Stories such as these, involving privacy breaches, mis- and disinformation, and companies failing to live up to their promises, are rather common in today’s business world. In many of these scenarios, the business initially appears to be doing well and leaders assume that the organization is trusted, only to suffer a breach in trust in an unexpected area. In other cases, they simply aren’t thinking about trust at all. The stakes, however, are high: A recent Deloitte analysis found examples of three large global companies, each with a market cap of more than US$10 billion, that lost 20% to 56% of their value—a total US$70 billion loss—when they lost their stakeholders’ trust.1 Trust—or lack thereof—has thus become a mainstay topic in headlines across the world.
Many senior executives recognize the need to build or rebuild trust in their organizations. However, they often struggle to understand exactly how trust can be managed. Indeed, in today’s dynamic and challenging business environment, trust is becoming increasingly complex to understand and manage, especially as organizations are expected to build trust across growing ecosystems of stakeholders and amid evolving expectations.
One of the first steps in managing trust is understanding how it can be defined and measured. Trust is commonly considered an abstract or even nebulous concept, and many organizations don’t typically prioritize trust or treat it with the same focus and urgency as they do other business priorities. But the benefits for those companies who are trustworthy are significant. Recent research suggests that these companies outperform the S&P 500 by levels as high as 30% to 50%.2
We propose that trust should be seen as a tangible, strategic, and critical asset, given the real, quantifiable value that it can bring to an organization. And it should be managed much like other key performance indicators on the organization’s balance sheet, by considering its drivers and implications more deeply across the enterprise. With this perspective, organizational trust should be built from the inside out,3 through levers and actions that cut across the functional areas of a business, from product quality to data protection to financial integrity.
Organizational trust also depends on the needs and perspectives of an organization’s different stakeholders—board members, investors, customers, suppliers, and employees—so the relative impact of trust-building actions must be framed and viewed through the lenses of these stakeholders as well. Organizations that proactively approach trust management in this way can build what we refer to as trust equity, helping create positive impacts on their bottom line and a layer of resilience protecting the organization against potential breaches of trust. Trust and resilience go hand in hand. Deloitte’s 2022 Consumer products outlook finds that 95% of executives whose companies have high levels of consumer trust believe their companies are more resilient.4
This paper offers a statistically verified approach for measuring trust across different operating domains, helping leaders identify their organization’s potential sources of a trust breakdown or areas where building trust proactively can create a competitive advantage.