Understandably and traditionally, the World Economic Forum includes multiple panels on economics, finance and business. That’s hardly a surprise: When the world’s business leaders gather in Davos this week for high-level discussions on everything from “Reshaping the World through Entrepreneurship, Education and Employment” to “The U.S. Economic Outlook,” those topics will dominate the public and private discourse that takes place during those four days.
But this year there’s one WEF discussion topic that stands out among all of the others. By the time you read this, five corporate chiefs — including the CEOs of PepsiCo and PricewaterhouseCoopers – who will have participated in a panel discussion called “Doing Business The Right Way,” will all be asking themselves and each other the most important current economic question: “How can business regain trust?”
Hopefully this discussion will include at least some recognition that trust will come from convincing more than just investors and analysts that a company is on the right track. Companies will also have to communicate with their customers in a way that will give them enough confidence to happily and continuously buy what’s being sold.
This is not just the musings of an executive of a global public relations agency who wants to sell more services to the companies whose CEOs will be in Davos. Opinion polls taken specifically on the subject as well as the only real poll that counts – sales – show that, while corporate earnings and profits have recovered from the recession, the reputations and trust of those same companies’ customers is at least no better (and in many cases far worse) than it was before the downturn began almost seven years ago.
The record earnings and profits of the past few years actually are part of the problem. Consumers, who constitute 70 percent of the economy in the United States and are similarly important elsewhere around the world, typically think that the profits come at their expense. When consumers consider high prices, layoffs, interest rates, product recalls, short billing periods, additional fees for basic services and declines in customer service, not to mention the seemingly constant headlines about their privacy being violated because of the theft of company-collected personal information, has constantly reinforced their belief that they have been the ones paying for a companies’ success and what they see as an executives’ high compensation.
Add to this the still-obvious anger from small business and small business supporters at the U.S. government bailouts of Wall Street and the auto industry and you get a virtual witches’ brew of consumer and buyer resentment. As a result there is little trust and corporations in a bigger reputational hole than they’ve been in for some time.
Some of the WEF panel discussions are aimed directly at the trust problem. For example, one of the topics –“The Millennial Challenge” is about the continuing problems (the WEF program calls it a “crisis”) with youth unemployment, one of the primary causes of consumer anger and reasons that sales aren’t growing as fast as expected. Another — “Money and Influence” – will debate another of today’s top reasons for consumer anger: inequality and whether those with the resources to influence policy are exacerbating the problem.
As someone who has spent almost his whole career dealing with Wall Street and Washington, D.C., I can tell you from very personal experience that the WEF has correctly seen both the present and future by having the concept of regaining trust run through each of its nine specified themes because the repercussions for companies not dealing with the issue will go far beyond-than-expected sales. It will also pose obvious domestic and international political risks as elected officials rush to conduct oversight and impose additional regulatory burdens to appease their constituents’ anger. Unless “money and influence” stops them, there simply will be no political downside to doing this.
If you have any doubts about whether this is true, just consider the additional and more stringent regulations imposed on Wall Street firms following the financial crisis. Also consider the literally billions of dollars in fines, settlements, legal fees and lobbying expenses these companies already have and will continue to pay to deal because of it.
As the WEF program shows, corporate leaders cannot pretend that their customer’s trust can be taken for granted. Even many of the most esteemed companies and most admired brands have experienced sales and revenue disappointments because of this resentment. Many have already and other may soon be in danger of being called before a legislative committee and having its CEO appear on the front page of a major newspaper with her or his hand in the air swearing to tell the truth. And that picture, along with a video taken with a smart phone, will go viral in seconds, be shown repeatedly on Bloomberg and CNBC and become the subject of a feature on Saturday Night Live and The Daily Show.
Qorvis’ National Director of Financial Communications, Stan Collender, has extensive experience in financial and public affairs communications. During his more than three decades in communications, he has designed and implemented award-winning communications efforts for financial companies, Wall Street firms, trade associations, nonprofit organizations, and federal agencies.
Follow him on Twitter: @TheBudgetGuy
Originally published on northamerica.mslgroup.com.