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Equally for boards, moving beyond oversight to proactive governance is imperative. As they witness seismic shifts in their agendas, boards of the future can propel their organizations towards success by taking cognizance of trust as a key differentiator.
Trust as a strategic differentiator: Trust is a company’s most valuable asset. It can be defined as “the foundation of a meaningful relationship between an entity and its stakeholders at the levels of the individual and the organization.”
Trust is built through actions that demonstrate a high degree of competence and right intent, in turn signalling capability, reliability, transparency and humanity.
For those that succeed in building long-term trust, the payoffs are high. Research shows that companies deemed “trustworthy” outperform competitors by up to four times.
88% of buyers who trust a brand become repeat customers, and 79% of employees who trust their employers feel motivated at work. Despite this, only 19% of organizations globally have a C-suite leader dedicated to trust-building.
While trust can take years to build, it can be lost in seconds, resulting in lost customers and revenues. In our information economy, a breach of trust across one stakeholder group can quickly cascade across others.
Boards need to focus on building long-term trust equity across all stakeholders: customers, shareholders, employees, contractors and competitors.
Globally, boards of organizations are recognizing stakeholder trust as a key competitive differentiator and strategic driver of success. Leading firms are starting to define executive ownership and metrics to measure trust initiatives.
Owning trust: Global leaders in the business world are setting a precedent by creating a new executive function, of the Chief Trust Officer (CTrO), who serves as a strategic leader to help build trust across the organization and its partner ecosystems.
The trust imperative need not hinge on a single executive alone. Instead, key trust drivers such as communication, collaboration and advocacy must be the shared responsibility of the C-suite, with clear lines of accountability among board members.
To distribute the responsibility and ownership of trust across an organization, managements can start by articulating how trust is grown across stakeholder groups including customers, employees, regulators, third-party vendors and suppliers, who is responsible for maintaining it and how responsibility is allocated. Here, boards serve as a bridge between the management and stakeholders, ensuring oversight of the trust-building process.
Measure and monitor trust: Levels of trust can be evaluated across the enterprise, including in domains such as cybersecurity, sustainability, financial integrity and product as well as service quality. Trust should no longer be viewed by executives as an abstract concept that is impossible to measure, define and act upon.
With the advent of sophisticated tools and methods, it is possible to measure trust at a tactical level, enabling firms to develop actionable plans for earning stakeholder trust.
For instance, a large consumer company applied neuromarketing principles such as functional MRI (fMRI) studies to reveal that brand awareness significantly impacts emotional and memory-related brain activity, altering consumer experience.
These insights should be supplemented with surveys and focus groups to examine feedback, monitor consumer behavior and measure outcomes including efficacy of execution and perceived impact, as seen by internal and external stakeholders.
Like other business assets, trust should be measured, managed and reported. It should be a board agenda item with other vital issues such as cybersecurity, sustainability, financial and resource planning.
Building trust is complex and executives can benefit from a structured approach involving an assessment of strengths and opportunities, prioritizing trust-building initiatives, setting key performance indicators for measuring trust and monitoring impact.
Upholding trust needs foresight and commitment from boards and a strong tone set by executive leadership. As leading boards include trust in their agendas, it is a clarion call for boards globally to recognize that high trust leads to resilience and eventually outperformance.
Looking ahead: In a post-pandemic world, the way that boards operate is rapidly changing. Beyond regulation and compliance, boards must detect risk and opportunity while staying agile and responsive. Their chairs must appraise how the boards can reconstitute themselves and their agendas to bolster organizational trust.
This means advocating that trust be incorporated in the company’s mission statement, highlighting that the organization take proactive steps and stop relying on trust as an outcome of business-as-usual, and directing that activities that influence trust be monitored and reported.
Chairs must serve as torchbearers of trust for the organization. This would entail maintaining dialogue with shareholders while collaborating with executives to manage conflicting needs of stakeholders, assessing opportunities and trade-offs, setting priorities and measuring purpose-based decisions—to build a trust-centric narrative for value creation.
Foremost, chairs and boards must jointly recognize that trusted businesses outperform others—not by accident, but by design—and that the blueprint for trust must be woven into the organization’s DNA.
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