Why has establishing credibility become so important in the post-trust era?

Business Communication

Developing Leaders for a Networked World

Peter W. Cardon www.mhhe.com

ISBN 978-0-07-340319-9 MHID 0-07-340319-9

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ess C o m m u n ic atio

n Developing Leaders for a Netw

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Cardon

Imagine yourself at the center of the communication process …

How do you establish credibility with your communication?

How do you convey your message effectively to influence others?

How do you set yourself apart with your communication skills to reach professional goals?

Develop into a leader for a networked world as Peter Cardon puts you at the center of business communication through his:

Unique focus on credibility woven throughout the textbook chapters

Practitioner and business case-based approach

Forward-looking vision built on tradition

@petercardon

To learn more and to stay up-to-date in the Business Communication field visit www.cardonbcom.com

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Introduction to Business Communication Chapter 1 Establishing Credibility

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After studying this chapter, you should be able to do the following:

LO1.1 Explain the importance of establishing credibility for business communications.

LO1.2 Describe how competence, caring, and character affect your credibility as a communicator.

LO1.3 Define and explain business ethics, corporate values, and personal values.

LO1.4 Explain the FAIR approach to ethical business communications.

Learning Objectives

Establishing Credibility

C H

A P

T ER

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Chapter Case: A Culture of Trust at eBay

Who’s Involved

Meg Whitman former CEO (1998–2008)

John Donahoe CEO of eBay (2008–present)

Pierre Omidyar founder and chairman of eBay (1995–present)

The Situation

Perhaps no company better exemplifies the importance of trust or credibility in business relationships than eBay. eBay’s online auction and shopping website is built on the notion that buyers and purchas- ers can trust one another to accurately represent the quality and nature of products and ship them in a safe and timely manner—a business model based on the notion of trusting a complete stranger. In recent years, eBay has begun to post seller ratings, which are measures of seller credibility in terms of accuracy of item descriptions, honesty of communications, reliability in shipping time, and fairness of shipping and handling charges.

Why Does T his Matter?

In most business situations, others make judgments about what you say, write, and do based on your credibility. Credibility is your reputation for being trustworthy— trustworthy to perform your work with excellence; to care about those you work with and for; to live by high ethical, corporate, and personal values; and to deliver on your promises. In short, your credibility is the degree to which others believe or trust in you. In this book, we often use the terms trust and credibility interchangeably.

Business communications occur in the context of working relationships, all of which depend on trust. 1 Credibility has always been important to business relationships, yet its importance has grown in recent years with an increasingly interdependent, knowledge-based workplace. 2 As one of the foremost thinkers on trust in the work- place, Stephen M. R. Covey made this observation:

Contrary to what most people believe, trust is not some soft, illusive quality that you either have or you don’t; rather, trust is a pragmatic, tangible, actionable asset that you can create—much faster than you probably think possible. . . . It is the key leadership competency of the new global economy. 3

The importance of credibility as a basis for effective communication is universal. As Victor K. Fung, chairman of the Li and Fung Group centered in Hong Kong, China, stated, “A good leader is probably no different in any culture in the sense that a good leader must have credibility. That is something one establishes . . . based on the way one handles [oneself] . . . and by [an] established track record.” 4 Fung’s comments illus- trate an important point that we will explore in detail: Credibility emerges from several sources, including abilities and achievements as well as interpersonal skills and traits.

In this chapter, we discuss the ways that business executives and the business community establish trust. Then, we focus on three components of credibility: compe- tence, caring, and character. 5 First, however, we discuss the culture of trust at eBay. Throughout the chapter, we will return to the culture of trust at eBay with examples and comments from business executives. 6

? LO1.1 Explain the

importance of establishing credibility for business communications.

Hear Pete Cardon explain why this

matters.

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Do you operate from a position of trust or credibility? That is one of the first things you should consider as you communicate. In the business world, you often start from a deficit of trust. As a result, one of your first goals should be to gain trust or credibility from colleagues, clients, customers, and other contacts. 7

Given the major business scandals over the past decade (i.e., Enron, Adelphia Com- munications, WorldCom), trust in businesses and business executives has dropped to all-time lows. In a recent Gallup poll, just 12 percent of respondents considered busi- ness executives honest and ethical. For other business-related professions, trust ratings were also low: bankers, 19 percent; advertising practitioners, 11 percent; insurance salespeople, 10 percent; stockbrokers, 9 percent; and car salespeople, 6 percent. 8 As depicted in Figure 1.1 , the trust extended by the general public to business executives is far lower than the trust extended to members of other selected professions. 9 The public also increasingly views companies with less trust. Approximately 85 percent of senior executives surveyed believe that public trust in business has gone down. Approximately 62 percent of survey respondents across 20 countries said their trust in corporations had gone down following the economic crises of 2008 and 2009. 10

A deficit of trust also exists within companies. Various surveys show that employees often do not trust their own business leaders. Just 51 percent of employees trust senior management, and only 36 percent of employees believe their company leaders act with honesty and integrity. Furthermore, approximately 76 percent of employees have seen

eBay started in 1995 when founder and computer programmer Pierre Omidyar’s personal auc- tion website sold its first item: a broken laser pointer for $14.83. Omidyar, a French-born American of Armenian-Iranian descent, is still chairman of eBay and now has a net worth of approximately $5.5 billion. Along with his wife, Pam, Omidyar also heads the Omidyar Network, a philanthropic investment firm “dedicated to harnessing the power of markets to create opportunity for people to improve their lives.” eBay grew rapidly in its first few years. By 1998, it had annual revenues of $4.7 million, half a million users, and 30 employees. Yet, its explosive growth really began when Omidyar asked Meg Whitman to take the CEO position. Whitman brought business credibility to the company. She had thrived in corporate leadership positions at Procter & Gamble, Bain & Company, The Walt Disney Company, and Hasbro, where she was in charge of global marketing for brands such as Playskool, Mr. Potato Head, and Teletubbies. When Whitman first met Omidyar, she did not expect to take the position. After all, eBay was a small, unestablished, and relatively high-risk company. But she admired Omidyar’s business model. As she explained in her memoir ( The Power of Many: Values for Success in Business and Life ), “Pierre carefully explained that he believed eBay was thriving because it was based on the idea that most people are basically good and that the users could be trusted to do the right thing most of the time. . . . Ultimately, eBay developed because millions of people bought into the idea that they could trust each other.”

Task 1 Establish credibility through

competence.

Task 3 Establish credibility through character.

Task 2 Establish credibility

through caring.

The Role of Trust in the Post-Trust Era

4 Part one Introduction to Business Communication

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ESTABLISHING CREDIBILITY Chapter one 5

illegal or unethical conduct in the past 12 months at their jobs. 11 As future business managers and leaders, you will often find yourself in charge of employees who are accustomed to not trusting those in leadership positions.

A strong predictor of cheating in the workplace is cheating in school. Sadly, re- cent research has found that cheating is so pervasive that some use the label a global cheating culture. Among high school students, 80 percent of high-performing students admit to having cheated, and 50 percent do not believe cheating is wrong. Other re- search about high school students found that more than 70 percent had engaged in serious cheating, and 50 percent had plagiarized assignments from the Internet. In a study of over 50,000 undergraduate students in the United States, more than 70 percent admitted to serious cheating. Nearly 80 percent stated that Internet plagiarism was not a serious offense. 12

Perhaps most concerning is that business students are among the worst offenders. When asked in anonymous surveys if they had cheated to get into graduate school, many students admitted to having done so: 43 percent of liberal arts students, 52 per- cent of education students, 63 percent of medical students, 63 percent of law students, and 75 percent of business students. Think about that! Three-quarters of graduate-level business students admitted to some form of cheating to get into their programs. In another study involving hypothetical ethical dilemmas, convicts in minimum-security prisons scored as high on unethical behavior as MBA students. 13 In yet another study of 6,226 undergraduate business students in 36 countries, American business students viewed cheating no differently than did students from countries considered high in corruption. 14

Michael Maslansky, a leading corporate communications expert, has labeled this the post-trust era. In the post-trust era, the public overwhelmingly views businesses as operating against the public’s best interests, and the majority of employees view their leaders and colleagues skeptically. Regarding the post-trust era, Maslansky said, “Just a few years ago, salespeople, corporate leaders, marketing departments, and communicators like me had it pretty easy. We looked at communication as a relatively linear process. . . . But trust disappeared, things changed.” 15

90 Nurses

Police officers

Clergy

Bankers

Business executives

High Trust

Low Trust

80

70

60

50

40

30

20

10

0 2000 2001 2002 2003 2004

Year

2005 2006 2007 2008 2009

FIGURE 1.1

How Will You Overcome Public Perceptions to Build Credibility? A Look at Trust in Professions over a Decade

Note: Based on annual Gallup Poll surveys (Gallup Polls, “Honesty/Ethics in Professions,” retrieved June 1, 2010, from www .gallup.com/poll/1654/honesty-ethics-professions.aspx). Percentages based on the number of respondents who responded “very high” or “high” to the following questions: Please tell me how you would rate the honesty and ethical standards of people in these different fields—very high, high, average, low, or very low?

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6 Part one Introduction to Business Communication

Most of these perceptions about business leaders as untrustworthy are not nec- essarily fair. Daniel Janssen, former chairman of the board of directors of Solvay (a Belgian chemicals company operating in more than 50 countries), explained the dilemma:

Executives of large companies today are generally perceived as efficient and competent, but also self-interested and ungenerous. However, I think that people who form this opinion are underestimating something of which they lack knowledge. Many executives, in top management and also at other levels, are incredibly generous and not at all self-interested. They do their job and they do it with respect for the common interest. But it is true that capitalism is too often marked by its dark and greedy side. 16

You will often find yourself needing to establish credibility in this post-trust era. As a future manager and executive, you can control your reputation as a credible communicator by focusing on three well-established factors: competence, caring, and character.

The Role of Competence in Establishing Credibility

LO1.2 Describe how competence, caring, and character affect your credibility as a communicator.

Competence refers to the knowledge and skills needed to accomplish business tasks, approach business problems, and get a job done. Most people will judge your compe- tence based on your track record of success and achievement.

In her memoir, Meg Whitman explains how as a young professional she gained cred- ibility and displayed competence within her organization: “I just focused on delivering results,” she said. “You have to excel at the tasks you’re given and you have to add value to every single project, every conversation where someone seeks your input.” 17

People develop competence in many ways: through study, observation, and, most important, practice and real-world business experiences. Your entire business program is likely centered on developing competence in a certain business discipline and/or in- dustry. You may already have significant business experience. If you’re a novice, seek- ing internships and jobs related to your discipline will help you develop competence.

How you communicate directly affects the perceptions others have of your compe- tence. Throughout this book, you will find an emphasis on two traits associated with competence: a focus on action and an emphasis on results.

A focus on action implies that you seize business opportunities. Meg Whitman em- phasized this action-oriented approach to work: “The way I usually put it is, the price of inaction is far greater than the cost of making a mistake. You do not have to be per- fect to be an effective leader, but you cannot be timid.” 18 She also described the eBay emphasis on results:

I don’t believe that all a company needs to do is declare that it has values and then say, “Trust us, we know what’s best.” To be a success, you must identify a goal with a measurable outcome, and you must hit that goal—every day, every month, every year. Trying is important. But trying is not the same as achieving success. . . . [Some] people expect to advance in their careers regardless of results and are surprised when it doesn’t happen. They feel entitled. Their attitude is: “Because I’m here, because I’m me, you owe me.” 19

In summary, you demonstrate competence by taking an active role in your business and by getting results. How you communicate your plan of action and the results of those actions will determine how others perceive your competence and your credibility.

The Role of Caring in Establishing Credibility Your colleagues, clients, and even your customers will trust you far more if they know you care about them. As Mahatma Gandhi once stated, “The moment there is suspi- cion about a person’s motives, everything he does becomes tainted.” This statement

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ESTABLISHING CREDIBILITY Chapter one 7

applies in nearly all business circumstances: Once an individual is perceived as un- concerned about the interests of others or disinterested in causes above and beyond him- or herself, others distrust such a person. In the business world, caring implies understanding the interests of others, cultivating a sense of community, and demon- strating accountability.

Understanding the Interests of Others Meg Whitman saw that the culture at eBay was committed to the best interests of buyers and sellers:

Connecting with people’s hopes and dreams is a dynamic I perceived in the eBay community. Both buyers and sellers so often loved eBay because it connected them to their aspirations—perhaps the desire of amassing a great collection, or the dream of financial stability from successfully building an online business. 20

Your ability to gain credibility strongly depends on your ability to show that you care for the needs of others. Furthermore, your ability to show you care puts you in a rare position as a business leader. After all, less than half (42 percent) of employees believe their managers care about them. Even worse, less than one-third (29 percent) of employees believe their managers care about whether they develop skills. 21

Effective communicators gain trust by connecting with others—that is, seeking to understand others’ needs, wants, opinions, feelings, and aspirations. Virtually every as- pect of communication you will focus on in this book relies on this other-orientation.

Cultivating a Sense of Community The most effective business leaders in today’s corporate environment have generally risen to their positions because of their sense of community and teamwork. Meredith Ashby and Stephen Miles recently interviewed hundreds of prominent and accom- plished business leaders to answer questions such as What are the burning issues for corporate leaders today? and How do companies identify, attract, develop, and retain the best and brightest people in the workplace? Here is what they learned from these CEOs:

Most defined their main responsibility as chief executive to be that of inspiring, influencing, setting the direction for, facilitating, coaching, mentoring, and developing their employees. The word “control” was rarely used; instead, they spoke emphatically about the importance of a strong team orientation. Their role was to identify and empower a team, not command it. Indeed, many of them characteristically used the term “we” rather than “I” in discussing success within the organization. Instead of thinking in terms of individual accomplishment, most tended to think in terms of what their management teams had achieved. 22

Throughout this textbook, you will see techniques for communicating your “we” and “you” orientation rather than a “me” orientation. Speaking about “our needs” or “your needs” as opposed to “my needs” engenders trust and helps you come up with solutions that achieve mutual benefit.

Demonstrating Accountability A sense of accountability implies an obligation to meet the needs and wants of others. It also involves an enlarged vision of those affected by your business activi- ties. It takes a stakeholder view that includes all groups in society affected by your business.

In a commencement speech to business students at UCLA, Robert Eckert, CEO of Mattel, spoke about trust and, in particular, the sense of accountability that is needed among business executives and managers. He concluded his speech this way:

You are the future leaders of business. And when it comes to trust, your leadership style affects those you are leading. . . . As you go to work, your top responsibility should be to

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8 Part one Introduction to Business Communication

build trust. To perform every day at the highest standards. Not just for yourself, but for your team, for your supervisor, for the consumer, for the company’s shareholders, for the rest of us in business. . . . It’s day one of the next chapter of your life, and I’m putting my trust in each of you. 23

Thus, a sense of accountability involves a feeling of responsibility to stakeholders and a duty to other employees and customers. By placing a rationale for account- ability in your communications, you will generate substantial trust and goodwill from others.

Honesty Ethical behavior

Exchanges information willingly Shared objectives

Respectfulness toward others Expertise

Positive attitude Motivation

Consideration of others Ability to do the job well

Communication skills Intelligence Experience

Connectedness Works for a reputable company

0% 20% 40% 60% 80%

77% 68%

63% 53%

49% 42%

40% 39%

37% 36% 36%

29% 23%

17% 12%

FIGURE 1.2

What Determines Trust in Individuals in the Workplace? For Collaboration on Work- place Projects Source: From Economist Intel- ligence Unit, The Role of Trust in Business Collaboration. Copyright © The Economist Newspaper Limited, London. Based on a survey of 453 business executives around the world who were considered expert collaborators.

The Role of Character in Establishing Credibility

Character refers to a reputation for staying true to commitments made to stakeholders and adhering to high moral and ethical values. Character has always been important in business relationships, especially long-term, collaborative relationships. It is becom- ing even more important—especially for leaders—in an increasingly open, transpar- ent, connected, and interdependent workplace. David Pottruck, former president and co-CEO of the Charles Schwab Corporation, explained it this way:

The twenty-first-century leader is surely different from the leaders of the last two decades. The Internet has placed real power in the hands of people around the world. It has increased the possibilities for millions to do the work that enlivens them. There will be little loyalty to people or to organizations that are not worthy. No longer do pension plans and benefits create chains that hold people in one spot. To create loyalty in such an environment, the new leader will understand how to create a compelling culture, one that will allow people to contribute their best. He or she will then communicate meaning and trustworthiness in every word and action. Culture, character, and communication are the cornerstones of today’s new leadership. 24

Character is central in creating trust. Consider the recent research, depicted in Figure 1.2 . 25 Business executives were asked what the most important determinants of trust in workplace projects were. Overwhelmingly, character-based traits—that is, honesty, ethical behavior, and willingness to exchange information—ranked at the top.

In the following sections, we focus on four topics closely related to character: busi- ness ethics, corporate and personal values, open and honest communication, and fair- ness in business communication.

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ESTABLISHING CREDIBILITY Chapter one 9

Business Ethics Ethics are “rules of conduct or moral principles that guide individual or group behavior.” 26 Business ethics are the commonly accepted beliefs and principles in the business community for acceptable behavior. At a minimum, business ethics involve adhering to laws; safeguarding confidential or proprietary information; avoiding con- flicts of interest and misuse of company assets; and refraining from accepting or pro- viding inappropriate gifts, gratuities, and entertainment. 27

As far as corporate communications, the dominant business ethic in recent years is transparency. Transparency involves sharing all relevant information with stakehold- ers. As defined by Transparency International, transparency “is a principle that allows those affected by administrative decisions, business transactions or charitable work to know not only the basic facts and figures but also the mechanisms and processes. It is the duty of civil servants, managers and trustees to act visibly, predictably and understandably.” 28

In recent years, perhaps in large part due to public scandals, employees of compa- nies in the United States have observed higher ethical behavior within their companies and generally view their upper managers as ethical. For example, in a recent Eth- ics Resource Center survey of 3,010 employees across the United States, 80 percent of employees said they were satisfied with the information they received from top management about what was going on in the company; 74 percent trusted that top management would keep its promises and commitments; and 89 percent stated that top management actively encouraged employees to do the right thing. Furthermore, 82 percent of employees believed that top managers would be punished and held ac- countable if they were caught violating the organization’s ethical standards. 29 For the foreseeable future, transparency is expected to remain the dominant business ethic related to communications.

You will soon be in leadership positions within your organization. You can cre- ate a transparent workplace by being accessible, acknowledging the concerns of others, and following through when you don’t have immediate answers. Trust- building behaviors include extending trust, sharing information, telling it straight, providing opportunities, admitting mistakes, and setting a good example by fol- lowing rules. 30

You likely will need to analyze ethical dilemmas in your business program, while training for your job, and once you are on the job. You probably recognize that “mak- ing the right choice” is not always obvious. In such situations, where the law and ethical principles do not provide a clear answer, transparency is key: Decision making needs to be open, documented, and based on the collective conscience of your work team and affected stakeholders.

Often employees fail to speak up when they observe potentially unethical behavior. Business professionals remain silent for four basic reasons: (1) They assume it’s stan- dard practice, (2) they rationalize that it’s not a big deal, (3) they say to themselves it’s not their responsibility, or (4) they want to be loyal.