All business transactions involve a large amount of implicit trust. The consumer of goods and services trusts that the seller will deliver what is offered, and that the description of what is offered is true and accurate. Employees trust that employers will honour their employment contract, that salaries and pensions will be paid, and they will respected for who they are. Similarly with suppliers, they trust that their bills will be paid on time, whilst the government expects, and trusts, that businesses will keep to the law and pay their fairly assessed burden of taxes.
The failure of trust can ruin a business if consumers lose faith in it, and it can impose massive costs on its operations if stakeholders don’t honour their implied commitments. Imagine how banks would struggle if every financial transaction was subject to doubt, and managed accordingly. Consequently, businesses and brands spend a great deal of time in building trust with their customers and consumers as well as employees, suppliers and other key business partners. Trust is an immense asset to any business.
Openness and transparency
The key to building trust is consistent and open behaviour. People need to know who they are dealing with and what they stand for; not just in terms of any immediate business transaction but also more broadly. They need to have some sense of the values that drive businesses and brands. How they would react in difficult and unusual circumstances? That is always a key question of trust. Can a company be relied on to do the right thing at a moment of crisis?
What builds that broad-based sense of trust is transparency. It is relatively easy to get to know the commercial offer a business is making in a competitive market place, in many cases a lot of money is spent on advertising to ensure that is the case. But what about the people behind the business or brand? Who are they and what do they stand for? In the past, long lived companies like Cadbury and Marks and Spencer managed to communicate their values over time by their consistent behaviour. They stood quietly and firmly behind the quality of their products, treated staff and suppliers well and it became known that they were “good” companies. Run by people who could be trusted to do the right thing as issues arose.
The importance of values
In the modern world of the internet and social media, companies cannot just let an awareness of the values seep out to the market place and beyond. They have to take pro-active action to communicate their values with all stakeholders and show clearly how they live them out. It is important for companies to have thought through what it stands for both in terms of its commercial mission, but also the ethical, social and environmental values it has. Today the ethical values it espouses while it pursues its commercial mission, are vital to building trust.
In previous years, business founders were the guardians of business values and often they knew in their gut, what was the right thing to do. But as they grew and became global, even businesses like Cadbury had to commit their values to paper in a code of business principles to guide managers in ethical and good behaviour for the business. For multinational companies, there has to be a clear source of guidance as to responsible behaviour worldwide, especially in countries where the rule of law is weak and standards of behaviour low. This idea of publically and transparently stating what a business stands for in and beyond its commercial mission, is important for all sorts of business large and small, international and local, and is a key component of building trust.
Sustainability reports and beyond
The massive expansion of social responsibility and sustainability reporting in the past 20 years or so is one way of giving this idea of trust powerful expression. These reports are really valuable in creating an overview of the non-financial, economic, social and environmental performance of a company; issues that really matter to stakeholders today. Consumers don’t want to be wearing clothes made by child labour or using packaging that cannot be recycled and these reports show in detail how companies are dealing with these and many other issues. Employees and managers can be narrowly focussed on their particular aspect of the business and are often surprised and re-assured by such reports, they show the company is taking its role as a corporate citizen seriously.
However, the problem with sustainability reports, like financial reports, is that ordinary consumers and people don’t read them. They are there for special interest groups, such as social and environmental NGOs, concerned about the company’s overall management of non-financial issues; just as the financial report does for investors concerned about commercial matters. However from the data accumulated for such reports the company can enter, through modern media, into a constant dialogue with stakeholders and wider society on the issues. Through the internet and social media, it can inform consumers, employees and others about how it is doing as a citizen of our modern world, enter in to a dialogue about issues that matter to it and get feedback in real time on its performance.
It is this type of transparent, modern engagement which will establish trust in a business today. Companies need to invest in creating and managing this dialogue with stakeholders across all aspects of the business, but the benefits for the company themselves and its reputation are real. They will be seen to possess much higher levels of awareness and consumers will have much higher levels of acceptance and trust in the business, which is an essential for its growth.