4 February 2009
Trust in business at a 10-year low in the US, but high in emerging economies
Edelman research says employees and peers are trusted three times the amount CEOs are trusted.
The recently released 10th Edelman Trust Barometer report found people trust corporations, including business, government, media and NGOs, less than they did a year ago.
US trust is low
In the US, only 38% of respondents trust business to do what's right – a 20% plunge since last year – and only 17% trust information from CEOs.
Both levels are lower than following Enron, the dot-com bust and September 11. Trust in banking is also down 33% on last year.
In addition, 77% refuse to buy products or services from a company they distrust, while 72% criticize a distrusted company to a friend or colleague.
Catastrophic year
“It’s been a catastrophic year for business, well beyond the evident destruction in shareholder value and need for emergency government funding,” says Richard Edelman, president and CEO, Edelman.
He says business must “recast its role in society” and move beyond simply generating shareholder ROI.
In the UK, France and Germany, trust in business is at a low of 36%. In these countries, three-quarters say government should step in to prevent future financial crises. The Netherlands and Sweden were the only EU countries making a notable trust gain.
Emerging economies have higher trust
In contrast to Western economies, business trust in several emerging economies has increased. In Brazil, trust in business is up from 61% to 69% and trust in banking is up from 52% to 59%.
David Ferrabee (pictured, left), managing director, Able and How, and one of the Hub's editorial board, says, “In the current recession, people have lost faith in companies – and countries run by companies.”
Social programs helping emerging economies
China and Brazil have instituted social programs and businesses there have to reflect these policies. Businesses in some emerging economies are required to have more of a conscience than many Western businesses are built to do.
“Trust has been worn down by how businesses have been managed entirely for shareholders and it’s not surprising people feel that way,” Ferrabee says.
“My father’s generation expected to work in the same company all their lives. There are few people under 50 right now who think they’ll stay in the same business forever.”
Trust levels rise in China
In China, trust in business is up from 54% to 71% and in banking up from 72% to 84%.
The Hub asked Christopher Hannegan (pictured, right), former director of employee engagement at Edelman, now principal, Booz & Company, to comment on the Barometer’s findings.
He says it will be interesting to see if the findings reflect an emerging market lag. “China still has many restrictions on sharing information and there’s not much sharing online,” he says.
Company reputation
The Western world’s explosion of blogging and twittering is not as widespread in China. Hannegan believes the emergence of web 2.0 has caused a Western decline in CEO credibility. “My theory is that as more people access sources of information – and get a greater number of perspectives – they’ll find out quickly whether what the CEO says matches up with other sources.”
He says that until people have the data points to validate and calibrate against, they're more likely to trust an authority figure like a CEO.
The Barometer found trust and transparency (frequent, honest communication) outranks other company aspects that include:
- financial future
- job creation
- giving back to the community
- innovation in products and services
Employees are key information sources
Barometer respondents say being able to “trust a company” is important in determining company reputation. Globally, people rank trust just below the quality of a company’s products and its treatment of employees.
To regain trust and re-earn the mantle of authority, business needs to make substantive shifts in policy and communications.
Employees and peers are credible sources of company information, with 47% trusting what they hear from “a person like yourself” and 40% trusting conversations they have with employees.
“To regain trust and re-earn the mantle of authority, business needs to make substantive shifts in both policy and communication,” says Edelman’s CEO.
Hannegan says, “Now more than ever, the people responsible for communication can play a critical role in restoring trust in their corporation.”
Communication role is critical
The Barometer shows trust figures for employees and peers are three times the amount CEOs are trusted. Hannegan says, “The avenue for corporations to rebuild trust is to make sure they’re turning their employees into ambassadors for the firm because they’re believed.”
This is not a new concept, so why are few companies doing it? “Lots of companies still operate outdated information philosophies,” Hannegan says. Many companies try to control messaging and the story being told about them.
Giving up message control
“In this day and age of web 2.0 – which is instant and dynamic – you have to accept giving up control of the message,” Hannegan says. “Let other people own it and tell the story for you. That’s very frightening for a lot of companies.”
He believes communicators play a big role in helping CEOs find alternatives to a control philosophy. “I’m not saying CEOs no longer have any role in communication and corporate reputation,” he says. “But only relying on that is a danger.”
Hannegan suggests communicators tap their networks to find more progressive CEOs, and broker discussions between their CEO and more enlightened CEOs. “Peer-to-peer connections can be very useful in helping communicators get their senior leaders thinking differently,” he says.
Hub members can hear Kieron Shaw, internal communication specialist and former head of research at Melcrum speak in a podcast interview about Understanding the power of peer-to-peer communication in the workplace. 
Further implications for internal communication
Ferrabee says many businesses are now into serious consolidation. “Leaders are telling people to reduce costs and streamline the organization as much as possible.”
If communicators continue putting human interest stories on the intranet they’re going to miss the story of the day – strategy.
The implications for communicators are potentially massive. “They need to focus on business needs almost to the exclusion of all else,” he says.
“Business-as-usual communication needs to carry on, but if communicators continue putting human interest stories on the intranet they’re going to miss the story of the day – strategy.”
The communication job is helping to keep the business going, but not just in terms of staff morale. “It’s about getting people they information they need to make good decisions,” Ferrabee says. “The last thing you want is people being completely gobsmacked by changes to their lives because ‘They didn’t get the memo’”.
Other Trust Barometer findings
- Trust in nearly every type of news outlet and spokesperson is down from last year.
- Trust in business magazines and industry analyst reports – last year’s leaders – decreased from 57% to 44% and from 56% to 47%, respectively.
- Only 13% trust corporate or product advertising – down from last year’s low of 20%.
Have your say
Do you have a feel for trust levels in your organization – have they gone up or down in the last year? What role do you think internal communication has in restoring trust levels?
NOT A MEMBER?
Sign up nowSign up for a free 7-day trial to the Hub and receive a free report - An Employee Engagement Toolkit!
Other recommendations:
Trust in business is higher than in government
Melcrum report: Communicating during economic downturn
Employee research: What are your people really telling you?
Strong PR case for social networks
AUDIO GUIDE: Understanding the power of peer-to-peer communication in the workplace
Got a news story? Contact the newsdesk