Report Access: http://www.corporate-ethics.org/news/20090610.htm
Charlottesville, VA, June 10, 2009--Public distrust in business is negatively affecting companies across industries a new report released today concludes. The report, “The Dynamics of Public Trust in Business—Emerging Opportunities for Leaders,” was prepared by the Business Roundtable Institute for Corporate Ethics and the Arthur W. Page Society. In releasing the report, the two organizations wanted to offer business leaders actionable recommendations, including opportunities to build and sustain public trust in their companies, their industries, and the institutions of business at a time when the idea of trust in business is in crisis.
As a first step, the Page Society and the Institute today launched a major effort to engage leading organizations in developing and implementing a long-term strategy to help restore public trust in business. The ongoing effort will be called the Project on Public Trust in Business.
“The release of this report could not have come at a better time. Aside from the current economic crisis, we have recently witnessed a crisis in public trust,” said Anne Mulcahy, Chairman, Business Roundtable’s Corporate Leadership Initiative and Chairman of the Board and Chief Executive Officer, Xerox Corporation. “These turbulent times highlight the great importance of mutuality—of searching for and seizing opportunities that benefit both the public interest and business. Business leaders have an opportunity to step forward and build a more trustworthy business community through effective strategies that foster public trust.”
In preparing the report, the Business Roundtable Institute for Corporate Ethics and the Arthur W. Page Society convened a wide ranging series of panel discussions. Participants included senior corporate executives; academic, consulting, and association thought leaders; representatives from investor, employee and other stakeholder groups; non-governmental organizations; the media; and business organizations. Panelists were charged with taking the current pulse of public trust in business; exploring and refining new paradigms on the dynamics of trust that might provide practical guidance to corporations and regulators; and testing breakthrough ideas and practices now being used for creating and sustaining trust in business.
The report is based on these discussions, along with leading academic scholarship and a variety of survey data. The task force concluded:
- The general distrust of business hurts all companies
- There are concrete actions that can be taken to address and improve public trust in business
- The time has come for vigorous exploration of the relatively uncharted territory of public trust in business, in particular the social and technological changes that have combined to heighten both opportunities and threats while shortening the window to take effective action.
“When individual businesses and industries lose trust, their ability to execute business strategy is significantly diminished,” said R. Edward Freeman, Academic Director of the Business Roundtable Institute for Corporate Ethics. “When distrust becomes widespread, the result is the large-scale destruction of value for both business and society that we have seen over the last several months.”
Recommendations for Business Leaders
The report identifies new approaches that will better enable leaders to proactively build trust. Specifically, it recommends concrete actions that business leaders can take with respect to building mutuality, balancing power, and creating trust safeguards:
- Create a set of values that define and clarify what your enterprise and its people are at root, and work to ensure that these values are adhered to consistently across your enterprise.
- Build and manage strong relationships based on mutual trust with mediating institutions.
- Embrace transparency.
- Work within your business sector to build trust in the sector.
- Re-invest in the trustworthiness of your firm by making a commitment to enhance the core contribution that the firm makes to society.
The report gives several examples of organizations that are building trust successfully and notes that the trend may result from businesses making social good a part of how they conduct their businesses.
“Today, a large portion of the public feels vulnerable in business relationships, and believes that there’s a sizable power imbalance that enables executives and companies to assume far less risk than the average person,” said Maril MacDonald, president of the board of trustees for the Arthur W. Page Society and CEO of Gagen MacDonald. “This is why we launched the Project on Business and the Public Trust and will continue to work on this issue.”
Next Steps: Closing the Knowledge Gaps and Preparing for New Challenges
The Business Roundtable Institute for Corporate Ethics and the Arthur W. Page Society are committed to a long-term effort to both improve business practice and promote a social narrative of business that reflects the changing features of the public trust landscape. There is a well-established correlation between high trust societies and social and economic prosperity and security. All parties have a stake in undertaking this effort and in ensuring its success.
Specifically, the organizations will:
- Conduct a series of research studies to develop a deeper understanding of the dynamics that impact public trust, with the aim of enabling executives to develop strategies for building and sustaining key trust relationships
- Promote a dialogue between thought leaders in the areas of trust and business to advance game-changing solutions with regard to practice and the public policy process
- Assemble leading academics in the area of trust to begin to fill the sizable gap in our understanding of the dynamics of public trust and deliver actionable knowledge to practitioners
- Devote increased attention to the issue of public trust in our ongoing work.
Creating and sustaining public trust in business is one of the great challenges of the global age. Making meaningful progress will require great effort and the sustained engagement of multiple communities working toward a common goal.
About the Business Roundtable Institute for Corporate Ethics
The Business Roundtable Institute for Corporate Ethics (www.corporate-ethics.org) is an independent business ethics center established in partnership with Business Roundtable—an association of chief executive officers of leading corporations with a combined workforce of more than 10 million employees and $5 trillion in annual revenues—and leading academics from America’s best business schools. The Institute, which is housed at the University of Virginia's Darden Graduate School of Business Administration, brings together leaders from business and academia to fulfill its mission to renew and enhance the link between ethical behavior and business practice through executive education programs, practitioner-focused research and outreach.
About the Arthur W. Page Society
The Arthur W. Page Society is a select membership organization composed primarily of the chief communication officers (CCOs) of the world's top multinational corporations, and the CEOs of the world's largest public relations agencies. The organization's members also include academics from the leading business and communications schools. The Page Society is dedicated to strengthening the management policy role of chief communications officers. For more information please visit http://www.awpagesociety.com.
For more information contact:
Business Roundtable Institute for Corporate Ethics
Associate Director for Communications
Arthur W. Page Society
212.400.7959 ext. 102