Stefan Stern

Here is an excerpt from an article written by Stefan Stern for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.

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A Rolls-Royce engine blows up, and … silence — for four days. The great British engineering company took its time to find out what had happened to the Trent 900 engine mounted on the wing of a Qantas A380 superjumbo, which had to make an emergency landing in Singapore a few days ago. The company preferred to offer facts rather than speculation. Its brief statement on Monday, declaring that progress was being made in the investigation, calmed investors, initially. By Friday it had identified the faulty component. So not too much harm done. Probably.

Rolls-Royce is still a trusted name. But most businesses cannot be so confident that their brands are equally bullet-proof. As if to remind us of this, the presidential commission into the Macondo well disaster is causing BP, Transocean, and Halliburton further reputational damage.

Trust is hard won and easily lost. Lack of trust makes business life more complicated, pushing up the cost of transactions, and making it harder to win and retain customers. All over the world, as the Edelman trust barometer has shown, trust has been in trouble for years.

“There is this huge stuff about trust,” wrote Alastair Campbell, former director of strategy and communications for the British prime minister Tony Blair, in his diary at the height of the controversy over missing Iraqi weapons of mass destruction in July 2003. How our leaders behave, in politics and business, shapes public opinion and can boost or undermine levels of trust in society at large.

Britain’s new coalition government, elected in May, was greeted initially as a welcome new broom, offering trustworthy new faces to replace its predecessors. But as The New York Times has reported in minute detail, a cloud already hangs over it, and in particular over the figure of Andy Coulson, the new director of communications at the heart of government.

Questions continue to be asked over Mr Coulson’s behaviour when, in a former life, he was editor of the News of the World. In April 2005, when it was named newspaper of the year,

Mr Coulson was happy to boast about how carefully he operated as editor. “We talk about our stories in great detail prior to publication,” he told the UK Press Gazette. Journalists who had worked at the NotW and then returned “were surprised by the degree of discussion and analysis that goes on before we decide to publish a story,” he said.

But in front of a parliamentary select committee in July 2009, Mr Coulson denied knowing anything about the allegedly widespread phone-hacking (described at length by The New York Times) that was going on at his newspaper. This episode has done nothing to improve levels of trust in the British media or British society more widely.

Business leaders should be concerned about declining levels of trust in what they do. Talented employees will leave untrustworthy organizations. Suppliers may not do business with untrustworthy counterparties. Well-informed consumers will reject untrustworthy products.

No one should take trust for granted. Mark Thompson, director general (CEO) of the BBC, one of the world’s most trusted media organisations, put it well in a speech over two years ago. “Trust in a given institution may be based on a great tradition and great inherited values, but it depends on what you do today,” he said. “It has to be earned and earned again. And the higher the trust, the higher the public expectation.”

Speaking on the BBC in 2002, the philosopher Onora O’Neill identified the source of mistrust in society and within organizations generally: “Deception is the real enemy of trust,” she said. “Deception is not just a matter of getting things wrong. Deceivers. . . mislead intentionally, and it is because their falsehood is deliberate… that it damages trust and future relationships.”

It is time for some straight talk in the battle to rebuild trust.

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Stefan Stern is the director of strategy in the U.K. for Edelman and was the management columnist for the Financial Times for four years prior to that. He is a visiting professor at Cass Business School in London.