UK: Trust In The Boardroom

Why Trust belongs on every board's agenda

Trust is a company's most valuable asset. It resides in the value proposition, in leadership, amongst the workforce, in the minds of customers, suppliers, the community, and other stakeholders - and is reflected in the value of the company and in shareholder behavior. But few boards look at Trust in a methodical manner.

Why Trust matters now

While Trust isn't new, much of today's world is perceived as less trustworthy than before, making it a rare and precious commodity. A recent survey on Trust in business found that sixty percent of US adults have little or no confidence in business leaders to act in the best interests of the public.¹ It is a constant battle, but establishing Trust has become even more challenging because of the public's higher expectations of business responsibilities, heightened by the challenges of the Covid pandemic, and the increasing willingness by campaigners to leverage the speed and publicity of the media.

However, the benefits of being trusted are huge: trustworthy companies outperform others by up to four times.² Eighty-eight percent of customers say they'd buy again from a brand they trust,³ and 95 percent of executives at companies with high levels of consumer trust believe their companies are more resilient.⁴

At Deloitte, we define Trust as "the foundation of a meaningful relationship between an entity and its stakeholders at the levels of the individual and the organization". A company builds Trust by being competent and having good intent, demonstrating that it is capable, reliable, transparent, and humane.

Trust gives companies resilience - much needed in today's world. When something goes wrong - and we all know that in business, something is usually going wrong somewhere - a full repository of Trust can carry an organization through the rough patch and help it recover more quickly - for instance, consumers will give it the benefit of the doubt over supply chain problems. Conversely, anything that damages a company's Trust will likely ultimately hurt the bottom line.

Like other important business assets, Trust should be quantified, measured, managed, and reported. Trust could be viewed like a bank account - the organization wants more deposits than withdrawals. It deserves as much attention from boards as other vital issues such as cybersecurity, financial planning, and resourcing.

Deloitte's recent research on customers in the technology sector revealed that B2B purchasers and end-users were 20 to 50 percent less likely to recommend a brand to others or pay more to purchase from brands that failed to deliver superior customer service, data privacy, and innovative offerings.⁵

Building Trust is a complex undertaking. The value that stakeholders place on a range of virtuous actions and behaviors can vary among regions, sectors, and industries. The nuances involved in growing and maintaining Trust require sophistication, thoughtful approaches, interest and commitment from board-level governance and a strong tone at the top.

Some leading boards have added Trust to their meeting agendas. We contend that all boards should do so because a high trust bank leads not only to resilience, but to outperformance. The data tells us so.

Considerations for the board

• Does the company have Trust resilience, and is it building a Trust repository?
• Is the company building Trust with all its significant stakeholders, such as employees, not just customers and investors?

Reduce contamination risk

Trust lost by one stakeholder group can jeopardize Trust with others because Trust matters not only to customers and shareholders, but to employees, contractors, suppliers, and competitors. In today's world, where information is shared instantly and globally, a problem that undermines Trust with one stakeholder group can quickly damage Trust among other stakeholders.

Consider worker safety, which is important not just to workers, but is also important to socially conscious investors who may avoid a company known for its poor worker experience, important to consumers who may boycott its products and services, and to suppliers and contractors, who may be wary of association with a company with a reputation for treating workers poorly. Competitors will be quick to exploit this weakness, presenting themselves as the preferred alternative, offering a safer and cleaner environment for workers.

The best way to counter the damage from an incident is with Trust equity, a repository of Trust with stakeholders built over time. With Trust equity, a company can gain resilience against issues outside its control. Consider a supply chain shock: With a good communication strategy drawing on a reservoir of Trust, customers will be more likely to believe the company's explanations, remain loyal, and resume their usual purchasing habits when those supply chain disruptions are fixed. In this way, Trust helps companies recover more quickly from setbacks and brings real value to the bottom line.

Trust needs to be managed

If we believe that Trust is sufficiently important to be a strategic priority, it follows that it should be managed accordingly. Trust should be part of a company's vision and included in its mission statement, situating it as an objective to be continuously developed and strengthened over time. This means that companies should not rely on Trust accumulating as a natural outcome of the organization's day-to-day activities: it means that those activities which influence Trust should be measured and monitored for their impact on Trust.

To make Trust a core part of their mission, some leading organizations have created a new C-level executive function, the Chief Trust Officer. Others have established a Trust group or team. We expect to see more of these in the future and we expect their remits whilst perhaps originating in cybersecurity and data privacy, to extend to more strategic areas of business activity, including customer promise and experience, ESG, and digital engagement.

Considerations for the board

• If the company does not have a Chief Trust Officer, who is responsible for ensuring high Trust levels?
• What is the remit of the Trust team? Does it cover all important areas that influence Trust?
• Has the company defined Trust KPIs to track how well management is maintaining or increasing Trust in the eyes of all material stakeholders?

Trust should be measured

For Trust to be managed, it must be measured, reported, and acted on like any other strategic objective. Key performance indicators are effective tools for measuring Trust. KPIs have long been used to measure performance where it counts - even internal support activities that influence perceptions - by IT departments which might, for instance, have a KPI for the average time needed to restore or remediate a server infected by malware, which impacts employee Trust.

Trust officers can set KPIs for regulatory compliance, data privacy, workplace experience, ethics, and environmental and social impacts. They can create them by working closely with executives in those areas of the company with the relevant subject-matter expertise: For example, regulatory KPIs will require working with the compliance officer, and ethics KPIs with Legal and HR. In fact, like the IT example above, it is highly probable that Trust KPIs exist in many areas already, so a meaningful Trust conversation may not be as far away as it might seem at first.

Considerations for the board

• Is the company measuring Trust, and are the metrics relevant and realistic?
• Are we gathering together our performance on Trust and translating the findings into action?

What next in the pursuit of Trust?

Organizational Trust needs to be earned and nurtured by your executives and your business processes - and the values and behaviors that build Trust should be owned by your employees, suppliers, contractors, and partners - by your end-to-end organisation. Your company's values and behaviors become a priority for all.

A trusted business outperforms, not by accident, but by design. Put Trust behind everything you do.

Footnotes

1 Pew Research Center, "Americans' Trust in Scientists, Other Groups Declines," February 15, 2022

2 Deloitte HX TrustID research, 2020-2021, n=50K

3 "The Future of Trust: A New Measure for Enterprise Performance," Deloitte, 2021: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/risk/future-of-trust-pov-21.pdf

4 Deloitte 2022 consumer products industry outlook

5 Deloitte technology customer trust measurement survey, January 2022

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