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Aug
26

TRUST ACROSS AMERICA™ RELEASES FIRST FINDINGS FROM ITS STUDY OF TRUSTWORTHY BUSINESS PRACTICES IN PUBLIC COMPANIES

While there may be a continuing and complex trust crisis in America, our research shows that there is a direct relationship between business performance and trustworthy behavior. And while a universal definition of trust may not exist, it’s not really a problem,—it’s just the way things are. We love to put precise metrics in place that describe and explain, in linear and causal terms, things like human behavior. But reality doesn’t always cooperate. And because what can’t be measured also gets overlooked, trust, which is absolutely critical in business relationships, needs measuring.

A 2008 paper written by the Economist Intelligence Unit entitled “The Role of Trust in Business Collaboration” concluded with the following statement:

“Even though best-practice corporate governance has been on the corporate radar for some time now, it seems that the trust element of governance, despite being so closely linked to ethics, has yet to become a business standard.”

We believe that many important concepts cannot be reduced to a single metric, and that is certainly true for trust. However, what can be defined and measured are various contributory components of trustworthy behavior in business—factors that we can all agree are definitely somewhere in the trust neighborhood. And when these factors are evaluated and aggregated, there are some encouraging results about companies that somehow seem to be “doing the right thing.” We may not be able to precisely measure trust; but that doesn’t mean we can’t rate it, test it, evaluate it, and above all—manage it. What we have recently done is removed the ‘yet’ out of the Economist’s description.

In 2007 we set a goal of developing a rigorous approach to better understanding and evaluating trustworthy business practices. We began laying a foundation for a trust ecosystem, and Trust Across America™ (TAA) was hatched. Through our professional relationships, LinkedIn group, and our radio show, we have spoken to dozens of academic and corporate experts and consultants across the wide range of specialized silos relating to organizational trust- ethics, integrity, reputation, ESG, CSR, accounting, and sustainability to get their feedback on this elusive concept of trust. From this collaborative effort, we have developed a methodology that we think approximates the most holistic and comprehensive definition and measurement of trustworthy corporate behavior to date. We named it FACTS™. It allows us to provide meaning, definition and measurement to both the business and behavioral side of trust.

FACTS™ is an acronym. It stands for:

Financial strength and stability
Accounting controls
Corporate governance and community impact
Treatment of Stakeholders and Transparency
Sustainability

We ran the FACTS model again historical public data for thousands of public companies from 1998-2009, and eliminated those that did not have complete data. In essence, our methodology analyzes hundreds of data points from three independent providers, and with equal weighting, arrives at a cumulative FACTS™ trust score for almost 2000 of the largest publicly traded companies. Currently, thirty nine companies reach the Gold Standard of 50 points or more in each of the FACTS data categories.

Some other noteworthy findings from this study:

•The company with the highest trust ranking (across sixteen sectors) is in the same industry as BP Global. We find this somewhat timely since it is a goal of TAA to have the most trustworthy companies share their best practices.

•The companies with the highest scores in all data categories come from six different industry groups, so no single industry dominates in the “trust” category.

•The retail sector has the highest average trust rating of the sixteen.

•When we rank the 1954 companies, the top 10% are almost evenly split between large and small (over and under $2 billion market cap).

•Only two hundred companies in the database scored above a “50” in sustainability efforts.

Over the next few weeks we will be populating the Trust Across America website Link to Website with the following material:

-An alphabetical listing of the names of all 1954 companies for which we have complete data.
-An alphabetical listing of the top 10% of all companies.
-Company specific and industry reports that will allow C-Suite executives to anticipate “surprises”, manage risk, and better protect their company’s reputation; provide a workable framework for enhancing organizational trust and reputation; and provide meaning, definition and measurement to both the business and behavioral side of trust..
-Reports for consumers and other professionals.
-Additional resources for public companies that wish to delve deeper into internal and external behavioral assessments.

We will also begin conversations with the media (both print and broadcast) about our findings and will start to contact some of the top companies for interviews and further involvement. Our mission is to highlight companies that are “doing the right thing”, refocus media attention away from the negative, and provide opportunities for companies to share best practices.

I look forward to your comments and feedback. The best initial method to communicate is via email: barbara@trustacrossamerica.com

Barbara Kimmel, Executive Director

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One Response to “Measuring Trustworthy Business Practices”

  1. August 27th, 2010 at 16:37 | #1

    Congratulations, Barbara and Jordan. I look forward to hearing more from you on this important initiative to broadly define the parameters of trustworthy companies. As you know, I remember when this was just a gleam in your eyes, and I am impressed at how far and how solidly it has come.

    Charlie Green

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