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How to design trust?

This week, KPMG launched their Trust by Design Report looking at the importance of trust for organisations.

This comes after yet another major the allegation from the banking sector, with Westpac’s contravention of the Anti-Money Laundering and Counter Terrorism Funding Act—an allegation that not only impacts Westpac, but that has further implications for trust in the industry in much the same way the Commonwealth Bank of Australia’s AML/CTF breaches are now said to have been a key factor that ultimately led to the Royal Commission into the financial services industry.

Trust, trust-worthiness and professionalism has been the recent focus of the Australian Securities and Investments Commission (ASIC), particularly since the appointment of current Chair, James Shipton.

In a speech intended to rebuild trust at the AFR Banking and Wealth Summit last April, Shipton said, “For there to be sufficiently high levels of trust in the financial system, we need both infrastructure and people worthy of that trust.”

Shipton added:

I have observed that there is generally—at present—high levels of trust in the infrastructure that supports our system and enables the underlying financial ‘plumbing’ to work. In recent years, data from the Edelman trust barometer suggests that, while we have high levels of trust in this underlying financial plumbing, financial services is still one of the least trusted industries in Australia. And since trust in the financial infrastructure appears to be sufficient, the sad conclusion must be that Australians don’t look to people in finance with enough trust.

Ironically, it was during the Royal Commission hearings that the regulator’s own approach came under scrutiny for its use of court enforceable undertakings over more litigative action against regulated entities that breached regulations.

The KPMG report, however, is careful to highlight that ‘trust is not a panacea’.

The report presents what it calls ‘four practical steps’ to designing a trustworthy organisation.

Image is taken from the KPMG report.

The report continues, highlighting six elements that are consistent with high trust in and of organisations.

This image is taken from the KPMG report.

However, the report goes on to highlight that, while most organisations do have some of these six essential elements, they are usually embedded in a ‘piecemeal’ way:

This results in conflicting signals about what is expected, prioritised, and valued. These ‘alignment challenges’ can inadvertently incentivise dysfunctional behaviour, processes, and culture, which can escalate into trust failures.

According to the report, while leaders and employees might be aware of these tensions, they are often left ‘unresolved’.

The other issue the report highlights is that this is a continuous process. And that means taking into consideration all stakeholder expectations.

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