A consultant's view: The crisis in trust – what sport can learn from other sectors

Declining public trust in institutions has been evident in the decade since the financial crisis but the findings of the 2017 edition of the Edelman Trust Barometer survey conducted in 28 countries were particularly alarming, showing “the largest-ever drop in trust across the institutions of government, business, media and NGOs”.

Speaking in April, IOC President Thomas Bach acknowledged the relevance of the subject to the sports world stating, “The public nowadays has great mistrust in any establishment and we belong in their eyes to the establishment”.

In one of several efforts to quantify the scale of the damage to sport specifically, a consumer survey commissioned by Freuds suggested that one in three Britons believed trust in the sports industry had declined in 2016.

While the causes of the loss of trust may be complex, multiple high profile scandals involving well-known individuals and institutions have surely been contributory factors. To cite just one example, the leak of the so-called Panama Papers in 2015 showed that public officials and other notable people had large sums of money hidden in offshore accounts and companies. In at least some cases, the arrangements were for the purposes of tax evasion, fraud and to evade international sanctions.

Sport too has had more than its fair share of prominent scandals, whether involving criminal behaviour or unethical conduct that damages reputations.

Trust and trustworthiness

Over a period of time, “vertical trust” has been eroded (meaning public trust in politicians, journalists, chief executives, qualified professionals and so on). Many argue there has been a partial shift to a preference for “horizontal trust” (think of consumer reviews on TripAdvisor or Uber ratings). The Trust Barometer found that “a person like yourself” is trusted to the same level as a technical or academic expert and far more than a business leader or government official.

A degree of trust is, of course, vital for the functioning of society. As Michael Power commented in his book The Audit Society, “Trust releases us from the need for checking”. A society with no trust requires constant monitoring – there have been some grim historical precedents.

Philosopher Onora O’Neill argued in the TMC Asser Lecture in 2016 that what matters is not so much the trustful or mistrustful attitude itself but rather the judgements that people make when they decide to trust or refuse to trust individuals or institutions. It would be a bad idea to place more trust in an untrustworthy institution. The attitudes that people hold are a response to trustworthiness.

This point was echoed by Alison Cottrell, chief executive of the Banking Standards Board, a membership body set up in 2015 to improve standards of behaviour within banks in the UK. In her view (subscription) the problem is not lack of trust today but excessive trust in institutions in the past. There are merits in a society which questions authority but huge risks when scepticism reaches the point where nothing is believed any more.

The challenge for sport, as for other fields, is to build trustworthy institutions.

There is a growing body of academic and management consultancy work on the drivers of trustworthiness. Consistent findings include the need to demonstrate competence, honesty and reliability.

One obvious course of action is to develop or improve regulatory systems. In The Audit Society, Michael Power discusses the rapid growth of regulatory frameworks in the UK in the 1980s and 90s in finance, education, healthcare and elsewhere. While the book was first published in 1997, most observers would agree that the growth has continued remorselessly since then. Well-designed and implemented regulations can help improve standards – consider the reduction in maternal mortality in hospitals over the decades - with common approaches including licensing, target setting and external monitoring. Even if rules often prove ineffective, a society without any checks is hard to imagine, as Power notes.

For Onora O’Neill, however, extra regulations can only provide limited assistance in building trustworthy organisations. As she points out, despite the mushrooming of regulatory frameworks, “the very institutions and office holders now subject to more law and regulation, and held to more detailed account, are now less trusted”.

Instead, she perceives an important role for organisational culture (once memorably defined as “the way we do things around here”). O’Neill argues that “culture provides ways of addressing the indeterminacy of principles and rules that the extension or proliferation of law, regulation and accountability by themselves cannot provide”.

Responses in other sectors

In the last two years responses to the crisis of trust have included examples of both regulatory changes in the UK and increased attention to organisational culture. It is too early to claim any stunning successes but nevertheless the steps taken in other walks of life may be instructive for sport.

The charity sector recognised it was time to act on both rules and culture. An article by Karl Wilding from the National Council for Voluntary Organisations (NCVO) in July 2016 identified some important tasks, which I summarise as follows:

• Showing the public that charities are listening to concerns and responding to them
• Setting higher standards for fundraising - there is now a Fundraising Regulator
• Strengthening governance, including through an updated Charity Governance Code published in 2017
• Improving transparency and accountability
• Improving the reporting of the impact and the difference that charities make (appealing to the heart as well as to the head)
• Living the values which charities advocate

For those who have followed the sports governance debate in recent years, much of this sounds familiar.

Elsewhere, it is perhaps not surprising that there have been attempts to address lack of trust in the financial services sector. Aside from tightening regulations, there have been specific initiatives on culture.

As referenced above, the Banking Standards Board (BSB) was established in 2015 to promote high standards of behaviour and competence across UK banks and building societies. It describes itself as “neither a regulator nor a trade association; it has no statutory powers, and it will not speak or lobby for the industry”. Instead, it is intended to “provide challenge, support and scrutiny for firms committed to rebuilding the sector’s reputation, and it will provide impartial and objective assessments of the industry’s progress.”

The BSB has carried out a detailed culture assessment exercise with each of its members, which participate voluntarily, and produced an overall baseline measurement so that progress can be measured. The assessment covered nine characteristics: honesty, respect, openness, accountability, competence, reliability, responsiveness, personal and organisational resilience, and shared purpose. It appears to be an ambitious and thoughtful scheme but it will take time to see whether the banks are able to act successfully in response to the findings.

There has also been increased focus on organisational culture in the wider business world with one important project being the “culture coalition” study led by the Financial Reporting Council (FRC), a body which regulates auditors and sets the UK’s Corporate Governance and Stewardship Codes. The work culminated in a report in 2016 entitled Corporate Culture and the Role of Boards.

In the foreword, FRC Chairman Sir Winfried Bischoff writes, “Rules and sanctions clearly have their place, but will not on their own deliver productive behaviours over the long-term. This report looks at the increasing importance which corporate culture plays in delivering long-term business and economic success”.

He called on companies, including their shareholders and stakeholders, to consider the need to:

• Connect purpose and strategy to culture
• Align values and incentives
• Assess and measure culture

Again, it is too soon to know much about how businesses are responding to the study and what results they will achieve.

Sceptics may point out the apparent contradiction here: businesses are asked to focus on organisational culture because regulations of various kinds, including audits, have proved insufficient; yet, in order to assess culture, another elaborate monitoring process will be required. However, I think it is fair to make the case that further research into the fairly new field of organisational culture will aid understanding.

Lessons for sport

As we have seen, institutions are unlikely to be trusted unless they are trustworthy. That implies demonstrating competence, honesty and reliability.

In deciding its course of action, the sports movement can learn from steps taken in other sectors.

Rules have a role. Sure enough, the regulatory framework for sport has been developing and evolving in recent years across the landscape: within individual sports, within sporting systems such as leagues, at national level and at international level – it is a complex picture due to the different types of legal entity involved, as well as the wide range of sizes and budgets. (Disclosure: the author has been involved both in the development of A Code for Sports Governance in the UK and the implementation of the Association of Summer Olympic International Federations’ governance review project). There may be value in creating new entities as part of the structure, following the examples of the Fundraising Regulator for charities and the Banking Standards Board.

In addition, sports bodies should consider paying more attention to their organisational culture. A strong culture is one that is appropriate to the purpose and strategy of the organisation. Incentives should therefore seek to encourage behaviours consistent with the purpose, values and strategy. Some assessment will be necessary, although analysis of organisational culture is still in its relative infancy.

Recovery from the crisis of trust is a huge challenge for sport, as for other sectors. Karl Wilding from the NCVO had charities in mind – but it could just as well have been sports bodies - when he wrote:

“None of this is easy, or quick. One size will not fit all. One size did not cause all the problems. Neither is it simply someone else’s problem: just because we weren’t on the front page doesn’t mean that we aren’t part of the solution.”