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Expectations of the business community have reached a new high. Amid social and economic disruption, the public increasingly sees corporations as agents of stability. In fact, business is the most trusted institution in America, according to the Edelman Trust Barometer. That puts corporations above NGOs, the government, and media when it comes to trust. But trust is tenuous—it’s hard-won and easily lost. To maintain trust, companies must be intentional when it comes to thinking through their stakeholder relationships.
In our latest report, we explain how to create trust with stakeholders through the board’s agenda, activities, and strategic decisions.
Trust matters
There’s a growing realization that companies must consider a broader group of constituencies in a different way than they may have in the past. Executives increasingly recognize that to effectively serve shareholders, they need to manage for “the benefit of all stakeholders” as the Business Roundtable has stated. To do this, boards and directors need to have not only a grasp on who those stakeholders are, but also to know what those stakeholders expect from the company and to acknowledge that keeping their trust matters.
The board’s role in creating trust is two-pronged. They must be intentional about understanding the needs of each group of stakeholders and take action to develop trust with each. But they also must understand how management is doing the same and ensure alignment.
…read more in the report.
Building multi-stakeholder trust does not challenge or undermine boards’ obligation to serve shareholders. Rather, it reflects the growing understanding of how a multi-stakeholder view contributes to shareholder value creation.
…read more in the report.
Boards and management teams won’t be able to resolve the inherent conflict among stakeholders. What boards can do is ensure that the strategies they—and their companies—implement for building trust with one group aren’t developed in a vacuum. Using a multi-stakeholder approach to understand and harmonize, where they can, these sometimes-conflicting needs can result in better outcomes overall.
…read more in the report.
Trust: more than an agenda item
Viewing trust as simply another item to add to the board’s already crowded agenda would be a mistake. Rather, trust is a theme and a strategic imperative that should shape all the board’s deliberations and serve as a beacon to guide management.
Questions that boards need to ask about building trust:
- Has the management team clearly articulated the corporate purpose? What metrics can the board monitor to ensure that they are delivering on that purpose while being mindful of stakeholder interests?
- What quantitative and qualitative tools can the board use to assess the company’s culture and whether it can engender trust across stakeholders?
- More broadly, how can the board monitor trust across all stakeholders?
…read more in the report.
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