Building reputation, building trust
Trust is waning. Trust in business, trust in government, trust in the institutions we rely on to support us. Reliance on the transport system to run, and the health service to heal has been worn away. And business, even its oldest and largest institutions, appears to be failing society.
Carillion’s collapse in 2018 led to loss of trust in the biggest companies, and also in government, for the way it awarded contracts and for not monitoring the risks being taken. Taxpayers who footed the £148m bill have had their faith in the dependable edifice of big business shaken.
Government and business both took another hit with the liquidation of British Steel in May this year, putting 24,000 jobs at risk thanks to uncertainty over Brexit. Its rescue by Chinese giant Jingye is unlikely to inspire renewed confidence in British industry. And commentators predict this is just the first wave in a ‘tsunami effect’ set to sweep over UK business.
Without trust, governments lose voters, businesses lose customers, and society loses cohesion.
The way to build trust is by building your reputation. Act consistently and authentically over time and not only will your stakeholders believe you will continue to do so, they will also translate that faith in your methods into other areas of activity.
A strong reputation feeds into a strong trust base among stakeholders: reputation is not the equivalent of trust – rather trust is a sure outcome of building reputation with individuals and stakeholder groups.
This message is not being lost on the corporate world. The Business Roundtable, a lobby group made up of America’s big hitters, which has released an annual statement on corporate behaviour since 1978, has this year urged organisations to switch from the model of “shareholder capitalism” popularised by University of Chicago economics professor Milton Friedman in 1970, to one of “stakeholder capitalism”. Its statement lauded “a modern standard for corporate responsibility” which knocks the shareholder off the top of the pile, replacing them with a conglomerate of stakeholders: customers, employees, suppliers and communities as well as shareholders.
Likewise, in an open letter to his fellow CEOs in 2018, Larry Fink, chief executive of BlackRock, purported that an organisation must function in the interests of its stakeholders. “Purpose is not a mere tagline or marketing campaign; it is a company’s fundamental reason for being – what it does every day to create value for its stakeholders.” Not, he added, that that should get in the way of making money – but profits also need be employed for the wider good. “Profits are essential if a company is to effectively serve all of its stakeholders over time – not only shareholders, but also employees, customers, and communities.”
Whether these laudable statements are translated into tangible action remains to be seen. The fact is that the contract between business and society is broken and only by focusing on its own reputation and the way it engages with society – walking the talk, so to speak – can business help regain society’s trust.
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