In the wake of the widespread crisis that’s plagued financial markets in recent months, gaining and maintaining the trust of stakeholders has become a top priority for corporate directors, business leaders said on Thursday.

Speaking at the Conference Board of Canada’s Leaders’ Forum on Stakeholder Trust, the leaders said that as directors attempt to steer their companies through the current economic downturn, they must focus on the simultaneous challenge of building—and in some cases rebuilding—the trust of customers, investors and employees.

“We are going to have to take it a step higher as directors to be very, very informed about all aspects of the business that could violate trust,” said Terry Savage, a Chicago-based financial commentator and a member of the board of directors of Chicago Mercantile Exchange.

Trust is a large part of the foundation that businesses operate on, according to Gord Cummings, former CEO of the Canadian Executive Services Organization.

“Trust is the fundamental that we work on,” he said. “Trust allows us to assume that we can do fast, safe transactions.”

Cummings emphasized that with loss of trust comes huge costs for any organization. “Look what’s happened to the credit market,” he said. “This loss of trust has created a huge added cost for all of us. It’s destroying value.”

The loss of trust has been even more prominent in the United States, where the American tradition of “blind, accepting trust” has been replaced with skepticism, according to Savage.

Savage pointed Americans’ loss of faith in the Bush administration, followed by the collapse of trust in financial market regulations as the financial crisis unfolded.

“For the first time since the 1930s, the American trust bank is really shaken,” she said.

The recent investment fraud charges against Bernard Madoff have further eroded trust in the regulation system, Savage added.

“Madoff is the epitome of an era which has shattered trust.”

One revelation of the financial crisis, the business leaders noted, is the interconnectedness of markets around the world, and the need for trust to extend beyond borders.

“This is the first time that we’ve had a crisis that immediately becomes worldwide,” said Cummings. “We have to find a way to build trust in the world.”

In building trust among stakeholders, the panelists said that transparency and honesty are crucial.

The leaders also advise companies to avoid getting caught up in the short-term economic turmoil, and to remain committed to long-term goals.

“Don’t forget what your mission is and your vision is,” said Cummings. Companies that get too tied up in improving quarterly profits, he added, end up making long-term sacrifices.

IE