Preserving Trust—The Foundation of Ethics & Compliance in Business

Katrina Faessel:
Welcome to TriNet's National Small Business Week Summit where you will hear from thought leaders and experts throughout this five-day event discussing topics from AI and compliance to culture and HR. Before we begin today's sessions, we have a few housekeeping items to help get you familiar with the virtual event space.

Building and maintaining trust in the business world involves more than people think. Trust must be earned in all areas of a company's operations. Explore the intricacies of the relationship between trust and ethics and compliance during this fireside chat with Doug Riegelhuth, TriNet's Chief Compliance Officer, and Shavonnah Roberts Schreiber, Founder and CEO of SNR Creative.

But first, we'd like to direct your attention to the poll tab. Does your company consider trustworthiness as a factor in hiring, measuring performance, choosing a vendor, or evaluating potential customers? Please take a second and let us know.

Shavonnah Roberts Schreiber:
Well, hello, hello, everyone. And hello, Doug. I am so excited for our session today. So thank you to everyone who decided to join us to talk all about preserving trust, which we believe is the foundation of ethics and compliance. Doug, last year, as you may remember, of course you remember, we had a very robust conversation at TriNet PeopleForce, and we spoke to small and medium-size business owners about the importance of ethics and compliance, and we focused on what we called the ethics economy.

And in that conversation, we talked about several things. Some of the highlights that I remember, the ethics premium, which is the reality that the most ethical companies tend to outperform their peers. We talked about trends and ESG investing, diversity, equity and inclusion as a performance driver and the rise of stakeholder capitalism and many other things.

This year, in preparation for our session today, we decided we would come at things from a slightly different angle and talk a bit more about trust. In particular, approaching this notion of corporate ethics from an angle that is a lot less technical, hopefully a lot less political, and much more founded and based on just common sense and foundations of business because we believe that trust is fundamental to success in businesses. That's what we're going to talk about today. This premise is what gets us, what really gets us to the importance of corporate ethics and compliance. Doug, are you as excited as I am?

Doug Riegelhuth:
I definitely am. Shavonnah, thank you for that great intro. Spoiler alert. Yes, I believe that without a focus on ethics and compliance, the key element of trust in your business will be lacking. That's our take. That's where we're headed and in order to get started, what I'd like to do is just explore the concept of trust and work our way through that into the ethics and compliance space.

Just to kick it off, let me just tell you about a video I saw recently by Simon Sinek, a well-known thought leader, writer and speaker on the topic of leadership in particular. And in his video, which is linked in our resources site for this presentation, you can watch it if you want, he explores the concept of how the Navy SEALs view trust versus performance. The SEALs define trust as basically, do I trust you with my money and my wife?

Obviously that we get into areas like ethics and performance on different axes of a graph. Those are the two things the Navy SEALs put onto their teams that go on their high-stakes missions. The SEALs' leaders told him that every leader wants a high performance, high trust person on the team, of course, but they also told him that they would rather have a medium performer with high trust, instead of a high performer with low trust.

That's how important trust is to the SEALs and arguably they're one of the most high-performing organizations on the planet. I just wanted to start out with that. As he points out in the sort of the end of his video, like in most organizations, there are many, many metrics to measure performance, but very few to none to measure trustworthiness.

Shavonnah:
I love what you said, especially the last thing you said. I love Simon Sinek in general, but this notion that there are few metrics that really get to, few to none, that get to this notion of trustworthiness. Let's double click on that and expand a little bit more. What do you think about that? I know you are a measurement and numbers and data type of a person. So tell me what do you think about that?

Doug:
Well, I try. Thanks, Shavonnah. I think number one, my first thought on that is organizations should do more to measure trustworthiness of their employees if they're not doing that already. After all, the point of this video, which I think is really well-founded, is that technical performance is not the only thing that matters when it comes to success. The other big piece, at least one other big piece, is whether you can be trusted. And that has to do with character, ethics, trustworthiness in general.

That's one thing that businesses should focus on figuring out—are there people getting the right results and are they going about it the right way to get those results. I think the other thing is that we all know that trust is a big deal, that trustworthiness is important. We know that a person in any particular field can be the greatest technician, strategist, salesperson, writer, programmer, athlete, whatever, fill in the blank, whatever their area of expertise or work is, but if people can't rely on them to show up to do what they say they will do, to be reasonable, to be honest, to do the right thing, then that's going to be a problem. I hope we can agree, Shavonnah, that at least for individuals in the workspace, being one others can trust is a big deal. What do you think, though? And how does trust factor into your views on employees in your own organization? After all, you are a business owner.

Shavonnah:
Yes, I am. Before I get to put my view on it, this conversation is making me think of something that Angela Duckworth, who wrote the book "Grit: The Power of Passion and Perseverance," talks about. She says that success is not solely based on talent. She has this formula where she talks about talent times effort equals skill, and then skill times effort equals achievement. Basically, what she's saying is this notion of effort is twice as important as any sort of natural talent or gift.

When you talk about, you know, it's not just the sort of the hard performance measures that people typically focus on, it makes me think of that. I bring it up because I believe that when it comes to a culture of trust, leadership takes this focused effort by the leaders in the leadership.

Not just the individual, but all the individuals who make up a leadership team to focus on building cultures where people feel that it is not only that the leaders are trustworthy, but that it's a safe space. I think that those two things kind of go hand in hand. Really, what it's making me think about is that this is not automatic.

To build a culture of trustworthiness, to have the type of environment where people feel like they trust the leaders and therefore the leaders trust them, it's not something that happens automatic. For my personal opinion, and we'll talk about this a little bit later in our conversation, we have team agreements that are sort of built around this foundation of trust. These agreements to the point of you don't just sort of set it and forget it are things that we routinely discuss and remind ourselves about. We talked about them in team meetings, et cetera, on a pretty regular basis to keep it top of mind because it isn't automatic.

I think that may be one of the things that makes this notion of trust and trustworthiness more difficult and hard for people to understand is that it's not automatic. You don't do it one time and say, "You should trust me" or even someone says, "I trust you." It's an ongoing thing. In your perspective, when you think about what makes it difficult in some cases for business owners and business leaders to understand how important trust is, what do you think?

Doug:
Well, I think you sort of put your finger on it, Shavonna. I think it's that it is not automatic. Trust is something that you have to earn. You have to do that on a daily basis in order to keep earning it. I think of it as coming, acting with integrity every day. I think if you're doing that, it means that as a business you have to do a lot of things related, or at least directly sort of tied, to the key reason that you're in business. You're trying to invent a new drug for cancer, or you're trying to create a new app or whatever it might be, but you're still going to have to focus on this integrity factor on an ongoing basis. And I think that's hard for people to do.

Shavonnah:
It's interesting because there's a saying and unfortunately, I didn't make it up. So I can't take full credit for it, but I say it all the time, that “character is hard to build, very easy to lose.” And so, in my opinion, it’s critical that it's a thing that your character that you focus on it intentionally, consistently, consciously, and character and integrity are the same, one and the same to me.

I always encourage people, and I talk a lot about this notion of personal leadership. Individual and personal leadership, which is just another way of saying having high integrity, having a solid character. I know that at TriNet, that that's something that you all tend to focus on too, right around your core values and integrity, et cetera.

Doug:
That's right. There's multiple layers here, but you can start again with individuals, with employees, and it helps to set the right tone for them in your organization. We have core values and a number of those are focused on customers and how we work together in a collaborative environment. One of them is very specifically related to this topic where we're engaging on and that's the value of Act With Integrity. We define it as being honest, transparent, ethical, fair. We talk about the fact that we earn trust with each other and that we take pride in doing what's right for our customers and our colleagues.

Again, like it's harder than it sounds, because the bottom line is you can act with integrity 364 days in a row and then do the opposite, even if just by mistake. Even if just for one moment on one day, and that one moment could leave you with a trust deficit that could take years to fix or that could be unfixable.

You can think of Sam Bankman Freed, the founder of FTX, the cryptocurrency trading platform. He decided to take money invested by his customers, via the trading platform, FTX, and to use it to cover losses in his hedge fund. That one decision, there were lots of others that probably weren't ideal, but that one more than anything else, in my opinion, doomed him and the business.

It takes a never-ending effort to build trust. That's what's difficult about this. It takes a lot of work. There's a lot of program-building and we'll talk about that in a few minutes. That's, I think, really difficult, but having talked about it in the individual space mostly. Now that we've raised FTX, let's talk about organizations themselves. How important is it, not just as an employee or an individual, but how important is it for an organization to be trusted?

Shavonnah:
I think increasingly so. Trust, organizational trust, has become paramount for many people. That's how they decide which organizations they want to do business with, be a part of, go and join to work. I think in a way, a business, an organization, a corporation, whether for profit or not for profit, is constantly selling itself as trustworthy or looking to position itself to trustworthy to all of its stakeholders. From a customer perspective, as I just mentioned, this idea that I trust this organization to provide value, whatever it is that I'm paying them, the transaction, from an investment or investor standpoint, that you trust the organization, the investors trust that the organization is a good investment, that the company will provide a good ROI return on their investment.

Also from the employee standpoint, the colleague standpoint. When people are making decisions about where it is that they would like to go and work and spend their time, I think increasingly so, individuals are saying, "Is this a good place to work?" Meaning, is this a place that treats their colleagues well, that nurtures the right type of culture, as we talked about before, where I feel like the leaders are leading with integrity and good character, et cetera?

Finally, from a regulatory standpoint. As you said, you can do all the right things, 364 days, and then if you have a misstep, especially that misstep is a regulatory misstep, that can upset the entire apple cart. I think just as important for the individuals, it's this notion of trusted organization. One last point on that, Doug, we sometimes forget individuals make up the organization. Going back to that sort of individual personal leadership, if everyone takes that responsibility, then I think we naturally create organizations that are embodying this notion of trustworthiness ethically and in compliance, of course, with any of those laws.

Doug:
I agree and I think it's so important that like at our company our mission and vision statements actually include the aspiration that we become the most trusted advisor to SMBs. That's not even qualified with respect to like just HR issues, it's just a huge audacious goal. I'm not here to say that we've reached it, but that's how important it is, I think in our business.

Shavonnah:
How do we tie in this idea of trust? We talked about from the individual level, the organizational level, and integrity with business ethics and compliance to make it all come together from our previous conversation to this one today? How do we bring it home?

Doug:
Yeah, so I think that's the kicker, so thanks for getting us to that point, Shavonnah. Bottom line, it's super hard to engender trust in your business if your business is ethically challenged, i.e., out of compliance with applicable laws or regulatory requirements or anything else, challenges like those have a tendency to be noticed by customers, regulators, employees, investors. All of those folks are likely to make those issues even more noticeable when they file lawsuits against the business, issue press releases, go viral on social media and the list goes on in terms of things that they can do to you once they've lost trust.

Once that happens, it's really hard to dig out of the hole. Here's another key takeaway and this is the flip side of it. If customers know they can trust your business, believe that and firmly feel that to be true, they will be willing to pay a premium for your products and services.

I just attended a conference where two academics from Indiana University presented on a paper that they've written about a study that they conducted to tease out the value of ethics and compliance in business, in a very rigorous sort of price point focused way. This paper is also included in the resources for this presentation.

Their study shows that you can charge more for your products and services if they're coming from a company that invests in and prioritizes ethics and compliance. Bottom line, I would argue businesses should not only embrace ethics and compliance efforts to ensure trust in their business, they should tout those efforts and activities, being reasonable and honest in doing so. Perhaps even fold them into their marketing campaigns and possibly even factor them into pricing decisions.

Shavonnah:
That's very interesting. This notion of using the fact that you are running your business in an ethical and a compliant way and talking about it from a go-to-market or marketing standpoint, very interesting. I think, or at least in my opinion, ethics and compliance alone won't get you to this sort of ideal state of nirvana when it comes to trust. You also actually have to provide value to your clients, whether it's a product or a service that you deliver. This idea of customer delight is still something that is definitely top of mind, even if you can charge a premium, you still need to delight your customers.

Doug:
I agree, Shavonnah. I'm not here to say that this is the only thing for a business to think about. Let's be honest. There's lots of things that businesses have to do to be successful. I do believe is that you won't get to that state of nirvana as a business, if you don't have ethics and compliance as part of your overall effort. I also think you could argue and we could debate this, but I think you can argue that quite frankly, you might not even get to the delighting your customers or providing the best value if you don't have this frame of mind going into it.

If you're not starting with a foundation of corporate ethics and compliance, because let's be honest, if you really don't care about ethics, doing the right thing, being honest, then you probably as a business owner don't care about providing the best value or even delighting your customers. It might be more of a short-term outlook on, let's just see how much money we can get out of people and then move on. I think if you're looking at the long game, then this stuff is critical and fundamental to all of it.

Shavonnah:
Yeah. A cash grab versus someone who's actually looking to be in a sustainable business for the long term. What are some key takeaways for our SMBs? More specifically, what can they do to create this environment, that is rich in integrity and character, ethically, also, obviously, compliant, how do they do that and how do they incorporate that in their operations and help their employees to just naturally feel like they can and want to do the right thing?

Doug:
Yeah, it's a great question. This is where it gets really interesting. I think there's a lot to be done. It really has to be a focus in all parts of the organization, but let's start with hiring and just go from there. It's gonna be, if you're really focused on this, it's gonna be critical to hire the right people, that you can trust.

That means background checks, using robust interview protocols. At the same time, and this is the age-old story that you will run into in ethics and compliance in corporate America, is you can't over rotate on that. You can't just exclude everybody who's got a bad credit record or a criminal record even.

In fact, in most instances, you can't run a credit check. It's not allowed. It's deemed irrelevant by the law except for certain jobs. You can't just disqualify folks for criminal background hits. You have to do an individualized inquiry and figure out is this really relevant for their job and this particular business.

You have to walk this fine line throughout, but you do have… That's why it's hard, but you have to do it. The same thing goes for onboarding. You have to spend a lot of time building this the right way so that when you bring someone on, they are introduced to this culture of ethics. That means company values, maybe one of those values will tie into this particular topic. Mission and vision, like I said, might tie in, a code of business conduct and ethics, and then you have to have a way for folks to raise issues, including hopefully anonymously so that they can come forward even if they don't want to reveal their identity, if they feel something's wrong, and then you have their policies.

Beyond that, then you have to have someone who owns all this stuff, who's in charge of this ethics culture and these various components of the program. One other thing, Shavonnah, is real quick, you got to treat folks fairly when it comes to benefits, compensation, all of that, also involves compliance considerations.

Doug:
Even offer letters have to be done the right way. And then you've got payroll taxes. And then finally, going back to the Navy SEALs example, you should be roping in this trust concept into your performance management.

Shavonnah:
That is all very employee, colleague focused and centric, which I think is excellent. Are there any other, one or two key points beyond the employee life cycle that you think SMBs need to focus on to really drive this notion of ethics and compliance in their organization and trustworthiness?

Doug:
Yeah, I love it. You knew I would say that. There's so much more. There's third party risk management, which is looking at your vendors and how you select your vendors, how you onboard your vendors, how you monitor your vendors, making sure like that they're legit, that they have their own ethics and compliance programs that they are, if you're going to give them sensitive data related to your company or your people or your customers, can they be trusted to handle that? You need to figure that out. Who are their vendors? Can their vendors be trusted? There's a whole lot that goes into that. Sometimes in some industries, at least there's customer selection and onboarding. If you're in the banking or financial services industry in general, you have to make sure you're not bringing on fraudsters, money launderers, sanctioned entities like Russian oligarchs, into your space.

There's data privacy and security considerations, Shavonnah, that are front and center for just about every business today, they have to be. You have to be thinking about that, not just with respect to vendors, but with respect to your own house. Safety is huge, if you're in certain industries.

The list goes on from there. There's the Corporate Transparency Act for small businesses, which has gotten a lot of attention this year because it went into effect this year. That's being litigated right now, but that's a big thing for small businesses as well. So the list goes on and on.

Shavonnah:
It is a big list. One of the things that I was going to get to. Actually, we have a question I think we'll address that as well, is, so this is a huge list. If I am an SMB, which I am, how do you get started? One of the questions is how do you educate employees on the importance of ethics and appliance and are there any examples that you've seen work, Doug? I guess that maybe goes for me too, but any examples that have worked well that we could suggest that people try within their organizations to get started?

Doug:
One thing I should say for sure in that regard is tone from the top. At the highest level of the organization there needs to be the right messaging around this. There needs to be the right leadership by example. That will frankly set the tone for everybody else in the organization, because they will be looking and watching at how that goes at the top level.

The culture stuff is critical. I would do that first. Try to build this, because culture, we all know, will beat strategy every day. So if you have the right culture, a lot of stuff will just happen organically in the right way, because you've created the culture.

Beyond that, I would say do risk assessments, figure out for your particular business, where are the hotspots? If we're not in manufacturing, then maybe you don't have to worry about safety as much as we would if we were in it, but if we've got a whole bunch of vendors and third-party suppliers, maybe we need to do some third-party risk management. Just sort of narrow it down based on those kinds of risk assessments and then focus where it makes sense to do so.

Shavonnah:
I like what you said, the tone from the top. And in closing, we always run out of time. One of the things that it brings up for me is at my organization, SNR Creative Advisory, we have what we call our team agreements. We bring our A game. We commit to maximum personal accountability and transparency.

We commit to not leaving any loose ends or things undone. We question to complete clarity and we always see the big picture and keep the collective end goal in mind. That setting the tone from the top, I've taken that to heart, and that's something that I've seen work well. Unfortunately, Doug, again, here we are out of time.

So if you had a question that we did not answer, please do be sure to visit the info booth. It has been so much fun, Doug. I feel like we could talk about this for hours. I don't know who would listen to us, but I definitely feel like we could talk about this for a long time. Again, thank you for your time, expertise and insight. Thank you to everyone who joined us today.

Doug:
Thank you, Shavonnah. Thanks to everybody.