Regaining trust in business
February 10, 2009
I went to a parents evening at my son's school recently and was reacquainted with the wonderful world of economics. I sat in on an inspiring introduction to the subject from the head of department who reminded the audience that economics, in academic terms, is a very immature subject (only 70 - 80 years old). Reading economics today is like living in an Aladdin's cave of opportunity. Oh to be young again, I thought. Such big issues to be solved, the complexities of the credit crunch and yes, the even bigger challenge of whether Kaka was worth his reputed £100m price tag. (For those of you not interested in football, he's world player of the year).
The reason for mentioning the two examples is that in a stark way they encapsulate the shifting times we are living in, where today's reality meets yesterday’s folly. Where the harsh realities of recession rub up against a world driven by irrational exuberance. This shift in thinking is being played out across most aspects of the economy and business as we challenge many aspects of the model we came to accept.
But how is this change going to play out? What is the end game going to look like? Is the business world going to be facing a new license to operate once we emerge from the recession? Personally I think so, and if you want to have a sneak preview of what it might entail look no further than the most recent results of the Edelman Trust Barometer. The main finding of this year's survey was that nearly two-thirds of the public (62%) trust companies less than they did a year ago. In the US only 38% of those poled said they trusted business to do what is right - a 20% fall from the previous year. It was therefore not a surprise to learn that 75% want tougher regulations introduced over business.
It would appear that business has little option but to rethink the case for why it can be trusted. It’s clear from the results of the survey that it’s not just banks and financial service companies who are in the firing line - everyone has been tainted by the events of the last decade. But changing the license to operate is not about a wholesale shift in expectations; it’s about subtle tweaks to the direction of travel. In his overview of the survey, Richard Edelman, suggested the need for the following reorientation:
• Business leaders to rethink what it means to be a public company - something many CEOs may have lost sight of
• Private sector diplomacy, whereby corporates lead the development of solutions to global problems
• The development of a new value proposition that delivers both benefits to society and a healthy bottom line
• CEOs leading by example and demonstrating they feel the burden of the recession
• Repeated, swift and accountable communications - reflecting the fact that most people say they need to hear information about three to five times before they believe it
• And finally transparency, no longer paying lip service to this critical component of trust
While you might not agree with all these issues, the question remains how to rebuild trust, a commodity that the survey highlights ranks just below the quality of products and treatment of employees and on a par with a company's financial future. The license to operate, as we know, is not something set down in tablets of stone, but in large measures and reflects a changing value proposition imposed on the corporate sector by shifts in public opinion driven by past events and future expectations. I suspect those that understand and respond to this changing environment will come out ahead, the question is can we spot those that get it from those who remain in denial?
As always I am pleased to hear your views and comments on the postings.