1. The Banks
— Mark Carney, Governor, Bank of Canada
Those of you who read my newsletters know that I spend a
fair bit of time citing the importance of values and trust as the only
sustainable framework for free-market economies. I also help my clients
identify their personal and corporate values frameworks to conduct their lives
and businesses with integrity.
Why won't the bad man stop hectoring us about this, you might be asking? For the same reason that Canada's Mark Carney, soon to be Britain's central banker after successfully filling the post in this country, saw fit to lecture financial executives about these topics in a recent speech at the Ivey Business School.
Carney urged bankers to rebuild the trust of their customers, lost during the financial meltdown. Western financial institutions, he said, have lost sight of their responsibilities to customers and to society at large:
"Over the past year, the questions of competence have been supplanted by questions of conduct. Several major foreign banks and their employees have been charged with criminal activity, including the manipulation of financial benchmarks, such as LIBOR, money laundering, unlawful foreclosure and the unauthorized use of client funds. These abuses have raised fundamental doubts about the core values of financial institutions."
Mr. Carney urged financial institutions to rediscover their values, a responsibility that he laid at the feet of boards and senior management. Critics of Mr. Carney's words, including gasbag business commentator Kevin O'Leary, suggest that this all Kumbaya. However, those who believe that any government regulation is too much, best heed Carney's warning or find the market flooded by new government regulations. This legislative response will be fueled by public outrage and will be designed to ensure that financial institutions play fair.
2. The Church
Meanwhile, the College of Cardinals has convened in Vatican
City to select the next Pope. The College might do well to listen to Mr.
Carney's sermon. Unfortunately, the Church has been crippled by sexual abuse
charges, official cover-ups, financial mismanagement, and a bully campaign to
silence its women religious, the Church's stalwart moral leaders. The Vatican
appears to have favored a strategy to deal with its missteps of denial over
apology, indemnity over remedy.
Just last week another Prince of the Church resigned his post. Scottish Cardinal Keith O'Brien, who had planned to contest four allegations of sexual misconduct, finally saw fit to admit the transgressions just days before the Papal conclave. "I wish to take this opportunity to admit that there have been times that my sexual conduct has fallen below the standards expected of me as a priest, archbishop, and cardinal," he said in a statement.
The cost of all of these shenanigans has been a significant weakening of the Church's moral authority and a growing alienation of its worldwide membership.
3. The Government
Finally, the Canadian government's callous disregard of the treaty rights of indigenous people continues to sow mistrust in both native and non-native communities across the country. Idle No More, a grassroots protest movement, has sprung up to challenge the Harper government's use of omnibus bills to ram through legislation rendering waterways, land, and air vulnerable to industrial exploitation.
The Conservatives have also been charged with seeking to assimilate native populations into the mainstream of Canadian society, undermining the sovereignty of indigenous peoples. Idle No More has been employing hunger strikes and peaceful demonstrations to raise awareness. Lawmakers take note: frustration at the government's mishandling of historic treaties is building and spring is in the air.
4. Rebuilding Trust
Trust, once lost, is difficult to rebuild – but not impossible. It does require commitment and ongoing attention to repair damaged relationships. Most of all, it requires action. Apologies, while important, are seldom accepted if there are no plans to redress violations. Here are three ways to rebuild trust:
- Accountability is the first law of leadership. Too often, those in power believe that the rules that apply to everyone else don't apply to them. It's also where they trip up. Mark Carney suggests that when "trust arrives on foot, but leaves in a Ferrari," there is damage done that can severely limit the best interests of the people and institutions involved. And, there are victims. Eventually, the past will catch up with you no matter how high you rise in the power structures. For more on accountability please visit: http://www.extraordinaryconversations.com/newsletter/newsletter-v6-issue4-web.php
- Transparency makes it easy to track whether an organization's words and actions match. Transparency requires disclosure and verification. Especially in matters where public trust has been violated, independent auditing or ombudsmen may be called in to ensure accountability. Transparency around fees, salaries, bonuses, pay grades...and arrest records may be required to regain public trust.
- Consequences ensure that limits and boundaries are respected and the rule of law is observed. Interesting that no one went to jail for the financial meltdown of 2008. No one from AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase or Morgan Stanley (etc.) was charged with fraud or theft! While small fines were levied there were no significant consequences to unhinging world markets and setting off the Great Recession. That is permission–granting for the next wave of what Macleans Magazine termed "heads I win, tails you lose" financing.