The Freeh report on the Penn State Sandusky child abuse case is now out and it confirms much of what we know about why some organizations produce major trust violations.
1. Individual leaders failed to exercise appropriate stewardship and ethical decision making 2. The Board of Trustees failed to proactively hold management accountable 3. Weak and overly decentralized HR and Compliance functions failed to contain risk. 4. The Penn State culture valued sports and image over transparency, ethics and doing the right thing for all stakeholders.
Trust violations occur when organization systems allow or enable behavior that violates stakeholder trust. These same root causes with slight modifications can be applied to the BP Gulf Oil Spill, Toyota Unintended Acceleration, Goldman Sachs Abacus, and Lehman, Countrywide and Ratings Agencies betrayals of trust. Its time leaders learned how to build truly trustworthy organizations to sustain long-term excellence and stakeholder trust.