As American business leaders join their peers at the World Economic Forum, they do so at a time when trust in business in the United States not only has jumped 18 points (to 54 percent) since last year when it hit an all-time low in the annual Edelman Trust Barometer, but also when trust in U.S.-headquartered companies is trending up in 19 of 20 countries, reversing years of low trust in American companies across the EU and Russia.
But a wariness casts a shadow over the resurgence in confidence, with nearly two-thirds (59 percent) of informed U.S. respondents expecting business and financial institutions to revert to old habits when the country firmly pulls itself out of the economic crisis. How can corporate America prove the skeptics wrong and maintain the upswing? To earn trust that sticks, it will take more than firing non-performers, paying back loans, and cutting CEO salaries, all considered effective in restoring trust, the survey shows, but rather more like quick-fixes than systemic solutions such as those under consideration in Washington D.C.
To build and sustain corporate reputation entrenched enough to weather future tumult, companies must adopt a new style of leadership.
Increase transparency, first and foremost. Trust and transparency are now as important to corporate reputation as the quality of a company's products or services. In the U.S., they even outrank product quality. Earnings -- at one time the ticket and often sole metric to corporate repute -- sits at or near the bottom of 10 criteria in all the regions studied. We see a 37-point spread between "has transparent and honest business practices" and "delivers consistent financial returns to investors" in the U.S., where the gap between "is a company I trust" and financial returns is comparable at 35 points. Trust is now an essential line of business to be developed and delivered.
Cultivate a wide circle of expert spokespeople and communicate through a variety of channels. People still place the most trust in credentialed spokespeople, namely academics or experts and financial or industry analysts, making it imperative that businesses nurture their relationships with those well beyond the company payroll. Likewise, industry analyst reports and articles in business magazines are the most trusted sources of information about a company--slipping enough in the U.S., however, to underscore the importance of casting a wide net, or a mosaic of communication, over the full spectrum of available communications channels.
Step up CEOs. This year, an increasing number of respondents express trust in information from a company's CEO, up 12 points -- to 31 percent -- from last year, when it had tumbled. CEOs should make good on the public's seeming willingness to believe them -- however low that credulity might be relative to the trust they place in others. (Interestingly, trust in corporate communications jumped in a similar manner -- while still relatively low, it's now on par with conversations with friends and peers, newspaper articles, and TV news coverage.)
Candid communications and a concern for all stakeholders' interests, not just shareholders', should be at the top of a chief executive's list of considerations when making a decision about his or her company. In the U.S., fifty-one percent say that all stakeholders are equally important to those decisions -- 30 points ahead of shareholders at twenty-one percent. Today's stakeholders are looking for leaders who will deliver performance, communicate frequently and honestly, and factor in the role of business in society.
Heed the youth or ignore at your own risk. The U.S. saw a surge of trust among 25-to-34-year-olds who report more trust in all institutions -- business, government, NGOs, and media--and in all sources of information about a company than their older counterparts (ages 35-64). It could be youthful optimism; it could be the Obama effect--it was not seen to such an extent in the other countries surveyed--but regardless the reason, it's an important consideration for companies that are looking to be seen as employers of choice in their efforts to attract talent.
Join forces to tackle global issues. Finally, companies that go outside their immediate sphere of business to advance the common good whether it's through work on energy, obesity, health care access or another global hurdle will see their reputation rise accordingly. Consider the strides made by Walmart and Starbucks, which have put environmental sustainability at the center of their tangible commitments, and food companies like Quaker Oats, and its parent PepsiCo, and the National Dairy Council to promote healthy eating and physical activity. Authentic engagement in issues of import to all stakeholders is a key factor in establishing and sustaining trust. Companies that embrace this new reality will see a rise in the trust and credibility that are vital to their license to operate.