Does Your Company Keep its Promises? Revealing and Addressing Commitment Drift in Business

by Elizabeth Doty adapted from an article in strategy+business

Businesses today make many promises. They may promise to deliver value to customers, provide opportunity to employees, deliver growth for investors, or contribute to society by creating jobs, improving public health, providing credit, preserving a free press, or addressing environmental challenges.1

As a practical matter, more aspects of our day-to-day lives now depend on some business somewhere to keep a promise. Is my data secure? Is this drug really safe? Was my vote counted accurately? Has the factory making peanut butter for my children addressed the safety violations it reported to the FDA? Are the companies in my socially responsible portfolio lobbying consistently with their espoused CSR strategies? Despite the transparency unleashed by social media, citizens, customers, employees and shareholders simply cannot verify every transaction in a global, digital, knowledge-based society. Fortunately, businesses usually benefit from the trust that comes from promises kept. Several studies show that businesses with a culture of keeping one’s word, or with leaders who keep their promises and live their values, are more profitable. (Zingales, 2013) (Simons, 2008) In addition, some evidence suggests that many business professionals place a high value on keeping their word. (Doty, 2009)

It is troubling, then, that many companies struggle to keep their commitments. Trust in business is low (though higher than trust in government) and broken commitments appear to be a significant cause. For example, when asked what CEO’s could do to improve trust, 72% of respondents to one survey said, “Do a better job of keeping your promises.” (Edelman, 2014) (BBB/Gallup, 2008) Another study found that 40% of consumers who had received a promise from a business in a given year felt it was not delivered, and of those 62% experienced multiple broken promises from that same business. (Accenture, 2012)

Why do so many business commitments seem to drift? Is it simply a matter of distorted incentives, or are there other factors? Put more simply, what does it take for a business to keep a promise?

These are the questions that brought Lab Fellow Maryam Kouchaki, Harvard Business School Professor Francesca Gino and I together to collaborate. We wanted to understand the processes of making and keeping business commitments. In particular, we wanted to study the dynamics of “commitment drift,” by which we mean systematic breakdowns in fulfilling a company’s most important commitments to its stakeholders.2 Our hypothesis is that commitment-keeping might be a generalizable competence that applies to multiple stakeholder groups. If this is the case, then we might help committed business leaders deliver on their promises and expand the range of interventions available to remedy institutional corruption.

We are the process of analyzing data from a mixed-methods study of a Fortune 500 company where the CEO personally initiated a focus on promise-keeping and where this focus had the potential to increase revenue and profits (in the form of customer renewals). We plan to publish our initial findings later this summer.

Meanwhile, as a preview, strategy+business has just published a short article outlining seven strategies to help leaders avoid the most common pitfalls we have observed thus far. Here is a short summary from that article:

1. Make fewer, better commitments. Leaders sometimes make promises that do not really help and leave stakeholders uncertain on the issues that do (i.e., can I trust you?).

2. Track your key commitments. Leaders often do not really stop and think about what they are committing. Tracking helps you make promises you can keep and remember them over time.

3. Ask for commitment from others. Leaders often fail to articulate the commitments they are asking others to make, which slows down follow-through on company commitments.

4. Connect the dots between groups. Leaders tend to focus on what they own, yet the biggest barrier to keeping promises as a company is often the lack of coordination between groups.

5. Focus on processes, not heroics. Leaders wear out employees’ goodwill if they rely on heroic efforts rather than investing in processes that make it easy to deliver.

6. Know what commitments you are inheriting in a new role. Leaders start new roles focused on making their mark, yet they can undermine trust if they don’t ask about prior commitments.

7. Continually check for contradictions. Contradictions create distrust. Yet a company can easily end up speaking out of both sides of its mouth if related departments don’t talk.

You can view the full article here.

Our hope is that tools like these seven strategies can help leaders accelerate the rewards from delivering on commitments to employees, customers and the public, so they are less susceptible to short-term pressures to compromise. In that sense, it appears that keeping commitments is synonymous with good management. There will be more to come once we have completed our analysis.

Elizabeth Doty has consulted for businesses and other organizations for over 25 years. She was a 2013-2014 Fellow with the Edmond J. Safra Center for Ethics at Harvard University and is the author of The Compromise Trap: How to Thrive at Work without Selling your Soul (Berrett-Koehler, 2009). Her website is LeadershipMomentum.net
View her full profile.

This post is adapted with permission from an article published by Elizabeth Doty in strategy+business entitled, Does Your Company Keep its Promises?

 

1. Technically, a promise is “an assurance on which expectations can be based,” a declaration in which the promisor attempts to increase their credibility by raising the moral stakes. And a commitment is similar, “a promise, a pledge to do, an obligation.” For purposes of this paper, we will refer to promises and commitments interchangeably.

2. As we are defining it, commitment drift can become institutional corruption, when a company systematically and strategically behaves in ways that undermine its ability to deliver on a commitment to a purpose or goal. In addition, any commitment drift represents an erosion of institutional integrity, since keeping promises is viewed by philosophers and applied ethicists as one of the most basic elements of integrity for both individuals and institutions. (Kant 1785Rawls, 1971Donaldson and Dunfee, 1999Paine, 2005)