CEOs concerned about trust in the digital age
The world is quickly becoming more connected, but CEOs say it’s harder to gain and retain people’s trust in a digitised society. Consumer sentiment backs that up, as concerns about the massive amount of information companies are capable of gathering can end up souring the relationship.
What a company does with consumer data can be valuable – retailers’ knowledge of a customer’s buying history helps to suggest related items or send customised promotions, for example. But carelessness with customer information can erode a company’s reputation.
A security or data breach that exposes personal information is the top unintentional action that is toxic to a company’s reputation, according to the 2017 Harris Poll Reputation Quotient survey.
Intentional wrongdoing, lying about a product or service, and intentional misuse of financial information for financial gain are the lone actions ahead of disclosure of personal information through a data breach, according to the annual US survey. Seventy-four per cent of respondents said such a breach was extremely damaging to a company’s reputation, and 21% said it was somewhat damaging. And a global survey by PwC shows that 84% of the public lost trust in companies because of breaches of data privacy and ethics.
Consumers in the UK listed protection of data as a rising concern, according to the Institute of Business Ethics. Businesses must address protection of customer information with urgency, according to IBE Director Philippa Foster Back. In the report, she said the issue is “potentially the biggest threat to corporate reputation in the coming years.”
Corporate executives are taking note: 69% of CEOs said it was harder for businesses to sustain trust in the digital age, according to the PwC poll, which surveyed 1,379 CEOs in 79 countries.
In the 2002 version of the PwC CEO survey, just 12% of chief executives thought public trust in companies in their country had greatly declined. By 2013, 37% worried that a lack of trust would harm growth. This year, the number who cite lack of trust as a growth concern is 58%.
Trust has many components, including how much a CEO is paid, how a company reacts to product recalls, and how it treats workers. Another part of trust is how it holds on to customer data: 91% of CEOs said breaches of data privacy and ethics will impact negatively on stakeholder trust levels in the next five years.
—Neil Amato (Neil.Amato@aicpa-cima.com) is a CGMA Magazine senior editor.