The future of building trust in business has been saved
The future of building trust in business
What chief legal officers should know
As we recover, reopen, and rebuild, it’s time to rethink the importance of trust. At no time has it been more tested or more valued in our leaders and each other. Trust is all-encompassing. Physical. Emotional. Digital. Financial. Ethical.
A value is now invaluable
Trust is a currency of commerce. That’s truer than ever today, with much of the world’s trade taking place among parties in distant locations who may never have met face-to-face. Every exchange may be viewed to some extent as an expression of trust, and the successful ones pile up like deposits in a bank account. In this way, the organization creates a nest egg to draw upon in the event—hopefully uncommon—that something goes amiss.
The nest egg is necessary because the loss of trust can be costly. We looked at three large companies hit by a trust-related scandal that led to regulatory or government intervention. Before the scandal, each of these companies had a market cap of at least $10 billion. Afterward, their market cap declined 20 % to 56 % for a combined loss in total value of roughly $70 billion.
Chief legal officers (CLOs) have always had a key role in the conscience of the enterprise, setting the course for ethics and, often, compliance. Today, as business moves faster and the CLO takes on a larger role in the strategic direction of an enterprise, trust continues to be a fundamental imperative and a growing factor in a company’s success—not only for the organization broadly, but for the CLO’s ability to be effective as a member of the senior executive team. And, while trust may be difficult to touch or see, it can be built.
The chemistry of trust
Trust is essential for the functioning of society and the economy. We rely on others to act with integrity and honesty. We expect governments, businesses, and organizations of all types to deliver on their promises and conduct themselves ethically and responsibly. The rise of complex and polarizing societal forces, the pace of technological change, free access to information, and the demands of a new generation of consumers and workers are changing the nature of business leadership, influencing the call for a bold vision, a renewed sense of purpose, and new models of thinking. Furthermore, these shifts are leading to business leaders being held more accountable in living up to their slogans of purpose.
The importance of well-being for effective leadership
How chief legal officers are leading during COVID-19