Christine Alemany November 11, 2020 The 2020 Edelman Trust Barometer revealed a troubling reality for brands: Consumers do not think enterprises can be both ethical and competent. Rather than brands needing to work harder to prove consumers wrong, perhaps the real problem lies in how we define competency and success.
With nearly 20 years of experience working in enterprise environments — including stints as the head of global retail software at Dell and as an SVP at Citi — I am familiar with this sentiment. My time at those Fortune 100 companies gave me first-hand knowledge of the lack of value executives put into aligning growth with ethical practices. Those ethical practices were welcome, but only as long as they did not interfere with the bottom line.
This reality was part of the reason I decided to strike out on my own and start TGBA, a branding, marketing, and consulting firm that affords mothers who have executive experience but have been away from the professional world for a while a chance to return to the workforce and lend their expertise to small businesses. It was a chance to ensure that competence and ethics could coexist rather than be mutually exclusive.
In general, publicly traded companies are incentivized to value short-term gains over long-term strategy. Under that model, ethics easily fall by the wayside. Take Uber, which continues to sink resources into lobbying to change regulations so it can avoid complying with laws. Or Amazon, a business built entirely on not paying taxes even though it would be nowhere without the ability to ship its products across the tax-supported highways, railways, bridges, and airports.
The world lauds these companies for their successes, and their earnings reports blind us to their refusal to invest in the infrastructure and educated workforce they rely upon. All hope is not lost, though. It is still possible to find success while championing sound values.
Yes, ethics and competence sound like an ideal combination, but what does that look like in practice? Do companies need to shape norms, even if it means a dip in profits? Do customers need to hold brands accountable, even if it means they have to pay a little more to align their purchase behaviors with their professed values?
Both sides are essentially engaged in a game of chicken. We all have a role to play when it comes to realigning ethics and competence. Here is what needs to happen:
1. Consumers must align their purchasing behaviors with their values
Modern consumers are too easily wooed by convenience and price. Brands like Amazon, Apple, and Nike provide a level of ease, quality, and customer service that consumers have trouble denying — even when considering how these brands fall short when it comes to ethical business practices and social responsibility.
Everyone knows that Amazon’s rapid turnaround is enabled by poor working conditions and draconian policies. Everyone knows Nike’s supply chain is problematic. Everyone knows Apple is a poor environmental steward. Yet, do we stop ordering online to make life a little easier by avoiding a trip to the store? Do we go with a different shoe brand? Do we give up our beloved iPhones? Hardly.
In short, consumer behaviors show that we value convenience, quality, price, and customer service ahead of social responsibility. For things to change, consumers need to start putting their money where their mouths are and align their purchasing behaviors with their values.
2. Businesses must bake corporate social responsibility into their business models
Many companies already pay lip service to ethics, but it is not enough. In 2019, for instance, 181 CEOs signed Business Roundtable’s Statement on the Purpose of a Corporation. They promised to lead their organizations in a way that benefits all shareholders, including communities, customers, suppliers, and employees. This sounds great in theory, but the “promise” they made had no teeth in reality.
This is similar to when Delta recently vowed to go carbon neutral. The idea is lovely, but the company is not taking any fundamental steps away from the source of the problem. Rather than stop flying or using fossil fuels, Delta merely is going to buy carbon offsets and continue to support the problematic oil industry. Like many companies, it is making changes to seem ethical instead of actually being ethical.
Why are these half-measures toward ethical practices so common? Because it is difficult to go all the way and do the truly right thing. It takes less effort to worry solely about your quarterly earnings. It is far easier (and cheaper) to lobby to get out of paying taxes and boost your profitability than to shift the fundamentals of your business model.
3. Company leaders must work to change what it means to be successful
Building trust takes time, and company leaders must get comfortable with the long-term approach and resist the endless temptations to take shortcuts. They must be aware of how the rules of the game are rigged to incentivize short-term thinking — and then do the opposite.
They need to foster a conscientious approach to everything, starting with the origins of their money. Not all investment is good money, but society often forgets this. Money always comes with strings attached, and companies need to be aware of those strings and whether their values can align with them.
Of course, there will be plenty of wins in the short-term. By balancing ethics and competence, companies will still be able to delight their customers and earn loyal fans. Better yet, they will prove to customers over time that profits and bad behavior are not the same.
Dr. Bronner’s Magic Soaps is an excellent example of a company that has taken a long-term approach. The company is highly profitable, and it has gotten there by sticking to its values and having a leader who was steadfast in his beliefs.
More recently, State Farm announced it would reimburse $ 2 billion in auto premiums to customers who have been driving sparingly in the wake of the COVID-19 pandemic. This gesture shows compassion for and an awareness of the current landscape. It is also good business for State Farm as its internal costs decrease based on its salary structure for claims adjusters. Ultimately, this seemingly minor adjustment to State Farm’s bottom line will give a major boost to its customer loyalty. Everybody wins.
There is no way around the fact that managing a company is hard. It comes with countless decisions, and many of them are incredibly complicated. If businesses want to earn and retain consumer trust, they need to prioritize transparency and consistency. These companies need to resist the easy path to increased revenue and educate customers on how they are living their values.
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