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In 2009, a major Indian IT company was hit by a substantial financial scandal orchestrated by its senior management. The company had reported inflated financial figures, which severely impacted its reputation. The incident resulted in customer attrition, investor backlash, and regulatory intervention.
In 2015, a renowned multinational food company faced a crisis due to its popular instant noodles product. Traces of certain substances were found in the product, leading to a nationwide ban and recalls. The lack of transparent communication by the company resulted in reduced trust among consumers and authorities, affecting its market presence.
In 2018, a prominent Indian bank was embroiled in a significant fraud case linked to a well-known jeweller. The bank discovered fraudulent transactions totaling a substantial amount. This incident led to skepticism among investors, customers, and the general public regarding the security and credibility of the banking system. Again in 2018, a significant Indian company specializing in infrastructure development and finance faced a crisis as it defaulted on debt payments. The situation brought to light governance and financial irregularities, leading to skepticism among investors and creditors in the financial sector.
The above are examples of businesses that demonstrated very unfortunate and undesirable outcomes that were avoidable. When their stakeholders perceived these businesses as putting their interests ahead of them it naturally led to Trust erosion, the very fabric upon which relationships are forged.
So what do different stakeholders trust a business with?
They trust a business with various aspects based on their distinct relationships. Here's an indicative breakdown for each of them:
Customers:
Customers trust that the products or services offered by the business will meet their needs and expectations.
Customers trust that their personal and financial data will be handled securely and used responsibly.
Customers expect fair and transparent pricing for products and services.
Customers rely on businesses to provide effective and responsive customer support.
Customer expect that business will deliver on the value as promised.
Employees:
Employees trust that they will be compensated fairly for their work and contributions.
Employees trust that the workplace will be safe, respectful, and inclusive, promoting a healthy work environment.
Employees expect opportunities for career advancement, skill development, and learning.
Employees trust that management will communicate openly and transparently about company goals, changes, and challenges.
Employees expect their leaders will walk the talk on their culture ethos.
Employees expect they will be heard, included, valued and cared for.
Candidates:
Candidates trust that the hiring process will be fair, transparent, and based on merit.
Candidates expect an accurate representation of the company's values, culture, and expectations during the recruitment process.
Candidates expect their time will be honored.
Vendors:
Vendors trust that the business will make timely payments for products or services rendered.
Vendors expect clear communication about orders, specifications, and any changes to agreements.
Vendors expect they will be treated consistently during good and bad times.
Investors:
Investors trust that the business will achieve sustainable financial performance and growth.
Investors expect transparency in financial reporting, company performance, and strategic decisions.
Investors trust that the company will be managed ethically and in compliance with regulations.
Investors expect fair return and value on their investment.
GTM (Go-To-Market) Partners:
GTM partners trust that the business will collaborate effectively to jointly achieve business goals.
GTM Partners expect alignment in values and a commitment to mutual success.
GTM Partners expect mutual motivators and interests will be considered in growing the pie.
CSR (Corporate Social Responsibility) Partners:
CSR partners trust that the business will fulfill its commitments to social initiatives.
CSR Partners expect transparency in reporting progress and outcomes of CSR initiatives.
CSR Partners expect the company to be actively committed to the cause.
In each case, trust is built through consistent actions, transparent communication, inclusive approach, an equation of true partnership with a commitment to delivering on win-win outcomes. Meeting the expectations and needs of these stakeholders contributes to the overall reputation and success of the business.
It is not difficult to imagine what happens to a business when stakeholders do not bestow the business with their trust. For instance, we all probably would not have forgotten the tragic accidents involving a particular aircraft model from an aerospace company - one that has had a significant impact on the global aerospace industry and has contributed to many important milestones in aviation and space history - that drew attention to a disregard for safety protocols and an undue rush to bring products to the market. This catastrophe had grievous consequences, costing lives and eroding the company's rapport with airlines, regulators and passengers. It's worth noting that this aerospace giant then faced significant challenges in grounding that particular aircraft model, which led to huge impact on its business, operations and reputation.
Combatting Skepticism Effectively
So, how can enterprises navigate the precarious terrain of stakeholder doubt? The answer lies in adopting fair experiences for all stakeholders as a fundamental principle. 6 out of 10 reasons why stakeholders opt out are experiences and perception led. Fair Experiences clearly is the primary driver in building TRUST capital.
For businesses to center their attention on fair stakeholder experiences, they must
· First bridge the gap between expectations & experiences of stakeholders
· Then augment and Institutionalize fair experiences in their DNA for all stakeholders.
Based on the FayrEdge CXO survey , it is revealed that 90% of them agree on the importance and the business impact of Fair Stakeholder Experiences but only 30% acknowledged that they have measurement systems around it.
Can we continue to afford not to pay importance to what matters most?
To know more, connect with us at reach@fayredge.com