Trust is hard to win and easy to lose. The business sector in Australia has earned hard-won trust during the COVID-19 lockdown period and must not let any gains slip away during recovery, which coincides with EOFY, annual reporting and earnings season, warns KPMG Chair Alison Kitchen MAICD.
Many companies needed to withdraw market guidance this year due to uncertainty, but they should now tell the market their stories in order to be transparent and to maintain trust, she told the AICD in an interview.
“I do feel that it's important that business has earned the right to talk about their stories to the public and to their stakeholders. And therefore, to demonstrate the authenticity and the purpose behind what they do. You get trusted by doing.”
Companies should build a clear narrative around short-term decisions made through the crisis period, the medium-term decisions they face going into the next phase of recovery, and how that sets them up for the long term, she says.
Right now, businesses need to start thinking about what is to be published in annual reports and what their year-end results are going to look like. “Then they need to work out how they communicate with the market to get the market ready for the news that’s coming. I think it will be important to tell the story of what has happened and why, and have a conversation round how they should think about the results.”
Give customers a say
Many consumer-facing businesses have really ramped up their communication to the community and customers during the lockdown period. “I know from dozens of conversations with lots of different businesses that has happened almost unanimously. I think this is a really big change in this period and it will be fascinating to see if people continue to do it.”
Companies do have to build some trust with people. “It's about giving consumers as much of a say in a difficult environment as possible in order to keep them. And if you can't give them a say, at least tell them why you've done something, and give them, or show them the decency of that authenticity from the point of view of sharing information with them, and think about that trust position.”
Companies should understand that people feel slightly safer if they are given some control over their environment. “I think in a lot of ways we are feeling unsafe because we all lost control of so many aspects of our lives.”
It is important from now on to communicate about what the organisation is facing, the choices they are dealing with, the opportunities and options being given to customers, employees and other stakeholders, so that all people feel they're being kept informed.
Businesses such as banks, supermarkets, telcos and energy firms have performed well during the lockdown, introducing customer measures which have built trust, she says.
But as we enter a long period of uncertainty, with JobKeeper and other government and bank support due to be withdrawn in a few weeks, businesses also need to demonstrate agility and a willingness to try new things and accept change. “So you do need a greater level of trust, but I think that it's absolutely here, and I hope business has successfully invested in and learned from this and will continue to nurture and hold trust as a priority.”
While we go through the rebuild, there will be a focus on trying to kickstart the economy and harnessing opportunities in order for everyone in Australia to succeed. “So we're going to have to make more difficult decisions,” she says. “We're going to have to innovate more, and be more agile, more flexible and take risks and try different things and new things. These things are much easier to do if your people and your customers trust you.”
Mixed results for banks on trust
A May consumer sentiment snapshot published in June by the Boston Consulting Group shows that net trust lifted significantly for healthcare service providers, supermarkets, energy providers and government over a two-month period.
“We found a strong correlation between an organisation’s response to COVID-19 and a net increase in trust,” the report says. “The top three drivers were honesty and integrity in dealings with consumers, regular communication, and speedy resolution of any issues via access to online and call centre support. Trust in organisations fell when consumers perceived there was a lack of innovation, issues with data security and confusion around constantly changing policies.”
BCG managing director & partner Monica Wegner says creating and maintaining consumer trust should be a key focus for organisations to ensure they maintain their relationship with customers into the future.
In the survey, supermarkets registered a significant uplift in net trust, including a 24 per cent point net gain for national grocery chains over two months. “Woolworths has been praised for actively contributing to society in difficult times which has helped boost the local economy. In particular, their priority assistance program for vulnerable customers and hunger relief program for the most in-need Australians solidified trust among Woolworth’s customers. Respondents are satisfied with the online purchase experience from both Coles and Woolworths.”
However, net trust in banks has not shifted over the past two months. Survey respondents were polarised, with 14% of consumers increasing trust and 14% decreasing trust.
“Those who increased their trust in banks cited honesty, regular communication and fairness and empathy as the key reasons (similar to other institutions),” the survey says. For banks specifically, financial support and fairness and empathy played a role. NAB and ANZ were praised for ‘responding well to the crisis’ and Westpac for its ‘innovative customer support’ during COVID-19 and ‘contribution to society’. CBA was associated with being the ‘most trusted bank in difficult times’.
Both federal and state governments have won consumer trust for their response to COVID-19, with net trust gains of 29 and 23 percentage points respectively observed over the past two months. Respondents believe governments have been honest, clear and timely in helping people navigate the crisis.
Business leaders must show the way
The rise in government trust is partly due to the high visibility of leaders through the crisis, which is a lesson that the private sector would do well to learn, says Michelle Hutton, Edelman Australia CEO.
“It's not easy to earn trust, but it's very easy to lose trust,” she told the AICD in an interview. “I think through this fragility there is one thing that government leaders have done extraordinarily well and that is to be visible…The more visible you can be, particularly in times of a crisis, the more people will trust you.”
There have also been great examples of business leaders in Australia stepping up and being equally visible. “But I think the challenge will be that we can't stop here,” says Hutton. “As we've learned throughout this crisis, your trust is very fragile. So if we think that business leaders and business generally have responded well, they need to keep that up.”
Trust really does start at home, so during this time of uncertainty, leaders need to listen more than ever, says Hutton. “They've really got to adapt very quickly, because I think this crisis has taught all of us as leaders that we need to move so quickly. Gone are the days where you have the crisis plan on the top shelf that you pull out and go through page by page. It's now a very fluid and agile response that's required to manage something of this scale.
“I think hopefully coming out of this crisis that business leaders have evolved their models to really think like change managers and be always thinking about how they need to adapt to their people, to their customers and to the market generally.”
A key finding during Edelman surveys on trust this year has been how fragile trust is in the community, she says. The latest Edelman Trust Barometer Spring update reported only a slight rise in business trust, compared to a large rise in trust in government.
The global 2020 Edelman Trust Barometer published in May shows that government trust surged 11 points since January this year to an all-time high of 65 per cent, making it the most trusted institution for the first time in 20 years. However, there was only a four-point increase in trust in business to 62 per cent.
According to the global survey, people believe this is a crucial time for businesses and governments to partner up to shape a better future, with 68 per cent of respondents expecting CEOs to proactively engage with governments to regulate the way companies operate to protect people and the environment, while giving them enough room and flexibility to still innovate.
While the Australian picture is a little different, these points still apply, says Hutton. Overall, the public is looking to business to drive recovery and business has a “huge responsibility” to really stand up and be part of the recovery, she says. “More than ever, customers are looking to business to fill the void, to form partnerships. “That’s been one of the other really key learnings coming out of this crisis and now into the recovery. It's really shone a light on the importance of partnerships, the importance of government partnering with business to solve some of the really serious economic and social impacts that we've seen through this health pandemic.
“I think those businesses that have shown resilience, and those brands that have been able to really step up and find their voice with partnerships, and those that have really been able to drive action, and not just words, are the ones that I think will come out of this recovery fighting fit.”
Competency and ethics are two of the key drivers of trust, but what Australians have previously said in Edelman surveys is that business is very competent but is not seen as that ethical. Now is a good time to revisit this problem, says Hutton.
Trust is about redefining purpose, which allows firms to tell “a wonderful story around ethics”, she explains. “So there's a runway now in reporting season and I would love to think that boards are really challenging themselves, and business leaders in Australia to tell those wonderful stories around purpose and ethics.”
Hutton adds there are four takeaways to drive trust and that these are enduring principles:
- Measure trust in your organisation, you can’t manage what you can’t measure
- Be good at what you do and address areas that need improvement
- Put aside differences and find common ground to work together on solutions to problems
- Change the narrative to reduce social hostility and articulate social purpose; be clear and engaging about your positive contribution to society, to both the informed and mass population.
Time for new thinking: Rachel Botsman
Rachel Botsman, author and Trust Fellow at Oxford University, says this period is an opportunity to build new products and to think about consumers and customers differently.
Leaders should resist the natural response to focus on short-term thinking. “You have to send a pretty loud signal that innovation is still important and we're still taking this long term view,” she said in a video interview.
Leaders should also demonstrate in their communications a balance between empathy and strength and think with a new more ethical mindset about the role that business plays in people's lives and in wider society. “I think a positive outcome of this is that we do realise we're all interconnected.”
In a question-answer interview with the AICD, Botsman outlines how the crisis has changed the landscape on trust for business.
How has customer behaviour and mindset changed and how should business react?
A crisis puts people’s actions into the spotlight. It’s as if a magnifying glass is put over leadership and cultures and you get to see the heart of what someone or something is really made of. The good, the bad and the ugly. Customers will hold business to much higher standards. There is a simple question every company should ask themselves: what did we do during Covid-19? If you don’t have a great answer or one you’re proud of, it will in some way damage trust, especially with your employees.
In times of uncertainty, the human response is to cling to the familiar and known. We don’t like risks or trying new things. With so many unknown unknowns, the thing we want most is control. I see many businesses not being sensitive enough to this issue. How can you reduce risks, create security or some form of control for your customers? This can come in so many different shapes and sizes.
Tied to the above is the resurgence of belief in local systems. A realisation of how important the shops down the road are and the individually owned business that genuinely care. The number of people who tell me they see their local butcher, coffee shop, post office, in a new light. They like knowing the person behind the counter. They like knowing the community this shop is serving. Why? Because it gives them some kind of feeling of connection and belonging and that’s what we want most in a crisis.
Can you offer advice for business leaders on building trust with consumers/the community?
You can’t ‘build trust’. It is something that you must continuously earn. Communities/customers will decide to give you their trust. Trust is earned slowly over time through small actions versus grand gestures. It’s not about big announcements or communication campaigns; trust lies in the way we consistently behave.
Do not treat customers or employees like they are all in the same boat or same state. People have such a different response to uncertainty. Do you know how many campaigns I’ve seen with images of people connecting over video with emotional music playing? Too many! One personal phone call to a customer can be far more effective than an expensive ad campaign talking about how ‘we’re here for you’.
At board level, what conversations should directors be having around trust now and what changes should be made?
It all comes down to one word – integrity. Boards need to be asking the question: are our motives and intentions aligned with the best interests of our customers? There is no way of short-changing this question. If you know as a director there is something in your business model, bonuses or culture that puts the company’s profits before customer needs, trust will falter at some point.
Boards tend to prioritise capability (how the company does things) over character (why they do things). But when it comes to trust, character always has to comes first.
I find a powerful lens for directors is to think of two types of currencies flowing through their organisation – money and trust. If money is the currency of transaction, trust is the currency of interactions. Now of course money is important, but if you don’t have trust, people will stop interacting with you. For instance, they’ll lose confidence in new products or services you launch. Just look at the scrutiny around Facebook attempt at cryptocurrency with Libra or their home device called Portal.
Great boards will be trust-first when making decisions because they realise it’s long term value, even if that means short-term sacrifices around money.
Directors should also be asking tough questions around the role their company’s product or service play in their customers’ lives. When you are crystal clear on the purpose you serve, it becomes much easier to unlock or reinvent the way you deliver value.
What sort of global businesses/brands are resonating with consumers on trust?
It sounds simple but it’s businesses/brands that are clear, compassionate and consistent in the way they’re communicating and behaving. The leaders we connect with in times of high uncertainty feel like they genuinely care and that we can depend on them. Look at Jacinda Ardern, the Prime Minister of New Zealand. She is remarkable at making people feel like she's standing with them, not talking down at them. Look at brands like Hilton or eBay that have in some way gone above and beyond to support people during the crisis. They’re not asking what do we have that we can give but what do people really need?
Australia has recently suffered recent bushfires, drought and the COVID-10 crisis. Trust in banks has not changed, so what work should be done?
I’m not surprised there hasn’t been a shift. It comes down to two critical issues – integrity and scale. The public does not fundamentally believe banks have changed in terms of who they really care about. The banks’ profits still feel like they come first. It doesn’t matter whether its perception or reality; when people are financially hurting and then reading in media about bank profits and bonuses, trust scars will not heal. I don’t think people believe anything has fundamentally changed in the culture of banking. It’s important for leaders to keep reminding themselves that trust is a feeling or a belief. Regulation and inquiries might create accountability measures and internal changes, but at the end of the day they do very little to move the needle on trust.
The second key issue is scale. Size matters. The bigger a system gets, the more unknowns there are. And the more it feels for customers that they have little control or understanding of how they system really works. It naturally creates a culture of suspicion. What’s lurking in the way these financial products and services work? What’s being kept from me? The banks have never really addressed their size or dominance. Financial services must feel smaller, more local and more personalised. For instance, what how do they improve the conditions in the communities where they operate? What can people point to? Customers need to feel more in control and like the system serves their individual needs.
A new and better normal
The World Economic Forum urges leaders to use their vision and to build trust to create a new and better normal. “The pandemic offers opportunities to act to build trust, or lose it,” says Punit Renjen, Global Chief Executive Officer, Deloitte in commentary on the World Economic Forum COVID Action Platform. “The shift from respond to recover requires us to move from an internal, functional view to a view focused on stakeholders and outcomes.”
Defining the destination first and working backwards will help leaders to create more aggressive and creative plans, he adds.
Great leadership is nurtured by trust, he says. Trust is nurtured and built amongst stakeholders in four different dimensions: physical, emotional, financial and digital. “The pandemic has heightened stakeholder sensitivity across these four dimensions…”
Research demonstrates that trust yields real results in terms of economic growth and shareholder value, increased innovation, greater community stability and better health outcomes, he says.