The importance of ‘good faith’ at work

Many people have reached out to me yesterday regarding the Rio Tinto story in Australia.??

I encourage you to read the LinkedIn post from Jakob Stausholm, the company’s CEO. ? It is a great post. His words and tone are good for the occasion. ? It is an important first step.? But it is not enough and he knows it.? Actions are what matters.? If Stausholm puts actions to back his words things will improve drastically for the Rio Tinto employees and as a by-product for the company and its business as well.

But the Rio Tinto situation and the public reaction of its CEO pushed me to put in writing a few thoughts I’ve been having these past few days.?They have to do with the concept of “good faith” and how it plays a key role in our workplaces.??

No one talks about it.?It is rarely discussed in the corporate context yet it is a fundamental concept and is one of the key ingredients to a sound employer vs. employee relationship.

While many CEOs, HR and DEI leaders are focusing on other important concepts such as diversity, inclusion and psychological safety, I’d like to contribute to the conversation by adding ‘good faith’ to the mix and reminding why it matters so much in the employment context.?Good faith perhaps supersedes other concepts as it is a preliminary concept.?Without it, diversity initiatives cannot work. Without good faith, employee productivity cannot excel.?Without it there is no psychological safety.?Good faith is foundational.

What is good faith?

The Oxford dictionary defines ‘good faith’ as honesty or sincerity of intention.??

So let’s talk about honesty and sincerity of intentions in the workplace.

Good faith means dealing with each other honestly, openly, and without misleading each other. It requires parties to be active and constructive in establishing and maintaining a productive relationship in which they are responsive and communicative.?It is wider than trust and confidence.

Good faith involves treating others fairly using common sense. Broadly, good faith requires employers, employees and unions to:?

• act honestly, openly, and without hidden motives;?
• raise issues in a fair and timely way;?
• work constructively and positively together;
• give each other relevant information ahead of when it is needed and as soon as possible;
• raise concerns or issues as soon as possible and respond to them quickly;
• keep an open mind, listen to each other and be prepared to change opinion about a particular situation or behavior;?
• treat each other with respect.

For example, we’ve all had meaningful and sincere conversations in our lives.?And for the best and most meaningful conversations we’ve experienced, we were able to have them because there was trust, there was honesty and most importantly, there was sincerity of intention i.e, good faith.?Sincerity of intention is crucial between a husband and wife, life partners or significant others, a parent and children, and a company and its employees.??

Because for me to feel safe, for me to speak up, and show up authentically, I need to know that our relationship is based on good faith.?I need to know and feel that you are sincere.?Once I feel that, I can act.

Sincerity of intention in the employment context is foundational.??

If you’re in a leading role at a company, when was the last time you pondered or even reflected about the sincerity of the intention of your company???

The good faith I am mentioning might actually be a subpart of the legal concept of good faith and fair dealing that an employer has as it relates to the employment agreement and its execution.???An employer breaches the implied covenant of good faith and fair dealing by acting in bad faith to prevent an employee from enjoying the benefits of his or her employment contract, thus causing the employee damage. (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 683; Sheppard v. Morgan Keegan & Co. (1990) 218 Cal.App.3d 61, 66; see also BAJI 10.05, 10.35, 10.38.)

In every contract, there is an implied promise that each party will not do anything to unfairly interfere with the right of any other party to receive the benefits of the contract. (Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658.) “This implied promise means that neither the employer nor the employee will do anything to unfairly interfere with the right of the other to receive the benefits of the employment relationship. Good faith means honesty of purpose without any intention to mislead or to take unfair advantage of another. Generally speaking, it means being faithful to one’s duty or obligation. However, the implied promise of good faith and fair dealing cannot create obligations that are inconsistent with the terms of the contract.” (CACI No. 2423.)

One could make the argument that when a CEO, the Board and managers let the work environment become toxic, they are actually violating the obligation of good faith and fair dealing.?

The findings from the report at Rio Tinto are deeply disturbing (they also absolutely did not surprise me).?

The fact that Stausholm learned that bullying, sexual harassment and racism are systemic across his company sites, with almost half of his people experiencing bullying in the last five years shows that there is a lack of good faith at Rio Tinto.?It is not the only company like that.?There are quite a few.?The findings of the report also show that racism is common across a number of areas, with the survey indicating people working in a country different to their birth experienced high rates of racism, and 39.8% of men and 31.8% of women who identify as Aboriginal or Torres Strait Islander in Australia experienced racism.

Alarmingly, over the same period, 28.2% of women experienced sexual harassment at work and 21 women reported actual or attempted rape or sexual assault.?

Stausholm said he was sorry and offered his heartfelt apology to every team member, past or present, who has suffered as a result of these behaviors.?He further added that Rio Tinto’s Executive Committee and he would accept all of the recommendations in the report.

Our partners in Australia, MindTribes have audited and assessed the various complaints and reporting systems; employee assistance programs and employee satisfaction annual surveys and they tell us how outdated and broken these ‘employee voice’ methods are. Even with the significant year on year spent on these tools, they never unearth proactively the data that is needed to make the right change in people’s working lives. If these data collection methods reveal anything at all, it is a lag indicator of harm already done, lives already changed forever.?One of MindTribes alarming findings of a large-scale investigation was that 65% of all participants ‘did not trust that the system would manage it [the complaint] to a satisfactory conclusion” and 64%?felt “that they would be ignored or dismissed”.

The tools from NotMe Solutions are a win-win for employers and employees and are improving the conversations between employees and their employers - daily - on complex (personal and personnel) situations at organizations across the US, Europe and Australia.?

It is now time for Stausholm, his management team and the Rio Tinto employees (and the unions) to come together and build bridges.?The time for everyone to act and support employees and management to work together is now.?The time for a genuine conversation about abuse of power and misconduct is now.??

If you're an organization or a current/former employee at an organization that's done a similar review and sees a need for coming together and bridging the gap, please do reach out.?We’d love to talk and help be part of the solution.

?If I was in Jakob Stausholm’s or Simon Trott's shoes, I know what I’d do (besides subscribing to #NotMe and making it easy and safe for people to speak up). I’d gather (physically and virtually) every single employee of the company - worldwide - at once.?And I’d say: “Let’s talk……….”