70 60
71% 59%
58%
50
62% 60%
48%
40
36%
30
41%
39%
34%34%
30%
20
48% 46%
39%
44%
10 0
US
France
trust
Germany
India
China
Jan - 08
2009 Midyear Special Report
UK
Jun - 09
Jan - 09
Trust in business has stabilized and is recovering significantly in the United States and France, following a devastating loss in trust in the private sector; remains high in India and China. In January 2009, the Edelman Trust Barometer recorded the lowest trust levels in more than a decade of Edelman tracking (of informed publics ages 35-64). Given the ongoing recession, the spate of bank bailouts, nationalizations, and bankruptcies, as well as scrutiny of executive compensation, we conducted a special midyear update in six countries. We found that trust in business is on the way back in the West (with challenges) and remains quite high in Asia. The 12-point increase in U.S. trust in business (figure 1) includes the younger sample of 25- to 34-year-olds1, whose overall trust in business also rebounded after a sharp decline in January 2009. In the United States alone, trust in business among the younger age group was up by 26 points in six months; their trust in government was up 24 points. Trust in business and trust in government are now moving synchronously (figure 2), unlike previous years where they tended to move in opposing directions. The expectation today is for these two institutions to work collaboratively to tackle economic and societal challenges. Yet fifty-five percent (55%) say business hasn’t done enough to cooperate with government to solve the global economic crisis.
Figure 1: Trust in business on upswing How much do you trust business to do what is right? 100
100
90 100
90
+12
80 90 70 80 60 70 50 60
+13
30 40
48%
35%
30%
44%
40% 38%
41% 38% 30% 40% 34% 39%
75%
71%
78% 74% 72% 62% 60% 58%
55% 34% 34% 36%
39% 44%
44%
70 60 50 40
43%
30
42%
20
26%
10 20
10
100
0
U.S. US
0
U.K. UK
France France
Informed publics ages 25 to 64; Responses 6-9 only on 1-9 scale; 9=highest
Germany Germany
January 2008
India India
China China
Jan - 09
Jun - 09
January 2009
Jan - 08
June 2009
Figure 2: Trust in government rises How much do you trust government to do what is right? 100 90
+13
80
+12
70
74%
72%
78%
60 50 40 30 20
55% 43%
42% 30%
35%
40% 38%
38%
34%
44%
40%
36%
44%
42%
26%
10 0
U.S. 1First surveyed in the 2008 Barometer
48% 46%
43% 36% 42%
20 30
75%
+12
59%
40 50
80
+11
U.K.
France
Informed publics ages 25 to 64; Responses 6-9 only on 1-9 scale; 9=highest
Germany January 2008
India January 2009
China June 2009
1
Accepted a bailout or loan from the government to stay in business
45%
Filed for bankruptcy protection
+12
+11
Reduced pay of ordinary workers
71%
75%
70
58%
19%
60
62% 60%
Figure 3: “Cleaning house” likely reason for increased trust in 48% business 48% 46%
0
20
40
60
44% 80
41% 39% Would you 36% trust a company more or less39% if that company took this action?
Companies that have repaid bailout or loan money to the government, reduced CEO and executive pay, or fired non-performing management teams are more trusted by eight out of 10 informed publics (figure 3). However business still has work to do: Only 6% in six countries describe the reputation of large global businesses as “excellent” and 52% say companies haven’t managed business operations well enough to ensure they survive the global economic crisis.
34%34%
30%
81%
Reduced CEO and executive pay
80%
Jan - 08
Jan - 09 62%
78% Jun - 09
61%
Continued to spend money on philanthropy
58%
Accepted a loan 45% from the government Informed publics ages 25 to 64; responses 6-9 only on 1-9 scale; 9 = highest Filed for bankruptcy protection 31% Reduced pay of ordinary workers Distributed bonuses to executives after accepting a loan
22%
Figure 4: Technology most19% trusted industry in five of the six countries
How much do you trust businesses in each of the following industries to do what is right? 100
Technology #3 in France (66%)
90 80
80%
70
81% 72%
60
In response to a separate question about what actions build trust, eightynine percent (89%) of informed publics said they would trust companies that 100 drive better innovation by investing 90 in research and development.
72% 69%
71%
50
93%
62%
86%
88%
84%
56%
40 30 20
+13
10
+12
0
74% U.K. 72%
U.S.
78%
France
Germany
India
China
60
Technology
50 40 30 20
43%
42% 35%
30%
40% 38%
38%
34%
55%
Food
Healthcare
Biotech/life sciences
Retail
Banks
44% publics 44% ages 25 to 64; responses 6-9 only on 1-9 scale; 9 = highest Informed 42%
40%
36%
26%
10
Trust in institutions in six countries: Summer 2009 0 100 90 80
60 50
51% 48% 42%
40
37%
67% 52%
51% 44% 38%
78%
75%
70%
70
41% 40%
46% 35%
39%
44%
55% 53%
60%
How much do you trust the following institutions to do what is right?
50%
39%
28%
30 20 10
Informed publics ages 25 to 64; Responses 6-9 only on 1-9 scale; 9 = highest
0
U.S.
U.K.
France
Germany NGOs
2
2009 MIDYEAR SPECIAL REPORT ON TRUST
India Business
China Government
40
100
20
Reduced marketing budgets
Technology has historically ranked high in the Edelman Trust Barometer and continues to be highly trusted. The No. 2 position varies by market with five different sectors taking the spot (figure 4).
50
30
Repaid loan money to the government
Fired non-performing management teams Closed non-profitable business units
Tech maintains lead
70
80
75%
22%
Distributed bonuses 59%to executives after accepting a bailout or loan
Actions pay off
80
90
31%
Media
10 0
US
39%
50
34%
40
75%
58%
30
48%
20 10
Figure 5: A stakeholder, not a shareholder, world 0
Customers Investors Local Government How important do youEmployees believe the interests of theSociety following stakeholders should be to a CEO’s decisions? Treat employees well
100
Keep producing quality products and services
90
Have transparent and honest business practices
80
Communicate frequently and honestly on the state of their..
70 60
Create and keep jobs in your country
70%
Drive better innovation by investing in research and development
58%
50
49%
40
Make meaningful progress on their company's enviornmental..
45%
Partner with thired parties to solve 40%major global problems such as
30 20
Increase profitability and business performance
10
Commit tiem, money and resources to the greater public good
Investor interests need to be balanced with customer and employee interests when a CEO makes a business decision.
26%
Reduce the gap between CEO pay and the pay of average workers
0
Customers
Employees
Investors Pay seniorSociety Local Communities Government executives mostly in stock so that their compensation.. Communicate important messages through multiple media..
Informed publics ages 25 to 64; responses 8-9 only on 1-9 scale; 9 = highest Eliminate financial incentives for taking short-term risks
Discount product or service pricing Have the CEO appear in media to give updates on the company's Increase shareholder value Protect profit margins by increasing poroduct prices
43%
A stakeholder society
Figure 6: “Hard and soft” measures0rebuild trust
The expectation of the role of business has expanded, supplanting Milton Friedman’s famous 1970’s assertion that the social responsibility of business is to increase profits. In addition to investors ranking third in the list of stakeholders whose interests CEOs should heed (figure 5), profitability and performance falls behind employee well-being, transparent and honest business practices, and frequent communication in the list of factors that could build trust in a company (figure 6).
Would you trust a company more for taking the following action?
Data also show that business wins when it takes on big societal challenges and engages in private sector diplomacy. Informed publics place great importance on business’s commitment to finding solutions for global issues like global warming, energy costs, and access to affordable healthcare but say business has not done enough to create solutions for these causes (71%, 70%, and 64%, respectively).
20
40 94%
Treat employees well Keep producing quality products and services
93%
Have transparent and honest business practices
93% 91%
Communicate frequently and honestly Create and keep jobs
90%
Drive better innovation
89%
Make progress on environmental initiatives
82%
Partner with third parties to solve major global problems
82% 82%
Increase profitability and performance
81%
Commit resources to the public good
78%
Reduce the gap between CEO and average workers pay
75%
Pay senior executives mostly in stock
70%
Communicate messages through multiple media channels Eliminate financial incentives for taking risks
70%
Discount pricing
69%
CEO appearances
69% 66%
Increase shareholder value Protect profit margins
43%
Informed publics ages 25 to 64; responses 6-9 only on 1-9 scale; 9 = highest
3
0
India
China
US Excellent
Germany
France
Neither good nor bad
Good
UK Poor
Fair
Figure 7: East-West divide on multinational corporations How would you describe the reputation of large global business? 100 90 80
5% 25%
12%
23%
5% 24%
37%
20
34%
59%
U.K.
Informed publics ages 25-64
France Excellent
12%
17%
34%
10% 1%
17%
10% Germany
India
China
0
U.S.
59%
The way forward for business
22%
29%
24%
10%
24% 28%
30
10
12%
19%
18%
50 40
2%
24%
70 60
1%
Good
Neither good nor bad
1%
Fair
Poor
Optimism thrives in the East India and China are the most positive about business. At 75%, India recorded the highest level of trust in business of any of the six countries surveyed. China followed with 60% saying they trust business to do what is right (figure 1, page 1). In China and India, 96% and 81% of informed publics, respectively, say their country is headed in the right direction,
compared with 47% of Americans and Germans, 37% of British, and 31% of French. In another marked contrast to the West, nearly seven out of 10 informed publics in India and China rate the reputation of large multinational corporations as good or excellent, compared with 30% of Americans, 29% of Germans, 24% of French, and 13% of British (figure 7).
Companies in the West have a long way to go to regain the reputation lost in scandals, bankruptcies, and government bailouts; it won’t happen in a single year or through a single set of actions like those we’ve seen in the past six months, however successful they’ve been. Much like a dieter who’s rather easily shed the first 10 pounds but is struggling with the next 10, business has to negotiate tough issues like the gradual exit of government from the private sector and a new set of co-habitation arrangements. Business is expected to play a broader role in society, to collaborate more with government and NGOs, to consider employees before shareholders, and to communicate frequently and transparently. How to square these goals—characterized by mutual social responsibility and shared purpose— with a profit-making strategy? Only by resolving this question will companies attract the best employees, build support for brands, and achieve outstanding returns for investors.
About the Midyear Edelman Trust Barometer
About Edelman
The 2009 Midyear Edelman Trust Barometer is an abridged version of the firm’s annual trust and credibility survey. The survey was conducted by research firm StrategyOne and consisted of 15-minute telephone interviews using the fielding services of World One from May 26 to July 3, 2009. The survey sampled 1,675 informed publics in two age groups (25-34 and 35-64) in six countries: the United States, the United Kingdom, France, Germany, India, and China. 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; and follow public policy issues in the news at least several times a week.
Edelman is the world’s leading independent public relations firm, with 3,200 employees in 51 offices worldwide. Edelman was named PRWeek’s “2009 Agency of the Year,” PRWeek’s “Large Agency of the Year” (for the third time in the last four years), and Holmes Report’s “2009 Best Large Agency to Work For” and was listed as a top-10 firm by Advertising Age in 2007 and 2008. Edelman owns specialty firms Blue (advertising), StrategyOne (research), and BioScience Communications (medical education and publishing). Visit http://www.edelman.com for more information.
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2009 MIDYEAR SPECIAL REPORT ON TRUST