In the Corporation We Trust?
In the Corporation We Trust?
Let us Count the Ways….
Corporations are major players in our global culture. Year by year, they upend historic benchmarks—larger payrolls, more offices throughout the world, millions in quarterly revenue. They operate, in short, on a scale that would have been inconceivable some 20 years ago, collectively employing billions of people across the planet and, for better or worse, representing the cornerstones of our modern civilization.
But with this kind of presence and far-reaching influence comes corporate responsibility. As multi-national employers and producers of global goods and services, businesses can spearhead innovation, contribute to the community and elevate standards of living—or alternatively—exploit populations and operate unethically. When we don’t like what a company does, do we have any recourse? Actually, yes. Although these huge organizations seem impenetrable and immune to public opinion, the public nevertheless has held corporate actors accountable—time and time again.
Consumers can affect the fortunes of corporations; in fact, studies show that losing the public’s trust not only results in bad press, but significantly affects the bottom line as well. A study conducted in 2018 by the journal Economist showed that companies with recent business scandals lost 30% of their value when compared to peers in similar industries whose public image was still intact. And rebuilding trust is not easily accomplished, as big-name corporations can attest.
So, what do corporations need to do to earn trust? Let’s dive in and talk about the characteristics that matter the most.
What Do We Expect from Corporate Players?
Let’s start with an easy one. Corporations need to deliver the goods: Stakeholders want, at a minimum, solid economic value.
Consumers expect companies to demonstrate a basic level of competence and to deliver quality goods and services. The market is full of products that underwhelm for different reasons; we’ve all regretted making bad purchases. If enough buyers feel as we do about a product’s poor performance, the company quietly but surely loses revenue and disappears.
Corporations Need to Operate Fairly.
Whether we are dealing with workplace safety requirements, industry product standards, basic tax laws or just plain honest dealings, we expect companies to follow the rules and to observe the law—with respect to consumers and employees alike. When a company falls short of these minimum standards, the public backlash can be intense.
One of the biggest scandals to hit the car industry in recent years involved the car company Volkswagen Group. Federal investigators discovered that the only VW turbocharged direct injection (TDI) diesel engine to achieve stringent emission targets was the engine tested during official trials. Volkswagen issued a public apology and admitted to the use of software specifically designed to cheat the regulatory test. Roughly 11 million cars produced between 2009 to 2015 were found to emit more than 40 times the banned diesel emissions. In reaction to a clear case of public deception, Volkswagen stock decreased by 20% the day after the public apology and decreased another 17% two days later. Billions of dollars of penalties later, the automobile maker is still working to recover the public’s trust.
Corporations Should Have No conflicts of interest.
A corporation motivated by something other than serving the customer is a sure-fire way to lose trust. Facebook faced public criticism for several reasons in recent years. Arguably, not only did Facebook betray its customer base by allowing personal data to become compromised in exchange for private corporate gain, it also failed to protect a specific user group, namely vulnerable adolescent users. Whistleblower testimony established that Facebook maximized use of computer algorithms that increased the frequency of negative messaging targeting the media platform’s youngest users. Facebook maintains a dominant presence in the social media space, but it’s worth pointing out that the company’s forays into other fields have been met with suspicion. Some would say the firm is losing ground as a result of a tarnished image.
What is the Broader Societal Impact? A Corporation Should be Aware of Risks.
An international corporation’s influence is significant, and its actions can have far-reaching implications. A responsible company needs to be aware of and protect against unintended consequences. Twitter gave us an example of proactive, responsible corporate behavior recently. The social media provider was aware of the high potential to spread misinformation relating to Covid 19 and other vaccinations. Therefore, as a preventative measure, the company flatly prohibited and continues to ban any online discussions relating to vaccinations on its platform.
Corporate Champions: The Heroes Among Us
Granted, just like individuals, there are nuances to a corporation’s image. Microsoft has had its share of anti-trust lawsuits and has been accused of monopolistic, bullying behavior towards competitors. But the corporation’s reputation for product excellence combined with the philanthropic generosity of its founder, Bill Gates, presents a unique case. Microsoft has given massively to regional schools and towards community revitalization efforts—both domestic and international. It is also undeniable that Bill Gates, through the far-reaching work of the non -profit humanitarian foundation he created with ex-wife Melinda Gates, has improved local critical infrastructure and health conditions for millions in the poorest regions of the planet. Recent efforts include the elimination of polio through focused and generously financed global outreach. The Bill and Melinda Gates Foundation is involved in many initiatives to promote the well-being of countless disadvantaged populations. Microsoft—and the humanitarian work of the related non-profit Foundation—gives both “champion” status.
Patagonia’s retiring CEO and his family made headlines recently by giving away all personal wealth generated from their successful international outerwear company and pledging it to the cause of fighting climate change. Thousands of companies like Patagonia are fighting the battles that matter and making a difference—both on a local and global scale. We admire corporations that put customers and employees first, operate to the highest ethical standards, admit mistakes and try to make the world a better place—doing good whenever and however they can. These are the corporations we trust.