Friday, March 7, 2014

Why are Indian companies not getting the ‘Trust’ they deserve?

Trust is a very emotive issue, subject to interpretation. The closest definition of trust in business would be that one should have the confidence to partner with another party whereby one shares his/her proprietary information, intelligence and practices.

As per the 14th Annual Edelman Trust Barometer, Indian institutions rank second from the bottom among 27 nations on the basis of being trusted by other nations. The annual survey captures trust levels in four key institutions globally and for each of the 27 countries. The institutions surveyed are Government, Business, Media and Civil Society (Non-Governmental Organizations). China is just one percentage point ahead of India which is insignificant, if that helps Indians draw some solace. But the point remains on why Indian institutions (companies headquartered in India) are not worth trusting or is it that they’re not getting the trust they deserve. I’d like to believe the latter.

Courtesy Edelman Trust Barometer 2014

The fact that many Indian brands figure in the most valuable brand, according to 2014 Brand Finance Global in the world effectively does away with the argument that Indian companies aren’t worth trusting. No brands can attain such value without being trusted.

Then why are most Indian companies not getting the trust they deserve?


One reason is clearly owing to the conduct of some Indian corporates that has earned Indian businesses and indeed the country a bad name – Satyam Computer Services (wherein its promoter B. Ramalinga Raju is serving his jail sentence in a multi-million dollar scam, arguably India’s biggest corporate fraud), several telecom companies involved in the notorious 2G spectrum scam are just a few examples.

To an extent, our tarnished image is the doing of our own brethren. Of course, one can argue that even America has had its fair share of corporate fraud with Enron, MF Global, WorldCom among others. So, the question should be whether Indian corporates have put in place the necessary checks and balances to avoid such occurrences. Time will tell.

The second reason could be many questionable corporate practices of Indian businesses. While it would be incorrect to paint all Indian businesses with the same brush, many companies do remain predominantly family-run with promoters ruling by fiat. Indeed, the erstwhile Roman Emperors would feel quite at home at many of our corporate houses. Industry forums are buzzing with discussions on corporate governance but when talking to investors and employees at these companies, the usual response is that the pace of reform is too slow to have any positive impact.

Courtesy Edelman Trust Barometer 2014

The Values v/s Valuations Debate

Many Indians tend to opt for white-collar jobs in MNCs, not just for the prospects of better remuneration (which isn’t always the case as salaries in Indian companies have caught up) but for better corporate practices and more conducive work culture. The Edelman Trust Barometer validates the fact when it shows that Indians trust companies from America, U.K. and many western markets more than Indian companies. The fact that Indians don’t trust the Chinese companies is no surprise. This clearly indicates that while valuations do matter (considering some BRIC-headquartered companies have very high valuations), the discussion is increasingly on the values of doing business.

Courtesy Edelman Trust Barometer 2014

 Staying with the Romans, many Indian corporates would argue that Rome wasn’t built (or rather reformed) in a day. Yes, but we’re in the twenty-first century, aren’t we, so perhaps the speed of reform should be a tad faster. Or does this sound like time travel for the old school corporate managers?

The third (and every Indian’s favourite reason) is that of rampant corruption in the government where rules are framed in a way to let those playing dirty get the edge. The 2G scam, coal scam (fondly referred to as Coalgate) are glowing examples. One tends to wonder what the Ivy League educated ministers in the Government were up to if they couldn’t get the basics right. A plausible answer seems to be as Arvind Kejriwal put it- the problem is not lack of capability of government ministers or bureaucrats, it’s the lack of intent. And that’s why any external reform effort is destined to fail.

So, is the end of the tunnel near? Hopefully, India Inc. has been through the worst and learnt its lessons on the way. Let the corporate bigwigs start by taking measures that would help in trust-building within each economic sector. It is when such an atmosphere is created that like-minded companies begin to work together. For instance William Procter, a candle maker and James Gamble, a soap maker realized that if they stopped competing with each other for their common raw material (wax) and formed one company, they would be far more successful.  That meant trusting each other. Thus was formed Procter and Gamble (today known as P&G) and the rest is history. Indian corporates need to realize that instead of fighting with one another for the limited pie, they’re better off working together to grow the pie. And this co-operation should not be limited to a transactional level but on a long-term basis. Reputation building, be it for a brand or an industry, is a long-term play and consistency is key - Consistency in conduct and in communication of the values. So, communication professionals have an important role to play. 

When Indian businesses usher in this atmosphere of trust, leaving corporate rivalry and egos aside, the trust of international companies towards India is bound to grow. The fact that Indian businesses are more trusted by India’s ‘aam aadmi’ (common man) than NGOs, Media and Government should be a good omen. Let’s hope the goodwill is strengthened lest the halo slips.