Over half (54%) of companies on the Accenture Competitive Agility Index experienced a major drop in trust, resulting in the loss of $180 billion in potential revenue.
A decrease in stakeholder trust can have a substantial impact on a company’s competitiveness, according to the research, which examined 7,000 companies in 20 industries and 4 million data points. Accenture Strategy worked with Arabesque to source data and create a new proprietary measure of trust.
Trust can no longer be considered a “soft” issue for companies, says Bill Theofilou, senior managing director, Accenture Strategy. From product recalls and data breaches to C-suite missteps, trust incidents present an ever-increasing risk to the financial well-being of companies, he adds.
Today’s leaders must deliver on their company’s promises if they want to limit the lasting impact a major trust incident can have on their competitiveness.
“Managing trust can’t be relegated to simply addressing individual incidents with public relations,” Theofilou tells Marketing Daily. “To regain trust and also mitigate financial loss, companies need to intentionally create a culture that builds, maintains and preserves trust—so that if and when a trust incident does occur, impact is minimized.”
Being transparent about a trust incident with all key stakeholders—from employees, to customers, suppliers, investors, analysts and the media—is critical after such a problem occurs, he says.
“Companies also need to immediately develop and communicate a clear, actionable strategy for how they plan to address the incident, maintain frequent communications on progress with all key stakeholders—and follow through on it,” Theofilou says.
According to the research, when a company faces a material loss of trust among its key stakeholders, the result is a drop in that company’s Index score by two points on average across industries. Every one-point drop in an Index score equals a negative impact on revenue growth by 3% and EBITDA by 5%, on average across all industries.
“Across industries, our research proves that those companies who prioritize stakeholder trust as part of their competitive strategy are much better positioned to weather trust incidents,” Theofilou says. “Companies must bake trust into their DNA, strategy, and day-to-day operations so they can shield against financial impact if and when an event does strike.”
While it can be nearly impossible to prevent trust incidents completely, companies can prepare by having a strategy that balances growth, profitability, sustainability and trust, he says.
“And when an incident does strike, this balanced strategy helps minimize its impact," Theofilou says.