Build Trust With A Purpose Statement
By Tom Knowlton, Partner and Director of Corporate Services, TCC Group
As we enter a new era in US politics, there is increased pressure on companies to build trust with customers, and both deliver and communicate their broader value to society and their employees.
As stated in the Edelman TRUST BAROMETER 2016, “A yawning trust gap is emerging between elite and mass populations. The most profound difference between the elite and the broader populations is found in their attitudes toward business. This skepticism is clearly manifested in the perception of specific industries, in particular the financial services sector where there is a gap of more than 20 points between the elite’s trust in the sector and the general population’s.”
How have companies been responding to this pressure? The development of new social impact initiatives, the communication of a company’s commitment to Shared Value, and the increasing importance of corporate citizenship within companies are indicators that companies are realizing the need to play a stronger role in addressing social issues that are important to all of their stakeholders.
However, programs and initiatives alone don’t necessarily build trust with stakeholders, especially if those efforts are not aligning with and reinforcing the company’s value to society. The strongest corporate citizens know that building trust with stakeholders requires a comprehensive, integrated corporate citizenship approach that permeates the entire company, and is clearly articulated and communicated to all stakeholders.
Companies articulate their role in society and their commitments through mission and vision statements, and increasingly, purpose statements. One way to distinguish between them is to look at purpose statements being used to define the driver or why a company does what they do; a vision articulating what they want their company and the world to look like; and a mission speaking to how they will live their purpose and achieve their vision.
Moreover, new business models have been created that combine a strong social purpose with a for-profit structure. These social enterprise companies, sometimes referred to as the “Fourth Sector,” are addressing the trust gap and satisfying an increasing demand from customers and employees to buy products from and work for companies that align with their values. A volunteer-managed, open source website of information and resources about the fourth sector provides a useful graphic to illustrate how the fourth sector has emerged from the original three sectors (private sector – for-profit; social sector – nonprofit; public sector – government). This fourth sector trend is also putting pressure on traditional companies to strengthen their commitments and define their purpose.
We took a look at companies in two industries—healthcare and financial services—to try and get a better understanding of how these commitments are evolving.
Not surprisingly – considering the four examples provided below – the mission, vision and purpose statements for healthcare companies focused more on social benefit – improving health, extending and saving lives; whereas financial service companies had a stronger business focus, with a mix of statements focusing on providing excellent service to clients, as well as helping individuals succeed financially.
Healthcare | Financial Services |
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While some companies are articulating a social purpose, many companies are developing programs and initiatives that are not tied to a higher purpose. These programs can be perceived by employees and stakeholders as public relation efforts and do little to build strong relationships and trust with key stakeholders.
Healthcare companies focus on increasing health access to underserved communities and provide drug donations worth hundreds of millions to developing countries. Financial services companies are allocating tremendous resources towards community development and social programs reaching the banked and underbanked.
Five of the top ten corporate cash donors in 2015, as identified by Fortune Magazine and The Chronicle of Philanthropy, were financial service companies, including:
- Wells Fargo $281 million
- Goldman Sachs $276 million
- JP Morgan Chase $224 million
- Bank of America $168 million
- Citigroup $142 million
Tying those activities toward clearly stated commitments (as the healthcare companies do) sends a clear signal to stakeholders that the company leadership is committed to providing value to society, and their initiatives and activities are integrated into the business. This integration is even more apparent (and beneficial to the company’s reputation and bottom line) when the company has a clearly developed outcomes framework with goals, as well as a strategic approach, which collectively reinforce and support the company’s commitment.
The role of companies in building the economy while also helping to address the world’s most pressing problems will only continue to grow. This dual purpose will be dependent on engaging and building trust with key stakeholders, most importantly employees. A strong purpose statement sends a clear message to all stakeholders from the company’s leadership about a company’s commitment, and provides the necessary guidance for the development of the company’s role and value to society.