Developing effective stakeholder trust strategies

A plethora of company trust issues have been exposed in the last year.

As a result, major brands have been subjected to searing scrutiny and suffered catastrophic reputational damage based on poor governance practices. This should be sufficient evidence to reinforce how critical stakeholder trust is to reputation and financial performance.

These failures have resulted in the loss of substantial shareholder value, largely driven by the evaporation of customer, employee and investor trust.

Despite concerted efforts to deny, obfuscate and deflect, several well-known senior executives have been held accountable (as they should) and stepped down. At least in the short-term, their personal reputations have also taken a big hit.

Governance failures also attract the attention of regulators and governments, leading to an added burden for all industry participants and, ultimately, shareholders and consumers who are forced to pay in one way or another for the added protections imposed.

No one quite knows how long it takes for affected brands to regain the trust of their stakeholders, but one thing is now very clear (if ever there was any doubt), trust is a strategic asset that is often ignored or under-managed to the great detriment of any company that takes it for granted.

Trust is more expensive when it disappears than it is to build and maintain.