This article first appeared in Revista Capital on January 30, 2020.
The latest CEP survey surprised us all, not only because of the low approval of the government but also because it reflects the crisis of trust in which we find ourselves.
Although it is true that private companies, compared to the authorities and political parties, generate more trust, they only have 7%, and it is on this point that I would like to focus on. Many times we tend to think that the solutions to the problems that Chile faces today are the responsibility of governments or “politics”, but the private sector also has a great role and a challenge when it comes to repairing the pending issues.
Like the country, companies have tended to lean towards the what, rather than the how, and this happens mainly because the incentives and measurements are short-term.
Chile has grown and in recent years we have seen large companies flourish, which have become a reference, not only in the country but also in the region. We also have large multinationals, where it is likely that Chile has a small percentage of global sales.
In this scenario, it is possible that top executives are measured month by month by a final number and that to be competitive in the sector, they need to show tangible results.
But what I mean by focusing on the how. I mean going beyond the numbers we are seeing in the short term, and I want to illustrate it with the example of some Ecuadorian entrepreneur friends, founders of PACARI (the best chocolate in the world, and I’m not just saying that several international awards endorse them). Cocoa is mostly found in Africa and the Amazon, under large multinational firms that buy everything, creating a real “cocoa slavery”. Thus, hundreds of thousands of children work to extract it and are paid almost nothing. As for PACARI, they have made it an intransigent part of their business to address this issue, not only by not buying cocoa where children work but also by ensuring a fair price, as well as a relationship of trust and transparency with the farmers.
And just like Pacari, we can find many companies that are faithful to their principles, but this requires consistency in all processes, otherwise, good intentions end up being just false advertising.
Most of the big companies have declared their values; if we review their web pages we can find this information. In most of them, we will see words such as honesty, responsibility, trust, transparency, integrity, passion, etc., the big problem is that these are not measured, and therefore become a nice declaration of intentions. The great challenge today for organizations and boards of directors is to be consistent with these concepts and to be
The great challenge today for organizations and boards of directors is to be consistent with these concepts, and hopefully to keep them in mind in every decision they make (from the launch of a new product to the selection of a supplier, to the acquisition of a company).
And the next challenge is to communicate the good things, for which the private sector must dare a little more to raise the standards in the industry. The objective is to inform to have a client/consumer who will value it or punish it if it is pertinent.
Therefore, the call is for everyone. We consumers must also look at the
how. How many of us have bought clothes made by children in some Asian country, or shares of companies that were involved in corruption scandals, for example.
If the user is not aware and does not “reward” companies that care about how it is we are pushing companies to act in a certain way. So being more consistent is everyone’s task.
Let us hope that after October 18, the private sector has not remained in the promises made in November, such as, for example, the payment to SMEs -recently it came out that it had increased to 67 days-, or fair wages for workers. We Chileans are very good at putting “the patch in front of the wound” and patting ourselves on the back, saying that everything is fine, but we have little long-term accountability.
At least, the global business world is declaring that it wants to follow this line, so we can find statements such as the business roundtable, and the recent Davos 2020 manifesto, where they are already starting to talk about the universal purpose of the company, with all its stakeholders.
I am more convinced than ever that only in this way, with this type of action (not just declarations), and with a long-term vision, can trust in companies’ change.
By Susana Sierra