Americans have a tough time trusting large corporations, especially in light of the economic collapse. This is actually good news for small businesses, which are mostly exempt from the skepticism. Plus, there are simple ways a small business can build trust. Read more about this in the full article from The Street.
For years, corporate America has had a public image problem, one that has only gotten worse since the economic collapse. In the wake of Enron and AIG (AIG), many Americans suspect large corporations of doing whatever it takes to make a quick profit, regardless of the effect on workers or the economy as a whole.
The good news for small businesses is that they’re largely exempt from this skepticism. A poll conducted by NBC News and The Wall Street Journal earlier this year found only 13% of respondents had "a great deal" or "quite a bit" of confidence in large corporations. That number jumped to 54% for small businesses.
It may be easier for a small company to build confidence, since customers often know the owner personally and can see firsthand how the business is run. But mistrust of corporate America has worrisome implications for all of us.
"Trust is as big an issue for small businesses as it is for large corporations, especially for new ventures," says Brian Moriarty, director of the Business Roundtable Institute for Corporate Ethics, which brings academics and business leaders together to promote and facilitate ethical training. "General mistrust in business hurts all companies, no matter what their size."
For example, the belief that financial-services companies are willing to sell shoddy investments to pump up their own profits — whether true or not — trickles down over time to cast suspicion on small-town financial advisers. Mistrust of the pharmaceutical industry’s marketing techniques can eventually lead to suspicion about payouts to independent medical practices.
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Companies that have been successful for a long time build a level of trust simply by thriving; if they manufactured dangerous products or had subpar customer service, they wouldn’t stay in business. But small businesses with less of a track record don’t inspire the same confidence.
"With a newer company or startup, the strength of the brand promise is much less well known than it is with a company like Wal-Mart (WMT)," Moriarty says. "Trust breeds trust, but it takes time and experience to build."
There’s been surprisingly little research done on what factors affect trust between the public and businesses, a gap the Institute for Corporate Ethics is trying to fill. Its Project on Public Trust in Business is investigating a number of different factors, from the relationship between good will and competence to implicit attitudes about business in U.S. culture.
In its initial report, the group spelled out five elements businesses need to build public trust:
- 1. Create a set of values that define your company and its people, then make sure those values are maintained at all levels.
- 2. Build and manage strong relationships with other institutions based on mutual trust.
- 3. Embrace transparency.
- 4. Work within your industry to build trust in the sector as a whole.
- 5. Enhance the contribution your company makes to the community and society.
Building trust isn’t simply a matter of feeling good; it also has a real economic impact on your business. It’s far more expensive to get customers than to keep them, and current customers also tend to spend more per purchase. Trust is one of the biggest factors in bringing those customers back.
"All organizations have to continually monitor that they’re doing what they say they do," Moriarty says.
He also notes that behavioral experiments have shown that people who are more trusting of others behave in a more trustworthy manner. In other words, you have to trust others to be trusted. Tempting as it may be to badmouth the CEO who ups his pay after laying off hundreds of workers, there are other business narratives. In towns across the country, small companies are helping local schools, donating to food pantries and empowering their employees to succeed.
That’s how trust is built, story by story.
This article was republished with permission from The Street.