The Emperor's New Clothes & Modern Trust

There are times when I have felt like the little boy in the Hans Christian Anderson story The Emperors New Clothes . This boy was the one that saw and had the courage to tell the King he was naked, that the "magical" clothes he had been sold were non-existant. For a while the boy was derided as no one wanted to point out that the King had been conned.

The relevance here is that for a while I have been saying that trust in the workplace has eroded, if not disappeared, and that either we need to find new and better ways to build trust or accept that it has gone and find new ways of working. The trust in question is at many levels; between peers in the work place, between employees and employers, between businesses and their customers, between regulators and the businesses they oversee, etc, etc.

I was first aware of the question that when I joined Flemings, the British Investment Bank now part of JPM. I had previously worked for North American Banks and I was quickly struck by the fact that in Flemings one was inherently trusted, whereas in previous employers there numerous checks and balances on anything I did.

At that time with the City of London, there was a background of personal responsibility and trust and those that could not be trusted were recognised and treated accordingly. When a certain media mogul took an unexpected late night swim from which he did not return, Flemings was unaffected. The reason being that the senior directors had met the man in question and decided that he was not someone they wished to do business with, so they didn't, even while many other organisations did.

As trust has eroded there has been a growing attempt by politicians and regulators to bolster/re-establish trust. Their primary tool is more and more prescriptive rules and reporting. This is because they are betting everything on what they call transparency. While transparency is no bad thing, I would and have argued that it will not restore trust, but instead creates additional work and extra costs, while removing the likelihood of individuals exercising unpopular judgement.

The biggest problem is that the various parties in any discussion come to the table with very different interests.

This happened again yesterday at breakfast roundtable I attended, where the discussion was around how to respond to the ever growing and disjointed demands of regulators. The opening comments were largely aimed at the various regulators and their lack of connected thinking. One person did use the word trust and I took that as an opportunity to raise the question of a need for new working models that reflected the fact that trust has been lost and probably cannot be recreated.

At the time of making the comment I immediately felt a little awkward, as if I had come in from "left field". While the discussion went back to pointing fingers at demanding regulators, I was pleased that around half an hour later in the discussion two of the respected contributors acknowledged that trust had been lost, as I had commented. Maybe my timing was off but the point did hit home.

In the analogy of the Emperor's New Clothes I see the labyrinthine web of regulation as being the "new clothes" meant to restore trust around the "Emperor" that is financial services. But it doesn't! And worse, in this case, it seems unlikely that we can go and find new clothes that will deliver trust.

Instead we need to work out how to live with a naked Emperor and all that may mean in new ways of working. I feel as if others are starting to "see" the situation and if they are it is possible we can pull our heads from the sand and get on with building that new world.

Fingers crossed.