To the three major sources of organizational wealth—Financial Capital, Human Capital and Intellectual Capital, add a fourth: Trust Capital. Trust Capital accrues like money in the bank. It is the confidence stakeholders have that you will live up to your promises and behave in a responsible manner. Trust Capital helps a company or brand bounce back after a crisis.
The CEO must lead the enterprise to accrue Trust Capital aiming to become the most trusted company (brand) in every market in which it competes. This cannot be delegated. The CEO is the Chief Trust Officer and being the CTO is a fundamental, ongoing, leadership responsibility. Trust building begins at the top.
Also, the role of Chief Trust Officer is more than a title: it is an indispensable, Trust Capital-building task of major cultural significance inside and outside the organization. Studies show that increased trust is a critical factor leading to increased preference and loyalty, generating high-quality revenue growth. The point: Trust makes money.
As Chief Trust Officer, the CEO must create and implement a structured Trust Charter. A structured Trust Charter provides immediate direction with a strategic set of priorities for Trust Capital-building actions. It addresses questions such as: How will we build trust across our geographies, our brands, our people, our shareholders, our franchisees, our partners, our suppliers, and our local communities? How will we build trust chains throughout all of our relationships, internal and external? What is our plan for being a good corporate citizen?
Here are 4 guiding principles for building Trust Capital.
1. Create a cross-functional, cross-geography team of which the CEO is the leader. This group ensures that all functions and divisions are represented. Carlos Ghosn, CEO of Nissan used CFTs as the driving force of the Nissan turnaround.
2. When strategy and culture conflict, culture wins. Implement this straightforward internal program:
- Education: Communicate to all employees what Trust Capital means and why it is important. Create a sense of urgency.
- Implementation: What will we do differently? Address structures and systems that may be undermining success. Articulate accepted behaviors. Use common language: words matter. As CEO, set the example for the entire organization.
- Inspiration: Reinforce, reinforce, and reinforce. Recognize behaviors. Look for ways to celebrate performance improvements. Anchor in shared values.
- Evaluation: If it is important enough to do, it is important enough to measure. Measure progress. People will manage what management rewards.
3. Do what you say you will do. Predictability is critical. It is the foundation upon which trust is built. Quality actions speak louder than words. FedEx has created a strong corporate reputation for its ability to achieve its promises of on-time delivery, and for customer-friendly operations.
4. Generate a plan to boost leadership, credibility, integrity, and responsibility:
- Leadership must be demonstrated, not merely claimed. Be a thought leader. Is your company perceived to be innovative? And, are you growing in size? (e.g., Dyson is an innovation leader and has grown exponentially in the past 16 years.)
- Credibility means your statements/actions are plausible. Be dependable. Be capable, competent and an expert in your field. Provide superior complaint resolution (e.g., Nordstrom is all about promising and delivering exceptional customer service that goes above and beyond a typical service experience. It is even rumored to have once accepted the return of a set of tires, even though the store has never sold tires).
- Integrity means having customers’ interests at heart. Refrain from taking unfair advantage. Be accountable for your company’s actions. Behave ethically (e.g., people have developed a trusted relationship with Johnson & Johnson driven by its underlying consistent values. This emotional connection is a powerful brand advantage even when it comes to simple, commodity products like baby shampoo and talcum powder.)
- Responsibility provides competitive advantage. Demonstrate good global corporate citizenship. Corporate Social Responsibility is not a separate division. It is a way of doing business. Some companies are making it a core of their operations (e.g. Ben and Jerry’s uses only fair trade ingredients and has developed a dairy farm sustainability program in its home state of Vermont. Starbucks has created its C.A.F.E. Practices guidelines designed to ensure the company sources sustainably grown and processed coffee).
In a world suffering from a Trust Deficit Syndrome, being the most trusted company or brand is a big competitive advantage.
A company name is a signature of the promise an organization makes with its stakeholders. Make that signature worthy of people’s trust. Build Trust Capital.