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January 25, 2010
Edelman Trust Barometer 2010 - A New Mandate for Business
I have just arrived in Davos, ready to present the findings of our tenth annual Edelman Trust Barometer at a breakfast panel co-hosted by the Financial Times tomorrow morning. Here are a few of the important conclusions from this year's 22-country study of opinion formers, who are "media attentive," have more than $75,000 annual income and at least a college degree:
What does it mean for business in the coming year?
- Trust in business has stabilized and is trending upward, with a substantial jump of 18 points in the US (from an all-time low of 36% in 2009 to 54% in 2010). Trust in business falls into three categories (High-Brazil, China, India, Indonesia-at 60-70%; Middle-Canada, Japan, US-at 50-59%; Low-France, Germany, Russia, UK, Korea, -at 35-49%).
- Business tends to be more trusted than Government and less trusted than Non-Governmental organizations. Government trust has risen in the US (substantially), France and Germany, falling in Russia and mostly stable elsewhere.
- NGO trust has jumped profoundly in China in the past six years, from 31% to 56%, a level comparable to that found in Western Europe, India and the US. About 70% of respondents trust a company more when it partners with an NGO on important social issues.
- The most trusted nations for company headquarters continue to be Canada, Germany and Sweden, all of which are social democracies. Trust in US headquartered companies jumped 10 points to 61% this year, most notably in Germany and Russia. The least trusted nations are China and Russia, though China's scores rose from 27% to 34%.
- The most trusted industry is still technology, achieving rankings of 80% plus in most countries (leader in 20 of the 22 markets surveyed). The banking industry has suffered a profound fall from grace, with three year declines of up to 39 points in markets ranging from the UK to the US to Germany. Banking remains highly trusted in China and India. Automotive staged a comeback and is very highly ranked in developing markets.
- Credibility of chief executives has recovered but remains well below that of academics, financial analysts and NGO representatives. In a reversal of past trend, a "person like myself" has seen a drop in trust and fellow employees has remained stable, now at levels comparable to CEOs.
- Business magazines and analyst reports have widened their lead over TV, radio and newspapers as the most trusted sources of information about companies over the past few years. Corporate advertising is the lowest at 14%.
- The three leading factors burnishing corporate reputation are now "quality products and services, a company I can trust and transparency of business practices." This stands in stark contrast to 2006 Trust Barometer data for the U.S., where "top ranked leadership and strong financial performance" were two of the three key trust factors along with quality products. Financial results are now the least powerful factor in positive corporate reputation in most regions.
- There remains great skepticism about future behavior of business, with almost 70% expecting "a return to business as usual" by companies and financial institutions once the crisis is over. Two-thirds of respondents expect government to have active influence over the financial sector. More than 70% said reducing the gap between senior executive and ordinary employee pay and firing underperforming management was central to restoring trust in companies.
- Stakeholder society supplants the shareholder society: Companies will need to listen to and engage a wider range of stakeholders than in the past. Business must be ready to change its policies. This is the time for business to demonstrate its ability to deliver both profit and purpose, to prove that capitalism is a force for change and for the common good.
- Practice private sector diplomacy by partnering with government and NGOs: The relationship between business and government is very fluid, with populism likely to flare up around issues of compensation, employment and trade. The power of NGOs is enhanced by the new emphasis on sustainable consumption and supply chain; partnership will be necessary on important societal issues.
- Be transparent and communicate frequently across all channels: There is no longer a single/small group of credible sources of information. The new influencers--from bloggers to consumer enthusiasts--will continue to gain share-of-voice from traditional media. Cultivate a wide circle of spokespeople with substantial expertise and participate in conversation in real time across every channel, because people need to hear or read something five times in different places in order to achieve belief.
- Prominent CEO Leadership: Today, transparency and trust are more central aspects of reputation. The chief executive officer needs to be visible and communicative, especially with his employees. They will take the story forward in their own way to friends and family. Academics and other experts will provide added credibility.
Posted by Edelman at January 25, 2010 12:39 PM |
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Comments
This is great material for any senior executive trying to bring thought leadership to the client table. Thanks!
Posted by: Barry Collodi at January 28, 2010 7:23 AM
Interesting insights as always, Richard. Particularly your comments regarding transparency and leadership. As we watch the Toyota recall play out, it's clear to see the significance of how leaders handle times of crisis. Hopefully CEOs and their teams will take serious note of the importance of communicating early, often and openly in the midst of a crisis...given its determining effect on reputation, profits and trust.
Posted by: Michele Nix at January 30, 2010 4:21 PM
Richard, there are always some interesting findings from the suervey. But what jumped for me was the massive drop in trust of peers.
Here's more: http://su.pr/1ePOQZ
Posted by: Tom Foremski at February 2, 2010 10:58 PM
Interesting take on the Trust Barometer as usual. One point to correct; CEOs are not trusted source of information. You must utilize employees, academics, NGOs and others in the supporting cast around the CEO.
-Richard
Posted by: Richard Edelman at February 4, 2010 11:53 AM
Entering the second decade of the 21st century, is there a more pervasive issue affecting stakeholders' economic, social and political outlooks than trust? If not, leaders, that realize that results are no longer the sum of the parts but rather the product of their interactions, should look into the root causes that short-circuit effective interaction.
Regardless whether the unsatisfactory interaction is of an economic, social or political nature; the causes that adversely inhibiting effective interaction will tend to relate to: prior result (tract record), integrity or lack thereof, competencies and intent (agenda).
Intent/agenda is likely to have played a significant role in this year’s Trust Barometer’s decline with respect to the media. If intent/agenda makes the media’s message resemble propaganda rather than news, why shouldn’t trust decline?
Posted by: Hugh Campbell at February 14, 2010 10:39 PM