Trust: Why Business Lost It, And How To Win It Back (Part 1 of 3)

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by Chris Jarvis, Senior Consultant for Realized Worth

There is a serious lack of trust among consumers these days. Citizens of every country are eying large national and multi-national corporations with a narrowed, suspicious gaze. Questions are being asked. Answers demanded. With taxpayers around the world bailing out stupendous failures in the financial, housing, and insurance sectors, there is more than a lack of consumer confidence affecting the market. Frankly, we’re over it. We just don’t trust big business anymore.

This is actually nothing new. I don’t know how many movies I’ve seen where the plot pivots on the malevolence of unscrupulous business oligarchies. But the uniform opinion of distrust, leveraged by the social media tools of Twitter, Facebook, LinkedIn, Ning sites, and blogging seems to have brought us to a tipping point.

It is not just the unwashed masses, gathered with burning torches in the village commons, causing the uproarious clammer. Even some of the most powerful CEOs are beginning to question everything from their own excessive salaries, to the seemingly inevitable excesses of capitalism itself. Kazuo Inamori, the 77 year old founder of Kyocera (KYO), a 13 billion dollar Japanese manufacturer, offers the following statement:

“Profits are created by the hard work and collaboration of the workers and other levels of management. For the top echelon to receive such high compensation, as if they alone were responsible for the profits, is unreasonable. We should possess the consideration and humility to provide all employees who work for the company with an appropriate share of the gains. That is lacking in today’s capitalism or free-market economy, and its absence is responsible for the growing disparity, discrimination and injustice in society.”

Charles Handy, an Irish philosopher specializing in organizational management wrote in his book ‘What’s a Business For’ (2002) this prescient paragraph:

“The markets will empty and share prices will collapse, as ordinary people find other places to put their money–into their houses, maybe, or under their beds. The great virtue of capitalism, that it provides a way for the savings of society to be used for the creation of wealth–will have been eroded. So we will be left to rely increasingly on governments for the creation of our wealth, something that they have always been conspicuously bad at doing…..Trust is fragile. Like a piece of china, once cracked it is never quite the same. And people’s trust in business, and those who lead it, is today cracking.”

I trust you, I just don’t believe you

But what do we mean exactly, when we use the word, “trust”? It isn’t as if we now see corporations as evil and and have consequently stopped buying stuff. Okay, I’ll grant you, consumer confidence isn’t….um….good. According to the January ’09 Conference Board’s U.S. Consumer Confidence Index, the numbers nose-dived to the lowest levels since tracking began back in 1967 (What was going on in 1967? Oh yeah, Vietnam, the cold war, immanent nuclear holocaust and the end of the world.) But, by and large, people still “trust” the products they buy. …Right?

Yes. And no.

Basically, we still trust companies – or at least brands – when it comes to products and services. As far as advertising goes, everything is pretty much the same. When I buy a bottle of laundry soap, I believe I’m getting what’s being advertised. If it is a no-name label, I’m prepared for a level of performance equal to the lower price I’m paying. But if it’s a brand like Tide, for example, I expect a higher level of performance for the price. This type of trust is intact. No one (as far as I know) is trying to link lapsing quality and misleading performance claims to the financial crises.

Issues of trust linked to the global crises are much tougher to quantify. A consumer’s degree of trust is no longer based on questions like, “Did this cleaning product remove the stain?” or, “Is my phone company competent (even though my billing is always wrong)?” Trust now asks intensive questions around topics such as corporate citizenship, community engagement, and ethical management. Trust is about character and behaviors, rather than quality and performance.

Maybe an analogy will help clarify the issue….

Have you ever worked under an unquestionably competent supervisor who was an entirely unlikable person? You respect the success you see in the results of her work, but the last thing you want to do is go for a beer after work. (Not that she’s the type to invite you, anyway.) You’re happy to trust her competence as your boss, but you generally detest her as a person. Why? She’s a jerk.

Well, it’s kind of like that with business and society today. You might trust a brand’s competence, but you sure as hell don’t want to support them with your cash. Why? Because face to face, that brand’s a jerk.

I don’t trust you because you’re trying too hard

Companies are hard-pressed to combat this image. To do so, they have increasingly invested in a strategy known as Corporate Social Responsibility (CSR). (If you’re not familiar with the term, Mallen Baker offers a good overview.) It’s important to note here that the sustainable practices of CSR are not being implemented solely as marketing or PR strategies. Many companies began the journey toward CSR long before the economic meltdown of the past few months. And even now, numerous companies are espousing practices of reducing waste, packaging, energy consumption and carbon outputs as a matter of conscience as well as good business strategy to trim costs. Despite the financial crunch, companies such as General Electric, Intel, PricewaterhouseCoopers and Wal-Mart are keeping or expanding their CSR commitments.

Unfortunately, in a market where trust has suffered a staggering blow, CSR efforts may add insult to injury. I conducted a small (very unscientific) survey of about 40 business men and women on LinkedIn, Twitter and in-person. The question: Does CSR engender trust toward a business?

The responses were a bit surprising to me – but very interesting (and a little entertaining). They were virtually all a version of a qualified, “No.” Some weighed in a little more positive, some leaned negative, and others were neutral. It looked something like this:

Neutral: “CSR doesn’t inspire trust, but I might think less of a company that’s not doing anything at all.”
Negative: “If it says ‘green,’ I won’t buy it.”
Positive: “If a company has been doing CSR for a long time and proved themselves, I might trust them a little.”

People are skeptical of the very claims that are meant to engender trust in brands. According to BBMG, a brand and marketing agency in New York, “Nearly one in four U.S. consumers say they have, ‘no way of knowing’ if a product is green or actually does what it claims.” BBMG believes this is evidence of a lack of trust in the ‘green’ claims of companies.

Couple this lack of trust with companies that are obviously beginning to do some amazing work as good corporate citizens, and the result is a brand that seems to be suffering from an identity crises. Walmart, for example, is leading retailers in the practice of greening supply chains. According to a study by the same group, BBMG, Walmart was ranked among the most socially responsible companies by respondents. Astoundingly, in the same study, Walmart is also ranked as one of the least responsible companies, along with Exxon Mobile, GM, Food, Shell, McDonald’s.

So is CSR an effective way for companies to increase their trust quotient among consumers and other stakeholders? Absolutely.

There is overwhelming evidence that “green” means profit. Companies that create eco-friendly products and services, reduce waste, carbon, water and energy use are more competitive and incur a significant degree of favor in the market.

Consumers are still buying sustainable lines despite their higher cost. Nielsen Co. data show sales growth of organic food at 5.6% year over year in December from a year ago, though that’s down from the double-digit pace of years past, and its SPINS tracking service showed sales at natural-food stores up 10.9% to $4.2 billion last year. Though growth slowed in the fourth quarter, it was still more than 7% in December, far healthier than the rates at even top-performing grocery retailers such as Walmart or Costco.
Read the full article by Jack Neff on Advertising Age here.

And it isn’t just companies of the West buying into CSR as a strategy for growth and instilling trust among stakeholders. In China, over 190 companies published CSR reports in 2008. That’s phenomenal when you consider that just 2 years previous, the sum total of CSR reports in all of China was 19.

How can I trust you? I don’t even know you

Clearly, there is a big leap between investing in CSR and restoring trust. One does not automatically inspire the other. According to my fairly (okay, completely) unscientific survey, efforts to implement CSR activities may, in some cases, be a detriment to consumer trust. Even among CSR practitioners, just greening your supply chain and publishing a report will not engender trust. This is because trust is fundamentally an emotive decision that is based on relationship, not just information. In fact, trust can exist even when there is an obvious lack of information. (We tend to refer to this as faith.) But trust can never be held without a relational quality.

Over the next three blogs I will suggest some practical and achievable steps to restoring and increasing trust in your brand. The premise: employing an authentic CSR strategy. (Greenwashing will blow up in your face if you follow these steps.)

Step One: Make your CSR believable. How? Create and leverage social capital.

Step Two: Stop preaching the CSR message; start attracting CSR followers. How? Use CSR as a social media platform, rather than a marketing tool.

Step Three: Make your CSR effective. How? Integrate the strategy with key business objectives, and measure the outcomes.

If you have any thoughts or info on the discussion so far, I’d love to hear from you.

© 2009, cjarvis. All rights reserved. Do not republish.

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Author: cjarvis (6 Articles)