DLA PIPER EXPLORES VIEWS FROM THE BOARDROOM
03 Oct, 2011
DLA Piper releases report on business leaders’ attitudes towards trust
DLA Piper has today (3rd Oct) announced the findings of its report into business leaders’ attitudes toward trust.
The report, undertaken by Populus, entitled: ‘The Trust Deficit – Views from the Boardroom’ , records the responses of over 50 senior Board members of FTSE 100, FTSE 250 and some of the UK’s largest privately owned companies.
The report investigates how attitudes to trust have changed, particularly following the global financial crisis, and highlights a phenomenon DLA Piper has identified as the ‘trust deficit': the notion that all businesses start with a deficit of trust, which must be actively redressed to achieve confidence and trust among their stakeholders and the wider public. Trust is undoubtedly a major issue for UK and international business leaders and we have seen many recent examples of how it can so easily be eroded, whether through accident or malpractice.
The Trust Deficit has highlighted some key findings:
– The environment in which companies are currently operating has changed fundamentally over the last decade and especially in the aftermath of the global financial crisis. Our report highlights the effect this changing market has had on perceptions of trust, and specifically how business leaders view the public and external stakeholders as increasingly sceptical about the claims and actions of businesses, and, furthermore, how this scepticism is both encouraged by and reflected in the media.
– The terms of engagement between companies and their stakeholders have changed. Individuals are increasingly feeling more empowered to judge and comment on a company’s actions. Additionally technology has accelerated this process; as information has become more accessible it has allowed individuals to mobilise against businesses regardless of where they are based. The rise in online and social media has placed pressure on Boards to respond rapidly to events. Ultimately the implications of this changing environment means that trust that has been built up for generations, can by destroyed in an increasingly short space of time.
– Globalisation has also made maintaining and restoring trust more complex. In a global economy corporate actions in one country are frequently judged by those elsewhere who may hold different standards and norms of behaviour.
– The collective view from the Boardroom is that trust, at a senior level, is intrinsically based on personal relationships. The ability to make trust–based decisions is viewed by Senior Executives as a means of distinguishing business leaders, whilst protecting trust is viewed as an important aspect of the role of Non-executive Directors.
– Overt ‘trust strategies’ through vehicles such as Corporate Social Responsibility (“CSR”) programmes or initiatives are viewed with caution by business leaders. It is acknowledged that customers, regulators and other stakeholders can and do react cynically to obvious attempts to court trust. Business leaders consider trust to be built as a consequence of other positive business actions; always delivering on and honouring commitments and, when necessary, admitting mistakes. That said, CSR can and does build trust, but only when linked to a business purpose, or reflective of a company’s core values.
– The increased level of regulation that has followed the global economic crisis is viewed by many senior board members with scepticism. Many fear that legislation focuses businesses solely on meeting the letter, rather than the spirit, of the regulation and prevents trust from developing. Furthermore, because trust proves difficult to gain and sustain, it is seen as a more powerful guarantee of corporate behaviour than frequently subverted and altered regulation.
Commenting on the findings, Sir Nigel Knowles (pictured), Joint CEO of DLA Piper said: “The views of these business leaders show that trust is a major issue for UK companies.
“The world in which today’s business leaders operate has fundamentally changed in a decade, as we have seen the end of the age of deference and power move from institutions to individuals. When you take account of the financial crisis, the growth in new media, globalisation as well as increasingly empowered individuals, it is no wonder that building, maintaining and restoring trust is now a much more complex issue for Boards to wrestle with.
“It is clear that personal relationships are essential to create the level of trust that is required for the success of a business at Boardroom level. Indeed, a charismatic and genuine individual can also engender trust on a corporate level with a company’s stakeholders.
“Regulation and CSR programmes are not a substitute for transparency, visibility and proper business behavior or common sense. Trust in business is a precious commodity. In the last few years we have seen examples of the detrimental effects of that trust being eroded.
“I believe that this report reveals the challenges that all business leaders now face and provides fascinating insight into how companies are seeking to build trusting relationships with their stakeholders.”