the organizational system.
As a consequence of the well known fraud at Enron, WorldCom and Tyco circa 2001 and 2002 there was a major effort in the United States, to restore confidence and enforce corporate compliance. Among other things, the U.S. Congress passed the Sarbanes-Oxley Act of 2002, increased spending on corporate compliance an estimated $ 6 billion annually and leading business schools ethics centers created and made ethics training mandatory.
«Hide

from
Robert F. Hurley,
Nicole Gillespie,
Donald L. Ferrin,
Graham Dietz
Source: MIT Sloan Management Review
8 pages.
Release Date: 1 July 2013. Prod #: SMR460-PDF-ENG
Designing Trustworthy organizations HBR case solution

[related_post themes="flat"]