trust
2011 Edelman Trust Barometer Executive Summary
Business and Government: Trust Stabilizes Globally In a year marred by corporate crises and financial turmoil for European governments, the 2011 Edelman Trust Barometer finds trust in business and government markedly resilient and sees a shifting center of gravity. Trust in NGOs, “the fifth estate” in global governance, stays strong. In this year’s Barometer, a three-part picture emerges of trusters, neutrals, and distrusters of business and government (figures 1 and 2). Countries hovering in the 50 percent-range, so called “neutrals,” occupy a middle ground as the divide widens between trusters (over 60 percent, including Brazil and China) and distrusters (under 50 percent, including the U.S., U.K., France, and Russia).
Figure 1: Emerging markets dominate as “business trusters;” U.S. drops to within 5 points of Russia (Top 10 GDP countries) How much do you trust business to do what is right? Trusters 100 90
Distrusters
+19
80
81%
70 60
Neutral
+12 67%
62%
70% 59%
64% 62% 61%
57%
The United States, which last year enjoyed an 18-point spike in trust in business, saw an eight-point drop, placing the world’s largest economic power within five points of last-place Russia. Trust in government tumbled in the U.S., where the two political parties were at loggerheads (see page 4 for more on the U.S.).
50
In the early years of the Barometer, trust in business and government tended to move in opposition. Increased trust in one was met by decreased trust in the other. We generally now see the two moving in tandem, an important step as the expectation is for the world’s two dominant institutions to work together.
Responses 6-9 only on 1-9 scale; 9=highest; Informed publics ages 25 to 64
52% 40%
30
48%
54% 46%
36%
49%
44% 42% 41%
20 10 0
Brazil
India
Italy
2010
China
Japan
2011
2010
Germany
France
U.S.
2011
U.K.
2010
Russia
2011
Figure 2: China and Brazil drive rise in trust in government; U.S. now on par with Russia (Top 10 GDP countries) How much do you trust government to do what is right? 100 90
The predominant exception is Germany, where trust in business is up by 12 points, but trust in government is down by 10 points—to 33 percent, the lowest of the top 10 economies. In Germany, business is now enjoying the benefit of the Hartz labor reforms, but the government is seeing widespread opposition to the country’s bailout of troubled European nations.
53%
40
-8
+12
Trusters
+14
70
Distrusters
+46 88%
80
Neutral
85%
74%
50
51%
40
39%
30
-10
-6
60
43%
42%
49%
45%
43% 44%
36%
38%
43%
46%
40% 38% 39%
43% 33%
20 10 0
China
Brazil
2010
2011
Japan
France
Italy
India
U.K.
2011
Responses 6-9 only on 1-9 scale; 9=highest; Informed publics ages 25 to 64
2
2011 EDELMAN TRUST BAROMETER
U.S.
Russia
2010
Germany
2011
Trust in Banks Plunges in West; Technology Holds Firm at No. 1; Automotive Rallies Technology, which is in the No. 1 spot for the third straight year, is now followed by automotive and telecommunications. In the U.S., where GM posted the largest IPO in history, the automotive industry earned back half of the trust it had lost in 2009. The starkest contrast, however, is between technology and banks (figure 3). The dramatic three-year drop in trust in banks in the West keeps this industry stuck at the bottom in global industry rankings. By contrast, in China, where banks are credited with financing increased prosperity, trust surged by 12 points to 90 percent.
Figure 3: Banks’ reputation plummets in West, while tech stays high worldwide; automotive climbs across the globe How much do you trust the following industries to do what is right? Banks 100
+12
90
90%
78%
80
83%
87%
98%
93% 93%
+7 78%
77%
-46
71%
70
Auto
Technology
+21
73%
73% 69%
-30
60 50
82% 80%
85%
75%
+17
46%
40
53% 49% 48%
32%
30
25%
20
16%
10
All four BRIC countries have gained trust as headquarter countries for global companies (figure 4). The trust comes mainly from fellow emerging markets, indicating that the BRIC strategy to target emerging economies is producing results. However, when compared to Germany and Canada, longtime leaders in the most-trusted-headquarter-country category, the BRICs still have a ways to go to be considered reliable business hubs. In 16 of the 23 countries surveyed, NGOs are as or more trusted than business. Historically trusted most in developed markets, NGOs continue to gain trust in emerging markets (figure 5). In Brazil and China, where NGOs are on par with business, higher economic levels come with a greater concern for environmental responsibility, education, and public health, the very province of NGOs.
0
China
India
U.S.
U.K.
2008
China
2011
India
U.S.
2008
U.K.
China
India
U.S.
2011
U.K.
2009
2011
Responses 6-9 only on 1-9 scale; 9=highest; Informed publics ages 25 to 64
Figure 4: Trust in BRIC-based companies rises
Figure 5: Trust in NGOs on par with business in emerging markets
How much do you trust global companies headquartered in the following countries to do what is right?
How much do you trust business to do what is right? How much do you trust NGOs to do what is right?
100
100
90 80
90 75%76% 76%75%
70
80
+3
+4
+5
60 50 40
36%
40% 39%
+5
70
81% 80%
60
61% 63%
50
42% 34%
39%
30
35% 30%
48%
30
20
20
10
10
0
46%
40
55%
55%
0
Germany Canada
2010
2011
Brazil
India
China Russia
2010
Brazil
2011
China
U.S.
Business
U.K./Fr/Ger
NGOs
Responses 6-9 only on 1-9 scale; 9=highest; Informed publics ages 25 to 64
3
The United States: The Stark Exception In a reversal of last year’s uptick, the U.S. suffers an across-the-board tumble, with declines in all four institutions.
Figure 6: In U.S., 2011 decline mirrors 2008-2009 drop; only country to see trust fall in all four institutions Trust in institutions: 2008-2011 70
The downturn in trust in the U.S. in 2010 echoed the drop that resulted from the worldwide financial crisis. While not as steep a decline, the country lost half the gains it earned back in 2009 (figure 6). Several explanations emerge for the grim U.S. picture: the prolonged fighting between business and government; unemployment rates— not the full recovery the country expected; and the nation’s spot as the epicenter of many of the headline crises of 2010, including the oil spill, product recalls, and the SEC investigation of Goldman Sachs. A four-year view paints a bleaker picture according to the Trust Barometer Index, in which each country’s score is an average of its trust in business, government, NGOs, and media. The U.S., fourth from the top in trust in 2008, sinks to the bottom this year, barely above the U.K. and Russia. On the other hand, the BRICs hew closer to their 2008 rankings, with the exception of Brazil, which climbs sharply. But if American business is largely not trusted by Americans, the opposite appears to be the case for American business abroad. Continuing a trend we have seen in recent years, trust in U.S.-based multinationals moved up in many markets, including China (+15), Brazil (+16), India (+16), and Indonesia (+16), possibly a halo effect of President Obama’s good standing abroad.
4
2011 EDELMAN TRUST BAROMETER
65
63%
63%
60 55 50
59%
Worldwide financial crisis
54%
46%
45%
46%
43%
36%
55%
46%
45 40 35
40% 38%
31%
30
30%
27%
25 20
Jan 2008
Jan 2009
Responses 6-9 only on 1-9 scale; 9=highest Informed publics ages 25 to 64
Jan 2010
NGOs
Business
Jan 2011
Government
Media
Trust Barometer Index U.S. drops while Brazil rises in composite scoring 2008
2011
Global
—
Global
55
Mexico
69
Brazil
80
China
62
China
73
India
60
Mexico
69
U.S.
53
India
56
Japan
50
Canada
55
S. Korea
50
S. Korea
53
Canada
48
Japan
51
Brazil
48
France
50
France
44
Germany
44
U.K.
43
U.S.
42
Germany
36
U.K.
40
Russia
36
Russia
40
Responses 6-9 only on 1-9 scale; 9=highest; Informed publics ages 25 to 64 Composite score is an average of a country’s trust in business, government, NGOs, and media
Credentials Count More Than Ever Trust in experts rises—and after years of being at or near the bottom, CEOs see increase in credibility. a company, a 19-point increase over 2009.
Trust in all credentialed spokespeople is higher this year, signaling a desire for authority and accountability —a likely result of the skepticism wrought by last year’s string of corporate crises. Since 2009, academics and experts—long the front-runners—earned another eight points to climb to 70 percent. For the first time, the Barometer asked about the credibility of a company’s technical expert who is, in turn, deemed “very” or “extremely credible” by a vast majority (64 percent).
By contrast, a “person like me” dropped by four points globally in that time, falling from the top three to the bottom two, virtually swapping spots with the CEO. This may be a result of changing attitudes about what constitutes “a person like me,” rather than an indication of a significant decrease in the actual credibility of peer-to-peer communication. With some estimates indicating that the average Facebook user does not know one-fifth of the 500 people typically listed as friends on his or her page, it is reasonable to ask whether the meaning of the word “friend”— and by association “a person like me”—has become devalued.
CEOs are now in the top tier of trustworthy spokespeople, a striking shift from two years ago when they sat second from the bottom (figure 7). Fifty percent say CEOs are credible spokespeople about
In the wake of last year’s crises, the Barometer posed a series of questions about who should speak for a company in a challenging time. “Multiple voices” is the first conclusion drawn, as CEOs, third parties, company chairmen, and technical experts all have a role to play when a company confronts a crisis. In the case of a product recall, the technical expert and the CEO are the preferred spokespeople (30 percent and 37 percent, respectively). In a situation where the local community has been damaged, more people want to hear from the CEO (38 percent) than they do a third-party representative (17 percent), government official (12 percent), or company technical expert (11 percent).
Figure 7: CEOs lead rise in trust in authority, but “person like me” drops amid flight to credentialed spokespeople If you heard information about a company from one of these people, how credible would that information be? 2009
2011
Academic/expert
62% 49%
Financial/industry analyst
47%
Person like yourself NGO representative
41%
Regular employee
32%
CEO Government official
31% 29%
Academic/expert
70%
Technical expert in company
64% 53%
Financial/industry analyst
50%
CEO
47%
NGO representative
43%
Government official Person like yourself Regular employee
43% 34%
Informed publics ages 25 to 64 in 20 countries “Extremely credible” and “very credible” responses only
5
Surround Sound Needed in Time of Skepticism A jumbled media landscape and the domino effect of corporate and government crises have increased skepticism in key Western nations.
Figure 8: Developed markets more distrustful of media (Top 10 GDP countries) How much do you trust media to do what is right? Trusters 100 90
+17
80
While trust in media as an institution inched up globally, it declined significantly in the U.S. and the U.K. (figure 8). As in 2009, the majority need to hear something between three and five times to believe it (figure 9). But in the U.S. and the U.K., approximately one-quarter say they need to hear something six or more times to believe it, twice as many as two years ago.
60
Distrusters
+19 80%
70
Neutral
63%
50
73%
+12
-11
58%
54%
50%
40
48% 36%
30
45% 38%
36%
39% 37% 37% 37% 38% 27%
20
31% 22%
0
China
Brazil
2010
2011
India
Japan
France
Italy
Germany
Russia
U.S.
2011
2010
U.K.
2011
Responses 6-9 only on 1-9 scale; 9=highest; Informed publics ages 25 to 64
Search engines rank No. 1 as the place people go first for information about a company, followed by online news sources, print, and broadcast media (figure 10). Their second stop is on the screen as well, with 23 percent saying they go to online news sources, which do include the Web versions of traditional media like newspapers and television. Thirty-three percent globally say they trust newspapers a great deal, followed by 31 percent who say the same for television.
Figure 9: Repetition enhances credibility
The data portray a savvy consumer who turns first to search engines to see what is available on the topic of interest, and who then seeks out traditional media to confirm or expand on what he or she has learned. Information ubiquity has changed the playbook for corporate communications, the data suggest, signaling to companies that they cannot simply be present with their messages, but rather must be omnipresent through an approach that encompasses mainstream, new, social, and owned media.
Figure 10: Search engines “go-to” source; online news second
2011 EDELMAN TRUST BAROMETER
-9
10
10+ times Don’t know 2% Once 6-9 times 6% 4% 8%
How many times in general do you need to hear something about a specific company to believe that the information is likely to be true?
Twice 22 % 4-5 times 26%
Informed publics ages 25 to 64 in 23 countries
3 to 5 times 59%
3 times 33%
Where do you generally go first for news about a company? Then where do you go?
First Source
Second Source 29%
Online search engine 19%
Online news sources
15%
Print (newspapers/magazines)
Company website
11%
Company website
Social media 5%
16%
Online search engine Broadcast (radio/TV)
7%
17%
Print (newspapers/magazines)
12%
Friends and family
23%
Online news sources
Broadcast (radio/TV)
Informed publics ages 25 to 64 in 23 countries
6
45%
Friends and family Social media
14% 11% 10% 7%
Trust Is a Protective Agent Trust has tangible value. Companies that are distrusted and facing an onslaught of negative news will have a harder time changing opinion after the storm than they would if they were trusted at the outset. This year’s Barometer explored whether trust can diminish the impact bad news has on a company. The answer is yes (figure 12). Fifty-seven percent will believe negative information about a company they do not trust after hearing it just once or twice. When a company is trusted, however, only 25 percent will believe negative news about it after hearing the news once or twice. The same holds true for positive information, with far fewer believing good news about a distrusted company. These findings send a strong signal that corporate leaders would be well advised to create a trust foundation so that positive information has an echo chamber in which to resonate. The most important corporate reputation factors remain quality products, transparency, trustworthiness, and employee welfare, while a company’s financial performance is tied at the bottom with its having widely admired leadership (figure 11).
Figure 11: Quality, transparency, trust, and employee welfare most important to corporate reputation How important are these factors to corporate reputation?
High quality products or services
69%
Transparent and honest business practices
65%
Company I can trust
65%
Treats employees well
63%
Communicates frequently
55%
Prices fairly
55% 51%
Good corporate citizen
46%
Innovator Widely admired leadership
39%
Financial returns
39%
Responses 8-9 only on 1-9 scale; 9=highest. Informed publics ages 25 to 64 in 23 countries
Figure 12: Trust protects reputation When a company is distrusted
When a company is trusted
57%
will believe negative information after hearing it 1-2 times
15%
will believe positive information after hearing it 1-2 times
51% 57%
will believe need to hear positive positive information information 3-5 times to beleive it after hearing it 1-2 times
25% will believe negative information after hearing it 1-2 times
Informed publics ages 25 to 64 in 23 countries
7
The Transformation of Trust A. Agree: Should corporations create shareholder value in a way that aligns with society’s interests, even if that means sacrificing shareholder value? B. Agree: Should government regulate corporations’ activities to ensure business behaves responsibly? 100
91% 89% 89% 89%
90 80
85% 85% 85%
82% 82%
70
70%
60
62% 61%
50 40
82% 81% 81% 80% 79% 78% 78% 74%
56%
66%
69%
73%
57%
67%
74% 73% 72% 71% 71%
67%
63% 62%
63% 61% 63%
50%
49%
48%
53% 44%
42%
30 20 10
Ge
rm
an y U.K Ire . lan d Ch ina U.S Me . x Ind ico on esi Ca a Ne nada the rla nd Sw s ed en Ru ssi Au a str Sin alia ga p Arg ore en tin a Ind ia Ita ly Fra nc e Sp ain Po lan S. d Ko rea Bra zil Jap an UA E
0
Question A
Informed publics ages 25 to 64 in 23 countries
Old Trust Framework
Question B
New Trust Architecture
W
HO
spa Tra n
nt
E
ER
me
age
Eng
ren
cy
Protect the Brand
Control Information
WHAT Focus Solely on Profit
Profit with Purpose
About the Edelman Trust Barometer
About Edelman
The 2011 Edelman Trust Barometer is the firm’s 11th annual trust and credibility survey. The survey was produced by research firm StrategyOne and consisted of 30-minute telephone interviews conducted from October 11-November 28, 2010, with the exception of France and Germany, fielded January 3-13, 2011. The 2011 Edelman Trust Barometer survey sampled 5,075 informed publics in two age groups (25-34 and 35-64) in 23 countries. All informed publics met the following criteria: college-educated; household income in the top quartile 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. For more information, visit http://www.edelman.com/trust or call 212.704.4530.
Edelman is the world’s largest independent public relations firm, with wholly-owned offices in 53 cities and 3,700 employees worldwide. Edelman was named Advertising Age’s top-ranked PR firm of the decade and one of its “2010 A-List Agencies” and “2010 Best Places to Work;” European Excellence Awards’ “2010 Agency of the Year;” PRWeek’s “2009 Agency of the Year;” Holmes Report’s “Agency of the Decade” and “2009 Asia Pacific Consultancy of the Year;” and among Glassdoor’s top five “2011 Best Places to Work.” Edelman owns specialty firms Blue (advertising), StrategyOne (research), Ruth (integrated marketing), DJE Science (medical education/ publishing and science communications), and MATTER (sports, sponsorship, and entertainment). Visit www.edelman.com for more information. © Edelman, 2011. All rights reserved.
On the cover, from top left: newspaper stall in Dublin, Ireland; Wikileaks founder Julian Assange at press conference; oil-soaked pelican in wake of BP Deepwater Horizon rig explosion; Goldman Sachs chairman and CEO Lloyd Blankfein testifies before Senate Subcommittee on Investigations; unemployed worker holds sign at rally; Dilma Rousseff, Brazilian president, receives presidential sash from Lula da Silva; relatives of Foxconn employees mourn family members following suicides at Chinese manufacturer.
8
2011 EDELMAN TRUST BAROMETER
58% 55%
53%
WH
Richard Edelman President and CEO, Edelman
Figure 13: Expectations high for business to invest in society
Stand Alone
Trust in business may have stabilized globally, but it is different and conditional, premised on what a company does and how it communicates. In this transformation, there are new expectations for governments, corporations, and leaders—as well as a new architecture for earning trust. It supplants the “fortress framework” in which corporations have customarily protected their brands, controlled information, and given short shrift to partners, aiming to maximize returns solely for shareholders. The new model, a “trust triangle,” is based on the expectation for companies to act collaboratively to benefit society not just shareholders (What); be transparent about their operations and profit engines (How); and engage using a range of spokespeople and all forms of media—mainstream, new, social, and owned (Where). Trust is no longer a commodity that is acquired, but rather a benefit that is bestowed. Business has the opportunity to build an enduring foundation of trust by asking its leaders to commit to a strategy that brings value to both investors and society.