Question: How would you describe the situation of the euro?
Answer: We are in an economic and monetary union. From my point of view, Monetary Union has worked well: we have delivered price stability – fully in line with our definition of “below, but close to 2% – during the first 12 years of the euro, the euro is a solid and credible currency, and inflation expectations are solidly anchored over a horizon of five or ten years. The Economic Union, for its part, has shown its weaknesses during this global crisis and it has to improve very significantly. All pillars of the Economic Union have to be reinforced: first, we need a strengthened Stability and Growth Pact to ensure a rigorous surveillance of fiscal policies; second, we need a close surveillance of the competitiveness indicators and of the imbalances in the euro area, something that we have been calling for all over these last years, since 2005; third, we need to accelerate the implementation of structural reforms, which is an objective for the economic union (the “27”) as a whole, as well as in the euro area (the “17”), in order to elevate the growth potential of European economies.
Q. What’s behind the dissatisfaction that seems to be affecting the euro?
A. I think there is criticism of the behaviour of some governments regarding their own economic and fiscal policies, and also on others, because they did not exert appropriately the surveillance on their peers. . But I don’t think the criticism concerns the single currency, which is a clear success. I have seen many surveys in different countries showing that citizens are supporting the euro. That is the case in Spain.
Q. Does rising debt indicate that the euro may be at risk?
A. As I said, the euro is a solid and credible currency. The economy of the euro area as a whole is in a better fiscal position than the US or Japan, with a likely deficit of 4.6% this year compared with around twice that figure in the US or Japan. Sovereign debt problems are global, not just a European problem. The paradox is that, while fiscal performance at the consolidated European level is relatively good, we have in the euro area some countries which are clearly in a difficult situation, and that require a major adjustment.
Q. Despite your rejection of a possible restructuring of Greek debt, markets are insisting that that is the only way out.
A. The ECB’s position has been clear from the beginning. We have an adjustment plan set by the IMF and the Commission. What we are asking for is that the plan be implemented as strictly as possible, as it was negotiated, with rigorous efforts being made by Greece. The adjustment, engaged by this country is essential for its sustainable, medium term growth, job creation and the stability in the euro area. And there is no other way than the strict application of this adjustment plan.
Q. What can we expect from the summit in Brussels on Monday?
A. The Ecofin and the Eurogroup will have to examine a number of issues, including the programme for Portugal, which has been negotiated by the IMF and the Commission, in liaison with the ECB. The ECB attaches a great importance to the fact that this programme has been approved by various political sensitivities in Portugal.
Q. Has it been ruled out that a country could leave the euro?
A. I already said that I consider this an absurd hypothesis. But let me come back to the euro. If, in 1998, we had been told that for the 12 first years of the euro, we would have a single currency that keeps remarkably its value, with average inflation below 2%, a better result than in any Member State in the past 50 years, many people would probably have said that it was too good to be true. Today it’s a reality and these achievements are documented.
Q. Is the standing of the ECB at risk because of the rating cuts for the countries from which you have collateral?
A. We are applying our own rules on the matter and are paying close attention to risk management. It is also useful to bear in mind that we are talking about three economies that account for around 6% of the GDP. The other 94% of the GDP of the EU are in a very different position.
Q. The ECB has embarked on debt purchasing but is doing it intermittently.
A. I’ve always said we are transparent in the management of this issue. I have no other comment.
Q. But that is a function that is not supposed to be performed by the ECB, it is not part of the mandate. Should another institution take on that task?
A. All these non-standard measures have been decided by the Governing Council to better transmit our monetary policy decisions, in times of financial crisis. It is fully in line with our mandate. These measures, including the full allotment of liquidity at fixed rate, are transitory by nature, as I say regularly in the name of the Governing Council.
Q. Three years after the start of the crisis, where are we now?
A. Since the recovery started in the third quarter of 2009, Europe’s economy has experienced often upward revisions to previous projections of real growth. Quarter after quarter, the data has frequently exceeded expectations. This has been particularly evident in the first quarter of this year, with an increase of 0.8% more than projected, and several economies in the euro area with better results, even significantly better than expected. That includes Spain, which is growing a little bit better than anticipated. It is no time for complacency, we have to be very cautious and we do not declare victory, but I think that’s encouraging. As for the role of the ECB, we are responsible for issuing the currency for 17 countries and 331 million citizens. That is a huge responsibility and it is normal that sometimes there are countries that go faster and others that go slower. What matters is that it’s not always the same ones who go rapidly or slowly because that would be unsustainable. There was a time when Greece and Ireland were growing very rapidly and then it was Germany that was lagging. So it’s good that there are now countries, including Germany, which are growing again fast and quickly recovering the ground they lost, while others need to undertake indispensable major adjustments. Again, what counts is that in the euro area as a whole the recovery is confirmed. But let us not be complacent, we have hard work ahead of us.
Q. Oil prices have fallen by more than USD 10 since the ECB decided to raise rates. How do you see price stability at the moment, with raw material prices so volatile?
A. The decline in oil prices is good news: it reduces both the inflationary impact and the depressive effect of high oil prices on the economy. That said, there is a high degree of volatility. The present price level is high; 2.8% in the euro area. We cannot do anything immediately to reduce the price of oil and raw material. We have to ensure that price setters and social partners fully understand that we are there to deliver price stability in the medium term at less than 2%, close to 2%. It would be for them a big mistake to think that the present hump in the CPI inflation signals the level of inflation in the medium term. Because we are there to take decisions that will prevent this. That’s why there is an independent central bank – to ensure price stability over the medium term.
Q. Are you seeing excessive wage increases?
A. Let me say something to the people of Spain: we are providing price stability in line with our definition, an average of 1.97% in the first 12 years, we are credible for the future five to ten years, and that has to be accounted for in all decision-making within the euro area. If prices and costs in a particular economy are permanently above that level, with spiralling of nominal inflation and nominal wages, in particular there will be unavoidable losses in competitiveness and less growth and less job creation.
Q. Does that apply to Spain in particular?
A. To all countries, without exception, and of course to Spain also. This is a very important message.
Q. So those involved in wage negotiations should forget about national price data.
A. All price-setters, in particular the social partners, must be conscious that there is a benchmark for the euro area inflation as a whole, which is less than 2%, close to 2%. If the unit labour costs in particular are not in line with the evolution of the euro area as a whole, a loss of competitiveness of the economy will be unavoidable, with its consequences in terms of growth and jobs creation. Again, the worst that could happen in terms of growth, is a cost/price signalling over and above the average of the euro area.
Q. That is the conclusion that many people are drawing about the situation in Spain, do you share it?
A. Some of these phenomena happened in the past undoubtedly. It seems to me now that everybody understands that competitiveness of the productive sector is essential for the economy.
Q. It is doubtful that the citizens of southern Europe understand the rise in rates resulting from the threat of inflation.
A. I think they understand. Because if we were to lose credibility in price stability, then inflation expectations would not be anchored and all medium- and long-term market interest rates in Europe, would rise, driven by those higher inflation expectations. Then we would all, I insist, all without exceptions, be suffering the consequences of a less favourable financial environment and its impact on growth and job creation.
Q. This is very reminiscent of the situation in July 2008. Are you still defending that rise in interest rates?
A. Of course it was an appropriate decision. The collapse of Lehman Brothers came later and we took the right measures to cope with the dramatic crisis. We decided to raise rates to counter an unwelcome increase in inflation expectations. By taking that step we confirmed that we are extremely determined to anchor inflation expectations. It helped us considerably during the crisis in preserving us both from the materialisation of the risk of inflation as well as the materialisation of the risk of deflation – which was a very important element to surmount the crisis.
Q. Jürgen Stark has said that the debt crisis is our own Lehman Brothers.
A. We are experiencing at the global level a second episode of the crisis. After the private-sector crisis we are now seeing tensions in the public sector and amongst sovereign risks. This is a global phenomenon, observed in advanced economies. It’s crucial to deal with these tensions correctly, especially in Europe.
Q. Let’s turn to Spain. Don’t the markets understand the reforms that have been made?
A. From our point of view, there are three key issues: fiscal policy, the financial sector and structural reforms. Spain is moving in these three areas, it has made decisions; it has set goals and has done a lot, and has still work ahead of it. I’d say that this is appreciated by external observers, who believe that the country is going in the right direction. But this is no time for complacency. On the fiscal side, the government has been convincing. That being said, measures have to be followed up and the deficit target of 3% in 2013 is essential for credibility. Regarding the financial sector, there is a huge difference in perception compared with a few months ago, but work has not been finished there yet. As for structural reforms, they are absolutely essential because it is through them that growth potential increases. There are reforms that need to be tackled, especially labour market reform, which is being discussed by the social partners. All this is true for Spain, but also for Europe, which has to push forward bolder structural reforms.
Q. Isn’t fiscal orthodoxy, the surge of austerity, condemning Europe to slow growth for a long time?
A. On the contrary, fiscal soundness is essential for confidence, and confidence is the most important ingredient for sustainable growth. Financial soundness and structural reforms are also of essence. But speaking for the past, let me give you two or three figures. In the past 12 years, GDP per capita has grown in Europe at the same pace as in the US, around 1%. In the labour market, despite the years of crisis, the euro area has created around 14 million jobs since the birth of the euro: about 6 million more than in the US. This is again no time for complacency. And nobody can say that we are satisfied when unemployment is still so high.
Q. Is Spain the red line in the EU?
A. Spain in the past has shown a remarkable capacity for innovation, for creativity, growth and job creation. It is a very dynamic country. That makes me optimistic, provided Spain continues to implement very actively and convincingly its programme in three areas already mentioned: fiscal soundness, banks’ reshaping, and structural reforms.
Q. And the savings banks are the red line in Spain?
A. In this sense, Spain has three main challenges. As regards the savings banks challenge, a lot of hard work has already been done and should continue to be very actively performed.
Q. Especially after the leaks in Germany, do you think all the European partners, especially the political leaders, are aware of the danger of the current fiscal situation?
A. I appeal to all governments to show a high sense of responsibility, both individually and collectively, and to keep a strong sense of direction.
Q. At first you didn’t seem very happy about the IMF involvement in the bailouts. Some were even calling for a European Monetary Fund. Why did you change your point of view?
A. The worst thing would have been benign neglect by the Europeans, which was a big danger at the beginning. Having overcome this temptation, the rescue brought together the conditionality and the financial support from the IMF and the European partners, which was necessary.
Q. On the subject of eurobonds, Europe has no treasury, unlike the United States. Do you think that a step could be taken in that direction?
A. At the present stage of European integration, with the current institutional framework, we consider that a major improvement in governance, particularly in fiscal policy, is absolutely decisive. At this stage we are not in favour of euro bonds.
Q. What is your opinion of Zapatero?
A. It is not for the President of the ECB to judge or give good marks or bad marks to the prime ministers! We are fiercely independent from the executive branches and we are issuing the currency for all the people, all the 17 nations, and political sensitivities.
Q. What about Draghi?
A. The appointment of the President of the ECB is the responsibility of the Heads of State and Government, after having had the advice of the Parliament and the Governing Council of the ECB.
Q. Does he have the right profile?
A. We have a great Governing Council, with very wise and experienced colleagues. And I have to say that Miguel [Fernández Ordóñez], José Manuel [González-Páramo], and Mario [Draghi] and all others have the right team spirit. And it is this very good team spirit which counts.
Q. What will you do after 31 October?
A. We’ll see. I have a very hard job ahead of me. There’s no time for complacency in many ways. I still have five and a half month! I will be completely absorbed by my work until the end of October.
Q. In these eight years, what has been the worst moment? May 2010?
A. We have had major challenges from the start. Immediately after my arrival the largest countries in the euro area, Germany, France and Italy, were asking for an easing and even a dismantling of the Stability and Growth Pact. We had to fight that. And there were other big challenges afterwards; the crisis has certainly been one. This is the greatest crisis since the Second World War. It could have been even worse – the worst crisis since First World War – if we had not made the decisions we made. They were times that required a great deal of effort. It has been very rewarding to see the team spirit of the Governing Council and of the staff of the ECB and of the other central banks of the Eurosystem. There have been some intensely challenging moments, during which my greatest satisfaction has been to see a formidable dedication to the euro and to Europe, in serving our 331 million fellow citizens..
Q. What is your legacy?
A. It’s not up to me to talk about that.
Copyright © for the entire content of this website: European Central Bank, Frankfurt am Main, Germany.
Return to Work Doesn’t Mean Business as Usual When it Comes to Travel and Expense
By Rob Harrison, MD UK & Ireland, SAP Concur
The last few months have been an exercise in adaptability for businesses across the UK. With the sudden mandate to work from home, company processes that were ingrained in employees’ day-to-day routines were either put on hold or turned upside down. The new office normal now includes virtual meetings, conversing through instant messaging instead of in the hallway, and the redefining of “business casual” attire.
Many of the processes that have undergone changes fall into the category of travel and expense. With most business travel on hold and the nature of expenses changing, finance managers have had to adjust policies and practices to accommodate the new world of work. Recent SAP Concur research found that 72% of businesses have seen changes in the levels and types of expenses submitted, but only 24% have changed their policies to support this. Examples of travel and expense related changes that were made at the beginning of work from home mandates include:
- A halt to business travel and its associated expenses.
- Temporarily ending expensed meals for business lunches, dinners, or in-office meetings.
- Increase in office expenses like monitors and chairs as employees furnish their home offices.
- New expenses to consider like Internet and cell phone bills for employees who must work from home.
Now, as companies begin thinking about return to work plans, finance managers are discovering it’s not simply business as usual again. SAP Concur research found that many expect finance will return to normal quicker than general workplace practices, but vast majority see the process taking up to 12 months. New policies and processes need to be put in place to accommodate travel restrictions and changes in expenses. While finance managers need to stay flexible as the business environment continues to evolve, spend control and compliance should still be a high priority.
Here are a few questions that can help finance managers prepare for return to work while keeping control and compliance top of mind:
- What will travel look like for the company? Finance managers must work with travel and HR counterparts to determine the need for employee travel, if at all, and how to keep employees safe. At SAP Concur, we surveyed 500 UK business travellers and found that health and safety is now seen as more than twice as important than their business goals being met on trips (34% versus 16%. Clear guidelines should be developed, even if they are temporary or evolving, so it’s clear who can travel, when they can travel, and how they can travel. Duty of care plans should also be re-evaluated and businesses should ensure they know at all times where employees are traveling for business and how they can communicate with them in the event of an emergency.
- Who needs to approve travel and expenses? While it may be temporary, businesses may have to implement a more stringent approval policy for travel and other expenses. Due to health concerns related to travel and the need to conserve cash flow, business leaders like CFOs may want to have final approval over all travel and expenses until the situation stabilises. To help ensure new approval processes don’t cause delays and inefficiencies, finance managers should implement an automated solution that streamlines the process and allows business leaders to review and approve travel requests, expenses, and invoices right from their phones. According to SAP Concur research, 11% of UK businesses implemented some automation of financial processes in response to COVID-19. This is definitely set to increase post-pandemic.
What types of expenses are within policy? Prior to social distancing, employees may have been allowed to take clients out to dinner. In-person team meetings held during the lunch hour, may have included expensed lunches. As employees return to work, finance managers need to determine if these activities and expenses will be allowed again. Clear guidelines must be put in place and expense policies need to be updated to reflect any changes.
- What happens to home office items that were purchased? While new office equipment may have been purchased for employees’ home offices, they remain the business’s property and what to do with them as employees return to work needs to be determined. Perhaps employees will continue to work from home a few days a week and need to keep the equipment to ensure productivity. However, if a full return to work is expected, finance managers have options that can maximise their asset investment and possibly save the company money, like replacing old office equipment with the new purchases, reselling to a used office furniture company, or donating to a non-profit.
- How can cost control be ensured? For many businesses, cash flow will be tight for the foreseeable future. Spend needs to be managed to help ensure recovery and stability. An important aspect of controlling costs is having full visibility of expenses throughout the company. Implementing an automated spend management solution that integrates expense and invoice management brings together a business’s spend, giving finance managers an understanding of where they can save, where to renegotiate, and where to redirect budgets based on plans and priorities.
Once finance managers have asked themselves the questions above and determined how they want to approach travel and expense procedures, it’s vital they create guidelines and communicate clearly to employees. Compliance can only be ensured if employees have a clear understanding of what has and has not changed with travel and expense policies and what’s expected as they return to work.
Spotting the warning signs – minimising the risk of post-Covid corporate scandals
By Professor Guido Palazzo is Academic Director at Executive Education HEC Lausanne.
A recent report from the Association of Certified Fraud Examiners (ACFE) found that almost seven out of 10 anti-fraud professionals have experienced or observed an increase in fraud levels during the Covid pandemic, with a-quarter saying this increase has been significant. Almost all of those questioned (93%) said they expected an increase in fraud over the next 12 months and nearly three-quarters said that preventing, detecting, and investigating fraud has become significantly more difficult.
For corporations, banks and financial directors, this is a clear warning signal of new risks ahead. Indeed, it’s not difficult to predict that the birth of next big corporate scandal will be traced back to this period. As the ACFE put it, the pandemic is “a perfect storm for fraud. Pressures motivating employee fraud are high at the same time that defenses intended to safeguard against fraud have been weakened.”
If we want to stop corporate misconduct, where should we be focusing our efforts? What should we do to minimise the chances of corporate scandals, fraud and unethical decision-making? Compliance and risk management are obviously critical in detecting fraud, but given that corporate scandals keep happening, perhaps it’s time to ask ourselves whether we need to take a different, more holistic approach to combat unethical behaviour.
Bad Apples or Toxic Cultures?
Most compliance is based on the premise that we need to keep bad people in check and to root out the ‘bad apples’ who usually get blamed when there’s a corporate scandal. When the scandal breaks, we all ask, “how was that possible? What were they thinking?” And we also tell ourselves that we could never behave like that and that it could never happen in our organisation – it’s not our problem.
But are those who succumb to this temptation really ‘bad apples’ or rather people like you and I? Most models of (un)ethical decision-making assume that people make rational choices and are able to evaluate their decisions from a moral point of view. However, if you made a list of the character traits of a rule breaker in an organisation and then compared it to a list of your own, you might be surprised to find a lot of overlap.
When we examine corporate scandals, what we invariably see is good people doing bad things in highly stressful circumstances. If you put sufficient pressure on an individual and they start making ill-advised decisions or behaving unethically, the first reaction is fear as they realise what they are doing is wrong. But then they will start to rationalise their actions to justify what they are doing. Over time, such behaviour becomes normalised and they convince themselves that there is no wrongdoing involved. That’s something that my HEC Lausanne colleagues, Franciska Krings and Ulrich Hoffrage, and I have termed ‘ethical blindness’, and it is a phenomenon that plays a fundamental role in systematic organisational wrongdoing.
The trouble with conventional technical and regulatory compliance strategies is that while policies, codes of conduct and formal processes are all very necessary, they don’t take into consideration the importance of leadership behaviour or human psychology. We can’t pre-empt those who succumb to the temptation to do bad things in difficult circumstances unless we understand why they behave in the way they do. If we simply attribute problems to the psychological failings of ‘bad apples’ while ignoring the context, culture and leadership style which made their wrongdoing possible, then the barrel will still be contagious.
So what can be done to reduce the chances of new corporate scandals emerging in these challenging times? One take-away from previous scandals is the learning how to read the warning signals. This entails a deep understanding the psychological and emotional factors behind human risk, which surprisingly is not included in most compliance and ethics training. These small signals viewed in isolation may seem insignificant, but over time they can combine to create a dysfunctional context and culture where it can be all too easy for people to slip into the dark side.
Develop a Speak Up Culture
One of the most potent antidotes to that sort of dysfunction and the ethical blindness it encourages is a culture in which individuals at all levels feel able to speak up to their superiors about problems and ethical issues without fear of retaliation. But that will only happen if their own bosses are prepared to speak up and the tone for this must be set at the top. So, the critical question every executive needs to ask themselves is, “do I speak up?” Then they need to reflect on whether people come to them and speak up freely without fear of the consequences. That’s an approach to compliance that offers real protection against the onset of ethical blindness in a way that no conventional strategy can match.
This understanding of human risk element also elevates compliance to a leadership topic with all kinds of positive implications beyond compliance. Whilst on the one hand, this approach helps to boost the status of the compliance and risk function, my experience of working with senior executives is that when they start to understand the psychological elements of the dark side, it shines a light on their own behaviour. One thing they realise is that, yes, it perhaps could have been them doing those things in one of those scandals. The other is understanding that their leadership style can unwittingly creating the context for unethical behaviour.
That’s one reason I invited two former senior executives who were involved in corporate scandals to share their first-hand experience as teachers on our new certificate in ethics and compliance. Andy Fastow is the former CFO of Enron and Richard Bistrong is a former sales executive involved in an international bribery scandal. Amongst other things, the valuable insights of people like these can help others to understand how risks accumulate over time and how this can impact the integrity of an organisation. Their stories also highlight the temptation that people can face as a result of the tension between the pressure to succeed and the pressure to comply.
Traditionally, compliance training and development has been technical and regulatory – what are the rules, what are people allowed to do or not allowed to do, and how do we demonstrate to the authorities that we did everything possible to ensure that people understand the laws and regulations? But what’s becoming increasingly clear is that it’s time for a multi-disciplinary approach if we are to start redressing the balance between the legal dimension of risk management and the human element.
Trust is a critical asset
By Graham Staplehurst, Global Strategy Director, BrandZ, explains how it’s evolving.
Trust is what makes us return to the same brands, particularly during times of uncertainty and crisis.
Pampers is an instinctive choice for many parents. It’s the go-to global nappy brand whether they shop online or in-store. By our reckoning, it’s also the world’s most trusted brand, driven primarily through its perceived superiority over competitors, which it has honed through a relentless focus on technological improvements that make its products the best in the category.
BrandZ has been tracking Trust since 1998 because it’s a critical ingredient in delivering both reassurance and simplifying brand choice, thereby boosting brand value. It’s also become extra critical in delivering business performance at a time when consumers are uncertain and often anxious.
Even brands that haven’t been available during Covid-19 lockdowns, brands that are already trusted, have found that they are more reassuring to consumers when they start returning to market with new safety measures such as protecting staff, which will be seen as evidence that the brand will take similar steps to protect customers.
With a growing demand from consumers for more responsible corporate behaviour, this in turn amplifies the need for brands to make a positive difference.
Alongside Pampers, other brands in this year’s BrandZ Top 100 Most Valuable Brands ranking that have strengthened their trust and responsibility credentials include the Indian bank HDFC, which has supported customer initiatives across its consumer and business banking and life insurance operations – with innovations such as mobile ATMs, and DHL, which has proven itself even more essential as a delivery service during the COVID-19 outbreak.
New brands too have managed to grow Trust relatively rapidly. Second in the Top 10 most trusted brands was Chinese lifestyle brand Meituan with a trust score of 130. This delivery and online ordering brand, which was launched just over a decade ago, has clearly demonstrated its understanding of what consumers want and developed a strong reputation for customer care.
Then there’s streaming service Netflix – founded in 1997 but which only became a streaming service in 2007 – which scored 127 and was the fifth most trusted brand in our ranking. Netflix has created a strong association with being open and honest compared to other ‘content’ platforms, despite the fact that it uses customer’s personal data to suggest future viewing options.
Top 10 Most Trusted Brands in the BrandZ Top 100 Ranking 2020
|Position||Brand||Category||Trust Score (Average is 100)||Position in Top 100 ranking|
|3||China Mobile||Telecom Providers||129||36|
What defines trust?
The nature of trust is evolving with ‘responsibility’ to consumers forming an increasingly large proportion of what builds perceptions of trust. This amplifies the need for brands in all categories to act as a positive force in the world.
Traditionally, consumers trusted well-established brands based on two factors:
- Proven expertise, the knowledge that the brand will deliver on its brand promise, reliably and consistently over time.
- Corporate responsibility, which is about the business behind the brand. Does it show concern over the environment, its employees, and so on?
In recent years, the latter factor has become increasingly important. It is now three times more important to corporate reputation than 10 years ago and accounts for 40% of reputation overall, with environmental and social responsibility the most important component, alongside employee responsibility and the supply chain.
Companies such as Toyota, with its emphasis on sustainability, Nike, with its campaigns around social responsibility, and FedEx focusing on employee responsibility, highlight the fact that responsibility is high on the agenda for many brands in the BrandZ Global Top 100 Most Valuable Brands, which has been tracking rises and falls in brand value via a mix of millions of consumer interviews and financial performance data since 2006.
Such actions explain why trust in the Top 100 brands has been increasing not declining, filling the gap as trust declines in other institutions like government and the media. This is being driven largely by consumer concerns over the bigger issues including sustainability and climate change that society faces today.
One of the challenges that we face in assessing trust is understanding how and why consumers will trust brands they hardly know or have never used? Why do we trust Uber the first time if we’ve never used the platform before, or Airbnb the first time we rent an apartment or holiday accommodation?
The answer is that there are three elements that build trust and confidence when a brand is new to a market. These are:
- Identifying with the needs and values of consumers
- Operating with integrity and honesty
- Inclusivity, i.e. treating every type of consumer equally.
New brands that can develop these associations not only build trust rapidly and more strongly but also tend to outperform their competitors in growing their brand value.
As a result of this new understanding we have added an additional pillar to our previous understanding of Trust builders. Alongside proven expertise and corporate responsibility, we have a new quality of ‘inspiring expectation’ driven by our three key factors of identification, integrity and inclusivity.
Airbnb, for example, has long had promoted a platform of inclusivity for both renters and users of properties on the platform, helping it to build an overall Consumer Trust Index of up to 105 – and 110+ on the specific dimension of Inclusivity.
Flying Fish in South Africa is a premium flavoured beer that has gone from a launch in October 2013 to being the second-most drunk brand in the country, with trust equal to the vastly more established Castle and Carling brands. It has appealed to a new generation of beer drinkers with strong integrity and inclusion, using a playful mix of young men and women in its messaging to portray South Africa’s multicultural society.
Brands have a unique opportunity to earn valuable trust and create change, providing this is seen to be genuine. Being sincere, empathetic and ensuring your brand remains consistent with its core values will ensure your corporate reputation is not compromised.
Return to Work Doesn’t Mean Business as Usual When it Comes to Travel and Expense
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