Corporates and Public Misaligned on Trust
28 January 2015 at 10:14 am
Mismatched public and corporate perceptions of trust in business represent a “fundamental disconnect” that must be addressed as faith in the private sector continues to crumble, according to a new World Economic Forum report.
Rapidly rising executive pay, widening income disparities, systematic tax evasion and various types of corruption combined with a perception of inadequate responses from regulators and governments have reinforced widespread public distrust of business and government as a whole, according to the report prepared by the WEF in collaboration with professional services firm PwC.
It suggests that when members of the public think about trust in business, they usually focus primarily on factors such as values, fairness and behaviour, while business leaders emphasise the delivery of products and services.
“Continuing scepticism points to a problem that goes deeper than the effect of recent corporate scandals – a fundamental disconnect that must be addressed if there is to be real progress towards rebuilding trust in business,” the report said.
“The uncomfortable truth is that the general public and other business stakeholders have struggled to trust business in recent years. Some would claim that – even before people see firm evidence either way – business now starts out as mistrusted rather than at a neutral trust level.”
Based on Phase I of the Leadership, Trust and Performance Equation project (2013-2014) from the WEF, the report explores how building trust contributes to business competitiveness and recommends a new approach for trust building by aligning the discrepancy between the public and corporate view of trust.
It also points to the absence of a clear business case and a lack compelling data to demonstrate why a company should invest in trust building in the same way as in other capabilities, assets or infrastructure.
“The challenge is to create a critical mass of business leaders who understand the magnitude of the issue, see the value of investing in solutions, and are willing to commit to the execution of long term change,” the report said.
“Few large, mainstream businesses have been designed from ground up with trust in mind. As a result, many business leaders face a challenge in convincing their boards to focus on trust, especially since board members may regard it as an intangible, ‘nice to have’ that is virtually impossible to measure and difficult to track.
“If these trust-rich, more resilient companies are the survivors of each period of turbulence, then they will come to dominate the market – and the model of the high-trust corporation will become prevalent.
“Over the longer term, a business without trust eventually loses its licence to operate – in some cases irrevocably.”
The report recommended that business take the following steps to boost trust levels:
Understand that trust is a multi-stakeholder networked relationship and bringing multiple stakeholders together collectively can create a stronger dialogue.
Be prepared to work within the system, rather than trying to work the system.
Acknowledge what leaders can and cannot do.
Recognise that measures are not absolute and outcomes may not be perfect.
Recognise when you may need to apologise publicly.
Read the full report here.