“Gresham’s Law, based on the 18th century observation that debased currency drives out the good, is now evident in the realm of information with fake news crowding out real news” said Richard Edelman, President and CEO, Edelman at an Executive Club of Chicago luncheon this week.
The cacophony of competing voices, partisanship and inability to discern truth has undermined trust in government, media, business and non-governmental agencies (NGOs) according to Edelman’s latest Trust Barometer. The problem is particularly acute in the U.S., where the decline in trust last year was the steepest Edelman has ever measured.
Trust is a forward-looking metric. It’s an economic lubricant, reducing the cost of transactions, enabling new forms of cooperation and generally furthering business activities, employment and prosperity.
Into this vacuum, business must take the lead. Indeed, the Trust Barometer indicates the public is increasingly looking for business to do so. Supporting this is the fact that in the U.S., trust in business – while not great – is higher than trust in government and media. In addition, trust in CEOs, boards of directors, technical experts, industry financial analysts and entrepreneurs all improved last year.
It’s not just the general public that believe companies should lead on relevant issues, a majority of investors think so as well. A special Trust Barometer report focused on institutional investors suggested half believe most companies do not fully acknowledge the political risks inherent in the current environment and three quarters believe companies should take a stand on issues relevant to fostering a healthy business environment.
Further, the Barometer indicated a majority of investors are attuned to board composition and quality, care about customer and employee satisfaction and give the benefit of the doubt to innovative or forward-thinking management and strategies. It appears investor trust is earned by having a clear strategy and purpose that’s focused on the long term.
Investors (customers, employees and other stakeholders) are seeking to be informed and educated. But communicating strictly about financial results doesn’t necessarily build understanding or trust. You need to create context for your strategies and business decisions by talking about your company’s purpose, culture and operating environment. To that end:
- Think how to integrate messages about strategy and performance into the broader company narrative. Be sure internal and external messages are aligned.
- Internalize your company’s purpose and culture and know what your organization stands for so you can quickly screen for political or social risks and be prepared to help shape the debate. Silence is no longer golden.
- Consider broadening your spokespeople to include senior-level technical experts such as your heads of technology, R&D or consumer insights as well as independent third-party experts. This can enhance understanding and create context for business decisions and results.
Business thrives in and benefits from an environment of trust. It is a critical part of the social construct and plays a role in creating, sustaining and growing social trust. It’s time to step up.
Lead-IR Advisors, Inc.
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 Wikipedia contributors, “Trust (emotion),” Wikipedia, The Free Encyclopedia, (4. Economics, February 5, 2018)