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Why trust is vital to your organization

01 Jun, 2020 Reputation, trust, stakeholder relations

 

Trust is vital to us personally. We have all wondered at some stage, “How far can I trust this person to do the right thing?” But trust is vital to organizations as well. Trust allows people to rely on others in their organization and in other organizations without feeling obliged to protect themselves with legal precautions at every turn. This article explains why trust is vital to your organization

Trust between organizations through their decision-makers depends greatly on the history of interactions between them or on word of mouth about their previous interactions with others—actions always speak louder than words. Trust is developed when behavior matches expectations. Trust is also related to reputation and ethics, and is crucial to business relationships because almost every business transaction requires a degree of good faith and trust. Through all these factors, trust is vital to your organization.

Being trustworthy generates a range of organizational benefits, as shown in the extract below from the Edelman Trust Barometer 2020 report:

Definition

Trust is a complex concept, which is difficult to define precisely. One widely used definition states that trust is willingness to accept vulnerability based upon positive expectations of the intentions or behavior of another. In other words, if you trust someone, you are accepting that while it is possible they could act to disadvantage you, they are not likely to. However, our willingness to be vulnerable also means our trust can be betrayed. Trust is not a behavior (eg, cooperation), or a choice (eg, taking a risk), but is an underlying psychological condition that can cause or result from such actions. Trust changes over time – developing, building, declining, and even resurfacing in long-standing relationships.

Our need to trust and be trusted has a very real economic impact. Creating trust lifts organizational performance, while betrayals of trust have major financial consequences. Even more: it deeply affects the fabric of our society. If we can’t trust other people, we will avoid interacting with them. Building trust isn’t glamorous or easy. And at time it involves complex decisions and difficult trade-offs.

Trust relates both to interpersonal and group interactions. Individuals represent organizations, and the trust they extend may relate to an entity like a business unit, an executive committee or an organization as a whole. Organizational trust can be defined as “The organization’s willingness, based on its culture and communication behaviors in relationships and transactions, to be appropriately vulnerable if it believes that another individual, group or organization is competent, open and honest, concerned, reliable, and identified with common goals, norms and values”. For organizations, trust is necessary for cooperation and communication, and is the foundation for productive relationships. The practical relevance of this is that trust is the strongest predictor of consumer satisfaction (Ovaitt & Rawlins, 2007). Edelman public relations firm, the biggest in the world, has conducted a Trust Barometer survey around the world every year since 2000 because the firm considers trust is a key indicator at every level of business and society, and is a key measure of reputation. Edelman states that trust is vital to your organization, and therefore commits significant resources to this high-profile survey to measure trust levels. (On the other hand, cynics like Alan Kelly believe activities like the Edelman Trust Barometer survey are mainly a way of attracting new business.)

Due to its importance, trust should be measured and included as a critical indicator on the dashboard of any organization concerned about relationships and reputation with its key stakeholders – other business leaders, employees and customers. Sandra Sucher, Professor of Management Practice at Harvard Business School, has studied trust dynamics in organizations and among business leaders for 20 years. Sucher and fellow researcher Shalene Gupta, developed the framework below of the fundamental promises of business. When businesses fail to deliver on these promises they lose the trust of their stakeholders.

Above image: Broken Trust, Harvard Business Review, 2019.

What stakeholders want

Sucher & Gupta say organizations can’t build trust unless they understand the fundamental promises they make to stakeholders. Firms have three types of responsibilities:

  1. Economically – people rely on them to provide value.
  2. Legally – people expect them to follow the spirit and letter of the law.
  3. Ethically – people want organizations to pursue moral ends, through moral means, for moral motives.

What this all looks like varies with each type of stakeholder, and expectations vary with each stakeholder group.

How stakeholders evaluate trust

Trust has many aspects because stakeholders depend on businesses for different things, and they may trust the organization in some ways and not in others. To evaluate the merit of a company, stakeholders continually ask four questions:

1. Is the organization competent?

Fundamentally, organizations, including government entities, are assessed on their capacity to create and deliver a product or service. This has two aspects:

  1. Technical competence. The basics of developing, manufacturing and selling products or services. It includes the capacity to innovate, to incorporate technological advances, and to gather resources and talent.
  2. Social competence. This involves understanding the business environment, and recognizing and responding to changes.

In the short term, technical competence wins customers, but in the long run social competence is necessary to build a company or a government entity that can successfully steer through a constantly changing business and societal landscape.

2. Is the organization motivated by serving the interests of others as well as its own?

Stakeholders need to believe the company is doing what’s good for them as stakeholders, not just what’s best for itself. However, stakeholder concerns and goals vary. Organizations must decide how to prioritize stakeholder interests, and how to avoid making a negative impact on some stakeholders while looking after the interests of others. To determine if they are doing the right thing by all their stakeholders, organizations should review their own motivations by asking these three questions:

  1. Do we tell the truth?
  2. On whose behalf are we acting?
  3. Do our actions actually benefit those who trust us?
3. Does the organization use fair means to achieve its goals?

The way an organization deals with customers, employees, investors and society often comes under scrutiny. Trusted organizations are given more leeway by stakeholders in the way they conduct business. Organizations that aren’t trusted face less flexibility in dealing with stakeholders.

According to Sacher & Gupta, to build strong trust, organizations need to understand, and be respected for four types of organizational fairness that have been identified:

  • Procedural fairness. Whether good processes, based on accurate data, are used to make decisions, and are applied consistently, and whether groups are given a voice in decisions affecting them.
  • Distributive fairness. How resources like pay and promotions, or pain points such as layoffs, are allocated.
  • Interpersonal fairness. How well stakeholders are treated.
  • Informational fairness. Whether communication is honest and clear. (In a 2012 study, Jason Colquitt and Jessica Rodell found that this was the most important aspect for developing trust.)
4. Does the organization take responsibility for all its impact?

If stakeholders don’t believe an organization will produce positive effects, they will limit its power. Companies should carefully define the kind of impact they wish to make, and then devise ways to measure and foster it. They must also have a plan to handle any unintended impact when it happens.

Credible sources of information

The most credible sources of information for forming an opinion about a company are shown in the image below. Credible sources of information are important because they influence trust – and trust is vital to your organization’s success.

Image: Edelman Trust Barometer 2021 report, p. 22.

Trust and public relations

For public relations practice to be effective, you first need to gain people’s trust. There’s no point in conveying a message if people don’t trust the source! Therefore, the first requirement is for you to have credibility. Credibility in PR is the confidence that receivers have in the accuracy and truthfulness of your message. To be credible is to be believed. In fact, the word ‘credible’ derives from the Latin word credo, which means ‘I believe’. Credibility is not the same thing as trust, but is closely related. Like trust, source credibility is a complex concept depending on a range of factors. Trustworthiness, competence and honesty appear to be the most important factors contributing to credibility.

Trust is also essential for good relationships between organizations and their stakeholders—and fostering good relationships is generally considered to be a key function of public relations. As the practice of public relations becomes more focused on outcomes and not just on the output of messages, the contribution of building, maintaining and sustaining mutually beneficial relationships that help organizations achieve their goals has evolved as a central role for public relations. Therefore trust is central to effective PR, and trust is vital to your organization.

Trust depends on your perspective

PwC conducted a US survey about trust in 2021 to seek the views of business, employees and customers because trust is vital to organizations’ viability in the long term. More than 500 US business leaders and 1,000 consumers were surveyed. PwC is a multinational professional services network of firms, ranking as the second-largest professional services network in the world.

Trust was surveyed from the perspective of three key stakeholder groups – business leaders, employees and consumers. The survey found that “customers and employees have clear priorities — which companies often miss”:

  • 73% of business leaders say the CEO is either responsible for or accountable for trust.
  • 80% of employees trust their company the same or more now than before the [COVID] pandemic.
  • 49% of consumers started purchasing or purchased more from a company because of trust.

When asked what comes to mind when they think of trust, business executives, employees and customers agreed on the top four items:

  1. data protection and cybersecurity
  2. treating employees well
  3. ethical business practices
  4. admitting mistakes.

The image below show the points of agreement between the three groups in response to the question, “When you think about trust, which of the following comes to mind?” They had diverging views on other points, as shown in the image.

Main findings of the PwC survey

Efforts to build trust appear to be paying off. Both employees and customers report higher trust in US businesses now than before the [COVID} pandemic began. Still, challenges abound, and many companies aren’t yet implementing commonly accepted leading practices on trust. Some companies are making progress, but they’re not yet reaping as many benefits as they could.

Image, opposite: PwC US trust survey 2021.

Business leaders tend to take a broader view of trust. In their definition of trust, they’re more likely to include both responsible artificial intelligence (AI), along with  several elements that relate to broader social impact (such as sustainable value chain management and ESG reporting) . Employees, however, are more likely than the other groups to emphasize holding leadership accountable. These disconnects can also be opportunities. Businesses can better communicate how their disparate priorities collectively tie into trust. They can also lead with true accountability. That includes both transparency for mistakes and sustained, equally transparent efforts to make things right.

The pandemic’s impact on consumer and employee trust

It’s been a rough stretch for business with COVID-19, but there’s a bright spot: Consumers and employees both say they trust business more now than before the pandemic. This rise in trust was hard earned, as many companies pulled through for consumers during a time of crisis. Today, over half of consumers have at least “a fair amount of trust” in companies in every industry. Consumer markets (68%) and healthcare (65%) lead the pack, while private equity (56%) and government (54%) rank lowest.

Employees also report gains in trust. An impressive 80% of employees report trusting their company the same or more now than before the pandemic. A slightly higher number, 84% report trusting their direct manager the same or more now.
When asked who in their company they trust the most, trust levels seem to rise with proximity. Employees reported their highest levels of trust (either trusting them completely or a fair amount) in their direct managers, coworkers and companies (all 77%) compared to 71% for their CEOs, 67% for their company’s board and 59% for other companies in the industry.

Image, opposite: PwC US trust survey 2021.

Four big ideas to help build trust

PwC concluded their survey report with a summary of broad actions that could help to strengthen stakeholder trust in organizations. These actions underline the fact that trust is vital to your organization  [Comms heads are strongly urged to adopt a role as strategic advisor in this process, including an active management role]:

1. Be deliberate about your trust strategy

Since companies are at different stages of their trust journey, start by evaluating where you are. Are you one of the 50% of companies that haven’t even defined what trust means? Is your trust strategy tied to your business strategy? Also consider how your senior leaders should work together to build trust. Even though every executive (and every employee too) should own trust, top leaders — most likely the CEO in close collaboration with the CFO — will have to take the lead and ensure a coordinated approach. With this foundation in place, you can better evaluate your customers’ and employees’ top priorities, focus your efforts on initiatives that will really move the needle and back up your words with action.

2. Consider all your stakeholders — and their conflicts

It’s not enough to focus independent trust-building efforts on employees, consumers and other stakeholders. You have to develop a plan from the start that addresses their sometimes conflicting needs. When done right, this multi-stakeholder approach creates a positive feedback loop that can add proportionately greater benefits. If you build trust in your employees, for example, they can become your trust ambassadors to customers and local communities. As customers see you do right by your people, they’ll be more likely to give you credit for your work on accountability, communications and a consistent customer experience. When customers and employees trust you more, you’re more likely to strengthen trust with other key stakeholders such as shareholders and regulators as well.

Key components of this process include listening to what employees want, a reimagined workplacedigital upskilling and chances for employees from every background to improve their lot in life. You’ll also want to deliver a customer experience that makes your customers feel heard and inspires them to trust you with their data.

3. Deliver on a specific set of actions

Trust can be earned when you commit to a specific set of actions that align to your purpose and values and then deliver on them, over and over. Trust is built with consistency and reliability. Examine your commitments and goals on everything.  Weigh and take action on those areas (and only those areas) that are important to your stakeholders.

To overcome business leaders’ two top challenges — diverse stakeholder interests and culture — consider nine key enablers that can make organizational culture your ally, and plan on taking concrete steps to help align all your stakeholders’ interests.

4. Deploy technology in ways that truly build trust

Consider trust aspects in all the ways you use technology — with employees, customers, business partners and other stakeholders. If you don’t provide strong levels of cybersecurity and data privacy that meet your customers’ and employees’ unique needs, or if you fail to mitigate bias in artificial intelligence (AI) or address common risks of cloud initiatives, your technology could quickly become a liability. Consider too how your customers are using your digital products and services. Collaborating more with others in your industry, community or the public sector on responsible, ethical technology and data use can help spread trust further.

When used strategically and responsibly, technology can power growth, innovation, more efficient operations and better experiences — all while increasing trust. The right technology can also make nearly every part of your operations more trusted — if you weave in trust at the start.

Communication is a vital factor in all these actions intended to build stakeholder trust. Your comms team should develop a detailed communication plan to enhance implementation and outcomes of this trust process.

Gallup’s elements of a high-trust culture

In 2018 Gallup reported on trust issues in business as part 3 of its series on The Real Future of Work. The report said, “In a globalized, highly interconnected world, trust is more important than ever to business success and sustainability over the long term.” The report noted that “customers rely on different signals to convey a company’s trustworthiness — including, in many cases, a wealth of information about its ethical track record and the experiences of its customers and employees.” Three essential elements of a high-trust culture, advocated by Gallup are:

  1. Make strong customer value the ultimate business goal. Organizations need an authentic, customer-centric purpose to guide their strategic focus and daily activities.
  2. Establish integrity as a primary organizational value. High-trust organizations make integrity a core value that influences all HR processes, from performance incentives to hiring criteria.
  3. Ensure ethical issues are a major leadership focus. For large organizations, trust is largely a product of leadership.

Strong ethical leadership is a big part of what gives employees and customers the confidence to invest in long-term relationships with organizations.

Identify and respond to stakeholder values

In a Spin Sucks article in 2018, “Building trust in communications,” public affairs expert Greg Brooks says values are central to trust development.

Figuring out target audience [stakeholder] values isn’t hard and doesn’t take much time or money. If done correctly, focus groups or audience interviews can get you most of the way there. When your messaging relates to people’s bedrock values, you’ll know immediately whether you’re on track or not – the audience will let you know.

A simple exercise is to choose one of your communication plans and map values and attitudes to each of your major messaging points. Then ask yourself:

How do I know my audience shares these values and attitudes?

  • Get it wrong, and you’re seen as inauthentic at best, counter-value at worst.

How many values and attitudes have I listed?

  • Too many means you’re defining your values or messages too narrowly.
  • Remember, people are apt to broadly share a reasonably small number of values. Those are the ones you should anchor to.
  • A great communication campaign probably anchors to no more than two or three values across all message points.

How deeply do the values I’ve identified flow through my plan?

  • Think a one-off social post can’t be tied to values-based, trust-building communication? Think again.
  • The biggest challenge is usually convincing detail-centric clients or colleagues that trust is the larger, longer-term prize.

Regaining trust

Reduced or lost trust? Some people consider that trust is like a sheet of glass—once broken it can never be the same again no matter how hard you try to glue it together. However, a study, “Promises and Lies: Restoring Violated Trust,” by researchers from the Wharton School of Business at the University of Pennsylvania, suggests that “trust harmed by untrustworthy behavior can be effectively restored when individuals observe a consistent series of trustworthy actions. Also, making a promise to change behavior can help to speed up the trust recovery process.” (But when a person’s trust is violated and the violation includes deception, that trust never fully recovers.)

Further reading

My article, “Counter loss of organizational trust in these times,” may be useful for further insights about the fact that trust is vital to your organization. I will be writing on this topic soon.

About Kim Harrison – author, editor and content curator

Kim Harrison, Founder and Principal of Cutting Edge PR, loves sharing actionable ideas and information about professional communication and business management. He has wide experience as a corporate affairs manager, consultant, author, lecturer, and CEO of a non-profit organization. Kim is a Fellow and former national board member of the Public Relations Institute of Australia, and he ran his State’s professional development program for 7 years, helping many practitioners to strengthen their communication skills. People from 115 countries benefit from the practical knowledge shared in his monthly newsletter and in his books available from cuttingedgepr.com.

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