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January 27, 2009
Edelman Trust Barometer 2009 - Paradise Lost
We will discuss the results of the 2009 Edelman Trust Barometer tomorrow morning in Davos in partnership with the Financial Times at the opening of the World Economic Forum. In this tenth edition of the Barometer, we looked at the state of trust through the eyes of 4,475 informed people in 20 countries on five continents.
The staggering losses in financial markets, the need for government bailouts of key industries and the revelation of corporate misbehavior has taken a toll on trust in all institutions. The impact is most profound in the corporate sector, especially in the United States. The problems of corporate trust in 2001-3 were limited largely to New Economy enterprises such as Enron and Global Crossing. This time, companies that are mainstays of the global economy are in serious trouble.
Here are some of the key findings from this year’s study:
1) Trust in business has collapsed in the United States, with American attitudes toward the private sector now comparable to France and Germany, which are historically the lowest among all nations surveyed. This stands in stark contrast to Asia and Latin America, where trust in business remains strong, with increases in trust in markets like Brazil and China, and high overall trust levels in Japan, India and Indonesia, which was a new country surveyed in this year’s Barometer. Trust in government did not rise to offset lower trust in business; Business is still more trusted than government in 13 of the 20 markets surveyed. And while NGOs remain the most trusted institution in nearly every market surveyed, they are not considered most responsible for solving global problems.
2) There is appetite for more government regulation. By a 3:1 margin, respondents agree government should impose stricter regulations and greater control over business across all industries. On important issues such as energy costs, bolstering the financial markets, and providing access the affordable health care, informed publics think partnerships among business, governments, and third parties are the best way for business to help forge solutions.
3) The most trusted sector in nearly every market is technology, followed by biotechnology, and life sciences; the least trusted are banks and insurance companies. In the U.S., automotive and banks fell precipitously, though every sector declined. Companies headquartered in Sweden, Germany, and Canada remain the most trusted; companies based in China and Russia, the least. The American “trust discount” persists in Western Europe, with big companies such as Citigroup trusted by 30% fewer opinion formers in Europe than in the U.S. However, many American companies are even more trusted in Latin America and Asia Pacific than they are in the U.S.
4) The most trusted spokespeople for information about companies are independent experts, such as academics or financial analysts. The least trusted are chief executive officers (now at a level in the U.S. comparable to the post-Enron period) and government officials. A person like yourself is still one of the most credible spokespeople, (note that trust in all types of spokespeople fell from last year’s survey).
5) Trust also waned for all information sources. Stock analyst reports and coverage in business magazines ranks highest, well above newspapers, radio, and television coverage (in most markets). Corporate press releases and company web sites rank below mainstream media; corporate and product advertising is viewed as the least credible information source, and is at a record low in many countries. Trust in information from digital media sources, such as internet search engines and free content sources like Wikipedia are, in some cases, as credible as traditional media, and often more credible than a company’s own communications.
6) Most people now need to hear or see information about a company three to five times to believe it, underscoring the need for multiple sources and multiple voices. Frequent and honest communication and trustworthiness are as important to a company’s reputation as value for money—and just below the quality of a company’s products and its treatment of employees.
7) Trust has tangible consequences. Seventy-seven percent (77%) said they refused to buy products or services from a company they distrusted—the first time the survey explored people’s direct actions toward trusted and distrusted companies. Seventy-two percent (72%) criticized a distrusted company to a friend or colleague.
We have moved from a shareholder to a stakeholder world and to meet its challenges, business must change its approach to policy and communications. You have heard my appeal to the corporate sector for Public Engagement. At Edelman we’ve witnessed its effectiveness through private sector diplomacy, in which business works in cooperation with NGOs and government to address major global issues; through mutual responsibility, a combination of cause-related marketing and corporate social responsibility; through shared sacrifice in the face of the global recession, not just in equitable compensation, but also in supply chain management; and continuous conversation with stakeholders, one characterized by agility, timeliness, and contribution—not control.
I’m optimistic that business has the ability to adapt to this new environment. The rebuilding of trust will not happen overnight; it will go hand-in-hand with a recovery in the economy and a rise in share prices. It requires us to think and communicate differently, to partner in order to preserve license to operate, to be transparent by speaking publicly about goals and then to document successes or failures. It is time for business to put on the uniform and take the field for the second half of the game, to regain the mandate to lead.
Along with Lionel Barber, Editor, Financial Times, we hosted a discussion about the state of Trust this morning in Davos. Click here for photos – here’s yours truly with some rather imposing guests
Posted by Edelman at January 27, 2009 11:59 AM |
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Comments
Richard, I hope you are well. Thanks for sharing the details of this years study. I would love to next see a new part of the Trust Barometer on green energy, and its reputation and companies using green lifestyle choices for themselves. It would be an interesting addendum to the already interesting Barometer. Also, how are the real green companies, integrators, manufactures etc. seen in different countries and from different origins?
Enjoy the snow in Switzerland,
Sebastian
Posted by: sebastian goeres at January 27, 2009 11:33 PM
This is absolutely the right focus for business communications at the moment, but the challenge for PR agencies is getting their clients to understand quite how much trust has been impacted by economic events, and what is required to turn that around.
Given the conversations I've had with PRs about this recently, it strikes me that for every client who understands the trust factor and the need to get to grips with it, there's another still wanting maximum brand awareness regardless of the quality of the content. Difficult times, changing times and a need for diplomacy! We have our work cut out.
Posted by: Steve Earl at January 29, 2009 7:21 AM
Richard,
You struck a nerve with the following points from “Edelman Trust Barometer 2009 - Paradise Lost”:
The decline in trust was the most profound in the corporate sector.
We have moved from a shareholder to a stakeholder world.
Of utmost importance to a company’s reputation is the quality of its products and treatment of its employees.
Your appeal for more effective public engagement through private sector diplomacy provides a strong foundation for a better future. Beyond this foundation, W. Edwards Deming’s Philosophy for Profound Change provides a, time-tested, roadmap that transformed Japan after WW II.
Perhaps Albert Schweitzer said it best: “In everybody’s life, at some time our inner fire goes out. It is then burst into flame by an encounter with another human being. We should all be thankful for those people who rekindle the inner spirit.”
The Japanese have been thanking Dr. Deming since 1951 with the Deming Prize for Quality. Since the 1980s many American “Deming Companies” and their stakeholders have been thankful to Dr. Deming. It is hard to imagine a more promising second half without a renaissance of trust, quality and value.
Posted by: Hugh Campbell at January 31, 2009 3:35 PM
Hello Richard. I am a bit confused at why it's difficult for us to regain trust among consumers during difficult times. While actions will always speak louder than words, if businesses tell the truth about their actions and motives then consumers will understand. The more businesses and "spin-doctors" within the industry try to cover up and sugar-coat their problems or mistakes, the worse off it is. I think it all boils down to a good set of ethics and reinforcement of the idea that people respect those who are genuine.
Thanks for the excellent report!
Posted by: Mark Taylor II at February 1, 2009 3:59 PM
Mark, to your question regarding regaining consumer trust it's pretty straightforward... It takes years for almost any brand to rebuild its reputation among stakeholders, whether they be consumers, shareholders, stakeholders, etc. Reputation isn't just about corporate transparency, PR and the like but doing what you say you're going to do.
Case in point: Sir Richard Branson was in Seattle today visiting Boeing and he really let loose on the company's delay of the 787 delivery in the local media. It's been a "nightmare for Virgin" and he made it clear that he may look at Airbus. While I don't think Virgin US is a Boeing customer (all Airbus), I do know the rest of the Virgin fleet is a strong mix of Airbus/Boeing.
Boeing is already laying off thousands of layoffs and the last thing they need is for Virgin to cancel its 787 orders. This isn't about "spin doctors," but about product mismanagement and unions convincing their members to go on strike at the possible worst time. All of this chaos will only add to Puget Sound's very battered economy.
I do PR for the tech industry so I may not be directly affected, but it's all a part of the trickle down. Sir Richard was smart to use the local media to help deliver the message to his supplier. He all as much said he can't trust Boeing moving forward.
So very sad and frustrating to hear that message in a community that calls itself "jet city."
Posted by: Pam Miller at February 7, 2009 2:58 AM
Richard,
Thanks again, especially for the excellent graphic. As you know, "trust" is a particularly broad term with many meanings. Some forms of trust change instantly, others glacially. It's good to see a time-frame of the opinions documented in your surveys.
Mark Taylor's comment is deceptively simple. The four Trust Principles that I have identified in my work are very much what he suggests:
1. A focus on the Other
2. A willingness to collaborate
3. A perspective of medium-to-long term
4. A practice of transparency.
Whether it's accounting, or automobiles, or brokerage firms, or food manufacturers, the assiduous practice of those four principles gives a company a tangible roadmap to becoming trusted. (At the risk of being self-serving, we offer companies a Trust Audit to begin focusing on forward progress).
PR firms have a tricky role to play here. They can get the ear of their clients about those principles, but their clients are accustomed to hearing their advice as both shareholder-specific (see Principle 1), and short-term focused in its benefits (Principle 3).
So PR firms have a double job to do here; not only to educate their clients about how to be trustworthy, but to get clients to hear their advice in the first place in somewhat new ways. I have no doubt that, if they rise to the challenge, PR firms will benefit as well.
Posted by: Charles H. Green at February 8, 2009 5:26 PM
Richard - I think it's time that the Edelman Trust Barometer took the next step into gauging an African perspective on trust. I think that the results would add some valuable insights, as the results from other emerging markets have.
Thank you for investing in such valuable research.
Posted by: Nadia Padayachi at February 9, 2009 2:35 AM
Hi Richard:
We briefly met about a year ago at the Paley Center for Media Breakfast that featured David Calhoun of Nielsen. I hope this note finds all well with you.
A quick heads up that today I have blogged and included a reference and link to you 6AM post “Edelman Trust Barometer 2009 – Paradise Lost”.
You can read my post here: http://www.burrellesluce.com/freshideas/?p=163
Also, I have seen that you are “on tour” to discuss the Trust Barometer as I have received various invitations to events around the country to hear you speak about it. To that end, we have successfully partnered with firms similar to yours (Ogilvy and Ketchum come to mind) where we produce a webinar around the firm’s pre-existing content/presentation. If you wish, we’d love to have Edelman present its Trust Barometer to our clientele via webinar. If you are interested all I would need is your marketing contact and we could take it from there. It’s my hope we’ll have the opportunity to do so.
Sincerely,
Steve Shannon
Posted by: Steve Shannon at February 23, 2009 4:04 PM