MBA Research

Trend #43: Mistrust of Leaders

Several recent studies revealed that trust in institutions, including businesses, governments, Non-Governmental Organizations, and the media, is declining. Specifically, those with a high level of authority and expertise are viewed as less trustworthy than ever. While businesses are still viewed as relatively reliable as compared to the government and the media, CEO credibility is at an all-time low. Many people do not even trust the high-level executives of their own companies. Instead, they trust information found on search engines. They believe companies’ social media posts more than traditional advertisements. Among other factors, unstable economic and political conditions have deteriorated trust in organizations.

It is understandable that the general public might feel frustrated with those institutions they believe betrayed their wellbeing. But, societal shifts have altered the ways that people view themselves and others. The gap between the general population and “informed publics” continues to grow. According to studies, those who are college-educated and regularly keep up with world events have starkly different worldviews than those who are not. The general public is now much more likely to trust people who are “just like them” as opposed to those who are different from them. They seek sources of information that confirm their beliefs, be they biased or not. When they hear something that conflicts with their own opinions, they are much more likely to ignore it rather than researching to find the truth. Opposing viewpoints are usually disregarded, no matter how educated or informed the person behind the idea might be. In fact, “experts” are widely disparaged and thought of as outsiders who do not understand how to relate to “real” people.

While it is difficult to explain all the reasons for these changes, institutions (including businesses) have at times put themselves in a position to be mistrusted. Whenever executives break laws or engage in unethical behavior, they damage their relationship with society at large. Volkswagen and Wells Fargo are two recent examples of large corporations that tarnished their reputations with dishonesty, illegality, and disregard for the public interest. Publicized scandals, however, are not the only way that companies can lose trustworthiness. Businesses that are perceived as paying excessively high salaries to top executives while lower-level workers struggle may lead to distrust. Similar negative reactions might occur if a company moves profits to other countries to avoid taxes, even if the practices are legal and often required of executives who are charged with maximizing shareholder returns. Another recent example is alleged price gouging, specifically when a few medically necessary products are sold at unaffordable prices.  

Trust is an essential component of any relationship, whether between employer and employee, customer and business, or citizen and government. Therefore, government, media, business, nonprofit, and other organizational leaders need to determine why people do not trust them and how they can regain that trust.

Aside from avoiding illegal and unethical activity, leaders can work to build trust by trying to relate to citizens, customers, and audiences on a personal level. Using an everyday, casual, blunt style of conversation is more appealing to most than elevated, expert-level language. For example, those that have engaged with people in an informal style on social media have received positive attention. Building a relatable connection to leaders and their organizations as a whole can encourage people to trust the brand.

Another way that organizations can build trust is through empowering the community. Organizations that do good for society are seen as more trustworthy. Their aim should be to benefit the public, employees, and shareholders rather than causing harm. Many people seek out brands that are socially responsible or associated with positive causes. Environmental initiatives, sponsorships of charitable organizations, and ethical sourcing are examples of ways to build this goodwill. Organizations can also develop trust with the public by offering high-quality products, meeting customers’ needs, and listening to feedback. They should promote ethical practices such as offering competitive wages to all employees, paying taxes, paying returns to cover investment risks to shareholders, and working to put the customer first.

Organizations can also focus on treating their own employees well to demonstrate respect and trustworthiness. Transparency, loyalty, opportunities for growth, long-term thinking, and respect can help an organization encourage trust within its own ranks. If the leaders at the top of an organization demonstrate integrity, honesty, and respect, these ethical traits will be upheld across the board. Transparency is particularly important for an organization to show that it isn’t engaging in unethical practices behind closed doors. Opening up communications to make sure employees at all levels are informed is a great way to build trust throughout the organization. Leaders who demonstrate competence to their employees also earn trust because employees can count on the organization to be successful and secure.

Leaders should also be accountable when things go wrong or when they are at fault. If those at the top do not take responsibility when they make mistakes, no one in the organization will see the need to do so. Employees may become frustrated with leaders who refuse to fairly accept blame. Accountability makes leaders dependable. It leads to a culture in which everyone takes ownership for success.  

Classroom Implications

Trustworthy leaders are those that are ethical in everything that they do. Ethics, however, do not always come easily and naturally. Like any other skillset, ethics must be taught and practiced. Ethical education is critically important for students. If students are taught the importance of ethics from a young age, they will carry it with them. They will comprehend the relationship between ethical behavior and success. Students should become familiar with ethical principles and understand how to act when ethical dilemmas arise. If they can learn how to be trustworthy now, they will be prepared to be ethical leaders in the future.

Some discussion questions to help prompt an in-class conversation about the importance of ethical leadership:

  • Why do you think people prefer to trust “everyday” people rather than experts or people in power?
  • Why are some people tempted to act unethically or illegally, despite the many negative consequences?
  • Think of people or institutions that you trust. What makes them trustworthy?
  • Are there any specific companies or institutions that you do not trust? Why or why not? What could they do to gain your trust back?
  • What have you done that may have been unethical? Did anyone lose trust in you? If so, what can you do to regain their trust?
  • How can you encourage others to act ethically?