A Question of trust

As commerce globalises, the personal relationship between business and consumer is lost. But for any firm, intimacy - real or false - sells. How does a distant corporation become a friend? And should it? Emma De Vita reports.

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Last Updated: 09 Oct 2013

The cat at Blue Peter has a lot to answer for. Since the breaking of 'Socksgate', there must be many at the BBC who wish the diminutive feline (its naming the subject of a phone-in) had never been born - the programme's editor who was forced to resign, for a start. Sceptics might say the punishment was harsh. Was it such a big deal? Were the children really so traumatised?

But for the BBC, the 'naming of the kitten' debacle, coming as it did after a spate of phone-in scandals and programme fakery, was part of a much more serious issue - lack of trust. Since then, the controller of BBC 1 has taken the rap for the misleading trailer for A Year With the Queen, a documentary by production company RDF Media. Says John Knell of the consultancy Intelligence Agency: 'The one thing you think about the BBC, as a public realm broadcaster, is that it's not going to lie to us.'

The BBC isn't the only organisation to have suffered a newsworthy breakdown in trust recently. Northern Rock, GMTV, Mattel, Bernard Matthews and Cadbury Schweppes have all been weighed in the balance and found wanting. Says Rita Clifton, chair of consultancy Interbrand: 'The lack of trust in a firm shows up much more immediately and dramatically than ever before, because any skulduggery or small mistake will be found out on a grand scale even before it has left your mouth. Mistakes that might have been contained on a national basis or internally are no longer containable.'

Trust has always mattered to business, but the recent preoccupation with it is a new phenomenon and a sign of a shift in its meaning and importance. Richard Lambert, director-general of the CBI, made the absence of trust in business the subject of his first major speech. A couple of months earlier, Todd Stitzer, CEO of Cadbury Schweppes, wrote a corporate call-to-arms on the subject. 'Business-bashing has become a sport,' he blasted. 'We live in a society that reveres the sports star and the performer, admires the artist and the writer, but despises the wealth and opportunity creators... Business is not truly trusted.'

But when was trust not an issue for business? 'Trust was always important for any business relationship,' says Madan Pillutla, associate professor of organisational behaviour at London Business School, 'but we talk about it a lot more because the form of trust that we think about now is very different than in the past.'

So what has changed? Why does trust seem to matter more now? And will business' obsession with it end in tears?

It's impossible to consider trust and business without first looking at trust in society. Francis Fukuyama's seminal book, Trust: The social virtues and the creation of prosperity, kickstarted the debate in the mid-1990s. He argued that the greater the levels of social trust in a nation, the greater its prosperity. Sadly, levels of trust in the West are in long-term decline - authority is something to be challenged; deference is dead. The EU's Eurobarometer survey conducted earlier this year found that only 15% of Europeans trust their governments. A World Economic Fund survey of more than 20,000 people in 2005 showed 'an alarming picture of declining levels of trust' in public and private institutions. Even worse, a national study of trust in 2003 revealed that the willingness among Britons to trust one other had halved over the previous 40 years. The depressing statistics continue to dribble out.

But not only do we trust less; we trust differently. Nowadays, Mr and Mrs Average are more likely to have confidence in what Richard and Judy say than Gordon Brown. 'There is clear evidence that we still trust but have transferred where we place that confidence,' writes Deborah Mattinson of Opinion Leader Research. 'Instead of automatically trusting authoritative bodies, we challenge that trust.'

As a society, we are far more likely to trust a 'person like me' than a distant authority. This can mean friends and family, but also anyone or anything we feel we have a level of intimacy with - real or imagined.

Companies have been quick to cotton on to the fact that apparent intimacy enhances trustworthiness. Tesco's 'Every little helps' slogan could have tripped straight off your mother's tongue. Pret A Manger's napkin recipes are like useful scribbles from a friend, while Amazon's personalised book suggestions read like a Christmas wish-list from a favourite uncle. There's no denying that for business, being seen to be your trusted intimate pays.

But how can a monolithic multinational corporation connect with its individual customers? The CBI's Lambert told his audience that 'globalisation has... loosened the emotional ties between business and society'. He is right. Most of our transactions as consumers are with faceless entities - be it our bank, our grocer or our car insurer. Says Pillutla: 'In the past, you did business with people that you knew, so trust was a given in those interactions, because we operated in a smaller community and you could monitor each other. Today, you hardly see your bank manager, so you have to assume you can trust your bank - it counts on a leap of faith that wasn't there before.'

The long queues of savers outside Northern Rock branches were testament to how fragile the connection really is. Once the intimacy in a transaction is gone, trust is quick to crumble.

Yet consumer and stakeholder expectations of how companies should behave have never been higher. The internet has played a large part in this. 'Suddenly, the world has become very transparent,' says Sandra McLeod, CEO of Echo Research, whose clients include McDonald's, Pfizer and the BBC. 'It's like a fishbowl, whether you're talking about a big-scale event like what has been happening in Burma or how an organisation behaves. There's an increasing exchange of information and views about things that matter to consumers, activists and employees, which affect organisations.'

Employees, too, are demanding greater transparency and engagement from their employers. Without the promise or expectation of a job for life, people need to trust their managers to give them what they want. And a company wanting to be seen as trustworthy needs its staff to behave with integrity - another big word these days. Says Knell at Intelligence Agency: 'What industrial sociologists and specialists have said for a long time is that if employees don't have a voice in an organisation then it is always going to suffer breakdowns in trust.'

But trust matters most of all because it's good for the bottom line. 'Trust absolutely sells,' says Interbrand's Clifton. 'On an operational level, if you have a trusted customer relationship, you have more loyal consumers, and they generate better margins and higher profits.'

In highly developed competitive markets, where product and brand extension is the name of the game, securing a strong degree of trust from customers is critical - whether it's Tesco moving from food to electrical goods or Armani going from clothes to hotels. Product and service differentiation can often come down to brand reputation and therefore how trustworthy you are perceived to be.

How do you make yourself more trustworthy? Perhaps the best way to understand such a nebulous desire is to try to define it. The Collins Concise Dictionary calls trust a 'reliance on and confidence in the truth, worth, reliability, etc of a person or thing; faith'. Clearly an emotional term, is it something we should be applying to business? We trust our families, we trust our friends - but isn't it too much to ask the same of business? The two relationships - personal and mercantile - are fundamentally different. 'Trust is about keeping promises, fundamentally, but also setting expectations that are realistic for your organisation,' says McLeod at Echo Research.

Clifton agrees: 'Trust means you trust a company to deliver on its promises, whatever that might be - and that can be either at a fundamental or superficial level.' Ryanair can be trusted to give you the cheapest flights to Milan or Berlin but not for much else, commercially; M&S, on the other hand, promises to help save the world through its 'Plan A' programme. Both are sound business models. The danger comes when a perceived gap arises between the promises you make and what you deliver. Smoothie-maker Innocent's halo was dented, for example, when the Advertising Standards Authority criticised one of its ads for being untruthful.

Amazon is held up as a company considered worthy of trust. 'If anyone had told you 10 years ago that an internet-based company would become one of the most trusted brands in the world without ever opening a single shop, you wouldn't have believed it,' says Clifton. 'The reason why it has been so successful is the sense of trust that you get from Amazon. Its tone of voice, the efficiency of its systems, the security of payments - all these sorts of things have absolutely highlighted that you can trust these people.'

But trust cannot be created on demand, nor measured. Says Knell: 'Trust is an end product. It is a consequence of other things - you can't mandate it, you have to earn it, and you earn it through a range of things. For a business, it's about quality of service, the integrity of your people, what people associate with you, and how you act as a responsible business.'

Trust, then, goes to the very core of an organisation - its values, the way it treats its staff, its whole ethos. As Sir Christopher Gent, chairman of GSK, told a CBI conference last year: 'How can we help executive management keep our business activities aligned with the values and goals of society? All boards should look at the way they do business, how their suppliers behave and how they affect communities. They should be concerned about business practices, ethics and integrity. All of these affect all of us, and are matters on which the board has to deliver.'

Affluent consumers in the UK have a growing concern for ethics and the environment, and this is what M&S is tapping into. The greenwashing of the early 1990s is no longer enough, though - companies that claim to be good corporate citizens need to live up to their promises. 'We are now seeing that companies are trying to do it, not just to say it,' says Clifton. 'Stuart Rose (chief executive of M&S) has done a fantastic job by putting his head above the parapet, saying they are going to do it.'

Businesses now engage on a much broader front with society. 'Our customers' expectations are continually increasing,' says Lucy Neville-Rolfe, executive director of Tesco, 'and we must evolve to meet new challenges, whether it be tackling climate change or making it easier to eat healthily.'

And as the promises businesses make to consumers get bigger and bigger, the danger of overpromising becomes real. As Lambert told his CBI audience, drinks companies now fund campaigns to promote responsible consumption of alcohol, pharmas supply HIV medicines at not-for-profit prices, and mining companies support environmental groups.

In the final analysis, a company is there to make a profit, not to save the planet, and no business is likely to put its bottom line at risk. 'Trust has an awful lot to do with expectations,' says McLeod. And a lot to do with honesty and transparency - surely a path down which business has travel- led far enough? Philosopher Onora O'Neill said in her 2002 Reith Lecture on trust and information: 'Openness and transparency are now possible on a scale of which past ages could barely dream. We are flooded with information.' How much more can we take?

Argues McLeod: 'Trust is absolutely about always telling the truth, but there are things that companies can't and shouldn't have to be totally transparent about. I think to be fully transparent would be a nightmare for most organisations... But that commitment is to say: if I make a promise, I'll keep it, and if I need to change it then I will tell you sooner rather than lie to you.'

It's the kind of promise parents make to their children, but parents will tell white lies to keep them happy. How many mothers and fathers will be sitting down with their six-year-olds this winter to tell them that Father Christmas doesn't exist after all? Can we expect business to do any better?

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