Trust tops the values list

Company boards would be better off thinking about regaining trust rather than worrying about their businesses’ reputations. Despite what royal commissions, NGOs and politicians say, there has been no complete breakdown of trust in our banks. There’s been no run on the banks.

In general Australians still trust banks to keep their money rather than hide it under their beds. Now that could be because in an oligopoly there’s no other choice. But think of the reputation of used-car dealers. It’s down there with PR people, hair restorers and talkback radio hosts. Right now, there are many alternatives to walking onto the lot with free balloons for the kiddies and sausage sizzles. But Australians still keep flocking to car yards and trusting the white-shoe brigade to help them make their second-biggest purchase after a house.

However, trust that the bastards at the banks will keep the vault with my money in it locked and guarded (operational trust) is not the same as trusting that the banks will do the right thing by me and my family. And that’s why we’ve had a very costly royal commission and lots of new controls and a couple of gun-toting, handcuff-wielding sheriffs let loose with orders to lock ’em up first and ask questions later.

Trust is in short supply these days. Clergy are court stars, athletes are on drugs and worse, and business executives are rewarded richly for failure. So as leaders we can’t ask anyone to trust us anymore. That’s unless you’re a business executive who happens to be a nurse or a school teacher as well.

The problem with ideas like restoring a reputation is they sound a lot like the corporate image concept of the 1980s and 90s. Like the image of movie stars, the idea was (and still is in some places) that when someone said a company’s name it immediately generated an impression based on the ideas you gleaned from the media, anecdotes and advertising.

Like a movie image, it could be airbrushed with liberal doses of corporate advertising, PR stories and big donations or community involvement.

And, of course, that’s partly true. Some companies are able to trade on spin for a long time. Stockmarket darlings, particularly tech darlings, are often super on the spin but eventually fail on delivering or accounting. There’s one legendary Australian CEO who built big businesses on this principle, jumping ships just before the icebergs scraped holes in the hulls.

There are a small number of drivers of trust. And we can see them at work in companies like McDonald’s which have been through serious crises but keep coming back better than when they started. The magic word (really three) is: “Give a damn.” It’s hard to trust a company, or a person, who doesn’t really care about me or my surrogates, employees and the community. That’s why, despite the billions spent, only a small number of do-good activities cut through. The Westpac rescue helicopter, Ronald McDonald House and NAB’s Auskick do.

Australians mainly see corporate do-gooding as writing a big cheque (and there’s always a giant cheque in the hand-over-the-money photo), whitewashing a cracked wall. In general Australians think most big companies care only about money, treat us like numbers and see us as fee or profit fodder. Mostly, based on what we’ve seen in the last couple of years, they’re right.

Another driver for most audiences is competence. When you go to see the heart surgeon for the pre-op check before he drops the new valve in, you look for surrogate indicators of his or her competence: lots of framed degrees with big red seals; lots of big books with Latin-sounding names; the compulsory family photo. The white coat and conservative pants or dress are more reassuring than a Hawaiian shirt, shorts and the sort of calendar that used to decorate the walls of garages.

It’s the same for companies. It’s hard to trust a firm as a customer or shareholder that regularly stuffs up or, as the financial media so quaintly put it, is accident prone.

The financial market now punishes at the speed of light with only those companies with some trust in the bank spared or at least spared the worst. Regulators will react more quickly now, with political pressure on them not only to behave like a combination of the SEC and FBI but to throw corporate miscreants in the slammer.

Generally, customers are slower to move. But where it counts, at least in consumer terms, is when they have to make the next buying decision. As for employees, don’t worry. The good people will go and the dopes will remain.

This article by John Connolly appeared in the March 2019 issue of The Deal

Julie Connolly