Failing to build trust in business

Jun 11 2009 by Nic Paton Print This Article

The pace of job losses, pay cuts and overtime bans may be starting to slow on both sides of the Atlantic, but the loss of public trust in business, the banking community and politicians during this recession is going to take a long, long time to come back.

After the economic buffeting of the past 18 months it's probably little surprise that so many people are feeling hurt, adrift and deeply distrustful of political, business and financial institutions right now.

The anger witnessed in the UK, for example, at the recent MPs' expenses scandal or the general shift to right-wing and centre-right parties in Europe's elections last week can in large part be put down to the disconnection many people are feeling with "mainstream" politics and politicians.

Similarly, the ongoing furore over executive remuneration, as witnessed yesterday by the reaction to Shell chief executive Jeroen van der Veer's comments in The Financial Times that whether he was paid 50 per cent more or less would not have made any difference to his performance, show that the public is still in highly unforgiving mood right now.

But, given that trust – in your product, what you do, your service, your delivery, your probity – is a bedrock of good capitalism the finding in a new poll that fewer than half of British businesses are even making an effort to build or preserve trust in their business is potentially deeply worrying.

The poll by "employee involvement" consultancy Involve of 180 director of FTSE-350 and Times Top 1000 companies found that just 43 per cent were taking active steps to build trust in their business.

This was despite the fact that more than six out of 10 of those polled felt customers had lost confidence in their businesses this year.

Perhaps unsurprisingly, financial services and retail emerged as the sectors with the lowest levels of trust, with expert and investment advisors suffering a dramatic 55 per cent decline in trust over the last year.

More than a quarter – 27 per cent – felt their organisation was either not, or hardly at all involved in generating trust.

This figure rose to nearly four out of 10 when narrowed down to the retail, transport and distribution sectors, and a similar 38 per cent for manufacturing and construction organisations.

The report also explored the effect the recession had had on levels of trust. Organisations that were able to demonstrate high levels of empathy with employees reported greater profitability, higher levels of customer confidence and lower redundancies, it argued.

This was even in a climate where eight out of 10 of those polled had imposed a recruitment freeze and 30 per cent had imposed an overtime ban or short-term working.

Companies, the research contended, classified as involved and empathetic were able to sustain profitability more, keep employees' confidence more effectively and make fewer redundancies.

In such businesses, manager and leaders tended to be more involved, the survey found, including regularly taking time to discuss ways in which they could improve performance, or actively seeking out feedback and ideas from employees or ensuring staff had a say in really important changes.

The consultancy outlined what it called "four pillars" of trust, with the directors polling them in order of: reliability, capability, honesty and empathy.

Yet, Involve also argued that empathy, though a "soft" measure, really needed to be much higher up the priority list for managers and leaders.

Lorne Armstrong, partner at Involve, said: "The startling fact is that even though there are clear figures showing that empathetic behaviour can have a major impact on businesses' performance, it's ranked of least importance in the four pillars.

"Some directors we spoke to told us that they have never been able to convince the board to take trust seriously. In a time when trust of the City and Westminster has plummeted, organisations must start rebuilding trust that has been lost over the last few months," he added.

"The building of trust is not about adopting a new model for your business – it is about your behaviour and the behaviour of all of your managers and staff," he continued.

"Behaviours that can make a difference are simple things like genuinely listening to people, putting yourself in their shoes and sharing what's going on in your own head," he added.

Involve's research is just the latest in a slew of reports over the past few weeks that have raised this question of whether organisations are doing enough to rebuild our battered trust in them.

Back in May, for example, intellectual property firm Marks & Clerk argued that just a fifth of executives were spending time and effort on maintaining their brand, despite its importance in maintaining a firm's image and trust perception.

And in the dark days of February, a study by Luigi Zingales of University of Chicago Booth School of Business and Paola Sapienza, of Kellogg School of Management, found that American public trust in its financial leaders and institutions had plummeted.

Finally, Management-Issues columnist Dan Collins in March argued strongly that trust in business was an issue of ever growing importance to consumers, with it even increasingly swaying purchasing decisions by consumers.