Trust in Business Hit Hard, Duh
I’ve just returned from a presentation and discussion of Edelman’s 10th annual Trust Barometer, an annual trust and credibility survey conducted for Edelman, the world’s largest independent public relations firm. In a year where governments bailed out banks in New York and London, baby formula was poisoned in China, big three automakers come hat in hand to Washington eager for bailouts, the stock market and most 401 (k) plans lost half their value and a $50 billion Ponzi scheme wipes out fortunes, it’s no small wonder that trust has taken a big hit both worldwide and here in the United States.
Nearly two-thirds of the informed public (62 percent) trusts corporations less than they did a year ago. In the United States, trust in business is at its lowest level (38 percent) than ever, down 20 percent in the last year. Only 17 percent said they trust information from a company’s CEO. Both of these figures are lower than those the firm measured in the wakes of Enron, the dot-com bust, and Sept. 11.
Calling 2008 a “catastrophic year for business, well beyond the evident destruction in shareholder value and need for emergency government funding,” Richard Edelman, the firm’s CEO, said “it’s going to be harder to rebuild our economies because no institution has captured the trust that business has lost—trust is not a zero-sum game. Business must recast its role in society and move beyond simply generating ROI to its shareholders. It must partner with government and other institutions to assume societal responsibilities,” in a press release.
By a three to one margin worldwide, those surveyed are in favor of government regulation of industry or nationalization of companies to restore public trust. In the U.S., only 49 percent say government should not intervene and the free market should be allowed to function independently.
The survey found that trust of a company and its transparency (defined as frequent and honest communication) are key to its reputation. Respondents ranked trust and transparency just below the quality of a company’s products and its treatment of employees, and above the corporation’s financial future, job growth, giving back to the community and innovation.
In order to regain trust, businesses need to make substantive shifts in both policy and communications, Edelman said. “This means forging partnerships, effecting real change in business practices from executive compensation to supply chain, and communicating all with transparency.” He said that it’s this type of public engagement is essential to rebuilding trust.
The surveyors interviewed 4,475 adults who met the following criteria: college educated; household income in the top quarter for their age in their country; read or watch business/news media at least several times a week; follow public policy issues in the news at least several times a week.
It comes as no surprise to us at Sunlight that transparency is a key ingredient to building trust. Even though this survey was focused on business, the same rules apply to government. Transparency and openness build trust and engagement. This is what we are demanding from the new administration and Congress.
Solutions? Just read The Cluetrain Manifesto.