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Posted at 11:27 AM ET, 01/25/2011

The United States and the Trust Barometer

By Richard Edelman and Neal Flieger

According to the Edelman Trust Barometer, released this morning at the World Economic Forum in Davos, the United States ranks near the bottom of 23 countries in terms of trust in major institutions.

In the wake of a year defined by corporate crises and government insolvency, we found remarkable resilience in business and government trust globally. Even in Ireland, whose economy is in shambles, trust in business actually increased as much as it did in buoyant countries such as Brazil and UAE.

The stark exception was the United States, where respondents reported a drop in trust in both institutions, and where the composite trust score knocked the world’s largest economic power down from the top four in 2008, to the bottom four, alongside Russia and the UK. While business is trusted by 46 percent of informed publics, more than in the midst of of the worldwide financial crisis, the number now is 13 points lower than in 2008 and 8 points lower than last year. Trust in government is at 40 percent, off 6 points from last year.

After the trust crash following the global financial crisis, last year’s Trust Barometer showed positive signs, with sharp increases in the US important in driving up global trust totals. This years’ drop in the US – while much of the rest of the world is holding or rising – is surely a signal of dashed hopes and disappointment.

The broader environment paints an even more isolated picture of the American trust psyche. Trust in most industries is up globally, including technology, which is in the top spot for the third straight year. Financial services is the least trusted sector, with banks and insurance tied for second-least trusted. In the United States, trust in banks collapsed, with banks dropping from the No. 3 spot in 2008 to second from the bottom in 2011.

Globally, trust in BRIC-headquartered companies rose, particularly among fellow emerging economies. Trust in companies headquartered in Brazil increased by 32 points in the United Arab Emirates, rising to 65 percent. Russian-headquartered companies are now trusted by 62 percent in Brazil, a 23-point increase over last year. Indian-based companies enjoyed a widespread increase in trust, shooting up by 17 points in Brazil and 15 points in Indonesia. And surprisingly, if American business is largely not trusted by Americans, the opposite is the case for American headquartered companies abroad.

Continuing a trend we have observed in recent years, trust in U.S.-based multinationals moved up in many markets, including China, Brazil, India, Indonesia, Australia and even Ireland. The data raises important questions for decision-makers in government and corporate C-suites. If the global economic situation is slowly getting better, why are Americans so negative in their attitudes toward the important institutions of society?

One answer is surely jobs. Unemployment has become the most dominant statistic for defining the American economic condition. Other answers might be found in the Barometer’s data. This year’s rise is not so much a case of the old trust rebounding as it is about a new trust emerging. Governments, corporations and corporate leaders face different expectations. We see four changes in how institutions can lead to enhancing and sustaining trust, which American political and corporate leaders should study carefully.

New roles for leaders – CEO credibility has flipped, rising 23 points in two years, moving CEOs from third-from-the-bottom of acceptable corporate spokespeople to among the top. Meanwhile, “a person like me” has fallen to a notch above last on the list of credible spokespeople. About 90 percent want to hear CEOs communicate transparently and frequently during a crisis, and want to hear about efforts to protect customers and employees. At the bottom of the list of actions companies should take in a crisis are to minimize its impact, defend the things that caused the crisis, and minimize the damage to the company. American executives can learn that the role of CEO is now to be the company’s ambassador to the outside world.

Manage communications differently – Information ubiquity is changing the playbook for corporate communications. More than 70 percent need to be exposed to a message more than three times to accept it as true. In the U.S., a stunning 14 percent need to hear or see a piece of information about a company more than 10 times before they believe it. Media consumption is changing, too. People do not turn to a few trusted media sources for information. Instead, nearly 30 percent of our respondents turn first to search engines, trusting that they will find the information they need from the vast media marketplace. In most countries of the world, including our own, Google is now the place people rely on the most for information about corporations. A company with a message can’t simply put it “out,” but rather must put it “everywhere.”

Private Sector Diplomacy – For much of the time we have conducted the Barometer, business and government trust has moved in opposition; when government trust was high, business was low, and vice versa. Today in many markets, including in the U.S., we see trust in the two institutions moving in tandem. While a majority still sees a role for government as a regulator of business, more believe that business acts in its own interest when it acts in society’s interest. People expect business and government to collaborate on policies that benefit society – not as two opposing teams on a playing field, but as the world’s dominant and inextricably linked institutions. From trade to food and nutrition, health, and the operation of capital markets, American stakeholders, like their international counterparts, want to see a different approach to crafting policies that benefit society.

Build from Trust, not just toward it – Trust has become more than an outcome, and more than a state of being. It is a vital tool for persuasion, for building alliances and for implementing change. Trust is the filter through which information is heard and understood. Under the older trust framework, good news was a tool for building trust. Today, trust is a prerequisite for good news to be believed. The Barometer reports that negative information about a distrusted company is believed after 1-2 repetitions, while positive information must be repeated 4-5 times before it’s accepted. Mistrusted businesses that try to roll out good news to build back trust will face a difficult task. Instead, corporate and government leaders should work to create a trust foundation so that positive information has an echo chamber in which to resonate.

Stakeholders want business to lead, but to lead differently than in the previous decade. CEOs now have the mantle to act as private sector diplomats and forceful advocates for strategies that encompass both profit and purpose. For business and for government, transparency is the new normal, explaining how and why, not just persuading on what and when. Our leaders, be they in boardrooms, legislative chambers or offices (square or Oval) need to understand that the nature of trust has changed, from a commodity that is acquired to a benefit that is bestowed.

Richard Edelman is President and CEO of Edelman. Richard Edelman is the president and CEO of the world's largest independent public relations firm with over 3,100 employees in 54 offices worldwide. Edelman was most recently named "PR Agency of the Year 2009," "Large Agency of the Year 2009" by PRWeek for the third year in a row, "Agency A-List 2008" by Ad Age and "2007 Global Agency of the Year" by the Holmes Report. Neal Flieger is Chair of StrategyOne. With more than 15 years of public affairs experience in Washington, D.C., he has an extensive background in designing and implementing successful strategies in the corporate, political, and public policy arenas.

By Richard Edelman and Neal Flieger  | January 25, 2011; 11:27 AM ET
Categories:  Neal Flieger, Richard Edelman  
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Comments

The Chinese Government gets result by managing its economy; therefore gets the highest trust ranking of 88%. The U.S. Government may not even deserve the 40% rating because it has done little if nothing to combat China’s innovative way of skinning the United States!

Mark Twain is credited with an early use of the cliché "more than one way to skin a cat" in A Connecticut Yankee in King Arthur’s Court, as follows: “she was wise, subtle, and knew more than one way to skin a cat, that is, more than one way to get what she wanted”. Thefreedictionary.com defines beggar-thy-neighbor as: an international trade policy of competitive devaluations and increased protective barriers that one country institutes to gain at the expense of its trading partners. Under the guise of fostering ‘indigenous innovation’, the Chinese government has creatively used a non-conventional, subtle version of beggar-thy-neighbor. Its version doesn’t entail the competitive devaluation of its own currency, which would enhance China’s exports and inhibit its trading partners’ exports to China. China’s version perpetrates an over-valuation of the currencies of one or more of its trading partners. This negatively affects all the trade of the pegged trading partner(s), not just trade with China. During the recent period China pegged its currency to the U.S. Dollar, its version of beggar-thy-neighbor was 8 times as damaging to the U.S. economy as what the media refers to as “China keeping it currency undervalued”.

In November 2003, Warren Buffett in his Fortune, Squanderville versus Thriftville article recommended that America adopt a balanced trade model. The fact that advice advocating balance and sustainability, from a sage the caliber of Warren Buffett, could be virtually ignored for over seven years is unfathomable. Until action is taken on Buffett’s or a similar balanced trade model, America will continue to squander time, treasure and talent in pursuit of an illusionary recovery.

Posted by: HJCampbell | February 1, 2011 8:04 PM | Report abuse

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