This article originally appeared on Handelsblatt.com. It has been translated into English from German.
Germany's reputation as an economic nation has suffered serious damage in the past year. "After Dieselgate, the German bank scandals and the lawsuits against Bayer and Monsanto, confidence in German companies has fallen sharply," said Richard Edelman, head of US communications agency Edelman, in the Handelsblatt interview.
In the prestigious "Trust Barometer," Edelman has been analyzing for 20 years how the image of countries like Germany and the USA are changing. The loss of confidence in the German economy is particularly high in developed economies. It fell 15 percentage points year-on-year to 44 percent - the strongest ever. "In the UK, people trust a German business leader only as much as a Chinese CEO. That shocked me, "said Edelman.
The scandals hit Germany's image at a particularly bad time, believes the PR expert. After all, consumers increasingly expect companies to do more than just make a profit.
Edelman strongly advises company leaders to become more visible to the public in order to bring "Made in Germany" back to its former glory. After all, many companies have long been committed to sustainability and other issues, but this has been overshadowed by the scandals of recent years. "Germans tend to do things and not talk about them. They'd rather let the results speak for themselves," said Edelman. "But they have to go out and tell their story."
Mr. Edelman, "Made in Germany" was easy to sell for a long time. What about the brand today?
Brand Germany has always been the one with the highest trust in the twenty years since we've launched our Trust Barometer. Everyone wanted to wear the German jersey at a football World Cup. While trust in other countries was sometimes higher and lower, confidence in the German brand was always high and stable.
Why?
High environmental standards, good treatment of employees, high reliability of products. This is how Germany has been perceived both in industrialized nations and in emerging countries. But after Dieselgate, the German bank scandals and the lawsuits against Bayer and Monsanto, confidence in German companies has fallen sharply. Interestingly, the value after Dieselgate has initially recovered somewhat until about six months ago. Now we see a big break again. Especially in industrialized nations. There, only 44 percent of respondents said that they found German companies trustworthy. We are talking about the USA, Great Britain, France - key markets for Germany. This is a wakeup call!
Why was there this new collapse?
In recent months, it has been Bayer-Monsanto, Deutsche Bank and some news from the auto industry that has hurt confidence. Once you have a problem, you can apologize and make it right, and people accept it. But if you do it twice or three times, you cannot.
These scandals come at a time when consumers increasingly expect companies to pay more than profits.
That's true. Especially in countries with populist governments, companies are expected to fill the gap left by politics today. This is not so much the case in Germany as in the U.S. or other countries. But many companies are more public, talking about LGBT ...
So, the rights of gay, bisexual and transgender people ...
Expectations have changed. In the meantime, one’s own employer is the institution that people trust most. So, it’s the wrong time for scandals.
In the U.S., only 40 percent of respondents to your study say that Germany is a good global citizen. That's twelve percent less than before. Does that also have to do with Trump’s criticism of Germany?
In any case, this has had an effect on Republicans. For a long time, Germany was considered a fair-trading nation. But then it is emphasized that American cars could not be sold so easily in Germany and that there are tariffs of which the ordinary American did not know anything. Many have never thought of Germany as an unfair trading partner, only China. This has influenced trust, especially among Republicans.
Consumers increasingly demand transparency from companies. Why is that important today?
Because people today do not just want to understand what you do as a company, but how you do it. These are the new expectations. A report on corporate social responsibility or corporate social responsibility is not enough. People want to understand the supply chain. And they focus on their consumption and their decision as to whether they want to work for a company or not. That's right now, in a full-employment economy.
In China and emerging markets, Germany is perceived more positively than in industrialized nations, also in terms of its local involvement. Why is that the case?
Especially in China and India, companies such as Siemens and Bayer have been around for many years. They are part of the local structure there. But in China and India, generally, trust in institutions is much higher. I call them the sunshine states. People do not question so much, also because the companies have brought them higher living standards.
Germany now has to overcome several scandals. How can the reputation improve again - if at all?
I am 100 percent convinced that it is possible to turn things around. Businesses need to focus on their strengths. You have to strengthen confidence in German quality again. It is no longer just about high engineering and quality products. Also, the confidence that scientific studies are correct must be restored. The companies have to be transparent. Consumers have to trust them that the statements about fuel consumption are really right. That's the most important. But also, CEOs have to lead and be seen.
What about the reputation of the CEOs?
I find it scary that trust is so low. In the industrialized countries surveyed it is only 22 percent. In Germany it is even only 17 percent. German CEOs must be leaders in regaining confidence. You must keep an eye not only on the shareholders, but also on other stakeholders. And they have to become better known. When we do our polls, we are shocked at how few people know German CEOs.
Being in the limelight is not very German ...
No, that's not it. But the times for CEOs have changed. Seventy-five percent of respondents expect corporate executives to express an opinion and not wait for the government to make decisions.
Are German CEOs ready for this change?
Yes, I think there is a new generation. For example, I am thinking of the bosses of Adidas, Allianz and Deutsche Bank.
Historically, German companies have long held up stakeholder values, not just profits. Did they lose that?
Only 29 percent of Americans say that the values of German companies are in line with their values - nine percent less than a year ago. The scandals have destroyed confidence in German reliability.
What about confidence in the reliability of the products?
That's still high. The trust in the values is not.
How do German CEOs measure against other corporate leaders?
In the UK, people trust a German business leader only as much as a Chinese CEO. That shocked me.
Who do they trust the most?
American CEOs.
Are they actually more committed to their employees and communities, or are they just selling better?
They are very active. The Starbucks CEO is very committed to the environment, and he eliminated plastic straws. The CEO of Levi’s is committed against gun violence and is committed to background checks. The CEO of Walmart has been committed to quickly removing electric cigarettes from the stores. The PayPal chief is committed to LGBT and sought a new location for the North Carolina office after discriminatory laws were passed there.
On the other hand, Walmart has long had a bad reputation as an employer because it pays employees badly and often does not provide health insurance. In contrast, German companies have tended to be much better in that area. Also, the Germans have long avoided plastic, where it goes ...
German companies need to communicate better. Germans tend to do things and not talk about them. They would rather let the results speak for themselves. But in a time when social media information spreads very quickly, you have to go out and tell your story.
How long will it take to improve Germany's image?
At the moment, the mood is very volatile. It takes hard work and much more transparency and the commitment of business leaders. I would say two to three years.
How has the American brand evolved under President Trump?
The U.S. image is now on par with Spain and Italy. That is not good. Germany is even better in comparison.
And who leads the ranking?
Canada, Switzerland and the Netherlands. These are countries that, ironically, have been guided by Germany's strategy: do right by the environment, good labor standards, good quality. Germany has paved the way and now must regain leadership.
What suggestions do you have for German business leaders?
A few weeks ago, the "Business Roundtable" clearly stated its opposition to shareholder value. At the initiative of France's President Macron, companies have joined forces to launch an initiative against social inequality. German companies should agree on new standards of transparency, the role of the boss and their values by Christmas, so that by 2020 they will regain their image. But it also depends on the performance: If Deutsche Bank should make the turnaround, Bayer solves its problems with Monsanto and the auto industry is growing, then that will certainly help.