24 Oct 2017
Trust is becoming a quality boards and executives are trying to fathom as the media documents the public’s loss of trust in businesses.
Trust has also – not surprisingly – been a much-researched and discussed topic, with international organisations conducting worldwide surveys on the concept. It’s a field of research I’m working in myself regarding the role of trust in executives in their media presence.
"Trust can’t be negotiated - but it is a form of exchange.”
Accounting and management firms, corporate communication consultancies and academics have recognised trust is vital to understanding how external stakeholders value CEOs and the organisations for which they are responsible.
Demonstrating trustworthiness is a vital element in the skill-set of today’s senior executives.
Research into why investors launched class action lawsuits against companies found CEO has trustworthiness a key cause, particularly when the lawsuit focussed on underperformance. The core CEO attributes sought by investors, analysts and the business media are transparency, honesty and trustworthiness.
CEOs need to be aware of how their communication attributes are actually received by external stakeholders – not just how they want them to be received.
The latest Edelman Trust Barometer results found the credibility of CEOs had risen 13 per cent in 2017 to 39 per cent.
The credibility of board directors had also lifted from 24 per cent to 34 per cent. Over 60 per cent of respondents said CEOs should take the lead on making changes to build credibility in themselves and their organisation.
According to Edelman Australian CEO Steve Spurr, while trust in institutions continues to fall and Australians become increasingly sceptical about the views of their peers, they instead are putting their faith in ‘credible individuals’.
Spurr says the resurgence in credibility of CEOs, directors and experts demonstrated Australians were looking to business leaders to advocate for, and lead on, broader societal issues.
A similar survey by an international accounting firm this year reported trust was very high on the business radar with 58 per cent of client respondents stating it was much harder for business to gain and retain people’s trust.
Around 63 per cent of Australian CEOs also thought trust in business was at an all-time low however the report argued earning trust is the single biggest enabler of success in business.
Obviously earning back trust is easier said than done.
Loss of human connectivity has created challenges for CEOs. Globalisation and technology continue to remain challenges but mastering them is necessary to maintain the human engagement necessary for trust.
Trust is not just an internal engagement issue or a political one.
External stakeholders are taking more notice of what businesses are doing in the broader community and losing trust can be a serious business risk, especially as investors take a greater interest in the finer operational details.
CEOs need to understand the causes of low trust and implement strategies to not only build and sustain current trust levels but also rebuild trust.
What to do?
Corporate communicators now have a wide range of both qualitative and quantitative methods to assess all elements of key external stakeholder relationships.
Perhaps not surprisingly, trust was a core element in the relationship between a CEO, media and the investment community.
The media see trust as an important factor when communicating with CEOs and company analysts value trustworthiness, as well as honesty and transparency, as top competencies for effective communications. This also drives perception of effective leaders.
With CEOs having to cope with increasingly intense scrutiny and competition, and new demands of customers and investors, being a highly competent and trusted communicator remains a core skill.
CEOs need to know the reasons for their relationships with key stakeholders inside out.
They also need to be highly knowledgeable of the perceptions of those stakeholders so that, when they construct messages, the chances of meaningful communication are greatly enhanced.
Trust is the critical variable CEOs must generate to be able to communicate effectively.
The key question then is how can CEOs improve their trustworthiness?
Trust can’t be negotiated - but it is a form of exchange. Visibility and participation in public forums is a good way to build trust.
CEOs need to be storytellers – their staff need to know not just what is expected of them but why; media, investors and analysts no longer take what a CEO says at face value, the narrative behind what they say needs to be coherent and they must be able to engage in debate around it.
CEOs also need to communicate with their most intimate core audience who can then be ‘influencers’ to spread the word internally, and then to key external stakeholders, especially investors, analysts and the media.
In my view this makes the role of the senior corporate communication staff increasingly important.
They must help their CEO invest more time and commitment to communicating, stay involved in the trust relationship they have with stakeholders and increase awareness that their communication effectiveness is contributing to the trust in their customer.
Trust is essential but it must be earned. And to earn it communication must be two-way - a dialogue.
Dr Donald Alexander is Senior Lecturer, Public Relations and Organisational Communication, School of Communication and Creative Industries, Bathurst Campus at Charles Sturt University. For the last six years he has been running a research project on core CEO attributes sought by investors, analysts and the business media.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
24 Oct 2017
24 Apr 2018