Director Coaching

Is trust to be trusted?

By: Dale Simpson


Understanding the concept of trust


Trust, within the context of a board, can be defined as the assured reliance or confidence in the character, ability, credibility, and truthfulness of other board members. It is a vital component that underpins the effective functioning of the board. Without trust, conversations can become circumspect, members may withhold valuable insights, and the board's ability to make robust, strategic decisions can be compromised. Trust enables honest dialogue, promotes transparency, and fosters a culture of mutual respect and collaboration.

There are several key components of trust among board members. 


The impact of lack of trust


A lack of trust among board members can lead to numerous issues that can impede the board's functioning and effectiveness. For instance, when trust is missing, board members may withhold information or be reluctant to voice their opinions, leading to a lack of transparency and open communication. Decision-making processes can become labored and inefficient, with decisions often being questioned and scrutinised excessively. This environment may also foster an unproductive board culture, characterised by suspicion and defensiveness rather than collaboration and mutual respect.


A recent notable instance of trust breakdown on a corporate board can be seen in the scandal that enveloped the multinational conglomerate Toshiba Corp. in 2021. The company faced accusations of colluding with the Japanese government to suppress foreign shareholders' rights. An independent probe found that Toshiba management had indeed worked with the government to swing votes in favor of board nominees who would support management's plans. This revelation led to the resignation of multiple top executives, including the CEO and Chairman. The incident severely damaged the trust among board members, shareholders, and stakeholders, leading to a crisis of leadership and governance within the company. It was a stark reminder of the importance of trust, transparency, and accountability on corporate boards.


Rebuilding trust among board members


When trust is broken it is quite often as a result of misunderstanding and misinterpretation of what the other director(s) intended. Once trust is broken among board members, it is a challenging task to rebuild it. However, it is not impossible. It does require getting back to the fundamentals. The process of rebuilding trust necessitates open dialogue about the issues that led to the breakdown in the first place. It requires an environment where board members are comfortable expressing their thoughts, concerns, and feelings without fear of judgement or retribution. 

One strategy to rebuild trust is to foster open and honest conversation among the board members. This could be facilitated through dedicated trust-building sessions, where issues can be freely discussed in a safe and non-judgmental environment. Another effective strategy is to establish clear expectations for all board members. This involves defining what is expected in terms of behaviour, performance, and communication, and holding all members accountable to these standards.  A preferred strategy of mine is to have directors undertake a behavioral proofing exercise where they can develop a common taxonomy and understanding not just of self but also others around the table.  This leads to an appreciation of difference/diversity and thinking.  Let’s face it, differences in thinking often lead to better outcomes.

Furthermore, board members must demonstrate their commitment to change through consistent actions. This may involve making tough decisions, such as removing members who consistently violate trust, or implementing new policies and procedures to ensure transparency and accountability. By putting words into action, board members can begin to rebuild trust and restore the board's effectiveness.

Rebuilding trust is a critical aspect of ensuring the long-term success and effectiveness of a board. It is not an easy task, but with dedication, humility, and a commitment to open and honest communication, it is possible to restore trust and create a board environment that is conducive to effective decision-making and mutual respect.


Case in point

Theranos, the now-defunct health technology company, provides a compelling example of how trust issues within a board can lead to the downfall of an organisation. The company's founder and CEO, Elizabeth Holmes, was accused of misleading investors, patients, and doctors about the efficacy of the company's revolutionary blood-testing technology. Even as red flags began to emerge, the board—which included illustrious figures from politics, defense, and academia—continued to support Holmes. It was only when the Wall Street Journal broke the story in 2015 that the magnitude of deception became evident. In the aftermath, Theranos collapsed, Holmes and former president Ramesh "Sunny" Balwani were indicted on fraud charges, and the reputation of the board members was severely damaged. This high-profile case of boardroom trust gone awry highlights the importance of due diligence, transparency, and independent oversight in maintaining trust among board members, and between the board, investors, and the public.


In the aftermath of the scandal, the board of Theranos was faced with the monumental task of rebuilding trust. The company brought in a new board, most of whom had backgrounds in healthcare, in an attempt to restore credibility. They distanced themselves from the practices and culture that had led to the crisis, striving for transparency in their operations. A crucial step towards rebuilding trust was the appointment of an independent investigator to carry out a comprehensive review of the company's practices and protocols. The investigator's findings were made public, and the company committed to implementing his recommendations. It was a painstaking process, but these steps signaled to the stakeholders that the new board was committed to integrity, transparency, and accountability, key elements in rebuilding trust.



Final words

Trust is the cornerstone of any effective board. Its presence fosters an environment of open dialogue, mutual respect, and collaboration, while its absence can lead to conflict, suspicion, and dysfunction. If trust is compromised, rebuilding it requires a sincere commitment to change, marked by open and honest communication, clear expectations, and consistent actions. The case of ABC Enterprises illustrates how deliberate, well-planned efforts can restore trust among board members, enhancing the board's effectiveness and performance. The journey is challenging and requires resilience, patience, and humility, but the end result is worth the effort. Therefore, all board members are encouraged to prioritize trust-building efforts, as this can significantly contribute to their board's success.



  1. McCrum, D. (2020). "Toshiba: An Unusual Corporate Governance Case." Financial Times. Available at: 
  1. Sorkin, A. R. (2015). "Theranos, a Blood Testing Start-Up, Defends Its Accuracy." The New York Times. Available at: 
  1. Carreyrou, J. (2016). "How the 'Theranos Effect' Is Impacting Healthcare Startups." Wall Street Journal. Available at: 
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