Multistakeholder capitalism just came home to roost. The latest data from the 2021 Edelman Trust Barometer Spring Update: A World in Trauma reveals that employees are now considered to have unprecedented material impact on a business. When asked to rank which group was more important to a company’s long-term success, employees topped the list over customers, communities a business serves and even its shareholders.

This shift in power shouldn’t come as a surprise. It’s actually the culmination of a trend line that started a few years ago and was articulated most dramatically in our 2019 Edelman Trust Barometer Special Report: Institutional Investors. Seventy-four percent of institutional investors said a company’s ability to win the best talent is more important in gaining investors’ trust than the ability of that company to attract new customers or increase a valuation multiple.

Sources: Edelman Trust Barometer: Brand Trust and the Coronavirus and 2019 Special Report: Institutional Investors.

Similarly, in the 2020 Edelman Trust Barometer Special Report: Brands and the Coronavirus Pandemic, 90 percent of consumers in 12 markets said that brands must do everything they can to protect the well-being and financial security of their employees, even if it meant suffering significant financial losses; otherwise, their brand loyalty would be impacted.

Considering these findings, can boards’ approach to governance continue unchanged? For multistakeholder engagement to keep pace with new realities, below are some considerations for boards today.

How well are you treating your people?

In our 2017 Edelman Trust Barometer Special Report: Institutional Investors, 69 percent of investors said companies that prioritize their commitment to employees positively influence their trust in them. More explicitly, respondents ranked “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.

With the latest Trust data highlighting the twin crises of mental health and job loss as the most profound post-pandemic consequences, the board must fulfill one of its most basic commitments and evaluate these risks. When you drill down to drivers of trust for both employees and investors, much of what we heard in our research 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 one that investors are watching. At the same time, today’s employees are expecting a powerful employee value proposition that includes continuous learning and upskilling. Developing a robust and genuine employer brand has direct ROI. The board must invest in redefining its employee value proposition and employer brand in a talent marketplace much changed by the ravages of the pandemic and events of 2020.
  • Corporate reputation, employee experience 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 offboard the impacted during headcount reduction/synergy capture—can directly impact trust. And in a post-pandemic world, trust can also be won or lost in return to office, vaccination, gender pay equity and DEI policies. But keep it real: In our work with clients, employees tell us authenticity ranks highest in building trust with them, the first step in building trust from the inside out.
  • With high trust comes high expectations… and higher risks. While “My Employer” is more trusted than business, government, media or NGOs, that increased trust comes with very high expectations from employees. More than ever, employees expect their employers to take action and lead change on key societal issues from DEI to safe workplaces and ESG challenges. If employers don’t, this can lead to activism; one in two employees surveyed in our 2021 Edelman Trust Barometer released in January said they were more likely now than a year ago to protest or speak out against their employer if they strongly disagree with a company action or policy.
  • Employees are valuable advocates. Employer media is believed more than any other source, and “My Employer” is the only trusted societal leader to do what is right, up nine points in trust since January 2021. This ability to educate and inform employees pays off as “employer media” radiates trust from inside the workplace out into the marketplace. So, consider enabling an employee experience that creates a true dialogue with your people. Supporting that with a platform for sharing employee voices, inside and outside the organization, is a wise investment.

Cydney Roach is Global Chair of Edelman's Employee Experience team.