Wednesday April 8, 2020
11:00am-12:00pm PT | 2:00-3:00pm ET
Duration: 60 Minutes
By all measures, Edelman’s 2020 Trust Barometer report reveals that we feel betrayed by our institutions. “Despite a strong global economy and near full employment, none of the four societal institutions that the study measures—government, business, NGOs and media—is trusted.” Corroborating this, a recent Harvard Business Review (HBR) report by Sandra J. Sucher and Shalene Gupta, The Big Idea: The Trust Crisis, stated that “businesses put an awful lot of effort into meeting the diverse needs of their stakeholders — customers, investors, employees, and society at large. But they’re not paying enough attention to one ingredient that’s crucial to productive relationships with those stakeholders: trust.” Each study illustrates that trust has a real economic impact on business. Betrayals of trust have significant financial consequences. Growing trust, by contrast, improves performance. Trusted businesses are given greater latitude to define their direction.
What Increases Trust from a Business Standpoint?
This begs the question: what increases trust from a business standpoint? At a macro level, according to the Edelman and HBR reports, trust is built on competence and ethics:
Competence: Businesses are evaluated on their ability to create and deliver a product or service. The two facets of competence are technical and social:
Technical - Can you deliver and innovate?
Social - Do you understand your business environment, and can you respond to change?
Ethics: According to Edelman, ethical drivers are 3X more important to company trust than competence. Businesses must balance stakeholder interests and avoid harming one group in an attempt to benefit another. To evaluate your organization’s ethics, helpful questions suggested by HBR study authors are:
Is your company motivated to serve others’ interests as well as its own?
Does your company use fair means to achieve its goals?
Does your company take responsibility for all its impact?
A New Mindset for Business Leaders
Leaders must operate from the view that their business approach is constantly under evaluation - belief-driven buyers vote with their wallets. Your customers choose, switch, avoid and/or boycott your brand based on your stand on societal issues. Beyond that, we expect businesses to lead the way in making a better world AND we expect to hear from the C-Suite on how our companies are rising to the challenge. The mindset shift is the expectation that businesses exist to deliver value to all stakeholders - not just shareholders. Underscoring this mindset shift, 87% of Edelman Trust study respondents indicated that stakeholders, not shareholders, are most important to long-term company success and 73% agreed that a company can take actions that both increase profits and improve conditions in communities where it operates. This news is refreshing and presents an opportunity for leadership.
Fundamentally, your reputation is grounded in how you deal with your stakeholders: If you act in a trustworthy manner, you will be trusted. Building trust is not the work of public relations teams and marketing organizations alone. Responding to the mindset shift requires investment in company culture, clear purpose and strategy that forward-looking leaders are taking action on. As we’ve learned, stakeholders expect to hear from business leaders and expect businesses to lead the way in shaping the future of society. In the Edelman Trust study, 92% of respondents agree that it is important that their employer’s CEO speak out on social issues. As a leader, it is your responsibility to share vision, mission, direction and ideas and to make sense of the uncertain and complex for stakeholders. In the next part of this series, with the levers of competence and ethics in mind, we will explore the role of the C-Suite and why thought leadership is a must when it comes to earning trust.