Hello, my name is Gillian Bowen, the Australian manager of Public Affairs at Chartered Accountants ANZ. This is Small Firm, Big Impact.
It is based on a huge amount of trust in each other, so it's actually a two way relationship. Actually, we need to think about it's not just about clients trusting us as a professional, it's actually us trusting the client as well. If either one of the parties breaches that trust or breaks that trust, it takes a long time to be able to rebuild it.
Companies that are trusted have higher revenues, higher profitability, higher shareholder returns, and lower employee turnover. Because trust increases commitment to an organization, it's actually much easier to be honest and ethical.
All professions are built on trust, and for chartered accountants, it really is the cornerstone of our profession.
It's the podcast giving you and your clients the up to date information you need to do your jobs. Each episode, I share resources, tools, and expert advice provided by CA ANZ and a range of people across our profession. So make sure you're following the pod in your favourite pod app. And if you've got an idea for the show, email
podcast@charteredaccountantsanz.com Today we have Dr. Lisa Marriott. She's a Professor at the School of Accounting and Commercial Law of Victoria University of Wellington, and an extraordinary professor at the University of Pretoria in South Africa. She's been working in academia for the past 15 years, and prior to that was
a financial controller and accountant in the private sector. She's a published author and helped with the CA ANZ thought leadership article, The Future of Trust: New technology meets old fashioned Values. We also have with us another author of that paper, CA ANZ General Manager for International Development Geraldine Magarey, FCA. At the time, she was our thought leadership and research leader. Geraldine had a background in audit and regulation prior to
joining CA ANZ. I'm very excited to have both of you on this episode. Welcome to Small Firm, Big Impact.
Thanks, Gillian. I'm delighted to be here and really looking forward to our conversation.
Yeah. Thanks, Gill. Great to join you and Lisa today.
If you're listening to this episode on the day it's dropped, it won't surprise you - it's Global Ethics Day. It's why we're diving into the topic of trust, why it's important for professionals, for chartered accountants. Big question right off the top, Lisa. What is trust?
And great place to start. So at its simplest, trust is when we rely on another party to behave in a certain way. So in any relationship there's a couple of things going on. There's dependence on the other party to do what they're going to do, what they will, what you've agreed that they will do. But there's also uncertainty about how that other party will behave. And then, of course, trust gets broken when that other party doesn't
behave as expected in that interdependent relationship. And of course, that holds for all of our relationships, our personal relationships and our professional relationships.
Geraldine, why take the time to understand what trust means? I mean, I guess in the sense of why talk about this on a day like Global Ethics Day?
Look, it's super important, Gill. As we know, all professions are built on trust. And for chartered accountants, it really is the cornerstone of our profession. But more importantly, just like to add from our research, we actually found there is a trust gap between what the perceived factors for improving trust. So it's actually really important to understand and not just to think about it just being a sort of a given. So it's really a really important thing
to to get right. If we want to have good relationships with our clients, with our community and with our employees.
What do you mean by gap? Can you explain that to me? What what is the gap?
Yeah. In the research, we actually found that the actual perceived factors for improving trust, what we might have thought they were, they're actually different to what people perceive trust as being from a client perspective. So I'll give you an example. So one of them was around data security. So as a um, you know, if we're working with our clients, we might not think of data security being super important to our clients. It is important. But is it the top factor when it comes to building that
trust with our client? So when we actually were doing the survey, 10% of our members said data security was a key trust factor. But when we actually asked the other side the clients, it was actually one of the very top trust factors. So there was that gap between what we perceived as a trust factor and as a top, top three, and what the client was saying was a trust factor in their top three.
Mm. Lisa, how do you get that understanding? How can you make sure that you're drilling down into what it is that makes the relationship between you as a professional and your client trustworthy?
That's a really good question. And I'm going to just follow on from what Geraldine was saying. And with the research that we looked at, um, the trust has changed. And of course, everything is evolving. But what we found in that research is that the fundamentals, the basics are actually pretty solid. We we want to engage with those who are ethical and those who are honest. And the survey respondents were really clear on this, and it was dishonesty and unethical behavior that was likely to
sort of decrease trust across the board. And that didn't really matter whether you were a professional or whether you're in some other industry or public sector or media or whatever it was, behaving unethically and being dishonest were those factors that really mattered most to people.
Geraldine, do you think the participants in in the survey and I guess professionals in general understand what behaving ethically means and what behaving with integrity means?
I do but think we do need to remind ourselves, you know, every now and then, about what it truly does mean. Think sometimes we can because all of us come to our roles. All chartered accounts come to this, you know, with that mindset of acting with integrity, acting with honesty, being ethical. But as a regulator, I've seen sometimes, you know, when we're busy, you're stressed, um, or, you know, sometimes you might take a shortcut. We don't mean to
go down that path. And so think just having that reminder of, of of what it truly does mean to be ethical, to act with integrity and to be honest, which are the real values that help build trust. It is really important for us to just to revisit and to check in regularly around those, those factors.
Um, there is a focus on the profession's ethics and integrity right now, where the behaviours of a few can cast a long shadow. And this isn't the first time, and it won't be the last time. And to take the name of the research paper and turn it into a question, Lisa, what is the future of trust?
Yeah. So I think at least, um, part of this is it's really thinking about the way we work and the, the way we engage with others. So, you know, don't need to tell anybody that our work practices are changing and everything's moving quite quickly. And of course, then we
got Covid coming along and things changed even more rapidly. Um, you know, probably go back to our research and talk about one of the things that came out of that was, you know, these days we tend to have a bit less face to face contact with people in a lot of situations. But what we saw out of that research was that people trusted their accountants and the work that their accountant produced more when they had more of a
connection with that accountant. When you have those strong professional relationships, that's really going to help build those future trusting relationships and face to face contact is part of that. One of our conclusions in the report was to not let technology get in the way of those face to face business relationships, because they're still really important, even as the way we do business actually changes.
What did you want to add into that, Geraldine, on the future of of the trust and build on what Lisa's brought up there?
Yeah, interesting enough just on that that technology piece. So face to face is important. But we also talked about, you know, we've got the tools have got now with you know, teams or zoom etcetera. We've actually got that ability to see each other. So although we might not be there in the physical sense, but you know, it's really important to make sure, you know, you do fundamentals, turn the camera on. And you know, being able to you can develop rapport and trust, you know, by being
able to read people's body languages. We know it's very important about, you know, a lot of the messages we convey are not just from our words, but from how we present ourselves and our body language. So having the camera on. So the future of trust. Yes, it is those really old fashioned values that we talk about in terms of relationships that we can get around some of those technology things, like with the camera. But one of the biggest things that came out of it is actually
suppose back to the future. But and that was really honesty is really the number one and it's actually key. It might sound a bit old fashioned, but it mattered the most to our survey respondents when we did that research.
And does that. That might tie into my next question. I wanted to ask about what damages trust? I mean, honesty, I think the perhaps two parts of it, one obviously being transparent about how you operate and what you do. But if you did make a mistake, what role does being honest about the mistake play? Lisa, what do you think about that?
Oh it is crucial. Absolutely crucial. I mean, you can do a well, you can do a lot of damage to your trusting relationships by having problems, but actually you can also do some good if you do the right thing and you resolve those appropriately. So resolving them appropriately generally means owning those mistakes. We all make mistakes, you know, you have to own it, not blame others apologizing if you get something wrong that goes a really long way
as well and really important. You've got you've got to fix it. If you've done something wrong, if it's all gone astray, then it's it's your job to fix that. And by actually by fixing things really well, you can almost end up in a better situation because you've you've shown your clients or you're working partners actually, that you can be trusted if things go wrong to resolve them. And that's just as important, I think.
Geraldine, what do you think the impact is of breaching or breaking trust between a professional and a client?
Well, it can have, you know, massive repercussion repercussions. But as Lisa has just pointed out, you know, you can get it back, but it can take a long time to get back. So, you know, the way we work with our clients there is it is based on a huge amount of trust in each other. So it's actually a two way relationship. Actually. We need to think about it's not just about clients trusting us as a professional,
it's actually us trusting the client as well. So that two way trust is super important to to think about in this, in this relationship. But if either one of the parties breaches that trust or breaks that trust, it takes a long time to be able to rebuild it. And the things that Lisa said, you know, around the apology, around, you know, showing you can fix it, you know, bringing that track record back in and, you know, keeping things
on track, not making any other errors. Um, you know, it's really just that long road to rebuilding it, but it can be rebuilt. But if we don't rebuild it, um, it's it's basically probably the very hard to have that professional relationship. Yeah. To come back from it.
Yes. Yes.
So I'm sorry. You go. Yep. There's just to pick up on what Geraldine was saying there. There are a couple of authors who work in the Harvard Business School, and they say pretty much almost an identical comment to which Geraldine just made, which is it takes a sustained history of right. And that's arrived to wipe out one wrong. So it is it's much more important to, to really
get things right, if you possibly can. There's also a really interesting statistic, and I wouldn't necessarily say this is 100% to be relied on and repeated and quoted, but they have a statistic that suggests that a company can lose around about 30% of its value in the short term when it loses trust. And as I say, that's I'm sure that's a highly variable statistic, but it is an indication of the real impact, financial impact that can can occur when trust is damaged.
I think now's a good time to then pivot to, um, you know, some of the preventative measures. We've talked about the importance of integrity and, and honesty and having that. But I'm thinking, Geraldine, what are the benefits? For example, if you're part of a professional body like CA ANZ, what does being part of a professional body help you with?
We at the end of the day, we are, you know, we are a community of professionals. The CA ANZ itself provides a number of of not just tools but, you know, access to people and resources. So I'll just give you a little bit of a couple of examples if that's okay. So you know, obviously even our research paper, so the research paper itself was a was a, it wasn't just,
you know, some sort of interesting set of research. You know, it really came back with, you know, a set of um, sort of, you know, six things to sort of think about. So there's, you know, there's the research papers will give you, you know, some, some ideas and suggestions around how you might like to, to approach trust. We've got things like ethics training, which is actually mandatory as being part of a being a chartered accountant. We have courses actually on trust,
which again, important to, um, you know, to be aware of. And, and one of the my favourite resources. And we are very, very indebted to these members and lucky to have is our Chartered Accountants Advisory Group, which are a group of our members who very generously give their time to help
their fellow members around difficult situations. So it's exactly these sorts of things about, you know, when you've got an issue or it might be a conflict or something in there that you know, around ethics or that you just need to talk to. It's someone who is independent of you, independent of the situation, who has vast experience. And, you know, you can actually talk through that dilemma with them. And, you know, to me, that is one of the most
fantastic things we have and offering our members. So we there's a lot of benefits to being, you know, part of that, part of the professional body and part of something that we all face these issues during our time as chartered accountants and during our careers. So it just gives access to those, you know, to people and resources to be able to talk through those issues.
Um, there's a couple of good takeaways from there, which I'll give some some wrap up when we finish in a couple of minutes time. And that includes the fact that we have done an episode for you on this podcast series about the advisory group, or as we call it, two of our CAAG professionals are on it, one from Australia, one from New Zealand. It's really interesting picking their brain and understanding how that works. I'll put a link to
that in the show, notes. Lisa. Before we before we wrap up, I'll get a final thought from both of you in a in a tick. I also wanted to just ask a quick question about what role does deterrence play? And I'm thinking in the sense of obviously for chartered accountants there is a disciplinary framework, but there'd be lots of professional organisations who operate with a disciplinary framework. What role does deterrence play in ensuring trust is upheld?
Yeah, I think it does play a pretty important role. And it's quite good actually, that our disciplinary framework is reasonably public, because what that does is it does signal to other members and our clients and potential clients that the profession does take any sort of non-compliance quite seriously. And then what that does is that builds trust across the broader profession, and everybody benefits.
Fantastic.
Could I add into that Gill? Sorry.
Of course. Go for it.
So there's two aspects obviously to deterrence. It's obviously that individual side, the accountability and repercussions. But it's actually super important that deterrence actually at the beginning of a trust relationship. Because if we don't know our clients, they come to us often because we are a chartered accountant. So there's that trust in the designation. It's a shortcut in a way. It signals that to our clients we've got a high
level of training. We've got we've demonstrated our competence. We've passed demanding exams. We have a code of ethics, we have professional standards, and we abide by disciplinary process. So all of that builds trust in our designation, which helps in that initial interaction with the new client.
Absolutely. Look, that is a great way to bring together the discussion and that it is Global Ethics Day, as I mentioned at the start of the show. So on that theme, I wanted to let everyone listening know that CA ANZ has created a dedicated global ethics hub on our website, which links to a wide range of resources, and I'll
put a link to that in the show notes. And we're also making Micro Course three, which is called Conflicts of Interest available to all members for free until the end of October, so details on how to access access that course can also be found on that Global Ethics Hub page on the website. And to coincide with the 18th of October, we're launching a new trust CPD course, which will be available, and I'll put the link to
that in the show notes. I will put a link to the episode on the Chartered Accounts Advisory Group or CAAG that Geraldine was just mentioning, which is called How to Get Help with Ethical Dilemmas. Very topical and key.
And if you are listening to this on the 18th of October, I will not miss an opportunity to let you all know that there are still two days to vote in our member vote to further strengthen the Professional Conduct framework, so eligible members would have received an email from electionz.com, which is the independent voting provider who's running the vote. And if you can't find it, have a look in your junk or spam folder. That email has your unique Pin and the link to get into the
voting platform. We want our members to be involved in this important process. If you haven't voted, please do. All the information is in the voting platform and also available on our website. Voting closes on the 20th of October and the 20th of October is also the day of our AGM. Gosh, come along to that too. I'm plugging things left, right and centre. Why not? Lisa and Geraldinea final thought before we go. Lisa you first.
Fantastic. Thanks. I would just like to close by saying that, you know, research has shown that there are just enormous benefits associated with being trustworthy. So very quickly companies that are trusted have higher revenues, higher profitability, higher shareholder returns and lower employee turnover because trust increases commitment to an organisation. So those are all great things to have. It's actually much easier to be honest and ethical and reap the
gains that come with that. And you know, of course it is just the right thing to do as well.
Geraldine, all good points there. What else?
Yeah, three things for me. I would just say, you know honesty is key. So never forget that. Also be mindful of that trust gap that I referred to early on. And in the in the age of, you know, A.I. , internet, fake news etcetera, etcetera that are leverage your expertise because your the expertise you have is super important to building and maintaining trust in the current world.
I love that leverage your expertise. What a great message. That is all we have time for. If you want to find out more, head to the Global Ethics Hub, which I've mentioned. There's a link in the show notes. Also, give the podcast a follow and we have an email. So get in touch podcast@charterdaccountantsanz.com Let's start a conversation. Thank you. Lisa Marriott and Geraldine Magarey, FCA for being my experts on Small Firm, Big Impact.
Thanks, Gill.
Thank you.
Bye bye.