Lack of C-suite trust puts focus on transparency, coordination: PwC

Dive Brief:

Responding swiftly to changing business needs requires established trust between company leadership, employees and their stakeholders — but while most executives agree that trust is critical for their bottom lines, they are less apt to trust each other, according to the 2024 Trust Survey by Big Four accounting firm PricewaterhouseCoopers.
Forty-four percent of C-suite leaders trust their executive peers “to a great extent,” compared to 53% who said the same of their trust in non-C-suite individuals, according to the survey of 548 executive leaders released Tuesday. With 93% of executives noting building and maintaining trust boosts their bottom lines, a lack of trust between top company leadership can bleed over to one’s employees and stakeholders —jeopardizing growth.
However, the “challenges to trust are only increasing,” Wes Bricker, PwC U.S. vice chair and trust co-leader told CFO Dive in an interview. Ninety-four percent of executives said that they face at least one challenge to building trust with stakeholders, according to the survey.

Dive Insight:

The results of PwC’s annual survey come as C-suite leaders are juggling everything from new regulations on cybersecurity and climate disclosure to the rising popularity of technologies like artificial intelligence, all while keeping an eye on an uncertain economic and political landscape.

Such developments require eagle-eyed attention and swift actions from top leadership, putting a further emphasis on the need for trust between C-suite leaders. That’s built on transparency, Bricker said, which means not only the creation of a timely flow of information between executives, but also coordinating a “common view of prioritization,” he said.

Consider certain circumstances such as a cyber event, which require “fast action, fast response” from the leadership team, he said — especially in the aftermath of new regulations by the Securities and Exchange Commission which require firms to report a material cyber breach within four days of determining the incident is material.

Such events require the attention of the CFO, general counsel, investor relations head, the board and the CEO, and “getting it all together as a team sport can be complicated,” Bricker said. Furthermore, each C-suite leader involved must be in lockstep when it comes to the information needed and where to place responding to an event on the business’s priority list.

Open communication between C-suite leaders such as the finance chief and the chief information officer is especially critical at a time when many businesses are zeroing in on how to best apply emerging technologies like AI. Developing a cohesive AI strategy requires a tight relationship between the IT and finance teams, CFO Dive previously reported. For many, developing a “responsible AI” model that champions data privacy and explainability is especially important; PwC, EY and KPMG have all earmarked billions for the development of such a framework.

The absence of a responsible AI strategy could also hamper stakeholder trust, according to PwC’s survey; as AI’s popularity grows, lawmakers and investors are taking a closer look at data privacy and governance — factors that are also becoming more important to employees and consumers. Eighty-nine percent of employees, as well as 88% of consumers, say that data privacy policies are important to disclose, PwC’s survey said.

“Businesses can take the lead in that area by being transparent about what their policy is, and the way they're managing privacy in order to protect information for consumers and employees,” Bricker said. Only 30% of companies said they currently have a responsible AI strategy in place, while 19% are in the process of developing one.

The use of new technologies is also accelerating ongoing shifts in how many C-suite executives operate; new tools are changing the way the controller works, for example, while the CFO steadily absorbs more and more operational and strategic responsibilities.

This can blur the lines between previously established realms of expertise, placing a further emphasis on the importance of trust between C-suite leaders.

“A CFO [who] might have a traditional financial background is now reaching across the company to understand operational impacts and environmental impacts, which may be led by a chief operating officer or other business unit leader,” Bricker said. “And so...to cross that bridge of competence or expertise requires time, and it requires understanding.”