Running a Business Through a Trust: Key Insights

A surprising statistic reveals the power of running a business through a trust: companies that are considered trustworthy can outperform the S&P 500 by levels as high as 30% to 50%. This unexpected fact highlights the significant impact that trust can have on a business’s success and performance.

Trust should be seen as more than just a buzzword; it is a tangible, strategic asset that can provide a competitive advantage. By prioritizing trust and implementing trust-building actions, businesses can create trust equity and protect against potential breaches of trust.

In this article, we will explore the benefits of running a business through a trust, the components of trust management, and the actions organizations can take to build trust with their stakeholders. Understanding the role of trust and its impact on customers, employees, and overall business performance is key to achieving sustainable success.

Key Takeaways:

Running a business through a trust can lead to significant financial outperformance.
Trust should be managed as a strategic asset, just like any other balance sheet asset.
Trust-building actions should be implemented across the organization’s functional areas.
Trust has a positive impact on customer loyalty, reputation, and revenue growth.
Even during challenging times like the COVID-19 pandemic, trust remains crucial in building relationships with stakeholders.

Understanding Trust at the Operating Level

Trust is a multifaceted concept that serves as the foundation of meaningful relationships between organizations and stakeholders. It is built through actions that demonstrate competence, reliability, transparency, and humanity. Trust management is crucial for organizations to establish and maintain strong relationships with their stakeholders, including employees, customers, and partners.

Organizational trust encompasses various components that contribute to the overall trustworthiness of the company. These components include compliance with legal and ethical standards, a clear and purpose-driven culture, a focus on exceptional customer experience, integrity and protection of data, and financial transparency. Each of these trust components plays a vital role in shaping stakeholders’ perceptions of the organization.

In order to effectively manage trust, organizations must have a comprehensive understanding of trust-driving activities across the entire enterprise. This involves assessing trust from the perspectives of different stakeholders and identifying the operating domains that influence trust the most. Deloitte’s research has identified several key operating domains that significantly impact trust:

Compliance: Ensuring adherence to legal and regulatory requirements to build trust with stakeholders.
Culture and Purpose: Developing an inclusive and purpose-driven culture that aligns with stakeholders’ values and builds trust.
Customer Experience: Providing exceptional products, services, and support to enhance trust with customers.
Data Integrity and Protection: Safeguarding sensitive data and ensuring its integrity to foster trust with stakeholders.
Financial Integrity and Health: Maintaining strong financial management practices and transparency to instill trust in financial dealings.

By focusing on these operating domains and implementing trust-building actions within each, organizations can strengthen their trustworthiness and enhance relationships with stakeholders. Trust-building actions may include:

Implementing robust compliance policies and processes.
Creating a culture of transparency, honesty, and integrity.
Investing in customer satisfaction and addressing their needs proactively.
Securing data and privacy through advanced cybersecurity measures.
Establishing strong financial controls and transparent reporting processes.

It is important for organizations to continuously monitor and evaluate their trust management strategies to ensure they meet stakeholders’ expectations and align with evolving trust elements. By prioritizing trust, organizations can build strong relationships, enhance reputation, and gain a competitive advantage in the marketplace.

“Trust cannot be demanded nor taken – it must be earned through consistent and trustworthy actions.”
– Deloitte Research

Key Trust Components and Operating Domains

Trust Components	Operating Domains
Compliance	The organization’s adherence to legal and regulatory requirements
Culture and Purpose	The organization’s inclusive and purpose-driven culture
Customer Experience	The organization’s delivery of exceptional products, services, and support
Data Integrity and Protection	The organization’s commitment to safeguarding data and maintaining its integrity
Financial Integrity and Health	The organization’s strong financial management practices and transparency

Understanding trust at the operating level enables organizations to effectively manage trust, strengthen relationships with stakeholders, and drive positive outcomes. By prioritizing trust components and implementing trust-building actions, organizations can foster a culture of trust and enhance their overall trustworthiness.

Measuring Trust in Operating Domains

In order to understand the levels of trust within different operating domains, Deloitte has developed a reliable and valid method for measuring trust performance. Through a comprehensive survey of global Fortune 500 executives, trust performance scores have been obtained for each domain, providing valuable insights into the areas where companies excel and where improvements can be made.

According to the research conducted by Deloitte, companies tend to prioritize trust areas where they have more experience and capabilities. This includes domains such as crime prevention, culture and purpose, compliance, and product quality. These domains have traditionally been the focus of trust-building efforts, given their direct impact on organizational performance and reputation.

However, there are other domains where companies have room for improvement in terms of trust performance. These include diversity, equity, and inclusion (DEI), environmental, social, governance (ESG), and innovation, intelligence, and technology. These domains are becoming increasingly important as societal expectations evolve and stakeholder demands change.

Trust Performance Scores by Operating Domains

Domain	Trust Performance Score
Crime Prevention	7.5
Culture and Purpose	8.2
Compliance	8.6
Product Quality	8.9
Diversity, Equity, and Inclusion (DEI)	6.3
Environmental, Social, Governance (ESG)	6.7
Innovation, Intelligence, and Technology	7.1

As the table above shows, companies have a strong performance in trust areas such as crime prevention, culture and purpose, compliance, and product quality. However, there is a need for improvement in domains like diversity, equity, and inclusion (DEI), environmental, social, governance (ESG), and innovation, intelligence, and technology.

By measuring trust in these operating domains, companies can identify areas for improvement and prioritize actions to enhance trust performance. Doing so will allow organizations to build stronger relationships with stakeholders and ensure sustained success in today’s trust-driven business landscape.

Driving Trust through Actions

Organizations can build trust by taking specific actions within each operating domain. These actions demonstrate competence and intent, making a positive impression on stakeholders. For example, an organization can prioritize data protection and cybersecurity, be transparent in financial reporting, and foster an inclusive and diverse workplace. Actions like these contribute to trust-building and generate value for the organization. It is essential for businesses to align their actions with the drivers of trust identified by consumers and employees, such as accountability, clear communications, and admitting mistakes.

By prioritizing trust-building actions, organizations can create a strong foundation of trust that resonates with their stakeholders. These actions serve as evidence of the organization’s commitment to ethical and responsible practices, enhancing its reputation and credibility. Trustworthy organizations are more likely to attract loyal customers, retain valuable employees, and foster strong partnerships with suppliers and other key stakeholders.

Developing Trust-Building Actions

The development of trust-building actions involves a deep understanding of the key organizational trust drivers. These drivers guide organizations in identifying the actions that will have the most significant impact on building trust. Through research and stakeholder feedback, organizations can gain insights into the specific areas and behaviors that influence trust. By aligning their actions with these drivers, organizations can create a targeted approach to trust-building.

Accountability: Holding oneself accountable for actions and decisions, and being transparent about the outcomes
Clear communications: Providing accurate and timely information, and promoting open dialogue with stakeholders
Admitting mistakes: Acknowledging and taking responsibility for errors, and implementing corrective actions
Respectful treatment: Treating employees, customers, and other stakeholders with fairness, dignity, and respect
Ethical behavior: Demonstrating integrity, honesty, and ethical practices in all aspects of the organization’s operations
Customer focus: Understanding and meeting customer needs, and consistently delivering high-quality products and services

These trust-building actions should be integrated into the organization’s culture, values, and day-to-day operations. By consistently demonstrating these actions, organizations can build trust with their stakeholders and strengthen their reputation as a trustworthy and reliable partner.

Through a combination of trust-building actions that align with the organizational trust drivers, organizations can create a strong foundation of trust that permeates all levels of their operations. This trust not only enhances the organization’s reputation and credibility but also fosters stronger relationships with stakeholders, resulting in increased loyalty, engagement, and overall success.

Trust and Its Impact on Stakeholders

Trust plays a crucial role in the relationship between businesses and their stakeholders, including both customers and employees. Extensive research has shown that trust has a profound impact on various aspects of a business, ranging from customer loyalty to reputation and brand growth, as well as revenue generation.

First and foremost, trust fosters customer loyalty. When customers trust a brand or organization, they are more likely to continue purchasing its products or services, leading to increased customer retention rates. Additionally, trusted businesses are more likely to receive positive word-of-mouth recommendations, further expanding their customer base.

Furthermore, trust significantly influences a company’s reputation and brand perception. A trusted brand is seen as reliable, transparent, and committed to delivering value. This positive reputation not only attracts potential customers but also strengthens the bond with existing customers, further enhancing their trust.

Employee trust is equally important, as it directly impacts employee loyalty and retention. When employees trust their company, they are more likely to remain committed and dedicated to their work. Trust empowers employees, creating a positive work environment that fosters collaboration, productivity, and innovation.

Building trust with stakeholders requires aligning business actions with their priorities and effectively communicating the organization’s commitment to trust. By prioritizing trust in decision-making, companies can develop a culture of integrity and transparency that resonates with both customers and employees.

In conclusion, trust has a profound impact on stakeholders, including customers and employees. Businesses that prioritize trust-building actions are more likely to attract and retain loyal customers, strengthen their reputation, and create a positive work environment, ultimately benefiting their bottom line.

The Pandemic’s Effect on Trust

Despite the challenges posed by the COVID-19 pandemic, both customers and employees report higher trust in businesses now compared to before the pandemic.

During this global crisis, many companies have stepped up and earned trust by delivering essential services and products. Healthcare companies producing tests and vaccines have played a critical role in combating the virus, while tech companies have kept the economy running by enabling remote work and online transactions.

However, the pandemic has also highlighted the importance of trust in organizations. Companies must continue to implement leading practices and address trust issues to maintain and strengthen the trust they have gained.

For customers, trust is influenced by accountability, clear communications, and admitting mistakes. In times of uncertainty, businesses that take responsibility for their actions and are transparent in their communications are more likely to earn and retain customer trust.

Employees, on the other hand, prioritize holding leadership accountable and being treated well. During the pandemic, companies that have demonstrated care for their employees’ well-being and provided support have fostered a stronger sense of trust among their workforce.

Impact of the Pandemic on Trust

Stakeholder	Trust Factors	Impact of the Pandemic
Customers	Accountability, clear communications, admitting mistakes	Higher trust in businesses that demonstrate responsibility and transparency during the crisis.
Employees	Leadership accountability, treatment and support	Employees trust companies that prioritize their well-being and provide support during challenging times.

Conclusion

Running a business through a trust provides significant strategic advantages that can contribute to long-term success. By utilizing a trust structure, businesses can foster increased trust from stakeholders, potentially outperform the competition, and safeguard against breaches of trust.

Trust should be recognized as a critical asset and managed accordingly, with actions taken across various functional areas of the organization and through the perspectives of different stakeholders. This involves a comprehensive approach that prioritizes trust-building actions in areas such as compliance, culture, customer experience, data integrity, and financial health.

Trust not only has a positive impact on customer loyalty and employee retention but also enables businesses to align their actions with the drivers of trust. It is crucial for companies to consistently build trust by demonstrating accountability, clear communication, and the ability to admit and address mistakes.

While running a business through a trust offers unique advantages, it is important for companies to consider their specific circumstances and evaluate the options available, including trust versus a corporation. By understanding the benefits and potential risks associated with different business structures, companies can make informed decisions that best suit their objectives and contribute to sustainable success.

FAQ

What are the benefits of running a business through a trust?

Running a business through a trust offers strategic advantages, including increased trust from stakeholders, potential financial outperformance, and the ability to protect against breaches of trust.

How can a trust structure benefit my business?

A trust structure for a business can provide enhanced trustworthiness, potentially outperforming the market, and safeguarding against trust-related issues.

How do I set up a business trust?

Setting up a business trust involves consulting with legal professionals who specialize in trust structures and establishing the necessary legal documents to create the trust.

What are the advantages of managing a business’s assets through a trust?

Managing business assets through a trust can provide benefits such as increased trustworthiness, protection of assets, and potential tax advantages.

How does trust ownership differ from a corporation for business ownership?

Trust ownership for a business offers unique advantages such as increased trust from stakeholders and potential financial outperformance, while corporation ownership provides separate legal entity status and limited liability for owners.