5 key lessons on building trust in business

While there is no one-size-fits-all solution for building trust, there are some common pitfalls that companies suffer when putting trust into practice. As part of the Leadership, Trust, and Performance Equation project conducted by the World Economic Forum, participants from business, government and civil society shared valuable experiences, both successes and frustrations. From these, five common misconceptions about building trust in business emerged:

Being compliant is equal to gaining trust

Companies often prioritize being compliant, rather than values-led, undermining the importance of changing the behaviours needed to build trust. For example, after the Deepwater Horizon oil spill in 2010, BP initially reacted with a focus on “compliance” instead of doing the “right thing.” The public wanted visible ownership of the problem, public apologies and quick action to address the needs of families impacted. A focus on compliance is unemotional, and places too much attention to the hygiene factors versus differentiating factors. Hygiene factors are the minimum requirement to build trust, such as following basic standards and regulations. This is box-ticking. Differentiating factors set a company apart from its competitors. For example, clear, public media responses to stakeholder needs and concerns in a crisis send the clear message “we hear your concerns and are taking action.” Companies must separate the differentiating factors from the hygiene factors when it comes to trust.

Trust is built through marketing

You cannot market your way to trust. In one of the workshops, participants debated the right approach to marketing. One group felt that a company should strongly communicate its good deeds. The other group felt that this could be perceived as a PR exercise, not based on pure motives. A participant said that his company specifically did not communicate actions it took to successfully resolve a customer service crisis for fear that “the right thing to do” would be instead as a PR stunt. This aversion to sharing success stories belies the complexity of the trust issue and the quandary in which companies find themselves. The key is that a company cannot rely on communication efforts alone to build trust, and that communication must be underpinned by real, authentic action.

A company does not have to be trustworthy to build trust

“Without values, the practice of trust building is mere risk management,” according to one workshop participant. Trust-building needs to be underpinned by the company’s values and inform its behaviours. The public quickly sees if a company’s statements are not backed up by actions and clear examples of courageous leadership. A company that hollowly promotes trust as an antidote to crisis is likely to meet public scepticism. One that claims to value trust and then makes choices that hurt stakeholders will be seen as false. Leaders need to closely examine their values and norms, to ensure that they are building trust for honest reasons, not for fear of getting caught doing something illegal or against stakeholder interests. A company that sticks by its values, even at the cost of short-term profits, will be seen as genuine and truly trustworthy.

The CEO is the face of trust of an organization

If trust is a human emotion and a company is an entity that can’t emote, then how can a company build trust with people? The role of CEO and Chairman in demonstrating a company’s behaviours is paramount. The recent departure of Pimco’s well-respected CEO Bill Gross illustrates how a CEO can be a trust asset for a company. The retention of other CEOs whose actions have undermined public trust has further damaged the reputation of companies and sectors. While the CEO and Chair are often the most visible face of the company, they cannot and should not be its only face of trust. Awareness of the importance of trust and the espousal of trust-building behaviours needs to be aligned across all levels of a company. In fact, employees are often the most under-utilized resources in building trust.

Managing trust is managing one’s reputation

Give up on reputation management alone. Reputation cannot be controlled, as it depends on how stakeholders perceive the company. Instead, focus on behaviours that build trust, because you can more effectively influence how your company behaves.

McDonald’s recently launched a campaign in Canada, New Zealand and Australia to be more transparent with its customers. Instead of using traditional phone calls and emails to address customers’ questions, it created online videos that revealed information that the public would not otherwise see. For example, in one video, food stylists demonstrated why the hamburger in an advertisement looks different from the actual product. This authenticity and transparency increased customer trust and strengthened the company’s reputation.

Even though it may seem risky, companies need to move away from spin and “have the real conversation” with stakeholders. It will pay off. A workshop participant shared her experience of building trust between pharmaceutical companies and international organizations by having frank conversations about prices and profits. As a result, the parties were able to reach an agreement that enabled win-win situations for the private sector, government and the end users.

While overcoming these common misconceptions may seem daunting, in reality, common sense and clear values will take you a long way. Ask yourself a few key questions:

• What would my stakeholders think if they read about this in the press?
• Would my employees stand by this decision?
• Is this about building for the future or patching holes for the short-term?
• Will this add to my own legacy and that of the company?
• Will this decision let me and my key stakeholders sleep at night?

Though there is no magic bullet, the answers to these questions will help you make choices that will build trust with your stakeholders. It is not rocket science; it is collaboratively sending someone to the moon.

Have you read?
How can businesses build trust?
2 things all business should do to gain our trust

Find out more through the World Economic Forum initiative Unlocking Trust: Better Understand Trust Building in Business

Author: Cynthia Hansen, Head of Professional Services, World Economic Forum

Image: Students shake hands during etiquette training at a vocational school in Beijing October 25, 2007. REUTERS/Jason Lee