Between the various privacy scandals, sexual misconduct probes, and CEOs charged with buying college admissions for their kids, trust in the business world feels like it’s at an all-time low.
But it turns out the picture is more complicated than that. While faith in big business, media, and government is under siege, more people than ever are turning to their employers for guidance and support. Globally, 75% of people trust their employer to do what’s right, according to Edelman’s 2019 Trust Barometer report. In uncertain times, we’re leaning on some of the people closest to us–notably, our bosses and colleagues–for confidence and direction.
I get this. I’ve always felt that my professional network is far more than just a collection of business contacts. In my career as a headhunter and now as an investor, I’ve learned that relationships built around mutual trust are the only ones worth pursuing, professionally and personally.
The challenge is that in the heat of the moment, understanding the intentions and motivations of colleagues can be hard. When you’re dealing with competitive industries, shifting markets, and pressure for instant results, who can you really trust?
In conducting thousands of interviews with top leaders and working with more than 100 companies as an investor, I’ve noticed a few signs that tell me I should maybe think twice about trusting someone to make the right call in the moment.
No one’s perfect of course–myself included. But whether you’re investing in entrepreneurs, hiring leaders, or even deciding where to work, here are a few critical and not-so-obvious “tells” that I’ve encountered.
They prepare you for the ups, but not the downs
Acting ethically isn’t about being nice or being liked. It’s about transparency. That means being honest about the potential for losses as well as gains. Hiding hard news from employees or stakeholders is rarely a sign of solid leadership.
This goes double in times of crisis. A classic example of this good kind of transparency comes from former Starbucks CEO Howard Shultz, who opened up to employees about company mistakes in 2008 after tearfully laying off 12,000 workers at the height of the recession.
I’ve been guilty of the opposite. A couple years ago, I invested in a company that was in the process of being acquired and encouraged colleagues to do the same. But the buyer changed the terms at the 11th hour–and we were left holding the bag. Rather than share that news openly, I tried to save face by paying the others out of my personal finances. But by not telling the whole story, I set off alarm bells for a couple of investors–and in the process, I lost a good friend.
They’re lone wolves
A serial entrepreneur might be a pro at pulling off seven-figure exits, but if they’re not talking to a single person who helped them get there after the fact, that’s a serious red flag. If you’re willing to burn people to make a buck, I’m willing to bet you’ll also cut corners along the way.
Just look at disgraced entrepreneur Billy McFarland. Long before he bilked customers, vendors, and investors out of millions with his disastrous Fyre Festival–and landed in prison on fraud conviction–McFarland had already racked up some serious bad will among previous customers and associates. A little research would have shown that his entourage of musicians and Instagram influencers were relatively recent acquisitions intended to build hype.
Most examples aren’t nearly as public (or as poetic) as this, but doing due diligence to see if a potential hire, partner, or boss has had relationships that have lasted from one project to the next can tell you plenty about whether they operate with integrity–or not.
They don’t incentivize honesty
Right now, hiring a “chief ethics officer” seems like the latest corporate trend to build public trust. But to me, it’s not enough to put a sole individual in charge of ethics and hope for the best. Instead, it has to permeate the whole organization. And it should start with the compensation model.
Companies that are largely performance- or commission-based often enable a win-at-all-costs culture, where people are inadvertently rewarded for dubious actions. From Enron to disgraced pharma CEO Martin Shkreli to Theranos, we’ve seen where this leads.
A better approach is to tie compensation to integrity as well as performance. I’ve seen some companies even put in bonus models contingent on 360-degree reviews by colleagues and peers, ensuring that interpersonal conduct matters just as much as meeting financial goals.
They don’t immediately course-correct
No matter how much you try, mistakes happen. I have made many and I know I’ll make more. It’s how you address them that matters. Ethical actors own up to missteps immediately and take the necessary steps to fix the situation, like firing bad apples, apologizing to shareholders, and making systemic changes to avoid repeats. This isn’t just about giving second chances. It’s about establishing a consistent pattern of responsibility for rectifying oversights and dealing with unexpected issues.
JetBlue and its founder David Neeleman stand out in this respect. After stranding a thousand planes in a notorious reservation and logistics screw-up that turned passengers into angry captives, Neeleman promptly took to YouTube to express a very sincere apology and–just as importantly–announce the creation of JetBlue Airways Customer Bill of Rights. Neeleman was subsequently replaced as CEO by his own board but, tellingly, he has since gone on to start new successful airlines around the world. And the cultural foundation he laid at JetBlue endures–the airline is consistently ranked among the top five in the United States.
Acting ethically doesn’t mean never making mistakes; it’s about addressing them openly and promptly.
Whether it’s mass staff walkouts, bad press, or even criminal charges, the repercussions of doing business with bad actors can have real and lasting consequences. Ultimately, the key to knowing who to trust lies in distinguishing between colleagues who are purely transactional versus those invested in building long-term relationships. In challenging times, your professional network can and should be a source of trust when you need it most.
Manny Padda (@mannypadda) is the founder and chief people connector at New Avenue Capital.
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