FIFA and Trust
The FIFA World Cup 2018 host selection process is hotting up, and the host will be chosen shortly. The Sunday Times newspaper uncovered an expectation of bribery for the executives votes, and two executives have been suspended.
Today (4th November), the BBC reported that the English bid for the World Cup was endangered because of the actions of the press. Well of course! Whcih organisation likes to have its name dragged through the mire? But the question is - who is at fault? FIFA, or the press for uncovering the fraud?
The FIFA President, Sepp Blatter has been one of the loudest voices in world football for many years, but has als been one of the dictators of the destruction of trust within football - though not alone.
You have to question an organisation that is set up in Swtitzerland - a country that until relatively recently allowed bribes to be tax deductible! The world power in football and the most powerful region - Europe (via UEFA) are both within miles of each other in the central European country.
Add to this, the power given to third world executives, from countries where bribery is a normal business practice, and you have a recipe for disaster. Is the right country getting the tournament for the right reasons, or because they greased the right palms?
And is this good for football - already seen as a self-centred, greedy sport full of unsporting participants who dive, try to get opponents booked and sent off and many of whom earn obscene wages.
I for one, support the bid for the 2018 World Cup to 'come home' to England, but not at any cost. If unethical and untrustworthy behaviour is the only way to get the World Cup, then I would push for FIFA to be disbanded and a new organisation to be set up in its place, with stricter regulation.
Otherwise, let's scrap the World Cup - the top footballers are paid by the clubs, many of which have very few national/local players. The absentees for international matches show that footballers do not value the national team as much as their paymasters.
So if we stick to the club championships, and keep international tournaments local, we can limit the bribery and corruption. This is not what I want to see, nothing binds the nation better than the World Cup, but if it is just about who can pay the most money, it is no longer sport, so why bother?
So England's bid is endanger because the English press uncovered this corruption! This shows that FIFA executives are running scared - two have been suspended, but who many others are worried that they will be exposed next?
Football must regain the trust of the billions of supporters worldwide, and as the ruling body, FIFA has a responsibility to make the organisation of football as clean and ethical as possible.
Trust needs leadership
People who know me understand (or not) my love of football. I have played football for most of my life, some at a reasonably high level. One thing I have always felt is that a good leader inspires trust.
My favourite club, Chelsea, has been embroiled in some negative publicity for most of this last season - the Ashley Cole misdemeanours, the John Terry indiscretions. Normally I would say that this was all none of my business, but let us take a look at what happened there.
Chelsea sacked a good manager in Claudio Ranieri and brought in a bit of an upstart - one Jose Mouriniho! These two managers between them served the club for about 5-6 years, not long compared with clubs like Manchester United and Arsenal!
When Mouriniho was sacked the club became unsettled - different managers, different styles and the constant threat of the axe above their heads. Players who in the past had shown themselves to be loose canons were freed to be reckless again.
I sincerely believe that had the management turmoil not happened, the problems seen at Chelsea would also not have occurred. This leadership instilled trust in and amongst the players and staff. With the leadership gone, the trust also disappeared.

A Political Take

Britain is currently gearing up for a General Election, and we are sitting through the first ever UK leadership debates. The three leaders from the largest parties are pitted against each other.
They are all, in their own way, good leaders. But are they the best leader for the country? I think it will all come down to trust - what you trust or don't trust them to do. The expenses scandal has not helped politicians at all, and without the new interest in politics, the polls could demonstrate their lowest ever turn out.
The leaders debates, however, are less about the men asking us to trust them than it is about destroying each other. The negativity could have serious implications on any future government - the next and subsequent ones.
The leader the electorate trusts (or at least the one they mistrust least) will be the winner - unfortunately with the 'first-past-the-post' election model the UK has, this need not be the one with the most votes.
If the UK, or any other country for that matter, is to come out of this recession strongly, we need strong leadership. That leadership will engender trust and therefore support.
A lot of debate is centred around the possibility of a hung Parliament - there are many European examples of coalition governments performing very well (e.g. Switzerland), but also of very poor performance (e.g. Italy). The strength of the coalition is also dependent on the leadership.
Let us hope that the next Prime Minister can bring that trustworthiness back, both in the politics and in the people governing us!
The death of trust in the banking system

Trust in Financial Markets

The UK financial services sector is the single largest contributor to the UK balance of payments – recent measurement of the sector suggests financial services are now 7% of the economy. Anyone with bank or savings accounts, insurance policies, ISAs, TESSAs, pensions, endowments, bonds, shares, etc, etc, is a customer of the financial services sector in one way or another. This means it includes the majority of the adult UK population – and a few children as well.
In the not so dim and distant past, securing a line of credit or a loan from a financial institution meant an interview with your local Bank Manager. These were often intimidating meetings, and when interest rates, unemployment and inflation were high the answer was often ‘no’. Bank Managers provided a voice of reason.
But higher disposal personal incomes and employment, an increasingly competitive commercial environment, combined with fiscal and taxation changes, fuelled consumerism and personal debt. In fact, Grant Thornton estimated that Britons have now racked up debt that exceeds the entire value of the economy. Not many days go by before I receive yet another cheap loan or credit card offer in the post, and shops are falling over themselves to offer me store cards at 25%+ interest rates every time I make a purchase.
The BBC’s Robert Peston suggests that UK banks had zero dependency on wholesale money markets for lending in 2001. But by 2007 this had grown to £625 billion – a borrowing and debt culture led by the Government and followed by the general public.
So what has happened since 2001? In their attempts to compete and secure market share, banks have forgotten their remit to protect customer money. Staff were provided with incentives to sell financial products, irrespective of the customer’s ability to pay or their need/understanding of the product. Cheap credit and low interest rates encouraged people to spend more and save less. The Internet has created even more opportunities to spend, spend, spend – online shopping, betting, share-trading – with a ‘buy now, pay later’ mentality taking hold of many consumers.

The Credit Crunch

The collapse of the sub-prime market has been attributed to the overindulgence and greed of the financial sector. Governments who gave the sector increased freedom during the late 1990’s are now having to take responsibility for the mess we find ourselves in.
So when over-inflated property prices started to fall, banks realised their exposure to market debts, and the flow of money around the system ceased. The first sign of this in the UK was the collapse of Northern Rock. Customers lost trust in the bank and in the safety of their investments, and the Government stepped in to secure confidence.
Since then we have seen semi ‘nationalisation’ of other banks, and the almost complete collapse of the Icelandic national economy.
When a company’s incompetence or greed becomes apparent, customers invariably react negatively towards them. If this isn’t short-lived then it will often drive the company into insolvency (like Lehman’s) or seek security in the arms of a buyer (like Merrill Lynch to Bank of America).
Now we find ourselves in a gridlock situation, where banks continue to restrict the supply of money and credit to each other and to consumers. The financial bail-out has transferred risk from the shareholder to the taxpayer, with more onerous repayment expectations. In consequence, almost overnight, mortgage offers have gone from 125% to 80% loan to value. Interest rate cuts are not being passed on. It’s a harsher regime, with a ‘one-size-fits all’ and far less personal approach than the old Bank Manager interview.

One-way Traffic?

So, this is all doom and gloom? We are in a recession, unemployment is rising, repossessions on the increase, and lines of credit are being cut off to businesses.
In one respect this is GOOD! Many people have been living beyond their means, and this sense check is good for the economy. The age of consumerism is coming to an end, we do not need 15 TV sets around the house, for example, and we must all reduce the wastefulness of modern living.
But how does the economy and the financial services sector get back on track? The one-word answer is
As consumers and businesses we need to show financial institutions that we are trustworthy by demonstrating our ability to repay. Credit costs outside of mortgages should be higher to slow the national spend culture.
But it isn’t just one-way traffic. Institutions need to show they are operating in a trustworthy manner. The obscene bonuses of the last 20 years must be eradicated, and a prudent fiscal management programme implemented. Banks should return to financial guardianship of our lives and money and reign in their sales tactics. A return to ‘bank manager’ relationships, and more scrutiny of repayment ability, would be welcomed by many.

What is Trust?

Trust is a feeling of confidence, often backed up by evidence of consistent performance and of keeping promises.
In an uncertain, unstable market, trust is often something that shines out as a competitive advantage. In 2003 I illustrated this point by taking Michael Porter's Value Chain Model and producing a Trust-focused Value Chain. In this model all aspects of marketing and business activities go into developing trust. It is no coincidence that trust occupies the 'profit' portion of Porter's model, because being trustworthy is profitable!

The Trust Focused Value Chain (Poole, 2003)

One measurable element of trust is the number of advocates your brand or business has. Advocates are customers who recommend you to others, who sing your praises and remain loyal despite minor set-backs.
The Trust Focused Value Chain shows that trust is not just related to front-line staff, it involves many back-room operations and the overall culture of the business. If senior management are rewarding short-term sales targets at the expense of sound financial risk management, the corporate culture will not generate respect or trust from customers.
Employees and other stakeholders need to be involved, and need to believe in the trust-building culture. Consumers are incredibly attuned to falsity and will exercise their choice by moving their business. Abbey and HSBC have benefited from their more restrained financial lending policies – savings and mortgages have flooded to their doors.
Shareholders are often rewarded for short-termism which in itself creates swings in the stock market. Just look at trading on most Friday’s or just before a bank holiday – anything that worries a stockbroker is sold. The bottom line is that they no longer trust the company and its management.

The Future

OK, so the UK is now officially in recession – so what? We’ve been here before, and we are probably in a stronger position than before. We need strong leadership from Government and business leaders, and a targeted approach to rebuild the economy. You can do your bit by trading freely with people and businesses you trust, and creating a culture of responsibility and trust within your own organisation.
Corporate Social Responsibility (CSR) programmes are a way to build trust – but only if they are perceived to be truly free of marketing spin and corporate ego. There needs to be real commitment and a formal strategic approach embedded into the corporate culture.
Most businesses are hurting, and this is likely to continue for some time. The general public are hurting, as house prices continue to slide, unemployment looms for many vulnerable workers and general living costs remain high.
The end of consumerism means some businesses will die if they fail to deliver what the public need, but this is just the law of the jungle. Consumerism is unsustainable over the long-term, and a new breed of trustworthy and ethical marketers and entrepreneurs are needed to drive economies forward.
To get out of this downturn, we all need to take responsibility, we all need to become trustworthy, and we need to trade with people who can demonstrate that they are worthy of our trust and business. This is a time of a new beginning for the economy, but one in which we return to some old fashioned values. It needs every one of us to succeed, including those in power – in business; local, national and international Government.
The revolution needs to start today. Are you on board?

Lost Credibility
So the Labour Government continue to screw up the UK economy, education, the health service and environment. The OECD have just confirmed that the UK economy is the only one in the G8 in recession, and that after having been the best. Gordon Brown famously said that we had seen an end to Boom and Bust. It may well be true, because during the Boom, he was borrowing like he was Bust, and is now reaping the rewards.
How can a leader who borrows heavily whilst he should be saving be taken seriously. Brown has lost the trust of the electorate, and shown his own incompetence. His successes relied on the policies that the previous Conservative government set in place, but he failed to build on it.
The electorate's trust also extends to the Government's failures in education. There is a perennial debate as to whether 'A' Levels are getting easier - they are, of course. When I did my 'A' Levels the average student could only fit two subjects into the two years. Good students studied three. Students are now studying as many 'A' Levels as many people studied 'O' Levels in the past. The high pass rates, and especially, the high level of 'A' grade passes have poured scorn on the whole system.
The problem here is that employers no longer have any trust in the education system - the universities have also lost faith in the system as more of them rely on their own entrance exams. New schoolkids, from this year onwards will now stay at school until they are 17 years old, but is the extra year going to be of any value, against the cost to the taxpayer. Many schools appear only to coach children to pass the exams they are put forward for, without providing them with a thorough understanding of the subject matter, and unfortunately of a lack of the basic 3R's - Reading, wRiting and aRithmetic.
The National Health Service (NHS) has also had billions of pounds ploughed into it by the Government, with enormous wastage, staff turnover and excessive clinical failures, such as the highest rates of superbugs in Western Europe rampant in the hospitals. Many people invest in private health to avoid the long delays and incompetence. I have also had the experience of one of the foreign influx of doctors some years ago after getting an infection in a toe following completion of the South Downs Way. An Egyptian doctor at A&E was close to refusing me treatment because the injury was 'self inflicted', and told me that because I had walked for 6 days, I should then rest for 6 days. This was a lack of cultural understanding on his part that led to my mistrusting his diagnosis. I have heard of many similar cases since.
Trust in the Government's environmental policies are also at an all time low, with delays and apparently incomplete research finds clouding their dithering minds. At the same time, the Government sent an army of 'advisors' to a holiday hotspot for a conference on climate change. An army of ministers also visited the Beijing Olympics, go on fact-finding missions about various elements of government. Private companies, on the other hand, bring the fewest people to report the masses, or to meet at a point of least cost, travel or disruption. The Government however, are using and abusing the taxpayers money - our money, leading to yet further abuse of our trust.
The earlier we can get our voices heard, and voting this incompetent Government out of office, the better. My only hope is that the alternatives are trustworthy, competent and credible, and that it happens soon enough to avoid any further problems and pain.
Data Privacy fiasco
No doubt you have followed the recent Governmental cock-up in IT with a mixture of disbelief, interest and anger. HMIRCE burning the records of 25 million individuals onto CD's and then sending it unprotected in an insecure mail system.

If a business were to do this, they would be rightly chastised, and the officers of the company facing huge fines and possible prison sentences. The Teflon Government, whilst getting a hard time about the issue are blaming it on a 'junior' - how convenient!

Data Protection and privacy are key elements to building and maintaining customer trust. Unlike other areas of legal compliance, there is only to be a single company ( that offers audits of a company's privacy procedures.

Don't get caught out like HM Inland Revenue Customs Excise. Make sure that your database is safe, your security procedures solid and your privacy policies are understandable and relevant to your customers.

Privacy Audit provides an objective and impartial approach to auditing your data security procedures, providing you with a snapshot of your data privacy operations, and your database marketing, as opposed the technical IT elements. At the end of the process you will get a quality mark proving your compliance with the audit criteria, and therefore with the Data Protection legislation.

In this age where identity fraud is rife, and information easier than ever to compile, surely it is time for companies that value their customers to engage in ensuring adequate (or better still, more than adequate) data security procedures, and to be able to prove it to all stakeholders within the company?

What does this do for your business? By proving that you take privacy seriously, you will
build trust amongst your customers and partners, which in turn will strengthen your relationships with them. So what does your company look like in terms of data privacy - could you be the next HMIRCE, or can you prove to your customers that you take your relationship with them, and their privacy serious? Can you afford to be another HMIRCE? If not, contact Privacy Audit today.