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Trust: Why Business Lost It, And How To Win It Back

What happened? Wall Street, in collusion with institutions around the world, have not only lost our wealth and our jobs, they have stolen our trust. Now we are “left to rely increasingly on governments for the creation of our wealth, something that they have always been conspicuously bad at doing…..Trust is fragile. Like a piece of china, once cracked it is never quite the same. And people’s trust in business, and those who lead it, is today cracking.” – Charles Handy

What
happened? Wall Street, in collusion with institutions around the world,
have not only lost our wealth and our jobs, they have stolen our trust.
Now we are “left to rely increasingly on governments for the creation
of our wealth, something that they have always been conspicuously bad
at doing…..Trust is fragile. Like a piece of china, once cracked it
is never quite the same. And people’s trust in business, and those who
lead it, is today cracking.” – Charles Handy

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There
is a serious lack of trust among consumers these days. Citizens of
every country are eyeing large national and multi-national corporations
with a narrowed, suspicious gaze. Questions are being asked. Answers
demanded. With taxpayers around the world bailing out stupendous
failures in the financial, housing, and insurance sectors, there is
more than a lack of consumer confidence affecting the market. Frankly,
we’re over it. We just don’t trust big business anymore.

This is
actually nothing new. I don’t know how many movies I’ve seen where the
plot pivots on the malevolence of unscrupulous business oligarchies.
But the uniform opinion of distrust, leveraged by the social media
tools of Twitter, Facebook, LinkedIn, Ning sites, and blogging seems to have brought us to a tipping point.

It
is not just the unwashed masses, gathered with burning torches in the
village commons, causing the uproarious clammer. Even some of the most
powerful CEOs are beginning to question everything from their own
excessive salaries, to the seemingly inevitable excesses of capitalism
itself. Kazuo Inamori, the 77 year old founder of Kyocera (KYO), a 13
billion dollar Japanese manufacturer, offers the following statement:

“Profits
are created by the hard work and collaboration of the workers and other
levels of management. For the top echelon to receive such high
compensation, as if they alone were responsible for the profits, is
unreasonable. We should possess the consideration and humility to
provide all employees who work for the company with an appropriate
share of the gains. That is lacking in today’s capitalism or
free-market economy, and its absence is responsible for the growing
disparity, discrimination and injustice in society.”

Charles Handy,
an Irish philosopher specializing in organizational management wrote in
his book ‘What’s a Business For’ (2002) this prescient paragraph:

“The
markets will empty and share prices will collapse, as ordinary people
find other places to put their money–into their houses, maybe, or
under their beds. The great virtue of capitalism, that it provides a
way for the savings of society to be used for the creation of
wealth–will have been eroded. So we will be left to rely increasingly
on governments for the creation of our wealth, something that they have
always been conspicuously bad at doing…..Trust is fragile. Like a
piece of china, once cracked it is never quite the same. And people’s
trust in business, and those who lead it, is today cracking.”

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I trust you, I just don’t believe you

But
what do we mean exactly, when we use the word, “trust”? It isn’t as if
we now see corporations as evil and and have consequently stopped
buying stuff. Okay, I’ll grant you, consumer confidence
isn’t….um….good. According to the January ’09 Conference Board’s
U.S. Consumer Confidence Index, the numbers nose-dived to the lowest
levels since tracking began back in 1967 (What was going on in 1967? Oh
yeah, Vietnam, the cold war, immanent nuclear holocaust and the end of
the world.) But, by and large, people still “trust” the products they
buy. …Right?

Yes. And no.

Basically, we still trust
companies – or at least brands – when it comes to products and
services. As far as advertising goes, everything is pretty much the
same. When I buy a bottle of laundry soap, I believe I’m getting what’s
being advertised. If it is a no-name label, I’m prepared for a level of
performance equal to the lower price I’m paying. But if it’s a brand
like Tide, for example, I expect a higher level of performance for the
price. This type of trust is intact. No one (as far as I know) is
trying to link lapsing quality and misleading performance claims to the
financial crises.

Issues of trust linked to the global crises
are much tougher to quantify. A consumer’s degree of trust is no longer
based on questions like, “Did this cleaning product remove the stain?”
or, “Is my phone company competent (even though my billing is always
wrong)?” Trust now asks intensive questions around topics such as
corporate citizenship, community engagement, and ethical management.
Trust is about character and behaviors, rather than quality and
performance.

Maybe an analogy will help clarify the issue….

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Have
you ever worked under an unquestionably competent supervisor who was an
entirely unlikable person? You respect the success you see in the
results of her work, but the last thing you want to do is go for a beer
after work. (Not that she’s the type to invite you, anyway.) You’re
happy to trust her competence as your boss, but you generally detest
her as a person. Why? She’s a jerk.

Well, it’s kind of like that
with business and society today. You might trust a brand’s competence,
but you sure as hell don’t want to support them with your cash. Why?
Because face to face, that brand’s a jerk.

I don’t trust you because you’re trying too hard

Companies
are hard-pressed to combat this image. To do so, they have increasingly
invested in a strategy known as Corporate Social Responsibility (CSR).
(If you’re not familiar with the term, Mallen Baker offers a good overview.)
It’s important to note here that the sustainable practices of CSR are
not being implemented solely as marketing or PR strategies. Many
companies began the journey toward CSR long before the economic
meltdown of the past few months. And even now, numerous companies are
espousing practices of reducing waste, packaging, energy consumption
and carbon outputs as a matter of conscience as well as good business strategy to trim costs. Despite the financial crunch, companies such as General Electric, Intel, PricewaterhouseCoopers and Wal-Mart are keeping or expanding their CSR commitments.

Unfortunately,
in a market where trust has suffered a staggering blow, CSR efforts may
add insult to injury. I conducted a small (very unscientific) survey of
about 40 business men and women on LinkedIn, Twitter and in-person. The
question: Does CSR engender trust toward a business?

The
responses were a bit surprising to me – but very interesting (and a
little entertaining). They were virtually all a version of a qualified,
“No.” Some weighed in a little more positive, some leaned negative, and
others were neutral. It looked something like this:

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Neutral: “CSR doesn’t inspire trust, but I might think less of a company that’s not doing anything at all.”
Negative: “If it says ‘green,’ I won’t buy it.”
Positive: “If a company has been doing CSR for a long time and proved themselves, I might trust them a little.”

People are skeptical of the very claims that are meant to engender trust in brands. According to BBMG, a brand and marketing agency in New York,
“Nearly one in four U.S. consumers say they have, ‘no way of knowing’
if a product is green or actually does what it claims.” BBMG believes
this is evidence of a lack of trust in the ‘green’ claims of companies.

Couple
this lack of trust with companies that are obviously beginning to do
some amazing work as good corporate citizens, and the result is a brand
that seems to be suffering from an identity crises. Walmart, for
example, is leading retailers in the practice of greening supply
chains. According to a study by the same group, BBMG, Walmart was
ranked among the most socially responsible companies by respondents.
Astoundingly, in the same study, Walmart is also ranked as one of the
least responsible companies, along with Exxon Mobile, GM, Food, Shell,
McDonald’s.

So is CSR an effective way for companies to increase their trust quotient among consumers and other stakeholders? Absolutely.

There
is overwhelming evidence that “green” means profit. Companies that
create eco-friendly products and services, reduce waste, carbon, water
and energy use are more competitive and incur a significant degree of
favor in the market.

Consumers are still buying sustainable
lines despite their higher cost. Nielsen Co. data show sales growth of
organic food at 5.6% year over year in December from a year ago, though
that’s down from the double-digit pace of years past, and its SPINS
tracking service showed sales at natural-food stores up 10.9% to $4.2
billion last year. Though growth slowed in the fourth quarter, it was
still more than 7% in December, far healthier than the rates at even
top-performing grocery retailers such as Walmart or Costco.
Read the full article by Jack Neff on Advertising Age here.

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And
it isn’t just companies of the West buying into CSR as a strategy for
growth and instilling trust among stakeholders. In China, over 190 companies published CSR reports in 2008. That’s phenomenal when you consider that just 2 years previous, the sum total of CSR reports in all of China was 19.

How can I trust you? I don’t even know you

Clearly,
there is a big leap between investing in CSR and restoring trust. One
does not automatically inspire the other. According to my fairly (okay,
completely) unscientific survey, efforts to implement CSR activities
may, in some cases, be a detriment to consumer trust. Even among CSR
practitioners, just greening your supply chain and publishing a report
will not engender trust. This is because trust is fundamentally an
emotive decision that is based on relationship, not just information.
In fact, trust can exist even when there is an obvious lack of
information. (We tend to refer to this as faith.) But trust can never
be held without a relational quality.

Over the next three blogs
I will suggest some practical and achievable steps to restoring and
increasing trust in your brand. The premise: employing an authentic CSR
strategy. (Greenwashing will blow up in your face if you follow these
steps.)

Step One: Make your CSR believable. How? Create and leverage social capital.

Step Two: Stop preaching the CSR message; start attracting CSR followers. How? Use CSR as a social media platform, rather than a marketing tool.

Step Three: Make your CSR effective. How? Integrate the strategy with key business objectives, and measure the outcomes.

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If you have any thoughts or info on the discussion so far, I’d love to hear from you.

Chris Jarvis
Senior Consultant, Realized Worth
Email; chrisjarvis@realizedworth.com
LinkedIn Profile; http://www.linkedin.com/in/chrisjarviscan
Twitter; @RealizedWorth

About the author

At Realized Worth, we help companies connect with their communities. We do this through corporate volunteering and social media.

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