What does it mean to be a “trusted brand”? For years, advertising agencies and businesses large and small have understood that word of mouth is the most powerful marketing campaign of all. When someone recommends a product or service, they are not just saying they liked it; they are putting their own reputation and credibility on the line. If the other person does not like the product or service, it not only affects their future buying decision – it also affects the trust they have for the person making the recommendation. For years, hospitals have used patient satisfaction surveys to gauge their performance on customer service. The key question used as the gold standard of how they are doing is, “How likely are you to recommend the hospital to a friend or family member?” If former patients are willing to put their own reputation and trustworthiness on the line to recommend a hospital, it must really be an outstanding place. Thus reputation and trust drive business credibility and profits.

We need only look back a short period of time to see how the erosion of trust has destroyed well-established organizations, as well as the effect it has had on public perception of corporate culture. From the Enron scandal to the sub-prime banking fiasco, mistrust of corporations large and small is rampant, and for good reason. The more recent issue with Volkswagen's misguided fuel economy numbers is yet to be played out, but VW has estimated it will cost the company $7.3 billion in the long run. In the short run, VW stock plummeted more than 35% and the company reported a whopping $1.9 billion loss in the third quarter, down from almost a $3 billion profit a year ago. These examples have led the public to see corporations largely as having a sole purpose – to make money – without a higher obligation to society. Moreover, it appears that those companies with higher levels of trust and a stronger reputation can weather challenges better, as the recent Chevrolet ignition issue exemplifies.

How then do organizations build their reputation and trustworthiness in order to increase resilience if not for sales and profits? It all revolves around culture and values. Honesty, integrity, caring for their employees and the environment, combined with a quality product and perceived value, are key drivers in building a strong trusted brand. In fact, according to the Edelman Trust Barometer, “treating employees well” and being a “good corporate citizen” are in the top 10 factors most important to a corporate reputation. Building external trust, however, cannot be accomplished without first establishing internal values that drive trust within the organization and building a corporate culture of trust starts with, like most things, the leadership.

Leadership, primarily the CEO and the board, must establish corporate values that drive internal, and subsequently external, trust. Values around ethics and good business practices are the starting point, followed by those that drive teamwork and high product and service standards. Values themselves do no good if they are just words on a page or in a slide deck seen at new employee orientation. Values must be communicated throughout the organization and modeled by the CEO and other leaders within the organization. One of our clients, a $4 billion public company, recently instituted an internal value structure where their employees were asked to follow three simple actions that exhibited the value of respect: Show up on time, look good and be prepared.

Communication and leading by example are also key factors in building trust within an organization. Every leader has a reputation, and leaders known as good communicators and those that lead by example are invariably trusted and consequently high performers. Simple things go a long way as well. Whether it's starting and ending a meeting on time or quickly solving an issue, every action taken by the leadership sets the tone and either builds or erodes trust within the organization. A well-prepared leader who treats others with respect, who always acts ethically and transparently, sharing pertinent information while committing to confidentiality of information not meant to be shared, and who is consistently honest and straightforward, will earn the trust of their colleagues and subordinates and build a strong reputation for their company and themselves.

Organizations that build this type of internal trust and reputation will then be seen externally at a higher level and will reap the benefits. These benefits range from stronger external relationships with suppliers and consumers to more resiliency in times of crises, all ultimately adding to the bottom line.

Stuart Levine is chairman and CEO of Stuart Levine & Associates and EduLeader LLC. He can be reached at 516-465-0800 or slevine@stuartlevine.com.

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Reputation Impacts the Bottom Line

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