Hi, I'm Severin de Wit, host of the TrustTalk podcast, where we dive deep into the fascinating world of trust. With a genuine passion for understanding the foundations and nuances of trust, I am dedicated to uncovering its secrets and sharing compelling stories that illuminate its profound impact. Join me on this captivating journey as we explore the transformative power of trust. Subscribe now and become part of the TrustTalk community
Hi, I'm Severin de Wit, host of the TrustTalk podcast, where we dive deep into the fascinating world of trust. With a genuine passion for understanding the foundations and nuances of trust, I am dedicated to uncovering its secrets and sharing compelling stories that illuminate its profound impact. Join me on this captivating journey as we explore the transformative power of trust. Subscribe now and become part of the TrustTalk community
Boston Consulting Group‘s Ai-based Trust Index measures and decodes stakeholders’ perceptions of the trustworthiness of more than 1,000 of the world’s largest companies. It enables companies to break down stakeholder perceptions of their trustworthiness. Analyses based on the Index have yielded valuable insights about what builds, sustains, or destroys trust.
What Is Trust, and Why Is It Hard to Measure?
In academic literature, trust is defined as the willingness of a party (the trustor) to be vulnerable to the actions of another party (the trustee). In a business context, broadly speaking, stakeholders (trustors) put a certain level of trust in a company (trustee) to fulfill a promise—whether that promise takes the form of a value proposition (product or service) to customers, an intangible such as corporate purpose to employees, earnings guidance to investors, or some other commitment. In doing so, stakeholders put themselves in a vulnerable position, trusting that the business will act in a way that aligns with their own interests. For example, you might trust your bank to safeguard your money, or your employer to live up to its societal aims, or your Tier 1 supplier to honor its pledge to reduce its carbon footprint.
As a latent psychological state and a predisposition to engage, trust is only indirectly measurable, through indicators such as transaction costs, or inferred from the attitudes and behaviors that people convey explicitly or implicitly in their communications and actions. Trust is naturally dynamic. It fluctuates, as individuals reevaluate their perceptions in response to new information and changing circumstances.
BCG’s Trust Index
The elements that generate, sustain, and enhance trust among stakeholders—the traits, decisions, and actions of companies—are many and complex. Until now, it has been difficult to distill them in order to understand their interrelationships and to link them to business performance. BCG’sTrust Index does just that.
Unlike traditional efforts to measure trust, BCG’s Trust Index draws on real-time stakeholder communications and applies natural language processing (NLP) and AI to analyze and quantify stakeholder perceptions. Constructing the Trust Index involves scraping the internet (traditional news sources as well as Twitter), combing through thousands of articles and posts on each company, and using a research-validated list of more than 200 trust-related keywords to identify instances in which the text mentions the company in the context of trust. Working with an NLP engine, we then analyze the trust sentiment behind each mention to gauge whether the perception is positive, neutral, or negative. (For this report, we searched only English-language sources, but the index can be applied in other languages as well. A detailed explanation of the methodology appears in BCG’s full report.)
To identify the mentions that relate specifically to trust (or distrust), we categorize keywords according to four dimensions of trust, which we identified in our past research:
Competence—whether the company can effectively accomplish a specific task at hand, or (in other words) whether it can deliver on its promise to stakeholders
Fairness—how equitable and empathetic the company is in delivering on its promise
Transparency—how open and unambiguous the company’s decision-making and actions are
Resilience—how effectively the company avoids or recovers from challenges and crises
This approach enables an analysis of a company’s trust score on an overall level and by individual dimension—for example, how its competence score has trended over time—so that we can more deeply understand its perceived trustworthiness. Dimensions also provide a window into context-specific reasons that encourage people to trust (or mistrust) and into the multifaceted nature of trust. Thus, we might notice that people trust a particular business for its competence in delivering its products and services to customers, but do not trust it for its fairness because of its weak commitment to social responsibility. Because the NLP engine can identify common themes in the trust-related mentions, we can assess the rationale underlying the scores. By analyzing the influence of each of the four trust dimensions and examining the more granular themes associated with companies that earned high and low trust scores, we obtain a useful reading of a company’s trust “health,” and we start to decode the “why” behind that reading.
Exhibit 1 illustrates this multidimensional tracking capability, using data underlying the trust score of one company in our data set. The graph on the left compares the company’s trust score to its industry benchmark. The center graph shows that social media mentions had a powerful impact on the company’s drop in perceived trustworthiness. The graph on the right shows that, despite the company’s relatively high competence score, its overall trust score has been trending downward as a result of declining scores for fairness, transparency, and resilience.
What the Index Reveals
In addition to uncovering the trust performance of individual companies, the Trust Index gives us a macro view of the trust record across a full data set—in this case, 1,100 of the world’s largest public companies (those with market capitalizations exceeding $20 billion) from 2018 through 2021. We break down perceived company trustworthiness along different lines to discern broader trends: by the entire set of companies, the Top 100, or the Bottom 100; by region or sector; and by a given point in time or an entire time period. We also deep-dive into the sentiment underlying trust scores to better understand the dynamics and patterns that govern how trust in businesses is built, maintained, and destroyed.
In the full report, we probe a wide range of questions, including the following:
Do the most trusted companies generate more financial value?
In what regions and industries are the most- and least-trusted companies found?
How dynamic are trust scores? And how much does the roster of Top 100 companies change from year to year?
On average, has trust in the world’s largest companies increased or decreased over the past four years, pre- and mid-pandemic?
How does trust correlate with other business metrics, such as ESG ratings?
What types of actions or events lead a company to be perceived as most- or least-trusted?
Among BCG’s many noteworthy findings are the following:
Trust pays off. The 100 most trusted companies generated 2.5 times as much value as comparable businesses at year-end 2021. They also had 47% higher P/E multiples. The link between trust and value highlights the need to take trust seriously.
Trust is highly dynamic. Fewer than half of the Top 100 companies from any given year were still in the Top 100 the following year. For the Bottom 100, turnover was as high as 70%. So business leaders need to measure and manage trust on an ongoing basis.
Trust levels rose during the pandemic. For all but the Bottom 100 companies in our study, average trust levels grew between 2018 and year-end 2021. Trust score CAGR grew less for the Top 100 than for the overall group (likely because the Top 100’s levels were already high), but it eroded the most among the least-trusted companies.
Ten themes commonly affect companies’ trust positions. We identified ten specific themes that most frequently establish, enhance, or destroy trust. The ability to track performance at such a granular level can help leaders devise strategies to improve their companies’ trust position. We found that the impacts of these themes vary markedly, depending on the company’s starting trust position. For example, for low-trust companies, crises are a major trust destroyer, especially when caused or exacerbated by negligence or recklessness. In contrast, high-trust companies, while not immune to major unexpected difficulties, avert, handle, and recover from crises in ways that maintain or even strengthen their perceived trustworthiness.
How Can Businesses Decode and Improve Their Trust Position?
The left-hand side of Exhibit 2 shows the correlations between the four trust dimensions (competence, fairness, transparency, and resilience) and the ten themes most commonly associated with establishing, enhancing, or destroying trust, based on the analysis of our dataset. The right-hand side indicates which areas companies need to focus on to sustain or improve their trust positions.
Consider the transparency dimension, for example. The theme that, by far, correlates most strongly with transparency is social responsibility. In other words, transparency scores were most influenced by mentions of social responsibility; the thick dark green wavy bar linking the two reflects the high volume of online mentions of social responsibility (whether positive or negative). The next-strongest influence on transparency involved discussions of corruption, fraud, and scandals, followed by discussions about innovation. Conversely, while innovation correlates strongly with transparency, it correlates even more strongly with competence, as the relatively greater thickness of the bar connecting innovation and competence shows.
The right-hand side of the exhibit shows how companies can advance their trust improvement efforts by targeting trust enhancers, trust foundations, or trust destroyers, based on their existing trust position. High-trust companies should continue to concentrate on trust enhancers, while also keeping an eye on trust foundations. Those with middling trust scores would get the greatest benefit from building up their trust foundations, while also tending to enhancers and guarding against destroyers. Low-trust companies should prioritize efforts to mitigate trust destroyers, while they work on building trust foundations.
Leveraging the findings from our Trust Index analysis, our report provides a set of actions that leaders can take to improve their company’s trust position. It also offers case examples and recommendations to business leaders for managing and improving their company’s perceived trustworthiness.
When companies or politicians break trust, it takes three equally important steps to repair it. As a professor of management practice at Harvard Business School and co-writer of the book “The Power of Trust: How Companies Build It, Lose It, Regain It”, (PublicAffairs, July 2021) Sandra Sucher takes us through some examples of apologies after broken trust that were ineffective, causing tremendous harm. UBER is a very competent company, yet they are losing customers due to a lack of trust, Volkswagen had its trust failure after rigging emissions test of their diesel cars, for which the CEO apologized, but did so unconvincingly, with great consequences.
But there are examples of successful trust repair. Who remembers Japanese-basedplatform business Recruit Holdings, who after a scandal showed how to repair broken trust, or the PWC gaffe from 2017, where employees mixed up the winner’s envelope, as a result of which La La Land was announced the Oscar winner, instead of Moonlight. Both did a remarkable job in restoring trust. In the interview, she explains what it took to restore those trust failures.
She talks about a study by Kurt Dirks who found that the NCAA basketball team won the most games due to the trust they had in their coach and about the way politicians can restore broken trust, about creating a trusted work environment for women, and the four attributes of trust repair.
In the book, Sandra Sucher and Shalene Gupta examine the economic impact of trust, and the science behind it, to prove that trust is built from the inside out.
The interview
In the TrustTalk interview, we talk about the four elements of trust repair: competence, motives, means and impact. About the last one Sandra says:
This is the sort of it doesn’t matter what the company intends, it’s really what’s the actual consequence of their actions. So I’m going to tell you a brief story about a female reliability engineer, her name was Susan Fowler, and in 2017 she wrote a blog post about what it was like at UBER after she left, and she recounted many really awful tales of sexual harassment not being followed up by the company. Now that’s not actually why I’m telling you this story is awful, as that was. She mentions in passing in this blog post that when she started in her division, women were 25 percent of all the reliability engineers. And when they left, when she left, they were three percent. Now, UBER didn’t set out to say, let me create an environment in which women are not happy to work, but the consequence of its practices, its policies, it’s the culture that they had, meant that this was a place that no woman worth her salt wanted to be involved with. And so that’s what it means to care about company impact. It’s the unintended impacts that worry us as much as the intended ones. And you can see this in all of the concerns that we have about climate change and the consequences of company actions. Companies don’t intend to pollute, but they do, and that’s what we expect them to take care of. We don’t care that their intention was not to do it. What we care about and trust them for is how well they actually try to remedy the effects that they have.
About competence:
So there are different kinds of competence. Of course, I’m an academic at this point in my career, so forgive me for this, so you can think about two kinds of competence, at least, that organizational scholars look at. One is technical competence. So am I good at the UBER stuff, right? Can I create that ride-hailing app? The other is managerial competence, and that’s my ability to adjust to changing circumstances and to manage relationships with different groups to accomplish my goals. Now, UBER is notably bad at that. It’s in the crosshairs of regulators and literally every country where it does business and for good reasons because they don’t like how UBER does business. And so thanks to some information you had shared with me, I’m aware of the fact that the Court of Amsterdam ruled in September that UBER drivers are not independent contractors. That ruling actually came out in the UK earlier in 2021. And it is something that the EU is now proposing, which is to classify gig workers as employees. So this is a very good example of unfair means, right, UBER treats these people as employees, but actually doesn’t want the financial consequences of owning them, having to give them benefits, having to give them vacation pay and things like that. And so that’s why it is that we think that they may not be competent in all the ways that they think they are.
About trust repair for politicians:
So I don’t actually think that repairing trust is going to be different for them. And what I mean by that is they would follow the same three steps, so the first thing they’d have to do is to acknowledge the harm and apologize for imposing restrictions that people have suffered under. People would want to hear that the politicians know that this has been hard and that they are really sorry for the fact that they’ve had to make these efforts to try to stop and limit the effect of the virus. The second thing is they should explain why it is that they were doing what they did, what trade-offs they faced, and why it is that they came down on the side of this versus that. People want an explanation of what it is that’s occurred. And if you can explain your reasoning, it builds confidence and trust that you have a process for thinking this stuff through and that it’s not random or something that you didn’t give very much thought to. And then in terms of an offer of repair, this is a question where I think politicians need to become more specific about the conditions under which they would allow the restrictions to be lifted. So that’s what people are looking for. They understand, you know, this is highly contagious, but reports are coming out now that this actually doesn’t make people as sick. So that’s going to require kind of a different calculus as people try to balance what it is of exposure to this virus versus actually having people get sick from it. But in any event, in my own university at Harvard Business School, my school has actually been quite good about this, they just came out with an announcement yesterday that said, week by week for the first three weeks in January, here’s exactly what we’re doing. Here’s why we’re doing what we’re doing, and here’s when we will be making the call as to what we’ll be doing the next week. And so if I’m teaching, which I’m not in that particular period of time, I would at least have the confidence in if I’m a student of knowing, OK, I get it. I know what I’m going to find out what’s going on. Now it is much easier in a controlled environment like a business school for people to do that, but I think the governments can actually at least help people understand the data that they are looking at to help them understand when it is that they might be able to lift restrictions so when case counts get below a certain level perhaps we could do that and I think that’s the kind of offer of repair of a transparency that I think we haven’t had to date.
You may also like Author Talks, where McKinsey Global Publishing’s Raju Narisetti chats with Sandra J. Sucher about her new book, The Power of Trust: How Companies Build It, Lose It, Regain It (PublicAffairs, July 2021).
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If you are feeling adrift after the attack on the U.S. Capitol, it may be because your trust has been betrayed. Trust is our willingness to be vulnerable and allow someone else, or an organization or institution, to have power over us.
Trust consists of four components: competence, motives, fair means, and impact. Fundamentally, we agree to let an institution, in this case, the U.S. government, operate because we trust in its competence, its good motives, its fair means, and its positive impact on us. The January 6 attack graphically illustrated the cracks in all four of these. Let us explain.
Competence
Competence refers to the ability to get the job done and is the most basic level of trust. There were clear signals that a protest was coming: On December 19 President Trump tweeted, “Big protest in D.C. on January 6. Be there, will be wild.” Vox reports that D.C. officials tracked bus reservations and expected “stadium-sized” crowds.
And yet, Capitol Police were severely underprepared. They were not wearing riot gear: a marked contrast to law enforcement’s military gear when responding to Black Lives Matter protests in Washington, D.C., last July. The barriers they set up around the Capitol didn’t stop the insurrectionists from entering. On the video footage, some police seemed to open the gates to the Capitol complex, letting attackers in. When the governor of Maryland tried to call up the National Guard for back up it took 90 minutes for the secretary of the Army to authorize. Overall it took four hours to secure the Capitol. At best, this is gross incompetence.
Motives
Motives are our reasons for operating. While it’s unreasonable to expect everyone to be completely altruistic, when we trust, we expect people to act in the best interests of the groups they serve. It is reasonable to challenge the results of a close election. However, there were 62 court challenges and three recounts that all came to the same conclusion: Joe Biden had won. And yet, in the wake of the Capitol attacks scores of House Republicans still voted to reject Arizona’s and Pennsylvania’s counts.
America is built on trust: in the choices, citizens make in electing their leaders; in political opponents to give up the fight and participate in a peaceful transfer of power. Given the overwhelming evidence that the 2020 election was fair and secure, and a 220-year-old tradition of peaceful transition of power, the lawmakers’ insistence on rejecting the certified results raises questions about their motives.
Fair means
The hallmark of fairness is consistency, whether it’s using the same rules to offer rewards or to mete out punishments. It’s long been clear that systemic racism is an underlying problem in American law enforcement. This was starkly evident in these recent events.
We’ve repeatedly seen videos of police killing Black citizens for selling loose cigarettes, for passing a counterfeit $20 bill, for playing with a toy gun in a park. We’ve seen phalanx of police in the streets ahead of last year’s Black Lives Matter protests. And yet we watched a largely white crowd storm the Capitol with impunity. An estimated 14,000 people were arrested for anti-racism protests this past summer; on June 1, 289 protesters were arrested in one day. As of the writing of this article, dozens of people have been arrested for storming the Capitol. If law enforcement officers cannot be trusted to apply the rules fairly, it calls into question the very foundation of what the American government promises its citizens: equality under the law.
Impact
All actions come with consequences and now we’re waiting to see the impact the Capitol attacks will have. What’s next? If the incumbent president and his team actively encourage violence to contest legitimate election results, and if lawmakers continue to protest the 2020 results, what does this mean for the days leading up to the inauguration on January 20? Can we expect to see more violence? And what does this mean for future elections? Can we expect power to transfer peacefully? Or did January 6 signal the beginning of the end? Our trust has been betrayed.
Recovering Trust
Our research shows that lost trust can be recovered. The Capitol attack can be a turning point rather than the beginning of the end. The road to restoring trust is long, but like any other road, you need to take the first step. Right now, government leaders can take three actions to regain our confidence:
1) They can communicate a single message: The actions of the insurrectionists are unacceptable. We know it’s difficult for the government to come to a consensus, but surely lawmakers can unite in saying attacks on the Capitol are unacceptable in any form. Members of the GOP are suggesting, without basis, that the attacks were conducted by members of antifa — a loose network of left-wing activists. This defies the evidence of our eyes and ears, the hours of horrifying footage of people wearing MAGA hats and bearing Trump flags rampaging, looting, and desecrating our seat of government. The suggestion that other parties are responsible, despite clear evidence otherwise, encourages people to deny reality and chips away at our trust in lawmakers. By sending a unified message that attacks on the Capitol are unacceptable lawmakers can make a start at restoring trust in their integrity.
2) They must punish the guilty. That there’ve been so few arrests is shocking, especially given the violence and destruction of property. But the attack on the Capitol isn’t just an attack on the building. The Capitol is a concrete symbol of the promises America makes to its people. Allowing the attackers to walk away sends two messages: First, violence and destruction are fine. Second, the promises America makes, the laws and processes it creates, and the lawmakers who do this work, are not worth protecting.
3) There must be consequences for the instigators, particularly Trump. While this was the work of many, including those who whipped up the crowd at the rally right before the attack and Sen. Josh Hawley, who infamously pumped his fist at the mob outside the Capitol, this was all ultimately done in support of Trump.
If lawmakers fail to immediately impeach Trump, or to remove him from office using the 25th Amendment to the Constitution, they send the message that incitement to violence against the United States of America is acceptable, even for the president. Trump lost an election. Instead of acting as previous candidates have done to call for a peaceful transfer of power and unity, he incited his supporters to fight. In a video speech, he continued to claim the election was stolen and told the mob, “We love you. You’re very special.” What precedent does that set for the future? In a country that is so divided, how can we possibly expect future peaceful transfers of power — not to mention a government that is able to function properly — unless we act now?
Sandra J. Sucher is a professor of management practice at Harvard Business School. She is co-author of The Power of Trust: How Companies Build It, Lose It, and Regain It (PublicAffairs 2021).
Shalene Gupta is a research associate at Harvard Business School. She is co-author of The Power of Trust: How Companies Build It, Lose It, and Regain It (PublicAffairs, 2021).
The host of the TrustTalk podcast, Severin de Wit interviewed Sandra Sucher. The podcast will be published around the first week of February
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