When it comes to board governance strategies, trust is recognised as an important issue by business leaders but isn’t consistently prioritised, said Deloitte recently.
The Deloitte Global Boardroom Program surveyed 177 board members and C-suite executives in more than 30 countries in October 2022, said Deloitte, adding that among the 89% of respondents who serve as board members, 39% serve as audit committee chairs or members and 19% serve as board chairs.
Few of those surveyed categorised their organisation as achieving a high level of trust maturity and around a third said they have no consistent approach to maintaining trust as part of board governance or only prioritise it in the wake of a crisis, the firm pointed out.
For businesses, earning and protecting stakeholder trust is fundamental to ongoing viability and success, not just in terms of reputation, but as an important driver of financial performance, said Michael Bondar, Deloitte Global Enterprise Trust Leader.
“When it comes to building trust, organisations should remember two key principles: every stakeholder counts—from shareholders to employees, customers, ecosystem partners and wider society—and action is key,” he advised. “Trust is demonstrated by organisations performing with a high degree of competence coupled with positive intent.”
Survey highlights
- All respondents agreed that trust impacts performance: 94% said it’s “important” and only 6% said it’s “somewhat important” to their organisation’s performance.
- Respondents also noted that the level of trust their organisation has with stakeholders has a high impact on the following aspects of their operations: business relationships (81%); employee engagement (79%); customer loyalty (76%); financial performance (66%); and market value (60%).
- However, responses varied around whether—and to what extent—formal processes are needed to build and maintain trust across the organisation.
- 67% of respondents said their organisation approaches trust proactively, and that trust is built into their ongoing operations.
- The remaining one-third of respondents reported a more reactive stance: 22% said they have no consistent approach and 8% only prioritise trust in the wake of a crisis.
- When assigning responsibility for managing trust, respondents feel that both CEOs and boards have a leading role to play.
- 82% of respondents said the CEO is ultimately responsible for trust leadership at the company, while 95% believe the board should play a key part in building and protecting stakeholder trust.
- Despite broad acknowledgement of their responsibility, survey results suggest that boards have more work to do to embed trust as part of the board governance strategy.
- 53% said they have no fixed cadence for such discussions—being guided instead by events as they arise.
- 28% of respondents said their boards put trust on the agenda twice a year or more, and 10% reported that they do not discuss trust at all as a board.
- Over the past 18 months, 67% of respondents said overcoming COVID-19 pandemic-related challenges was the main area of focus for building stakeholder trust.
- But as the pandemic becomes less of a pressing concern in many regions, ESG issues are quickly becoming some of the issues more likely to impact corporate trust building.
- While 45% of respondents said ESG is a key driver of trust for their company right now, that number increases to 61% when respondents pointed to priorities over the next three years.
- They envision ESG and climate change becoming even more of a priority than other vital trust areas as customer experience (52%), innovation (50%), and cybersecurity (49%).
- Respondents cited the following as key barriers to building or rebuilding trust: lack of clarity over which actions to take and how to measure progress (46%); lack of a designated owner of trust management (21%); and complacency (18%). At the same time, 33% of respondents believe there are no barriers to building or rebuilding trust.
- When asked what actions their organisation needs to take to earn trust over the next six months, respondents cited the need to perform an ongoing, consistent trust assessment (58%); develop a comprehensive definition and framework of trust in the context of the organization (45%); and include trust as a regular item on the board and management team agenda (42%).
