A worrying drop in trust is endangering business
TODAY marks the start of Responsible Business Week, Business in the Community’s annual initiative to inspire and equip businesses to do more to meet the world’s most pressing challenges.
As society faces up to demographic changes, resource scarcity, the shift in economic power, and accelerating urbanisation, business has a powerful opportunity to make a positive impact on society. However, its ability to seize this opportunity is hampered by the loss of trust between society and business; in fact, a loss of trust in institutions in general. According to a recent study by Portland and ComRes, 67 per cent of people think trust in business has fallen in the last few years, with only 36 per cent saying they trust companies with over 1,000 employees.
There is a growing consensus that trust is a powerful, but often unrecognised asset, which is essential to a company’s long-term survival and success. Any decline in trust should concern us all. The trust gap which has emerged between business and society is worrying because UK business does so many fantastic things, and successful British firms benefit everyone in our country. More than ever, I believe responsible business will help to underpin the economic recovery.
PwC’s recent Global CEO Survey found that half of UK business leaders are somewhat or extremely concerned that a lack of trust in business poses a threat to the growth prospects of their organisations. Only 15 per cent are not at all concerned. However, while all the chief executives we polled believe it is important to promote a culture of ethical behaviour, only 54 per cent agree that the purpose of business is to balance the interests of all stakeholders.
PwC has been running the Building Public Trust Awards for 11 years to recognise organisations with good corporate governance. For the past three years, we have held annual debates with senior private and public sector leaders, regulators and government officials, on the subject of establishing trust. It has become clear that there is no silver bullet. You cannot simply regulate your way to trust. It has to be earned through behaviour based on principles of honesty and integrity.
Despite the progress being made, there is still a way to go for businesses to move beyond treating “building trust” as a short-term fix, to something that is embedded in the DNA of an organisation. At a basic level, businesses must behave better and avoid becoming too transactional and short term in the way they operate.
It should also be a key test of any organisation’s intent to promote trust as an integral part of its fabric that its culture encourages the challenge of unacceptable behaviour, and that there is a strong promotion of the acceptance of personal responsibility.
There are organisations which are already taking bold and decisive action to engage people in an effort to rebuild trust. Increasingly, leaders of companies across all sectors cite the need to rebuild public trust as a driver behind major business decisions.
A new agenda is emerging that requires businesses and organisations of all types to embed the right culture and behaviours that can deliver public trust and business success. This demands a step change in all relationships within, across, and beyond the organisation.
We will know we have made progress when building trust, and celebrating and rewarding trustworthy behaviours, are business as usual, and not special events for recognition.
Ian Powell is chairman and senior partner of PwC.