Businesses turning to employees and social media to rebuild trust
With public's diminished confidence in business, firms must turn to everyday stakeholders and create 'shared value' for society
This year marks the 10th anniversary of the height of the international economic crisis that saw the collapse of Lehman Brothers and other firms.
A decade on, the fact that multiple equity markets are near or at all-time highs - and that the global economy is growing again- is disguising a toxic legacy of the period for the corporate world.
A key ramification of that crisis is growing distrust in business, not least among the young.
And in turn, this has helped fuel the post-truth phenomenon - in which objective facts have become progressively less influential in shaping public opinion than appeals to emotion - by reinforcing a wider collapse of public confidence in major institutions in both the private and public sectors.
Diminished confidence in business has reinforced key drivers of the post-truth era, posing new hurdles for firms looking to grow and enhance reputations when there is already long-standing and growing backlash to corporates on issues such as executive pay, international trade and globalisation.
Key ways businesses can build trust include tried and tested ones of creating good new jobs while paying workers fair wages.
Yet, beyond this, a growing number of firms are using new ideas to restore credibility in the post-truth age.
While faith in big institutions and elites is declining, trust in everyday stakeholders - perceived to have more authenticity and legitimacy - is growing.
And this trend relates to a second key driver of the post truth-age, with the digital revolution changing the way many of us consume information.
Research shows that public recommendations from family, friends and colleagues we know and trust is becoming increasingly influential in shaping views and opinions.
The political world has been trying to get to grips with this change, and corporates are also increasingly addressing it.
One way business is harnessing the power of this shift is through empowering a new breed of grassroots advocates to help rebuild trust.
Another key feature of successful reputation building in the post-truth economy is founded on the apparent paradox that while there is growing distrust of business, many people nonetheless expect the private sector to play a greater role in society, including helping tackle the range of problems, from climate change to growing economic inequality.
Of course, firms have long had sustainability, social responsibility and/or philanthropic programmes.
But the challenge - and potentially opportunity - is greater now, giving rise to what leading Harvard academic Michael Porter has highlighted as a new way for firms to secure competitive advantage by creating "shared value" for society as well as shareholders.
Perhaps the key idea behind this shared value concept is that the corporate competitiveness and the health of society at large are mutually dependent and reinforcing.
Thus, capitalising on the connections between societal and economic progress - including tackling challenges such as climate change - can help drive growth for years to come.
The writer is an associate at LSE IDEAS at the London School of Economics. This article appeared in The Business Times yesterday.