26 July 2016

What It Will Really Take To Rebuild Our Trust in CEOs. Take a stand.

Written by: Kate Ferguson, Deputy Global Lead Executive Positioning; Senior Director Client Strategy and Operations at Edelman

Australian Business, Insights, Reputation, Trust

This year’s Trust Barometer, our firm’s annual survey, sheds surprising light on how CEOs are perceived as change agents, and suggests that a new model of CEO leadership is emerging – provided CEOs take specific actions.

The Edelman Trust Barometer reveals that the Australian general population trusts business as an institution more than it trusts its leaders.  A majority of survey respondents view business as the institution most capable of keeping pace with the changing demands of the global economy (compared to government, NGOs and media), yet almost two thirds of the people surveyed in Australia (39 percent) do not trust CEOs to do what is right.

This trust gap is partially explained by a misalignment between what CEOs have traditionally needed to focus on – near-term gains – and what people now expect them to care about and act on, which is long-term solutions. For instance, in Australia, most say that CEOs focus too much on short-term financial results (72 percent) and lobbying (49 percent), and not enough on job creation (60 percent) or positive long-term impact (60 percent).

Further, there is a sense that CEOs are unrelatable (64 percent agree), perhaps fuelled in part because they are seen as being paid too much in relation to everyone else (67 percent agree) and because people are looking for leaders to share more openly about their personal values (79 percent).

But there’s a deeper change in play. While most CEOs believe that their duty is to centre their communications on the operational and financial aspects of a company, today 78 percent of Australian say that a CEO should be personally visible in discussing societal issues and 74 percent expressed the importance of CEOs communicating about the future of their industry.

With expectations for business higher than trust in CEOs, there’s a clear need for more engaged and purpose-driven leadership to bridge this critical trust gap.

 

A New Leadership Model: The Engaged CEO

To understand the shifting expectation of business and its leaders, it’s helpful to trace how the public persona of the CEO has changed over the past few decades.

Back in the 1980s and ‘90s, business leaders could engender attention both for their thriving businesses and their status as pop culture icons. And while the current popularity of Donald Trump in the United States might suggest otherwise, the era of the celebrity CEO essentially ended with the recession of 2008-2009.

Faced with growing government regulation and activist investors, CEOs went underground and turned “invisible.” Instead of being present at public-facing activities or weighing in on the issues of the day, chief executives put their heads down and turned inward, focusing solely on increasing revenues and decreasing costs.

It’s not surprising, then, that today 39 percent of Australian Trust Barometer respondents said that they cannot name any CEOs.

The time has come for the invisibility cloak to come off because expectations of business and its leaders are changing. People now expect CEOs to re-balance their attention to near-term gains with action on long-term solutions.

The call for CEOs today to be not just present on the business side, but also to be visible, real and human on the public side is driving the need for what we call Engaged Leadership.

How can a CEO heed the call?

Meeting Great Expectations

If you are a CEO, shareholders may evaluate you based on your balance sheet. But a broader range of stakeholders shape their opinions and decide whether they trust you through four lenses: your actions; your perceived values; how you treat employees (and what they say about you); and how you engage with the community. People told us that the most important attributes to build trust are around “leading integrity” and there are several ways to communicate integrity to key audiences:

Be visible. Your stakeholders fully expect to hear from you frequently and openly about your dual mandate of earning profits and providing societal benefits. Speak beyond spreadsheets and address industry trends and social purpose. According to Australian respondents, 74 percent expressed the importance of CEOs being personally visible in communicating about the future of an industry.

Take a stand. Be purpose-driven and have a point of view on how your company and industry contributes to society in positive ways. Eight in ten Aussies (78 percent) feel CEOs should be personally visible in addressing societal issues like income inequality.

Tell your story. Be open and share your story in a way that is personal, honest and relatable. According to Australian respondents, the following types of information are important to building trust in a CEO: personal values (77 percent); obstacles overcome (63 percent); personal success story (60 percent); education and how it shaped you (53 percent).

Put employees first. Engage employees directly and frequently. Let them serve as your ambassadors and advocates to help tell and humanize the company’s story. Eighty-one percent of Australian respondents agree that employees are a CEO’s most important audience, even more so than investors and analysts.

Make yourself accessible. Express your values and purpose through direct engagement with stakeholders. Fifty-six percent of Australian respondents expressed the importance of placing the customer ahead of profits, and with an increasing number of communications channels there is a wide variety of ways to engage.

The survey does reveal a direct link between CEO awareness and CEO trust. There was a staggering 24 point rise in trust in CEOs when Australian respondents could name CEOs (63 percent of those who could name two or more CEOs said they trusted CEOs). So if they know you, they are more likely to trust you. 

A Meaningful Opportunity

Recently, several global CEOs have stepped forward on a range of important industry and social issues. Mark Zuckerberg (the only CEO who achieved double-digit recall globally in the Trust Barometer) consistently shares a mix of content and commentary across personal, company and industry interests.

These global CEOs know that finding the right balance between attention to financial progress and advancing the societal good truly matters because it has a real impact on business. The Barometer shows that 42 percent of Australians attribute a business’ contribution to the greater good as the reason that their trust in business has grown. Conversely, of those respondents whose trust in business decreased, half cited a business’s failure to contribute to the greater good as the main driver.

CEOs have an incredible opportunity to build and strengthen relationships by carrying themselves and communicating in a way that is transparent and open. As the data indicates, business leadership as usual won’t cut it in today’s world. The remit is now broader, not unlike what citizens expect of a presidential candidate or other major government leader.

But change does not begin and end with the CEO. As Satya Nadella, CEO of Microsoft, noted, “As CEO, I see my role ultimately to be chief curator of culture. Without the right culture, transformation is impossible.” But only an Engaged Leader can create a culture of integrity, setting the right tone through their actions, values, purpose, and employee advocacy.

View the global findings of our Trust Barometer CEO Supplement here: Trust and the CEO

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