Understanding the Burden of Trust for Business Leaders
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Every year since 2000, Edelman, a global public relations firm, has conducted an international survey to gauge people’s trust in our grassroots institutions. This survey is called the Edelman Trust Barometer, and earlier this year Edelman released the most recent results based on responses from more than 36,000 respondents in 28 countries. The results paint a disconcerting but not surprising picture: high levels of distrust that undermine our ability to communicate, collaborate and solve the problems we face.
But in this gloomy picture, the Edelman Trust Barometer finds hope in an unexpected place: business. Among the institutions studied, businesses are the most trusted, with 61% of respondents globally saying they trust businesses, compared to 59% for NGOs, 52% for government and 50% for the media. Additionally, businesses are seen as the most capable of solving societal problems and achieving results, scoring a startling 53 points higher than the primary institution created to solve societal problems: government.
Companies are especially trustworthy of their own employees. Seventy-seven percent of respondents globally and 74% in the United States said they trust their employer. On a more personal level, 66% of respondents said they trust their CEO and 74% said they trust their colleagues, a level of trust second only to scientists.
Related: Study Reveals American Crisis of Trust with Government, Business and Media
The burden of trust
Given these results, business leaders must ask themselves a question: if our organizations have reserves of an increasingly scarce resource – trust – what responsibility do we have to use this asset to help society to solve our problems?
Our employees and customers have already made up their minds. According to the Edelman Trust Barometer, 58% of people make purchase decisions, 60% make employment decisions and 64% make investment decisions based on their beliefs and values. Additionally, 60% want their CEO to speak out on controversial issues that matter to them, and 81% want CEOs to be personally visible on public policy issues. As a more specific example, according to the Deloitte Global 2022 Gen Z and millennials survey, almost half of Gen Z (48%) and millennials (43%) say they have exerted some pressure on their employer to it acts against climate change, for example. .
This is probably unsurprising but unwelcome news for CEOs. Historically, many business leaders have avoided wading through the murky waters of societal issues. Unless the issue had clear implications for the bottom line, it was considered distracting at best and dangerous to get involved at worst.
A world in which every company engages on every issue society deems important would be noisy, disorienting, and unproductive. But the trust that people place in companies, and more specifically in their own employers, creates an opportunity, a responsibility and an avenue of action for business leaders. The challenge is deciding when to do so, especially given the pace of change, the divisions in society, and the limitations of time, attention, and resources.
Related: How Entrepreneurs Can Navigate the Crisis of Confidence
When should business leaders act on these issues?
The key for companies is to speak up and act when they have a credible reason to do so. Without a credible reason, corporate action becomes performative, confusing, even counterproductive, and often erodes trust. But with a credible reason to act, a corporate action has a much higher likelihood of hitting all three i’s: intentional, informed, and impactful. Companies can determine if they have a credible reason to talk or act on an issue by looking at the issue along three dimensions:
Impact on mission: A company’s purpose for existing is defined by its mission and how it will achieve that mission is defined by its values. Therefore, the first step is to assess the extent to which an external event or issue affects an organization’s ability to fulfill its mission and values. For example, at Mineral, our mission is to help companies and their employees thrive at work. Thus, we first examine whether an issue hinders, enhances, or does not affect employers’ ability to create a successful team. Issues like anti-harassment, pay equity, or mental health are highly relevant to what we consider the ingredients of a successful team, while an issue like animal cruelty is less relevant.
Impact on employees: The second dimension to consider is the extent to which an external event or issue affects a company’s employees. This requires looking beyond the work experience of employees and their overall life experience, including their families and communities. At Mineral, we have identified events and issues such as natural disasters, civil rights legislation, climate change and racially motivated hate crimes as those that materially affect the well-being of our employees and their families.
Customer impact: The third dimension to look at is the extent to which an issue or event affects customers. Similar to the employee perspective, this perspective requires looking at the health and well-being of customers beyond a company’s business relationship with them. For example, at Mineral, our clients are small and medium-sized businesses based in the United States. When the Covid pandemic caused businesses across the country to close in the spring of 2020, we joined campaigns to financially support those businesses until the economy could be reopened.
Related: CEO Activism – When Leaders Should Speak Up
The greater the impact on these dimensions, the more credible a company’s reason for acting. Here is a simple decision matrix for deciding when and how to act based on these considerations:
Let’s start with the red areas. If an issue or event has a significant impact on a company’s mission and its employees or customers, a company has a highly credible reason to act. And if he does, his action is likely to reflect the three “i’s” above: intentional, informed and impactful. Corporate action can include using a website, social media, or thought leadership to promote a position or taking direct action through volunteerism or financial contributions.
Now let’s move on to the orange areas. If an issue has a high impact on a company’s mission, but a low impact on its customers and employees, the company should conduct further analysis to determine whether a public action or stance is appropriate. The same would be true if an issue had a high impact on customers and employees, but a low impact on the mission. Further analysis may include assessing whether the company has a unique perspective to offer or whether it can take meaningful steps to achieve results.
Now let’s move on to the green and blue areas. If an issue or event has a high impact on customers, but a low impact on mission and employees, a company can use external customer communication to respond to the issue. For example, external communication might mean sending an email to customers acknowledging the issue and the company’s position or response to it. Similarly, if an issue or event has a high impact on employees, but a low impact on the mission and customers, the company can use internal communication with employees to address the issue.
The last is the gray area. If an issue or event has low impact on the mission, employees, and customers, the company probably doesn’t have a credible reason to act. This does not mean that the issue or event is not important to society. It simply means that the company’s involvement may not be productive, or at least productive enough, to justify devoting time, attention, and resources to other efforts. Company executives and employees could certainly still engage on the issue as individuals on a personal basis.
As the Edelman Trust Barometer indicates, businesses now have a powerful and unique combination of benefits – trust and competence – but they need to use them wisely. Business leaders must take on the role that their employees and customers have given them, focusing on issues where there is a credible reason to act and finding that credibility through impact on the mission, employees and corporate customers. By taking these steps, companies can confidently move from the boardroom to the town square, driving positive change both for their own businesses and on an even broader level.