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There’s a new currency in town. One that’s dynamic, ephemeral, exceedingly difficult to earn, and painfully easy to lose: We’re talking about trust.
Today, as the world embraces hyperconnectivity, information has the power to get from one end of the globe to another in a matter of seconds. And it’s not always good news that travels the fastest.
Do you believe your employees will rise to the challenge and support you during difficult times? Will your customers remain loyal even in the face of negative publicity? Can you rely on potential candidates to become brand ambassadors for your company?
Studies show that while all stakeholders matter, businesses tend to prioritize customers, investors and then employees. However, people can have multiple relationships with a company. A customer today can be an investor; a candidate is a future employee; a vendor could become a partner and might be already a customer. Building trust in every stakeholder group can have a cascading effect across the ecosystem.
This is not just for your company’s reputation but also as an important driver of success and profitability. Leaders that embrace the importance of trust and fair experiences will find themselves suitably rewarded.
In a recent PwC survey, 87% of business leaders interviewed believe that consumers are highly trusting of their company. However, a mere 30% of the consumers surveyed at the same time said they trust companies. This wide chasm between leaders’ and customers’ perceptions of trust indicates there’s a long way to go still.
If your business is not out there earning it, your competition definitely is.
Today’s companies don’t exist in isolation
Trust isn’t restricted to customers and the business alone. It spills over and enters the community, the workspace, the supply chain, and several other aspects of a business where it must meet the diverse expectations of every stakeholder. It is not a vague concept; it is an intangible asset that’s tightly interwoven with stakeholder experience and corporate performance.
Today’s consumers hold their brands up to higher ideals. Besides the transactional aspect of the relationship and ethical & compliant business practices, they demand environmentally-friendly production, sustainable business practices, inclusive hiring, fair treatment of employees, human rights advocacy, etc. Employees want to be considered as co-creators who grow alongside. Vendors and other suppliers seek mutual growth and long-term partnerships. Students and potential candidates pursue companies that are making the world a better place.
Companies that have a ‘purpose’ are more likely to be trusted and offer a better stakeholder experience. When businesses find a higher calling, it not only helps improve the lives of the common man, but it also gives them the power to stay adaptive and cement their reputation, and gain a competitive advantage.
A recent Deloitte research says that 88% of customers will make a repeat purchase from a brand they trust. But if the companies haven’t built trust, customer perceptions can change overnight and negatively impact brand value and profitability. There’s also a strong correlation between experience and employee retention, with 79% of employees feeling motivated to work for an employer they trust and believe to be fair.
Advanced statistical analysis of data from PwC’s 25th Annual Global CEO Survey shows that 31% of the business profit margin coming from trust alone. Not convinced yet? This Deloitte research shows that trusted companies outdo the competition by up to four times.
Shareholders versus Stakeholder
Till recently, most companies have been in the business of making profits for themselves and their shareholders and investors. That’s traditional capitalism for you. The new world, however, demands a new approach, that of stakeholder capitalism, one where all stakeholder counts and mutual value creation.
Simply put, it means a company should create value for all stakeholders and not just for those who stand to profit from it. Companies need to take into consideration all parties : current and prospective employees, consumers, GTM partners, vendors, investors and even CSR partners – and account in the design of their business model to create and deliver fair experiences for them.
In a recently conducted CXO survey, it was found that more than 90% of CXOs personally believe in fairness and understand that fair experiences are crucial to building trust, long-term business success and stakeholder value. However, less than 30% have any ways to measure fair experiences and act on them and focusing only on few select stakeholders, such as employees and customers.
Yes, the business world is definitely starting to wake up to this need and recognize the importance of managing stakeholder value creation. And yet it doesn’t occupy a prominent position at board meetings on concerted action. For many leaders, stakeholder experience continues to remain a complex topic and some even believe that fair experience is an organic by-product of their operations.
Make the choice to change the future
Everyone talks about transformation. But before that happens, companies must first take the time to understand and recognize their brand perception in the minds of all the stakeholders from their lens. Is intent meeting impact? Businesses can only change if they’re conscious of the need for change. Are we delivering stakeholder experiences aligned to the expectation of the brand’s promise? Do we understand what those expectations are? Only when all stakeholders see - hear – feel that business leaders are intentional to bring about a change to offer experiences aligned to expectations based on the brand’s promise, will they be more likely to trust a business and its leaders.
TRUST is dynamic, and expectations will evolve continuously. What worked yesterday is not good enough for tomorrow. The good news is that companies can have far more control than they believe by centering their attention on the key driver of Trust - using the power of Fair Stakeholder Experiences, FSx to build and strengthen brand value & reputation, gain market leadership and have far reaching societal impact.
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https://www.pwc.com/us/cis-trust
https://www2.deloitte.com/us/en/insights/topics/leadership/build-nurture-measure-stakeholder-trust.html
https://www.pwc.com/gx/en/issues/c-suite-insights/ceo-survey-2023.html