How to Restore Trust When Goals Aren’t Met
In light of the news that the U.S. Federal Reserve has rejected Citicorp’s request to increase dividends and buy back stock, CEO Mike Corbat is now in a difficult position. He not only has to find another way to turn the company around, he will also have to regain the trust of all stakeholders. And the latter, some experts say, is as critical as the former.
April 11 2014 by ChiefExecutive.net
Citigroup CEO Mike Corbat is one CEO among many currently dealing with this challenge. Today, he has to tell investors that he did not achieve the financial goals that were set in place when he was named CEO 18 months ago.
Charged with improving relationships with federal regulators, Corbat promised that 2015 profitability targets would equal at least 10 percent of the bank’s common equity. On March 26, the U.S. Federal Reserve rejected Citigroup’s request to raise dividends and buy back shares, which puts that goal in jeopardy.
Some would say that not meeting goals equates to failure. Others would say that times like these show what a person is made of, and reaching a closed door simply means changing direction and activating plan B.
When CEOs don’t achieve what they were hired to do, what should the consequences be? There are several options, such as resignation, apologizing, cost-cutting, or simply continuing to move forward toward new goals. As the head of the team, how much of the responsibility sits squarely on the CEO’s shoulders?
In January, Nintendo’s chief, Satoru Iwata, announced he would take a 30 percent pay cut after third-quarter shortfalls. Other executives also reduced their pay. There are numerous stories in today’s news of CEOs that step down after negative financial results. These are drastic moves, and do not fit every situation.
Apologizing is a key part of Japanese culture, and is increasingly being used by business leaders in the U.S. as well. Toyota’s chief has been apologizing publicly for years, as have those of American automakers GM and Chrysler. Nintendo’s Iwata can be seen bowing deeply in media photos after his formal apology for the company’s financial loss.
While the basics for regaining trust are simple, their importance bears repeating: get out from behind the desk. Roll up your sleeves. Speak to your employees, investors and partners. Listen to their concerns and questions. Don’t over-promise, but promise to try your best. Be honest, but positive.
In interviews with PricewaterhouseCoopers, CEOs shared strategies they have used to regain trust, including personally speaking with all stakeholders, including customers, and understanding where bridges are broken and focusing on repairing them.
Trust, PwC says, is the glue that binds an organization and its stakeholders together. With strong communications and clear, manageable goals, Citigroup’s Corbat may be able to rebuild confidence in both himself and his company. Others can learn from his experience.
Six Lessons in How to Turn Crisis into Opportunity with Superior Customer Experience: http://bit.ly/R9Gdys
Rebuilding trust: A PwC report: http://pwc.to/1erzgDc