Will government’s new high-pay strategy help repair trust in business?
Today, the UK government announced a raft of new measures aimed at improving corporate governance. I was asked by PR Week for comment and you can read the resulting article about whether this strategy will improve trust in business here. Below are my thoughts in full:
- Trust in business as an institution is largely a function of how well the private sector delivers growth in jobs and living standards. To the extent that these reforms deliver long-term improvements in UK business performance, they will help improve trust.
- When companies or industries are seen to be delivering prosperity and tangible benefits to our daily lives, how they conduct themselves matters much less to the public. The concept of ‘fairness’, rather than ‘equality’, seems to be the central issue. In this context, the register of companies that have pushed through executive pay deals in the face of shareholder opposition will be more important than the published pay ratios, although the latter is what will dominate the headlines and cause communications professionals the most headaches.
- If improving trust in business is one of the main objectives, as the announcement claims, then the decision to drop the proposal about mandatory worker representation on boards was a mistake. The British public increasingly trusts companies they think are relatable — shared values, good listeners, responsive to customers and communities — and worker representation would have helped to demonstrate that companies are not governed by detached elites, but are run by regular people wrestling with tough challenges.
- In a low-trust environment, trust is a competitive advantage for individual companies, so businesses should be thinking about how they can go further than this modest set of reforms.