CorpComms Magazine

Almost two thirds of British adults want businesses to explain openly how they make and spend their money as one of the first steps in rebuilding public confidence, according to a new report.

The Perceptions of Business Transparency Report, an annual publication from the Institute for Business Ethics (IBE) revealed exclusively in CorpComms Magazine, found that 60 per cent of adults want businesses to be more transparent in their workings but that 62 per cent do not believe businesses offer sufficient information on how they conduct themselves.

This follows the revelation that public trust in British business is still faltering and that half of all adults claim that the conduct of banks linked to the financial crisis has damaged their trust in all businesses.

But the report finds that businesses have yet to respond to the request for transparency. Indeed, 24 per cent of those surveyed by Ipsos MORI claimed that openness and honesty in business have declined over the past year, while 59 per cent say they can see no change over the same period.

Although not highlighted in the report, however, there have been several examples of Britain's businesses embracing transparency over the past year.

Last October supermarket giant Asda, which is part of America's Wal-Mart, outlined a new strategy to make it a genuinely transparent business and put its customers at the heart of its decision-making process.

Open customer engagement

Asda has launched a 'Chosen by You' initiative allowing a panel of 18,000 customers to get involved in the decision making process, installed web cameras in different parts of the business to allow customers to 'trace the journey of every Asda product' and introduced a 'Bright Ideas' strategy, rewarding customers who come up with innovative ideas to save money.

At the time, chief executive Andy Bond, who also pledged to provide access to his expenses if demanded, said: 'From today, our customers become core decision makers. We're opening up the company in a way no company has done before.'

Similarly, online banking group first direct, which is owned by HSBC, is pioneering new ways to engage openly with customers by carrying live, unedited customer opinions on its website. A 'happiness widget' also sweeps the web for comments about first direct, depicting each as either positive, negative or neutral.

The move follows the realisation that, as customers now share bad experiences more openly on the Internet, companies need to open up and really listen to what is being expressed - both good and bad.

However, sadly for Britain's businesses, it seems that the majority of adults are now so cynical about the state of corporate ethics that 76 per cent cannot imagine any large company opening up about its daily dealings without being compelled to do so by, for example, a regulator.

Philippa Foster Back, director of the Institute of Business Ethics, says: 'Trust is the bedrock upon which consumer confidence is built, and while British business has so far focused on finding routes to economic recovery, our report makes it clear that the recovery of public trust is equally important.

'In order to rebuild trust among consumers, employees and business leaders of the future, institutions must prepare to move away from their traditional investorled, one-way method of communication via dense and complex reports. All businesses should prepare for a sea change in which they build and sustain an open and honest dialogue with the public.'

Rebuilding trust - A roadmap to recovery

Catherine May, group corporate affairs director, Centrica

When historians finally turn their attention to the recession that marked the end of the first decade of the new century, they'd do well to consult the Institute for Business Ethics (IBE). Every year it publishes a report into the public's attitudes towards ethics in business.

This year's results show that the conduct of banks linked to the financial crisis has damaged trust in all businesses, not merely banks. Alarmingly, business is facing an acute crisis of trust among young people. The number of 16-34 year olds who believe that businesses generally behave ethically has plummeted by 14 percentage points in the last year.

As companies emerge from the downturn they will have to rebuild public trust as well as their balance sheets. The companies that recognise that the two are inextricably linked will win through.

Smart companies realise that winning is no longer about getting consumers to spend more, but rather making sure that consumers choose to spend their money with them. History shows that in tough times consumers often deepen their ties with brands they trust. Authenticity and integrity are no longer a 'nice to have' and the brands that demonstrate this hold even more currency when consumer confidence has been dented.

The pre-takeover Cadbury and Waitrose are prime examples. Both have recently made moves to cement their reputation for sustainable business practices at a time when ethical labour and environmental responsibility issues rank in the top three areas of company behaviour that the public believe need to be addressed, according to the IBE's research.

Cadbury took Fairtrade to the mainstream with its Dairy Milk bars last July, whilst Waitrose has looked to sustainable fishing, sponsoring the popular End of the Line documentary.

Both initiatives were grounded in their corporate DNA as opposed to marketing bolt-ons. The moves successfully positioned Cadbury and Waitrose as companies that are investing in tough times to provide ethical products without the premium price tag. This is ultimately good for consumers, good for the environment and, importantly, good for business too.

So, in a period in which many companies are trying to do less but achieve more, what does the IBE's research tell us about the roadmap that winning businesses must follow to recover trust?

First, companies can show that they are in touch with the real world and public concerns around fair play by looking long and hard at pay and incentive structures. Companies need to ensure they encourage long-term sustainability and retain the best talent while discouraging excessive risk taking for short-term rewards.

Second, they can cultivate a company conscience that empowers employees from boardroom to factory floor to 'do the right thing'. Every business will claim to operate according to a set of core values, but they are meaningless unless brought to life as criteria in performance reviews, reward and incentive structures, and confidential 'whistleblowing' hotlines, such as the one we operate at Centrica.

Third, leading companies will be asking themselves whether they are doing enough to lift the lid on how they run their business and the challenges they face. This means getting better at opening up to show how they price their products and services, a concern for almost one fifth of consumers.

Centrica is starting its journey down this road to recovery by acknowledging customer concerns over the price of energy and creating greater transparency about the story behind the bill. The aim is to help customers feel in control by explaining what makes up their bill, showing them how to reduce it and, in the process, their carbon footprint.

To this end, British Gas, our retail arm in the UK, has launched a listening campaign. The company is inviting members of the public to join a customer panel that will have unprecedented access to the heart of the business. They will ask challenging questions and most importantly, report back publicly on what they've found. British Gas will listen carefully, answer questions honestly and do all it can to act on their feedback.

It will take time to build trust, and time will tell if this is a tipping point for public trust in business. Businesses cannot always expect the public to like what they do, but they can and must work harder to ensure their actions are understood. History will not judge kindly those who fail to do so.

Issues businesses should prioritise

                                                           2009              2008

Caring for employees              38 per cent     32 per cent

Concern for environment         29 per cent     36 per cent

Investing for future                     27 per cent     20 per cent

Providing more jobs                 26 per cent     21 per cent

Training the workforce              26 per cent     21 per cent

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