Why businesses suffer from a trust gap
Why businesses suffer from a trust gap
It's one of the great truisms of our time: Trust is critical to business success. Business leaders regularly pay homage to the need to earn and retain it. And no less a luminary in business than Warren Buffett has observed that trust is "like the air we breathe. When it's present, nobody really notices. But when it's absent, everybody notices."
So, trust matters; this much we knew. But what does it actually mean to trust a corporation, particularly when we think about business in its role as a member of society, and not just as a supplier of goods and services?
Trust is a slippery concept and hard to define, but underlying it seems to be the notion of putting your faith in a company despite not knowing all the facts: giving them the benefit of the doubt. And the irony is that, despite an increasingly information-saturated world, there seems to be more doubt around than ever.
GlobeScan works with global businesses on corporate reputation across many sectors, and trust appears to be increasing in value to our clients' businesses at the same time as it is becoming more elusive. Trust -- or the absence of it -- is having an ever-greater impact on the things that businesses care about such as such as brand equity, customer loyalty and market share, propensity for collaboration opportunities and the attraction and retention of talent. Time and again, when we look into what drives the success of our clients' businesses, trust is at the heart of it.
And yet the corporate world as a whole continues to suffer from a chronic trust deficit. For over a decade now, GlobeScan has been tracking the trust that the public around the world has in different institutions to "act in the best interest of wider society."
As the chart below shows, despite some steady improvement in the way people feel about global companies, the gulf in trust between business and nonprofit entities like NGOs remains considerable.
Why might that be? A great deal comes down to the question of motivation. Many -- even most -- people fundamentally do not accept that business exists to work for the general good of society. They believe that a profit-making enterprise will always prioritize the interests of its directors and shareholders over the common good. And with the public defining NGOs' primary role, broadly, as "helping people," the reason for the gulf in trust starts to become clearer.
But when we look further at what appears to drive trust in business, an interesting story emerges. Our recent research with consumers worldwide suggest there is a big difference in perspective between those in the industrialized world and those in emerging economies, as the chart below illustrates.
People in the global south seem much better able than their northern counterparts to point to examples of tangible contributions that business had made to their communities -- education and health infrastructure, sponsorship initiatives -- not to mention the jobs and higher living standards that businesses are bringing with them as they expand their operations.
In contrast, the picture in industrialized economies is almost unremittingly cynical. Our respondents tell us that the motivations of business cannot be trusted, and that shareholders will always come first; that companies will use their advertising and communications to pull the wool over the eyes of the consumer; that business cannot be trusted to regulate itself, and will only respond to intense statutory pressure.
In the global North, at least, the role that business played in creating the prosperous world people see around them has been long forgotten, and many no longer view their own interests and those of companies as being aligned.
The challenge for NGOs is different. While some people question the way they spend their funds, trust levels in NGOs are healthy and the public's doubts centre mostly on the low profile of their activities and their ability to really make a difference. This goes some way to explain why corporate-NGO partnerships are so appealing.
Our recent global polling suggests that across 22 countries, three out of four people say they would have more respect for a company that partnered with an NGO to help solve social problems. NGOs bring the inherent credibility of their mission, while the corporate world has the reach and resources to change the world around them.
Addressing sustainability challenges is the obvious point where the corporate and the NGO trust agenda intersect. The need to engage with the sustainability agenda is certainly becoming ever more pressing for companies, as the list of systemic problems needing to be addressed and the demands from stakeholders for action both continue to grow. In this new environment, businesses need not just a "social license" to operate -- they need a license to be bold.
The transition to sustainability is going to require the public to give businesses the leeway to do what needs to be done (and it may be controversial) and for businesses to spend the time to understand what matters to people, not just as consumers, but as citizens.
So, the stakes for business are high. But if they succeed, ideas like "shared value" that argue that there is no inherent conflict between a sustainable society and profitable businesses models, may just end up being what re-establishes a jaded public's trust in the corporate world, by convincing people that business can indeed grasp the big picture, and that it cares about something other than the bottom line.
Corporate headquarters photo via Shutterstock.