[A head]Engineering Trustworthy Organizations [Subhead]Companies often blame trust violations on “rogue employees,” but they are predictable in organizations that allow dysfunctional, conflicting, or incongruent activities to take root.
[Byline]By Robert F. Hurley, Nicole Gillespie, Donald L. Ferrin and Graham Dietz [Bio]Robert F. Hurley is a professor of management and director of the Consortium for Trustworthy Organizations at Fordham University, in New York City. Nicole Gillespie is a senior lecturer in Management at the University of Queensland in Australia. Donald L. Ferrin is a Professor of organizational behavior and human resources at Singapore Management University. Graham Dietz is a senior lecturer in human resource management at Durham University in the United Kingdom. Comment on this article at http://sloanreview.mit.edu/x/REPRINT NUMBER TO BE ADDED LATER, or contact the authors at firstname.lastname@example.org.
The Leading Question • How can companies recover from trust failures and create sustainable reputations for trustworthiness? Findings • Trust failures occur because of faults in the organization’s system rather than rogue employees and bad apples. • A common cause of trust failures is a company strategy or culture that serves the interests of one stakeholder group at the expense of others.
Trustworthiness can be embedded into the organization’s design, making the company resilient to trust failures.
When trust failures occur, quick fixes don’t work: repair requires understanding the systemic causes of the failure and reforming the organizational system.
In the aftermath of the well-publicized frauds of Enron, WorldCom, and Tyco circa 2001, there were major efforts in the United States to restore trust and enforce corporate compliance. Among other things, the U.S. Congress passed the Sarbanes-Oxley Act of 2002, featuring enhanced whistleblower protections, requirements that CEOs and CFOs personally sign financial...