Trust Is Priceless: Four Ways Companies Can Foment Credibility

What makes a company trustworthy?

For some, customer service is key – clients like to know their problems will be addressed quickly and efficiently. For others, it’s knowing that the company has a positive reputation, usually earned through consistent delivery on ethical conduct. For still others, the most important aspect is transparency – being able to rely on the company to be open and honest about its products and pricing.

One thing is for certain: trust is the backbone of a successful company.

IESE professor Jordi Gual explores the importance of trust in his book Confiar no tiene precio (Trust is Priceless). He looks at how, in recent years, citizen trust in public entities and private companies has been on the decline – and what we can do to change that.

According to the World Values Survey (2017-2022), the percentage of respondents who feel “most people can be trusted” varies from country to country drastically. In Greece, only 8.4% of people say they trust others, while in Denmark, that figure is as high as 74%. The European average falls somewhere in the middle, closer to Germany’s figure of 45%, while in the United States the level of trust has fallen to 37%.

This increase in distrust among free-market democracies is a result of profound economic and social transformations. In recent decades, these societies have faced several challenges: digital revolutions (including the introduction of artificial intelligence), geopolitical conflicts, extreme weather disruptions stemming from climate change and aging populations – especially across Europe. There are also the lingering effects of both globalization and the international financial crisis of 2007-08. The culmination of all these issues has created repercussions in wealth distribution, the sustainability of the welfare state and economic insecurity.

At the same time, public policies have failed to meet people’s needs, which in turn has led some citizens to demand more from private entities. Increasingly, citizens are asking companies – particularly corporate giants – to step up and play a more active role in addressing society’s biggest problems.

In his book, Gual looks at how companies can respond to this pressure while keeping economic viability in mind. Here are four steps organizations can take in order to generate trust:

1. Have a clearly defined corporate purpose. This helps the company stay on track when orienting itself towards tackling social issues and meeting societal needs.
2. Be transparent with stakeholders and clients about your goals. It’s crucial to keep their interests in mind when making decisions, and not prioritize any one person or entity above the others in order to maintain a proper balance.
3. Keep your promises. Trust within the company is just as important as – if not more than – trust from the public. In order to generate trust, the company must focus on the organization’s collective wellbeing – this means not just treating employees well, but also maintaining expectations. Companies need to follow through on their promises and show their commitment to employees so that employees can in turn be committed to the company.
4. Be purpose-driven but control profitability. Although profitability is not an end in and of itself, it is essential in ensuring the company prospers and its goals are met. If a company cannot compensate its shareholders for the risks they have taken in their investments, it will simply disappear from the market.

The way companies are structured and operate in the modern world is changing. The new paradigm departs from traditional practices that mostly prioritized shareholder interests; now, companies adopt a more holistic approach that considers the well-being of various stakeholders, including employees, customers, suppliers and the broader community – including the environment.

There’s the idea that companies can, as the saying goes, do well by doing good. After all, the decisions companies make can affect consumers or employees directly – in the type of food people eat or the type of work-life balance they get.

But it’s not so simple: sometimes it’s more expensive to do what’s right and, therefore, not financially sustainable in the short run. That’s because it’s not always clear if there are enough clients willing to pay the price increase necessary to, for example, be more environmentally friendly. But despite the economic challenges, making such changes could be profitable in the long run – to address and try to solve today’s societal issues can be a means to build a profitable and sustainable business model for the future.

Jordi Gual is a professor of Economics at IESE Business School and author of the book Confiar no tiene precio (Trust is Priceless).