Are you in? Conduct – it’s everyone’s responsibility
In times of distrust and heightened regulatory and reputation risk, it is crucial that you own the conduct conversation.
Prioritising preventative measures will ensure better conduct outcomes are more consistently achieved by employees and business partners – minimising the need for large scale and reactive remediation.
Visible leadership means company boards and other oversight bodies have the advantage of accurate and meaningful reporting metrics to discharge their fiduciary duties effectively.
Are you in? Conduct - it’s everyone’s responsibility
Find out where your sector sits
Embracing the customer voice
"Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen." Winston Churchill
In April 2016, Australian banks each committed to appointing a customer advocate. Buffered by a persistent reputational storm and plummeting trust, the installation of individuals whose job it is to give voice to the customer was one of many changes made by the industry to rebuild trust and confidence in the sector.
Organisations continue to grapple with how to genuinely take into account, and act on, the needs of customers, and deliver them value. We are in the age of the customer: every organisation seems in hot pursuit of a customer-centric business model and robust customer satisfaction ratings.
There is a real and pressing need for organisations to find a meaningful and sustainable way to take the perspective of customers, and to understand the impacts - positive or negative - that the organisation, its processes, products and services, have on them. The appointment of customer advocates isn't only relevant for banks; many sectors could benefit from such a role.
What does a customer advocate do?
The role isn't set in stone and there is no 'one size fits all' approach, but common features include:
- Customer advocates give voice to the customer's perspective, ensuring it is understood and given priority and weight.
- Where there is an existing complaints framework, the customer advocate can provide an impartial review of a customer's internal complaint outcome. Their role is to reach an outcome that is fair to both parties and their decision is often binding on the organisation, but not on the customer.
- Many customer advocates focus on developing policies and approaches within the organisation that support larger cohorts of customers - such as how to assist customers in financial hardship or other vulnerable circumstances.
- Customer advocates can act in an advisory capacity, and are consulted on particularly sensitive, complex or long-standing disputes to see if they can add a fresh perspective, and facilitate a more creative or human solution.
- Proactively engaging with customer and community groups to understand the impact of the organisation on its customers, and how processes, products, and services can be refined, enhanced and improved.
Why appoint a customer advocate?
There are several reasons to appoint a customer advocate. It demonstrates commitment to the interests of customers, and gives both customers and staff confidence that an organisation is treating good customer outcomes as a priority.
Effective customer advocacy also saves an organisation money and time. It ensures that customer issues are resolved sooner with less chance of reputation damage and an increased ability to identify where things have gone wrong. This enables better preventative insights and supports efforts at organisational improvement.
Lastly, customer advocates may be 'culture barometers' capable of gauging the level of transparency and willingness of management to be challenged on customer matters.
How can you make your customer advocate a successful part of your business model?
Five key points to keep top of mind include:
- Have clarity about your purpose for appointing a customer advocate. Don't tick a box with this role, but rather position it to make a difference and solve existing problems in the organisation. Communicate this from the top, and often.
- Make sure the customer advocate can act in an impartial and independent way. The organisation needs to ensure there is structural independence for the role, such as through the right reporting lines and remuneration model, as well as empowering them to actually act in an independent manner.
- The organisation's culture has to be such that it is prepared to embrace the challenge of an alternative - and at times controversial - viewpoint, which the customer advocate will provide if they are doing their job properly. It's up to the CEO and executive team to create permission for constructively challenging viewpoints to help drive insight and change.
- Be prepared for the role to evolve over time, as both the organisation and the customer advocate 'settle into' what the role can bring. We are seeing banking customer advocate roles expand to take a focus on preventing problems, and using data analysis to better understand where customers are vulnerable to problems.
- Choose the right person: someone who will have the respect and support of senior management, external stakeholders, and staff, but also who has the courage to speak truth to power.
Community expectations are the new KPIs
The way we've always done business is often the very thing that fails to meet community expectations.
Establishing and maintaining the social licence
It's certainly important for organisations to pay due attention to how they treat stakeholders, but assuming you already have a social licence misses a key point: the very nature of any licence is that it must be granted, and - crucially - it can be withdrawn.
The concept of the 'social licence to operate' emerged from the mining and minerals industry a quarter of a century ago. The highly intrusive and potentially damaging impact these operations could have on the communities and environments within which they operated, made it essential for them to establish and maintain trust through consultation, engagement and demonstrating respect.
Today, social licence considerations apply to a broad range of sectors. For instance, it has been said of banks that "they don't just operate under a banking licence; they operate under a social licence and that is underwritten by public confidence and trust". Without that confidence and trust, the licence fails.
Taking the temperature on your social licence
A social licence is not about 'trying to do the right thing' - it's actually about whether or not the organisation has the community's permission to operate. It's also dynamic: a social licence can not only be withdrawn, it can reflect an organisation's level of legitimacy and trust. A widely accepted model for understanding the quality and maturity of a social licence uses the range shown in image 1 below.
Social licence comes at a cost
The withdrawal or weakening of an organisation's social licence can impose enormous cost, pressure, and distraction - from unnecessary disputes with stakeholders, to management distraction, knee-jerk government policy, over-regulation, unwanted media attention, and loss of shareholder value.
It was surely a shattered social licence that allowed the Treasurer to boldly, and without notice, impose a major levy on Australia's five largest banks, confident that, when they took up arms against it, they would find few allies at their shoulders. "They already don't like you very much", the Treasurer said. "Prove them wrong... tell them another story".
Obtaining and maintaining a social licence requires sustained commitment, effort and investment. Senior leaders have a great opportunity to apply the mindset and language of social licence to tell that other story: to frame the way they talk, make decisions and set the organisation's values and direction.
Food for thought
- Do you need a social licence to operate?
To establish whether you need a social licence, questions to consider include the following:
Do you provide essential services to the community, whether directly to consumers or as a key link in the value chain? Could your organisation have a serious negative impact on your community - if you failed, or treated stakeholders unfairly?
With community expectations increasing for all types of organisations, is there even any limit to the types of organisations that require a social licence?
- What does your social licence health check say?
Organisations need to continue to test the health of their social licence, beyond the realm of Net Promoter Scores. The social licence is built on more complex issues of trust and community expectations.
Social licences rarely detonate overnight. They are more likely to erode through a series of problematic events that expose a divergence between what the community expects, and the perception of whether the organisation in fact meets those expectations (the trust gap).
- Could the way you've always done business be what gets you in trouble?
Since community expectations continue to ratchet upwards, 'the way we've always done business' is often the very thing that fails to meet community expectations.
Take the opportunity to test your business against social licence criteria to rethink how you deliver services to customers - because out-behaving your competitors could be your strategic advantage.
Image 1: The quality and maturity of a social licence
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