Eighty-two percent of institutional investors say “my trust in the company” is important when considering a company to invest in.
Ninety-four percent say most trustworthy companies deserve a larger premium.
While those two statistics from the Edelman Trust Barometer Special Report: Institutional Investors may not be surprising, here’s one that’s more unexpected: 69 percent of investors say companies that prioritize their commitment to employees positively influence their trust in them. More explicitly, respondents rank “poor relationships with employees” as having a negative impact on investor confidence. In short, investors increasingly take notice of how well organizations treat their people. And in drilling down to levers and drivers of trust for investors, much of what we heard in these survey results is directly tied to the employee experience:
- Ability to attract the best talent. Your talent pipeline is as valuable to your company’s growth as any of its other pipelines — and it’s one that investors are watching. Developing a powerful and genuine employer brand has direct ROI.
- Corporate reputation and valuation are linked. Corporate reputation is formed by many factors, and human capital research tells us that every employee touchpoint—from how you treat candidates during interviews to how you off-board the impacted during headcount reduction/synergy capture — can directly impact trust. Employees tell us authenticity ranks highest in building trust with them — the first step in building investor trust from the inside out.
- Highlight innovation to show you’re ahead of disruption. In our recent study, 86 percent of respondents said that a company’s reputation for innovation builds investor trust. Seventy-five percent said innovation is a direct driver of investing decisions. Since innovation is more a by-product of culture than of process, organization or R&D spend, an employee experience that encourages risk-taking and esteems curiosity and creativity is an important part of the virtuous circle of innovation.
- Employees are advocates. Respondents shared that they find information more credible if it comes from an employee/technical expert within the company (74 percent) than from a business/financial academic or expert on a company’s industry issues (57 percent). Enabling an employee experience with a platform for sharing employee voices, inside and outside the organization, is a wise investment.
- Seventy-six percent say ethics and standards drive their trust in where to invest. At its core, ethics are rooted in values and how employees behave. This is yet another clue to creating investor value from the inside out.
Cydney Roach is EVP, U.S. Lead, Employee Engagement.