Does the public trust your company? Chances are most of us would answer that question with a resounding "yes" and many of us would be wrong. Evidence is mounting that the general population does not trust business. For those of us who care about the longevity of our companies, it is time to take stock of where we stand in the eyes of the public. No matter what our opinions of movements such as Occupy Wall Street, most of us understand that our companies cannot be sustainable for the long term unless we are viewed as being trustworthy not only with our customers but also with our employees, our suppliers, and the broader community.
Leaders of enterprises in the US overestimate the degree to which their companies are trusted, according to Peter Lacy, the Head of Sustainability Practice for consulting firm Accenture. He reports that in North America, "87 % of CEOs say their company is trusted by the public and stakeholders." Yet evidence from a number of sources reveals that these CEOs may suffer from what Lacy calls a "trust delusion." For example, the 2011 Edelman Trust Barometer shows that fewer than half of the US population trusts businesses to do what is right. While globally trust in business tended to increase this year compared with last, in the US trust plummeted. This year the US trailed all countries except the UK and Russia in measures of trust in business. Furthermore, results of the Edelman survey indicated that in the US, trust and transparency impact corporate reputation to a greater degree than does the quality of products and services.
While these findings raise many questions, perhaps the most pressing is why people do not trust US businesses. While a thorough and comprehensive review of this question is beyond the scope of this article, several possible contributing factors do jump to mind:
Corporate spin breeds suspicion. If your company expends more resources on communicating about your good works than on establishing sustainable strategies and practices, you are in danger. At best you can expect skepticism on the part of the public. At worst, you might experience negative fallout should the discrepancy become visible. The most recent KPMG International Survey of Corporate Responsibility Reporting 2011 showed that the US falls into the category of countries with businesses having the highest risk of failing to deliver on their promises. The report states, “The Americas seem to have focused so far on communication rather than Corporate Responsibility processes. This is clearly an area of attention for companies in these geographies, as an imbalance between reporting and actual implementation might increase reputational risks.”
Even the companies with the strongest sustainability practices often lack clear targets by which the public might judge whether they were successful, according to the report Tomorrow’s Value Rating 2011. This report summarized the findings of a survey of sustainability practices and was issued by the international corporate sustainability agency, Two Tomorrows. You don’t have to look far to find companies that pledge to “monitor results” or “act ethically” or “balance social, environmental and financial considerations in decision-making.” Two Tomorrows points out that even those companies with specific targets often frame them in a way that impedes our ability to assess whether they are meaningful. For example, a goal of “reducing carbon emissions by 10%” doesn’t give us enough information about the context to know whether we should care.
Making commitments is easier than honoring them. The successful implementation of long-term sustainable strategies usually requires large-scale transformative or disruptive change of one sort or another. Sometimes company leaders make promises that they will not keep when they find out what they and their organizations must do to fulfill them. Often the challenges push companies to revaluate their entire business and management model. This process can be disquieting for those who are comfortable with the status quo. The context within which sustainable strategies are executed is evolving and uncertain. Leaders of companies that succeed in implementing their sustainable strategies tell us that they had to jump in without a precise plan. They set the direction for change and the processes for learning and adjust their plans as they go.
The Global Environmental Management Initiative (GEMI) organization defines transparency as “the openness of an organization with regard to sharing information about how it operates. Transparency is enhanced by using a process of two-way, responsive dialogue.” Many believe the adage that “knowledge is power.” Likewise, many company leaders still act as if they can preserve their power by controlling the knowledge that others have about their companies. One of several problems with this logic in today’s Internet and social-media-enabled environment is that leaders cannot exert great control over who has access to information about their companies. Secrecy is not a viable option in today’s world. And even if it were still possible to maintain a cloak over company data, secrecy tends to breed mistrust. And yet many companies continue to act as if the world had not changed and information could be kept under wraps indefinitely. They produce reports extolling only their successes and good deeds. They hesitate to discuss areas that need attention or engage in honest dialogue with stakeholders about areas of weakness or risk. This lack of openness leaves the public to its own devices for gathering information about the companies and deducing what it means. These old business models of secrecy have never engendered trust and certainly do nothing to enhance it in this age of open access.
Some company leaders act as if they can get by with “doing good” in one arena while they blithely disregard their poor performance in others. For example, a company that has a sound record for meeting its targets to reduce its carbon footprint but questionable conduct in its treatment of its suppliers or employees will not be trusted by the public. Real trust comes from committing to and living by a set of values that consider how the company is contributing to a sustainable society.
So where does your business stand in the eyes of the public? If you care about the long-term success of your business, it is time to examine the degree to which your company is engaging in acts that will engender trust rather than creating skepticism or ill-will in the collective community.
Dr. Kathleen Miller Perkins is a psychologist and is the CEO and owner of Miller Consultants , a firm specializing in organizational development, executive coaching and change management founded in 1980. In addition to managing the company, she continues to remain active in assisting client organizations in assessing and addressing the organizational culture and leadership requirements for executing sustainability strategy. She has delivered services to over 100 public and private sector companies. Dr. Miller’s client list includes organizations such as IBM, Toyota, BC Hydro, Brown -Forman, General Electric, Ashland Chemical, Ernst and Young, Bristol Myers Squibb and Kindred Health Care.
