Restoring Trust and Confidence: A Public Relations Strategy for 2010 and Beyond

Transcription

1 Restoring Trust and Confidence: A Public Relations Strategy for 2010 and Beyond CCI Symposium on Reputation K P M G L L P Kathy Fitzgerald Chief Communications Officer March 5, 2010

2 Why Is Trust So Important? It takes 20 years to build a reputation and five minutes to ruin it. --Warren Buffett Trust is at the foundation of business Trust impacts the cost of doing business. Loss of trust can lead to: Higher transaction costs Lower brand value Difficulty attracting, retaining, managing employees Reestablishing trust is one of the most critical components to a sustainable recovery 2

3 Edelman 2010 Trust Barometer: Trust Is An Essential Line of Business Trust and transparency equally important as quality of products and services If I don t trust you, I won t do business with you Financial success dropped from top three to 10 th in ranking CEOs must consider all stakeholders not just the shareholder 3

4 KPMG Fraud Survey: Potential Impact of Fraud and Misconduct Loss of public trust 71% Legal fines or sanctions 54% Loss of new or existing customers 52% Loss of ability to attract and retain good employees 43% Damage to the company s share price 34% Other costs 3% 0% 20% 40% 60% 80% 100% Q. In addition to the direct dollar costs, which of the following would your organization be most concerned about if it were to experience fraud or misconduct? - KPMG Forensic Fraud Survey

5 The Old Days: Build Shareholder Value The 1990s mission statements: build shareholder value Today s mission statements talk values and stakeholders In 1996, from Wall Street heroes to corporate killers The hit men. Allan Sloan - 26 February

6 The New View: Stakeholders, Not Shareholders How you treat your people is important to consumers and investors How investors, consumers, regulators view your compensation systems affects trust Corporate social responsibility: from nice to have to must have 80% of Fortune 500 companies have sustainability reports & diversity reports 6

7 Responsibility Is Good for Business GE: Ecomagination, Healthymagination Wal-Mart: A company in transformation 7

8 The G20 Knows Responsibility Is Good for Business Coordination by the G20 finance ministers aims to stabilize the global economy and restore trust Confucius: Governing requires weapons, food and trust. If a ruler cannot have all three, he should relinquish weapons, then food, then trust. 8

9 Causing Mistrust Is Not Good For Business Flush Goldman Sachs Seeks to Soothe Bonus Outrage --Dow Jones Newswires - March 1, 2010 Goldman Sachs Board Rejects Shareholder Demand to Curb Excessive Compensation --Agence France Presse - January 21,

10 KPMG: Trust As A Business Imperative In the end, I believe that all of us need to get back to basic values, fostering highly ethical business cultures built on trust, integrity, and transparency, and grounded in the recognition of the roles and responsibilities that we all have to the capital markets and the communities in which we operate. --Tim Flynn, Chairman 10

11 11

12 What We Did at KPMG New leadership New governance policies: elevated ethics and professional practice to Office of Chairman Changed compensation policies Implemented annual mandatory interactive Ethics and Compliance training for every employee Made model Ethics and Compliance Program a critical part of the strategy Made employee engagement & CSR critical legs of the strategy 12

13 Building A Model Ethics and Compliance Program Governance structure supports the program The Ethics and Compliance Program has stature Use touchpoints across the organization to build an ethical culture Recruiting and orientation Ongoing training Leadership development 13

14 Ethics and Compliance Training The five most dangerous words in business today are everybody else is doing it. --Warren Buffett Interactive training presents real-life scenarios How should you handle these situations? It s not always so clear 14

15 Model Ethics and Integrity Program Wharton Professor Tom Donaldson has said KPMG has achieved a world-class ethics and compliance program Former federal judge Sven Holmes is our Chief Compliance Officer and a member of the Office of the Chairman Our employees rank us more than 20 points higher than almost all national benchmarks for corporate integrity 88 percent believe that partners/managers in their local offices value ethics and integrity over short-term business goals 21 points higher than the national benchmark 93 percent feel that partners and managers are positive role models 21 points higher than the national benchmark I ve not seen a more intelligent or earnest set of initiatives. Professor Tom Donaldson Wharton School of Business, University of Pennsylvania 15

16 Employee Engagement 16

17 Restoring Trust KPMG s chairman has spoken externally about restoring trust and confidence at least 12 times in There will be no sustainable long-term recovery until we rebuild trust and confidence in every part of the system business, regulators, consumers. -- Tim Flynn Melbourne, Australia - March 2,

18 Thank You! 18