It’s that time of the year again when companies have their annual kick off and share their plans for the new year. As I think about the key social, technology, economic and political trends that will shape 2019, my predictions come with a healthy dose of ESG (Environment, Social, Governance); an enduring framework for creating long-term business value.
Here is my Leadership Manifesto for 2019!
- Tune Into Trust
Consider just how far we have come in what is now called the “trust economy”. We get into cars with perfect strangers and sleep in homes of people we’ve never met because we trust the companies that provide us with these services, and the communities that self-regulate them. The world is now shaped by user reviews and ratings, and in most cases we trust these before making a personal or business purchase.
One slip though, one problem and we are two taps away from a tarnished brand and a plummeting stock price. According to the annual Edelman Trust Barometer, consumer trust continues to decline both for companies and for governments.
How your organization operates its marketing, advertising, customer and employee engagement programs will be critical to creating a trustworthy brand in 2019. In particular, how you manage data will have a significant impact on building trust with your brand, your consumers — and increasingly with regulators. For those leaders or Board Directors who think their company is not a “data” company, let me set the record straight — every company is a data company! You have data on your customers, your suppliers, your employees, your competitors and more. How you use that data, and how you align your values with your business practices will directly influence your own Trust Barometer.
2. De-risk Your Reputation
Your reputation can be your most valuable asset — and one of your greatest risks.
Customers in any industry value transparency and responsibility as they choose how and where to spend their money — they want to engage with brands that inspire them and that they trust.
Many corporate boards and leadership teams under-estimate reputational risk because it can be considered “intangible” and difficult to measure, as opposed to the more straightforward operational and financial elements of a business. But, with public and investor pressure heating up around issues like climate change mitigation strategies and diversity, boards and investors need to broaden their views on risk and reputation and begin looking at “capital” and “value” differently. This means going beyond financial, manufactured and intellectual assets alone, and including natural, social and human “capital” as a part of risk and reputation management.
By incorporating all elements of risk (financial, environmental, social and governance) into reporting and measurement systems, you can proactively create a positive company reputation, and develop ways to “de-risk” it.
3. Galvanize Corporate Governance
Corporate governance (the “G” in ESG) and ethics are the measures of fairness and transparency that shape the culture inside the company walls. The transparency of these walls, however, is increasing, making governance part of brand reputation — no matter how hard we might try to keep it “internal.”
Governance must include a holistic set of ESG components in company governance structures so that warning signs can be easily detected for early prevention. For instance, how will the you respond if environmental or social issues arise? This should be determined and communicated far in advance of any actual incident to avoid costly brand and reputational clean-up. It will create confidence and good will with employees, shareholders and customers.
4. Emphasize Employee Value
Employees are one of the most — if not the most — important stakeholder for any company, and the way in which you engage with them is a crucial characteristic of success. Millennials are not only the largest spending generation, they are also entering and moving up the ranks of the workplace at astonishing rates, having surpassed Generation X in 2015 as the largest share of the U.S. workforce.
Employees want to work for companies whose values are aligned with theirs, and these include environmental and social responsibility. Whether through diversity groups, “green teams,” or company-sponsored volunteering, successful companies provide opportunities for employees to meet freely, develop ideas and channel these values into tangible, actionable efforts that ultimately improve the company’s product and brand.
Leaders who are dedicated to improving working conditions and enhancing the diversity of their teams will be more successful in recruiting and retaining the best talent — and passionate engaged employees strengthen the company brand.