The most important conversation not happening enough in ethics & compliance circles right now is the falling level of trust people have in corporations. If we want an example of how executive conduct puts companies in that position, look no further than health insurance giant Anthem and the recent actions of its CEO.
Anthem’s CEO, Joseph Swedish, last week praised the GOP plan to repeal the Affordable Healthcare Act. He’s the only health insurance CEO to support it. In fact, he seems to be the only person involved in healthcare at all who supports the Republican legislation—but if he truly believes their repeal plan is better for the nation, he’s entitled to say so.
At least, that’s the theory. In practice Swedish’s motives look more craven. And everyone can see that, which feeds right into Corporate America’s deeper problem that the public doesn’t trust it.
In the real world, Swedish needs the government’s permission for Anthem to acquire rival Cigna for $48 billion. Anthem originally proposed that deal two years ago. The Obama Administration opposed the merger on antitrust grounds. In February a federal judge agreed and blocked the merger. Cigna is no longer a fan of the merger either, and sued Anthem to scuttle it.
Enter the GOP plan for healthcare reform (Trumpcare? Ryancare? Republicare? I’m confused), a shambling political mess with insufficient support. On March 9, Swedish gave that much-needed support.
Five days later, Swedish received a private audience with Donald Trump and his secretary for Health & Human Services, Tom Price.
Do we know that Swedish lobbied Trump and Price on his floundering dream of a merger with Cigna? No. We do know that he lobbied for more tax dollars to go to Medicaid and health insurance subsidies, so Anthem can keep collecting that money from the consumers who use Medicaid and healthcare subsidies.
But people aren’t blind. They’ll see how all these ducks line up, and reach their own conclusion: that Swedish wants more growth and profit for Anthem, and he needs that merger to do it; so he’s supporting a half-baked reform plan now to win a political payoff from the Trump Administration later.
Transparency and Distrust
That’s a big allegation to level against Anthem—which is exactly the problem for ethics & compliance officers today. As we continue to move into our digitally transformed world, where all actions are transparent, people can make their own judgments about corporate motivations more quickly. If their conclusions differ from what the company claims its motives are, that breeds distrust.
This isn’t an abstract problem. Distrust in institutions is growing, with real consequences for corporations and compliance officers charged with keeping them on a trustworthy path.
I explored this in a recent post on the NAVEX Global blog. We have the Edelman Trust Report, an annual survey of public trust in various institutions: it shows trust declining for all types of institutions, including businesses and governments, around the world. We also have the PwC CEO Survey of 2017: it cites organizational trust as an emerging risk for businesses, and noted that companies able to foster trust will have a competitive advantage in the future.
So what are the practical consequences of growing distrust for compliance officers? More regulation, for starters: as people trust companies less, they want to control the actions of companies more. Eighty-two percent of respondents in the Edelman survey say the pharmaceutical industry needs more regulation; 72 percent agreed with the statement, “The government should protect our jobs and industries, even if it means that our economy grows more slowly.”
Distrust can haunt compliance officers in your daily jobs, too. The NAVEX Global 2016 Ethics & Compliance Training Benchmark Report, for example, cited employee cynicism as the chief obstacle to compliance training programs; employees don’t believe corporate culture will really change. That’s what distrust is: not believing a promise that another party makes to you. Employees are less likely to speak up. Compliance officers are more likely to dwell on monitoring, testing, and auditing (that is, compliance), rather than educating and leading (that is, ethics). Nobody wins.
Sending Contradictory Messages
Let’s bring this back to Anthem and Swedish’s dealings with the Trump Administration. How does something like that generate distrust and complicate the lives of ethics & compliance officers everywhere? How does it embody the challenges to come?
It’s incorrect to say that Swedish is lying to taxpayers and consumers about what he wants. He isn’t. Rather, the way he’s exercising power to pursue his goal (the acquisition of Cigna) through the larger conversation that’s happening—that is what’s breeding distrust. Swedish is pursuing a course of action that will affect tens of millions of Anthem customers, 53,000 employees, and possibly everyone in the country if Republican healthcare reform becomes law of the land.
What he’s doing, really, is dragging everyone toward an outcome that they don’t necessarily support. They have no power to participate in the conversation; certainly none like the power Swedish has, to get an audience with the president just by publishing a tepid endorsement of Republicare.
That’s where distrust is born: in fear of being beholden to someone else’s choices.
A person can overcome distrust when you see that the other person’s motives and values align with yours. That last bit—seeing how the other person’s motives and values align with yours—is the challenge ethics and compliance officers face. In our transparency-soaked world, finding and assembling facts in a way that confirms your beliefs gets easier every day. And as more risks proliferate in our lives, ever more threats of loss, our cynical beliefs tend to be the dominant ones.
I don’t know the way out of that swamp. I do know Swedish has only taken us further into it, and that does nobody any favors.