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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.


2011 Edelman Trust Barometer Executive Summary