We all live and work in an era of increasing connectivity and public scrutiny: a world where societies are being reshaped and businesses disrupted by powerful global trends.
The changes driven by these trends – both alone and acting together – bring major implications for trust.
To succeed in this fast-changing environment, businesses need to have a clear purpose that enables people to understand why a business does what it does. This purpose needs to look beyond the generation of financial returns to encapsulate how the business serves society.
Articulating – and embracing – such a purpose has never been more important. Why? Because today, in the wake of events that shook people’s trust in organisations of all types, attitudes and expectations of business are undergoing fundamental shifts. Having a shared recognition and understanding of why a business exists is key to bridging the trust deficit and shaping a new relationship between business and wider society.
Trust is a powerful asset. It brings a sense of confidence and belief in an organisations which in turn enables other things to happen. It is a vital foundation for any business’s long-term survival and success. Our research into the value and drivers of organisational trust highlights four operational reasons for an organisation to be trustworthy:
However, recent events have reduced public trust in business, government and institutions of all types. According to the latest Edelman Trust Barometer, only 52% of the people surveyed in the UK said they trusted business; and in over half the countries surveyed, the proportion was under 50%.
When trust disappears, many things can change. Businesses can go on the defensive, and stop communicating, collaborating and innovating. And that’s just the start. Customer loyalty may diminish; it may get harder to attract, retain and motivate talented staff; regulation may increase, adding cost and effort for everyone; and businesses may lose their license to be listened to. Together, all these factors can dampen growth, creating quantifiable impacts on share price, cost of capital and liquidity. The effects on morale innovation and behaviour are harder to measure but potentially even more damaging in the long-term.
Businesses are fully aware of these implications. In PwC’s 18th Annual Global CEO Survey, more than half of all respondents worldwide cited lack of trust as a key concern.
To help bridge the trust gap we recognise that organisations need to work with each other and with wider society to identify practicable, actionable steps that businesses can take to shape a new relationship with wider society: a new ‘settlement’ based on mutual understanding and a shared recognition of the positive role that business plays in people’s lives.
To create such a settlement, businesses need to see themselves as part of a diverse, interconnected and interdependent ecosystem – one that involves government, regulators, individual citizens and more. Trust within and across this ecosystem is key to its long-term sustainability and survival. That’s why trust needs to be restored to the heart of the business world.