By Stuart R. Levine
Published in The Credit Union Times
Business leaders feel that their organizations are increasingly under threat today as uncertainty from market and political challenges seem more intense and issues of trust are more pronounced. PricewaterhouseCoopers’ recent article, “Redefining Business Success in a Changing World, CEO Survey”, recorded data from interviews with 1,409 CEOs in 83 countries. Most CEOs (55%) are concerned about the deficit of trust in business today; only 37% expressed that concern three years ago. Moreover, two-thirds see more threats to their businesses today than three years ago. Yet, 60% see more opportunity. Whether it’s threats or opportunities, employing the strengths of your values and mission in this uncertain environment will build trust.
A high level of trust drives business performance. PwC’s studies indicate that the world’s most successful companies are building trust through a commitment to values and purpose. These organizations are significantly more profitable than their competitors that lack this focus. Consumers make choices not just based on services provided, but more often because of overall trust in the organization.
CEOs know that customers, employees and other stakeholders increasingly care about what an organization stands for, and 84% believe that customers value how organizations conduct themselves in society. Most CEOs (69%) understand that their organizational purpose should encompass value for a variety of stakeholders — not just customers and investors, but also employees, wider society and even the organization’s supply chain. Serving this broad constituency had always been the case for 45% of the organizations. Evolving societal expectations caused 24% more to revise their mission over the last three years to reflect a broader constituency. Moreover, 64% of the CEOs said that corporate social responsibility is core to their business, not an add-on program.
What do CEOs mean by their purpose or mission? “Purpose is something you carry in your heart, not something an ad agency makes up”, says Denise Morrison, CEO of Campbell Soup, U.S. While an organization’s vision captures its aspirations, the mission defines an organization’s purpose – the reason the organization exists. It becomes the starting point of everything the organization does and should guide decision-making when effectively communicated and understood by all levels of management.
When the organization aligns its strategy around its values and purpose, commits to them and effectively executes strategy with them in mind, it positions itself to create the best value for customers and investors and also for society. Trust builds. Trust attracts new customers and retains existing ones. People aligned with the values and mission are attracted to the company, existing employees choose to stay, partners are more willing to collaborate and investors are more prepared to entrust stewardship of their funding.
Unfortunately, policies and practices that advance the economic and social conditions in the community, while also benefitting the organization, can be difficult to articulate. Long-term strategies and priorities that build trust may appear counter to the often-intense focus on short-term performance. Many CEOs (33%) feel a conflict between financial expectations and wider stakeholder expectations. Even private companies and nonprofit organizations, which may not have to meet quarterly earnings targets, face demands from investors, donors and stakeholders. Contentious publicized difficulties can cause organizations to act defensively, and risk undermining long-term strategic plans. Even so, PwC found that CEOs (82%) prioritize long-term over short-term views, understanding the benefit of a continuing investment in trust, even in difficult times.
There are more channels than ever to learn from stakeholders and disseminate information to them. Because of changing expectations, CEOs (90%) have made changes over the last 3 years to their technology and communication strategies – either significant change (50%) or some change (40%). Technology and social media increasingly disseminate information, and active “listening” using social media provides valuable insights on motivations and priorities of stakeholders, thereby informing strategy. Regardless of the channel, internal and external communication must be clear, consistent, regular and aligned with values and purpose in order to build trust.
Most CEOs believe that their customers will increasingly desire relationships with organizations that address wider stakeholder needs. Research conducted jointly by the Duke and Harvard Business Schools indicates that CEOs taking values-based stands on issues important to customers, enhances brand loyalty and trust. A perfect example is Tim Cook’s core values supporting inclusion and diversity of LGBT nondiscrimination and marriage equality. Mr. Cook’s values-based communication increases trust in Apple. When a leader is able to effectively express their core values, this communication not only creates respect, but increases the ability to build relationships around shared beliefs that remain constant in an increasingly complex and challenging world and business environment.