RESTORING CORPORATE REPUTATION AFTER A MATERIAL BREACH OF TRUST
Trust in business continues to slide. Restoring trust in corporations “is the most important issue of this decade”, writes Oxford University professor Colin Mayer. “Without trust in corporations, economic systems will fail, financial systems will collapse, the environment will continue to degrade and civilizations will clash,” he adds.
But rebuilding corporate reputation is challenging. Largely, it is because such trust is fragile and judgements in the court of public opinion are delivered at the speed of 280 characters or less. Still, nearly 70 percent of global respondents to our annual 2018 Global Trust Barometer maintain that building trust is the number one job for CEOs.
To strengthen their companies’ reputation and trust, chief executives in droves are seeking to transform their organisations to respond to an increasingly disruptive and complex marketplace. In the past decade, 87 percent of businesses have undertaken transformation initiatives, estimates Boston Consulting Group (BCG), sparking what the managing consulting firm considers ‘always-on’ transformation.
It is not hard to understand why. BCG figures that one-in-three public companies has a chance of failing within the next five years, up from one in 20 just 50 years ago. Yet, it also estimates that only 25 percent of companies that attempt a transformation capture short- and long-term performance gains versus their sector average. No wonder consumer faith in companies and brands suffers.
It diminishes particularly in the wake of a material breach of trust – an event so egregious that it exposes the chasm between an organisation’s behaviour on core competencies and the expectations of its constituents. Just consider Facebook’s woes as it grapples with controversies involving unauthorised data use. An annual Harris Poll in December 2017-January 2018 found that 45 percent of participants gave Facebook a positive reputation, but that percentage slid to 35 percent in a subsequent survey taken in late March.
Jan-Mar 2019 Issue