With many stakeholders questioning their social contract with government and corporate institutions, how can leaders invest in, rebuild, and renew trust in these relationships?
For many business leaders, 2020 has been defined by the global pandemic. Yet our challenges as leaders won’t end with a COVID-19 vaccine. Underlying societal issues that have long simmered below the surface are questions that will likely last long after a COVID-19 inoculation is developed. Individuals are frustrated; many don’t believe they are being heard by their leaders in government or by corporate institutions—or are being treated fairly and equally.
These challenges are occurring against a backdrop of mistrust. According to the spring Edelman Trust Barometer, just 38% of global respondents believe business is doing “well” or “very well” at putting people before profits. Furthermore, only 41% of millennials believe business is making a positive societal impact, according to the Deloitte Global Millennial Survey 2020. Amid the pandemic, trust has fractured across government, business, and other pillars of society, and the implicit social contract between institutions and stakeholders is fraying.
Trust is defined as “our willingness to be vulnerable to the actions of others because we believe they have good intentions and will behave well toward us.”¹ How can leaders rebuild this trust as we seek to restore the world’s economy, health care systems, climate, and human relationships? Both trusting and being trustworthy require us to make conscious, daily choices to invest in relationships that result in mutual value for our organizations and our stakeholders. Leaders can start by considering three aspects of trust.
Trust is an exchange of value. We as leaders should have a concrete way to talk about and act on trust for all of our stakeholders: customers, workers, suppliers, regulators, investors, pension holders, and the communities we serve. We can think of trust as an exchange of value—a currency. When invested wisely by leaders in relationships with stakeholders, trust can enable activity and responses that help us mutually rebuild our organizations and society.
The reverse is also true. As leaders, we know that failure to invest in building trust and responding authentically to external crises (such as COVID-19), and to broader societal issues such as climate change or racial injustice, can lead to significant risk to the organization’s brand, reputation, and overall mission. Stakeholders—whether customers, employees, investors, or ecosystem participants—will be more likely to defect to a competitor if they don’t trust the organization.² Loss of trust can affect more than the measure of revenue; it can affect the intrinsic value of the organization.
Trust can best be fortified when there is a “balance of payments” between vulnerability and response. We expect vulnerability from our stakeholders, and we respond accordingly to their needs, but we should also be vulnerable in return. When trust flows in both directions, the stakeholder can become a vested participant in the success of the organization. For example, this commitment to mutual success is demonstrated by vendors that are implementing new financial services to assist cash-strapped supply chain collaborators in the current COVID-19 crisis.³
Trust is actionable. Leaders can help rebuild trust by focusing on four dimensions—physical, emotional, digital, and financial—in order to understand stakeholders’ worries and consider how to best address their individual needs during the pandemic and beyond.
These four dimensions can act as a starting point to understand where stakeholders expect us to invest our time, attention, and energy for their benefit. In our current disrupted environment, stakeholders have varying concerns related to trust along these dimensions: the physical safety of the worker contemplating going back to the office, the emotional safety of a family venturing to a resort for vacation, or the financial safety of a supplier dealing with uncertain lead times. Building relationships across different stakeholder groups can require leaders to understand the dimensions relevant to each group and to take action to address their specific concerns.
Trust is human. When trust breaks down, it is often due to a failure on the part of leaders and organizations to understand and deliver on the signals that drive and enhance trust. We, as leaders, can demonstrate trustworthiness by being transparent, reliable, and human—demonstrating genuine care in the experiences our stakeholders value most.
In May, Deloitte conducted a survey to understand measures of trust in consumer industries. The survey found that three-quarters of customers who highly trust a brand are more likely to try a new product or service from that brand, and 79% of employees who highly trust their companies feel more motivated to work for them. Trust drives experience, which in turn can drive behavior.
A Call for Leaders
If our efforts as leaders take us back to where we were before the events of 2020, then we have failed. Our goal is not a new future, but a better future. Trust is part of the foundation for that better future because it enables stakeholders to believe in the organization and its mission, its competence to succeed, and its intent to do good. Asking ourselves difficult questions as leaders can enable us to plot a path forward, to organize and prioritize our next steps to rebuild trust, and to operationalize it within our organizations and across our stakeholders. Even when difficult choices must be made, trusted leaders and organizations will have amassed the currency—and the courage—to make and stand behind those decisions with conviction and integrity.
—by Punit Renjen, CEO, Deloitte Global