Like the economic business cycle, public trust in American corporations has gone through ups and downs. Through much of the latter half of the 20th century, the public supported and trusted business not only to create jobs, income, and wealth, but also to contribute to the good of the nation by being good corporate citizens and supporting sound public policy.
Since the beginning of the 21st century, the cycle of public trust in business has turned downward. The ethical, legal, and business failings of Enron and WorldCom kicked off this descending spiral. Then came growing outrage over excessive corporate executive pay and the global financial meltdown. Greed and hubris - - not public trust - - were what many Americans came to associate with business.
What should business leaders do in such a climate? At a recent Bloomberg Boards and Risk Briefing, "Under Attack: The New Assault on American Corporations," several experts addressed this question. Perhaps the best advice came from one sitting board member, who discussed the role of independent directors, who are constantly being confronted with new challenges and uncertain circumstances. Her advice was succinct: get over it and do your job. That job was well articulated by another panelist, Ben Heineman, former GE vice president for law and public affairs. Corporate boards and executives, he advised, must seek high performance with high integrity, balancing risk taking with risk management and adopting the best practices of transparency and accountability.
Though many corporate leaders feel they are under attack from the media, politicians, regulators, and shareholders, they must come out of their bunkers. Former Education Secretary William Bennett used to say that in Washington, you are either on offense or defense, and it is far better to be on offense.
A defensive posture does them - - and our economy - - no good. There will always be conflict in the relationship between large business enterprises and some elements of social need. But these conflicts need not dominate the relationships.
Corporate leaders should go on offense and highlight their economic and social contributions to the nation's well being and communicate their very positive message to all of their stakeholders. Their message should be: we hear you; we are working on your behalf; we are doing our best to contribute by producing goods and services people want while providing jobs and incomes people need; we are not imposing our costs onto society or asking people to pay for our mistakes. It is obvious that these things are easier said than done. But there are lots of examples of how to do them in leadership companies that are successfully taking this approach. More business leaders need to embrace this responsibility and to do so proudly.
Many business executives are reluctant to acknowledge the new environment in which they work. Their role is to manage their business: to maximize shareholder value, as some see it. But today's senior business executives need skills that go beyond spreadsheets and financial statements. They also need political skills, in the most positive sense: the ability to build trust and inspire others to achieve organizational goals. Of course business leaders need to manage their organizations to grow the bottom line--profitable businesses thrive while unprofitable ones die. But they also need to navigate their way through the competing demands of shareholders, workers, communities, other stakeholders, and the public at large. Without the social license to operate they would not exist, and a hostile political environment can impose significant, even crippling, costs.
So, yes, businesses are under attack, and they must respond, not by denying the validity of the attacks but by doing what businesses have always done. They must adapt, regroup, and remind us all why they deserve our respect. They must show that they understand that they are interdependent with the society around them. They must remind us that they make a positive contribution to that society in all of its dimensions. Only then can they move the cycle of trust in an upward direction.