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Canadians needn’t be reminded that the most high-profile political scandal in recent years – SNC-Lavalin Group Inc. – centres on corporate reputation.

DARIO AYALA/Reuters

Bruce MacLellan is the CEO of Proof Inc., a Canadian-headquartered communications marketing firm.

It’s a tough time in Canada for trust in the private sector. Canadians needn’t be reminded that the most high-profile political scandal in recent years – SNC-Lavalin Group Inc. – centres on corporate reputation. While that specific situation has had considerable impact, now encompassing the recent departure of the company’s CEO, it’s far from an outlier. Concerns over executive compensation at faltering Hudson’s Bay Co. recently came to a head at its annual meeting. And the disintegration of Canadian cryptocurrency exchange QuadrigaCX has spurred a deepening FBI investigation.

It is clear that companies have homework to do to build confidence within the business community, with their shareholders and with the society, whose structures enable them to function. Unfortunately, though, new data underscore how corporate Canada is already on the back foot.

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According to Proof Inc.’s 2019 CanTrust Index, large corporations are the least trusted organizations in Canada right now, garnering the trust of only 20 per cent of respondents, well behind not-for-profits, charities, media organizations and even governments. Surprisingly, Canadians are also feeling less trusting of small and medium-sized enterprises (SMEs). Western Canadians and women are two of the groups most skeptical about big companies.

And among people in leadership positions, CEOs are faring little better. When we asked employees in Canada to rate their own CEOs or most senior leaders at work, only 45 per cent expressed trust in these figures, a result significantly lower than the 55 per cent CEO trust level recorded in 2018.

These aren’t just domestic trends. In February, Gallup’s Workplace consulting division released a survey that begins with a provocative question: “Are businesses worldwide suffering from a trust crisis?” The answers came, in part, from employees themselves. In one set of questions, a shockingly small proportion of respondents – less than about a third – expressed confidence that their companies would behave ethically in their relationships with customers. The result poses a bracing question: If the people on the payroll don’t believe in their employers, who will?

It’s not all bad news. The Canadian cannabis-production industry is steadily building trust, according to our three years of tracking. Strong government regulation likely helps that confidence.

Certain brands – Canadian Tire and Loblaw, for example – also tend to fare better with steady or growing trust.

The digital age has changed the rules for communicating and building trust.

Incidents that impact trust are increasingly visible to the general public and have a significant impact on shaping reputations. Digital channels enable online customer reviews, price-comparison tools and consumer empowerment, challenging brands and reputations like never before. The heightened transparency in our digital world means trust breaches are on display and an ever-present concern. Employees can rally on social platforms to blow the whistle on CEOs and companies; some see this as a duty.

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For years, we’ve also seen some companies at all scales, but especially larger ones, invest efforts in their corporate reputations. They talk about “stakeholders” as much as “shareholders,” and allude to the importance of securing “social licence” to operate, especially in regulated sectors. Corporate social-responsibility programs, including philanthropic efforts, have become table stakes in the reputation wars.

In this struggle for trust and positive reputation, our research suggests business needs a better game plan. The downward trust trends demand that we consider how the decline in faith in businesses of all sizes has affected reputations and brand loyalty, sales and other measures of corporate well-being, such as employee retention and recruitment.

The private sector is the source of our prosperity and the enabler of important government spending in areas such as health and education. Trust in these companies is a matter of national importance and concern.

There are at least three ways we can do better:

  • First, CEOs and other senior leaders need to be more self-aware. We know that ethical behaviour, transparency and alignment on values drive trust. Leaders need to walk the talk. But when was the last time a CEO mapped out his or her trust-building strategy?
  • Second, boards of directors must be playing a role. A good risk-management framework should consider reputation and include metrics for how it is measured among internal and external audiences. The trust-building record of the CEO ought to be part of a board’s annual performance evaluation.
  • Third, we need to ask how business schools are responding to the accelerating trust deficit. Have curriculums been updated to train leaders to communicate and genuinely connect with audiences and stakeholders? Do business students and faculty fully understand the digital-age implications for corporate reputation? And do our business schools adequately explain the importance of trust in terms of the impact on the bottom-line?

It’s high time that we start giving trust the full attention it deserves. Corporate Canada will enjoy even greater success when consumers, employees and voters trust the private sector to make the right decisions for a better country.

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