The McKinsey Quarterly carries a very interesting article on the disconnect between the extent to which executives believe that companies have a positive impact on society and the extent to which consumers agree with them. Not surprisingly, companies rate corporate contributions higher than do consumers.
The survey indicates, among other things, that the issues that consumers feel are important for companies to address are different from those the companies themselves feel are important. For consumers, the top three issues are the environment, retirement benefits and healthcare. Corporations also rank the environment first but then place offshoring / job losses and data security second and third. The Edelman Trust Barometer offered respodents a different list of issues – poverty alleviation for example – so it’s difficult to directly compare the two sets of data. However, the interesting parallel is the extent to which consumers believe that ethical treatment of employees should be a priority. This ties in very well with both the EdelmanTrust Barometer and the Asia Pacific Stakeholder Study.
Also, when asked what single thing companies could do to build reputation, the results show a wide disconnect:
“Twenty-seven percent of the consumers say it would be to improve benefits and conditions for employees, 17 percent to tighten safety and environmental procedures, and 14 percent to limit redundancies and the offshoring of jobs. By contrast, executives believe that the most effective actions would be to tighten corporate-governance procedures (25 percent), to increase philanthropy and social investments (20 percent), and to improve benefits and conditions for employees (15 percent).”
(Source: McKinsey Quarterly 2007 No. 2)
Consumers act on their perceptions of a company’s trustworthiness in a number of ways – they don’t buy the products or services of companies they don’t trust, they don’t work for them or invest in them, they encourage other people to boycott them, they complain directly to the company or to third parties. Clearly, therefore, companies need to be more rigorous in communicating with their stakeholders to assess what their interests really are and tracking that data over time.
The trust gap has a real and mesurable impact on corporate reputation and performance. The only way to close the gap is by opening up to dialogue-rich engagements with stakeholders to assessnot only what issues are out there but also which issues matter most to the stakeholder who drive the business.