The business of trust.

Companies and businesses have a problem – Trust. Put simply there is a decline in how much trust is being placed in business by customers and society in general. And a business that isn’t trusted isn’t going to survive for long. But is trust that important?

I think so. Customers are spending more time researching the companies they buy from, and the fact that so much information is available on line, opens up a business to a lot more scrutiny than previously possible. As customers are subject to exponential levels of change they will look to anchor themselves through relationships based on trust.

Would you go to a Doctor you didn’t trust?

And businesses play a huge role in society, providing income and rewarding places to work, generating wealth and making tax payments to help governments support their chosen areas of investment. The problem is partly guilt by association. As Edelman reported there is a collapse in trust in 4 of the major institutions (Business, Government, NGOs and Media) in many countries around the world.

At the same time however, businesses face some challenges that while not specific to industry will have a large and potentially dramatic impact. The 4th Industrial Revolution (4IR) is beginning to reshape what business is and what it does and how it does it.

And trust is going to be come one of the most important topics businesses will have to deal with.

4IR involves the coming together of a number of different initiatives that are beginning to integrate data, robotics, technology, Biology, Genetics. There is a blurring of the lines between the Physical, Digital and Biology spheres. What seems to be different about this industrial revolution is the speed of change, the scope of change and the impact on systems.

The rate of new breakthroughs in science and technology is breathtaking and unlike previous revolutions we are seeing exponential changes. The scope is vast; billions of connected devices all capable of transmitting and receiving data (from your phone to your light bulb to your genes) with the number of connected devices again growing exponentially. And systems are changing almost in real-time – artificial intelligence, driverless vehicles, blockchain and so on.

Business should be able to benefit from all of this. But how will a business benefit if it isn’t trusted?

It won’t.

As the World Economic Forum has identified trust is evaporating and business needs to get it back. While the issues raised in this report ‘We’re losing trust in business. How can we get it back?’ highlight issues faced by major businesses I think we need to see something that builds on these suggestions. And something that can apply to businesses of all size.

Businesses need a new charter that puts them at the forefront of gaining benefits from the 4IR but ensures that in addition to shareholders, employees and the wider society also benefit. I’e like to propose a 8 point charter along the following lines

1) CEO and other senior staff should  only to be remunerated an agreed x amount of lowest paid workers. And this agreement should be voted on not just by the shareholders (as is typically the case nowadays) but by staff as well.

2) Staff should be actively involved in the key decisions of the company. Staff forums or works councils should have influential roles and technology today allows for regular and simple voting/feedback from all staff as well as shareholders. Why not have a weekly vote on a variety of strategic topics by the staff themselves?

3) A mechanism should be developed to assess returns to all stakeholders (Shareholders, Staff and Society). Metrics should be published that show the balance of risk and reward for each stakeholder. Staff run a risk working for a business in that it might not be there anymore and society runs a risk that a business is, for example a large user of fossil fuels. And rewards should be equitable. Staff and Society still seem to come behind shareholders and this cannot be good for trust.

4) A company should have a stated purpose that is explicit about improving the needs of society, staff and shareholders and that the performance of the company management is regularly assessed by the three key constituents; pay and performance depending on results.

5) Businesses above a certain size have to provide a number of apprenticeships or careers for people with fewer opportunities. In addition when for example, a business relocates its head office or establishes a major facility somewhere the business has to provide social housing support.

6) Businesses should be apolitical. Staff can support and business can encourage participation in politics/political parties but like the separation of church and state businesses should not find themselves in positions that could impact one of their stakeholders over another.

7) All staff to be given specific time and support for learning to ensure that they can continue to develop their skills. And these skills should be both relevant to the business and relevant to the changes going on in society. Businesses have a role to play in educating people more broadly to help them to thrive in a world of rapid and constant change.

8) Where businesses are investing in AI and other technologies that will replace people or reduce people’s roles an element of budget must be set aside and used for retraining those impacted. Training must involve the development of the individuals. Otherwise benefits of AI etc flow to company management and shareholders only and this again is bad for trust.

What is being described here naturally will have an impact on the costs of doing business. And this is often viewed negatively particularly by management and shareholders. And that is the point. When viewed through a shareholder lens only this is not likely to be a popular option. But take into account staff and the wider society and the costs involved provide much wider benefits.

And perhaps the biggest benefit will be that businesses might regain some trust.

And that is worth a lot.