Trust in government institutions and corporations has been on a downward spiral for some time. The well-regarded Edelman Trust Barometer reveals further declines in trust across government, media, and business. Our recent federal election reinforces this with support for the majors dropping from 92 per cent to 67 per cent since 1980.
This decline is driven by factors such as political polarisation, misinformation, and economic instability. Edelman reports that arresting the decline requires improved transparency and accountability, effective communication and responsive governance.
We use most of these capabilities at a household level to maintain social harmony with our neighbours. Yet these same attributes are seemingly difficult for governments and corporates to deliver consistently. Larger organisations, likely due to poor accountability, often fail in their commitment to a deeper community engagement beyond a sports or arts sponsorship.
CEOs will always feel the heat of organisational reputational and potential career damage that inevitably comes from failing to meet community expectations. Edelman reports that 62 per cent of respondents want CEOs to engage more in contributing to social changes.
Continuing a key theme of our future leader series, the future CEO will need a stronger external focus, taking on a “chief community engagement” role. They will deeply engage and address the needs of the community their organisation serves, while their COO deals with the many daily internal matters.
The CEO’s role as a chief community engagement officer demands significant commitment. It is not a role for a part-time chairperson, and it certainly cannot be subordinated below the senior leadership team. With Australia’s oligopolistic economy, major super funds could soon join the airlines, supermarkets, banks, and telcos as being on the nose if they don’t engage well.
All funds must allocate more time to better listen to and act genuinely on community concerns. This ensures the CEO is fully invested in the community’s well-being, making informed decisions that benefit both the organisation and the community.
Stay ahead of the curve or get cancelled
The CEO must always balance the interests of all stakeholders, including employees and customers. However, the community might be considered the most influential, as it encompasses all stakeholders. Engaging with community organisations, advocacy groups, business associations, media, and NGOs, who can all influence their membership, is essential for maintaining a positive social license.
Ignoring community engagement can lead to significant backlash and potential cancellation of products or services. A major Australian airline learned its own harsh lesson in recent times and has improved its community reengagement with a new CEO.
Many super funds met their Jan Carlson “moment of truth” with the Covid 2020 early-release scheme. They rallied to deal with the huge spike in withdrawals, and most managed very well. But this hasn’t translated into dealing promptly with insurance claims, cleaning up duplicate member accounts or ensuring better cyber security protections, which banks have had for years.
Speaking of banks, just ask our biggest bank what it learned after it introduced new fees, just prior to Christmas and after years of inflation. The pub test fallout was swift.
Commit to acing the test or face the fallout
While super funds have had their missteps, making themselves easy targets for politicians and media, they are well positioned if they stay on purpose to deliver better services and returns for members.
That said, purpose alone will not produce winners. This will require heavy expenditure on systems and greater responsiveness. Combined with the highest service, governance, communications, and transparency standards, per Edelman’s criteria. Regular pub visits are encouraged – purely for community engagement testing, of course.
Insightful CEOs understand that a strong community reputation provides some buffer against missteps and temporary performance failures. Yes, a fund’s performance is always very important for members but it can never be guaranteed, whereas excellent customer experience together with strong community engagement is within management’s control, with more predictable outcomes.
Strong engagement is about integrating the community’s voice into the organisation’s strategy. This involves transparent communication and collaboration to develop solutions that are mutually beneficial. This is where trust, enhanced reputation, and competitive advantage begin.
An internally promoted CEO, with experience in various operating roles, is likely better equipped to engage with the community faster. They have the internal network and confidence to drive changes, in response to community feedback, across the organisation. An ability to shorten the time frame from listening to delivering better community results will only further boost the organisation’s community standing.
Complexity needs CX squared
Just as a strong customer focus should deliver better customer experience (CX1), strong community engagement (CX2), should deliver better community trust. This gives us what I call CX squared.
Wise leaders know that they need to consistently support our institutions in their words and actions every day. The future CEO as the chief community engagement officer is a transformative role that requires a shift in thinking on stakeholder engagement. Only when the CEO and their boards place community engagement at least the same level as government relations will their efforts be seen as more than token.
By dedicating more attention to community engagement thereby engaging the power of CX squared, CEOs can ensure their organisations remain relevant, competitive and trusted by the communities they serve. This community leadership approach is existential for success in our volatile world.
Michael Swinsburg is managing partner at Alexander Hughes Executive Search and Leadership Advisory.
