The more things change, the more things stay the same. As compliance matures as an industry, we sometimes forget the foundational best-practices that our programs are built upon. Every last Friday of the month, we revisit some of our most educational posts from the past. We think you’ll find they are just as relevant today.
Originally published June 2017
A recently released ranking of industries by Trust Across America shows that one of the most competitive and financially stressed industries – consumer staples – nevertheless scored highest on a collection of measures that center on trustworthiness. Trust Across America’s FACTS Framework assesses financial stability, accounting, corporate integrity, transparency and sustainability. The advocacy group says companies with high FACTS scores tend to generate higher shareholder returns, as well.
Transparency Equals Trust
Customers, especially millennials and members of younger generations, care about more than just price.
So how does an industry characterized by brutal margin pressures and disruptive competition manage to rack up high scores for reliable accounting, transparency and sustainability? The answer says a lot about what it takes to succeed in today’s global economy.
Consumers have a profusion of choices on the internet and in bricks-and-mortar stores. Price-shopping is effortless. Yet successful consumer-products companies know that their customers, especially millennials and members of younger generations, care about more than just price. They want to be sure their food was produced in a sustainable manner and their organic juice was squeezed from real organic fruit harvested by workers who were paid fairly for their labor. That all requires rigorous compliance with laws, rules and standards across the organization and its supply chains, combined with corporate transparency so customers know that when they pay a little extra for the ethical company’s products, they’re getting what they paid for.
Customers Don’t Have To Love You to Trust You
No. 2 on the Trust Across America list is even more surprising: Utilities. An industry with a reputation for being unpopular with its customers somehow still ranks high on the measures that matter with customers, employees, investors and regulators. This one probably can be attributed to the heavy regulation and demand for utter security that comes with safely providing electricity, gas and water, commodities that form the foundation of Maslow’s hierarchy of needs.
Utilities simply can’t afford to violate trust, especially when they’re going before regulators to seek a rate increase. Consumers may hate paying their monthly bills, but they would hate it even more if the lights went out.
Doubling Down on Transparency
This could reflect the sensitivity the public has to the many factors that affect trust with these companies.
The auto, tires and truck industry came in third in the Trust ranking. This could reflect the sensitivity the public has to the many factors that affect trust with these companies. For instance, the stakes are high in the auto industry when it comes to safety, environmental consciousness and employee support. Missteps in any of these trust areas can – and has – required strenuous trust recovery efforts. If employees or consumers feel that they have been misled, especially intentionally, regarding any of these trust areas, it can do incalculable damage to the companies, their workers and their reputations with customers.
The entire industry has redoubled efforts to restore trust and perhaps this year’s high FACTS score reflects those efforts. The best companies are sure to be examining their relationships with employees and showing with actions, as well as words, that employees will be listened to without retaliation when they speak up about wrongdoing.
Construction Scores Well but Other Industries Struggle
The construction industry also scores relatively well on trustworthiness. Here at NAVEX Global we work with organizations that succeed in this highly competitive market, not by cutting costs, but by selling standards – high standards of construction and upgraded living standards for the communities where they build their structures. They sell these concepts internally to their employees too, and it works. Employees are more engaged and buy into the idea that business success doesn’t require ethical shortcuts that are damaging in the long term to the community and the company itself.
Some of the lower-ranked industries are puzzling and may be penalized by low scores on sustainability or accounting. Oil and energy ranks at the bottom, for example, perhaps reflecting its reliance on non-sustainable resources extracted from the earth and volatile financial results. Transportation and aerospace also rank low, despite their utility-like levels of regulation and demands for safety.
One industry with middling scores that should be higher is medical. It’s a field that is founded on the assumption of trust, but maybe that conclusion needs closer examination. People come to medical professionals when they are sick, and trust should be at the top of the list of indicators that concerns the industry. Is price inflation diluting the message? Are managers in the medical industry watching regulatory-related metrics and neglecting the one that matters most? The warning signs are there.
We live in an era where reputational damage can happen fast, with devastating consequences – not only to the organizations involved but to others in their industry. As a result, organizations need to keep trust in mind, because it’s the right thing to do for our customers, employees and bottom line.