Participants of this year's World Economic Forum in Davos, Switzerland were cautiously optimistic as the discussion shifted from crises to a focus on growth, job creation, and global values.
However, attendees agree that the public's skepticism about the values of the business community could put brakes on growth. The high visibility of litigation and corruption charges fills news reports and skews attitudes. According to PwC's 2013 CEO study, 37% of CEOs believe a lack of trust in their industry could potentially jeopardize their company's growth. As was evident at Davos, business leaders recognize that they need to take a greater role in defining how business is viewed. This marks a big change from times when CEOs felt reputation and public attitudes were far less of a priority than commercial imperatives.
It is challenging to reshape the dialogue around business, and there needs to be strategy, good execution, and metrics to determine impact. Some areas that should be considered as part of a concrete plan to change attitudes include:
- Reconnect business and purpose: CEOs need to restate and reinforce the purpose of their commercial activities. As PepsiCo chairman and CEO Indra Nooyi noted in a session on “Doing Business the Right Way,” there is a responsible way to run companies and make money, and if we change the dialogue, this will rebuild trust. We can shift the conversation by focusing on how businesses bring value to the general public beyond products and services.
- Step up board and investor communications: According to a recent McKinsey study, 63% of surveyed business leaders found that short-term pressures have increased over the past five years, with 46% of respondents noting that these pressures come from their own boards. Short-term investor horizons influence CEOs to focus on quarterly results. Further, Harvard Business Review reports that 44% of business leaders use a time horizon of less than three years for planning strategy, although 86% believe that using a longer time horizon would result in positive corporate performance. Communications with boards and investors can begin to build in longer timeframes for defining company goals, which can encompass a broader set of activities. In a session on trust and long-term value creation, Aron Cramer, president and CEO of Business for Social Responsibility, asked attendees: “Do you want to be around for three years, three quarters or three decades?”
- Drive employee engagement and build into organizational DNA: A strong vision and guiding purpose for business must be repeated and cascaded deep into an organization. Numerous surveys show that an organization's values and leadership inspire and engage associates, retain and attract top talent, and simultaneously increase productivity. PwC chairman Dennis Nally noted that without trust within your organization and various stakeholder groups, businesses cannot move with the speed and agility needed to drive change and react to today's business climate.
- Adopt a multi-stakeholder model: The systematic development of a network of relationships with all key stakeholders will provide support. This includes civil society and government. Several CEOs at the WEF pointed out that the answer to good governance is not government regulation but rather partnership with government as companies move beyond what is just legal to what society expects.
- Measure progress: As we shift to a value-based global business model, corporate leadership must establish key metrics in order to measure progress. The session on “CEO Dialogue on the Role of Business” emphasized that like all critical business activities, reputation efforts need to be measured and tracked to be successful.
While concrete steps can help improve the reputation of business, there also needs to be a new framework with language that moves away from the negative connotations of capitalism to how businesses can both be profitable and bring value to our global society.
Kathy Bloomgarden is CEO of Ruder Finn.