How Businesses Can Regain Trust after the Global Economic Downturn
For corporations operating in a changed world and challenging business environment, reputation is everything. According to a recent study among a global audience of 25- to 64-year-olds, being able to trust a company is one of the most important factors in determining a company’s reputation. However, in an economic downturn, people tend to have less trust in business. So, how does business get back in good graces?
At the adidas Group, I struggle with this question every day. One observation is that regaining trust in business begins with the CEO, a company’s most visible spokesperson. How CEOs act, publicly or privately, plays a large role in shaping perceptions of business. Although the vast majority of CEOs behave responsibly, the media focuses a significant amount of attention on CEOs running large multinationals, and recent times have portrayed a number of executives in no good light. If we want to regain the public’s trust, then CEOs foremost must lead the way by example.
Companies must also establish stronger communications with their key audiences, including employees, consumers, customers, shareholders and the local communities in which they operate. Here are a few other thoughts to consider.
To regain trust, start with educating employees. Given their vested interest in the organization’s success, employees are a company’s most logical supporters. If you don’t have the support of those who work for you, how could you possibly expect to gain the trust of others outside the company?
I’ve always felt strongly that our 42,000 employees need to be ambassadors of our brands to the world. Their loyalty and passion has to be authentic, and this starts with fully understanding and embracing our mission, business and strategies, then communicating them locally in relevant ways. Therefore, it is vital that our senior management team, myself included, regularly engages with employees to ensure they understand our strategy and are integral partners in our organization.
Following the Group’s acquisition of Reebok in 2006, we recognized the importance and immense challenge of pulling our brands together in one common platform. We invested heavily in communication and collaboration, including the creation of a cutting-edge intranet based on wikis and blogs to showcase our brands. We held global employee meetings and local town halls and we have one of the most open forums worldwide, where every employee can ask any question even anonymously to senior management – myself included. We developed newsletters, employee magazines and idea forums. We embraced social media. In short, we made communications central to our business and strategy for growth. This high degree of transparency was key to building trust among employees, who then took our message back into their communities.
In today’s technology-driven world, it is no longer enough to simply speak “to” your customers. Instead, you must “engage” with them in a two-way conversation, using social media outlets like Facebook, YouTube and Twitter. These offer consumers a venue to provide feedback, both positive and negative, on your products, campaigns, customer service, corporate initiatives, and anything else they desire. It is also a way for customers to actively participate with your brands to raise awareness and visibility.
Social media provides organizations with an opportunity to speak to their consumers in an arena in which they feel comfortable. When companies listen to their consumers and respond to posts or tweets, consumers feel that their voices are heard, their concerns addressed, and their desires met, sentiments that ultimately help build confidence and trust in a company.
Transparency is the ultimate key to regaining trust. Given the increased volatility of markets and real-time news reporting, governments have implemented stricter guidelines regarding disclosure, and stakeholders are demanding greater transparency and accountability. Companies should go beyond what is required by regulators and accountants; this can include more detailed financial presentations, hosting "Investor Day" meetings, or, simply making materials easily accessible online. A corporate website that is relevant, organized and continually updated is now a necessity.
Corporate Social Responsibility
All corporations are facing increasing global, investor, NGO and societal pressures to operate their businesses more responsibly by minimizing their environmental footprints. In a depressed economy, some might see this as a burden, as additional resources must be set aside to implement the necessary changes to make significant impacts. However, companies cannot disengage from society simply because times are tough. Companies must be committed fully, in good times or bad.
At the adidas Group, our vision is to enhance social and environmental performance across the company and in the supply chain, thereby improving the lives of the people making our products. We strive to be the global leader in the sporting goods industry and, yes, this demands that we return strong financial results. But leadership is not only about results. It is also about how success is achieved and the way we operate our business. We love sports, but nobody wants to win if done so unfairly. This is how we approach social responsibility, believing we can succeed and do well at the same time.
Regaining trust, especially in a challenging economy, is no easy task. The companies that are most successful will be the ones that find ways to connect with their stakeholders in meaningful and authentic ways. If stakeholders feel companies understand them, they will automatically feel more connected and have a greater propensity to engage back. Dialogue and transparency are the ways forward for business, and regaining the standing of companies in the eyes of an increasingly skeptical public.
Herbert Hainer is the Chief Executive Officer of adidas AG since 2001. In addition, he is currently the Deputy Chairman of the Supervisory Board of FC Bayern Muenchen AG, and a member of the Supervisory Boards of Engelhorn KGaA, Allianz Deutschland, and Deutsche Lufthansa AG. Mr. Hainer began his career at Procter & Gamble GmbH.
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