Edelman's 2011 Trust Barometer: Is The U.S. a Trustworthy Economy?

Last week, Edelman released its 11th annual trust barometer survey results.

5,075 college-educated, upper middle class, media-savvy and politically informed respondents from 23 countries, ages 25-64 set the bar for trust in four sectors: business, government, media and non-government organizations (NGOs).

Of the four institutions measured, NGOs kept the top spot as the institution most trusted to do what’s right, up four percent from 2010. In fact, NGOs are more trusted than business in developed markets and trusted nearly equally with business in emerging markets. Following right behind were business, government and the media in that order.

Interestingly though, despite the turmoil and financial woes in global companies in recent years, trust in all institutions increased.

Edelman also reported that in past years trust in business and government has normally trended in opposite directions where gains for one resulted in loss for the other. Now, with gains for both, does this suggest the beginning of a tentative, but crucial, interdependent relationship where the two institutions work more closely together in the future?

Moving on…

TRUSTWORTHY ECONOMIES

U.S. Loses Ground…

Although overall trust (slightly) rebounded around the globe, the U.S. showed the most significant overall loss and was the only country to fall in all four sectors. The past three years have been rough: The country saw its trust score plummet in 2008, managed to regain some ground in 2009, and lost it all again in 2010.

Round after round of bad news like the oil spill, high unemployment rates, product recalls, and financial snarls (SEC investigation of Goldman Sachs, widespread mortgage ugliness, etc.) kept up an unwelcome spotlight.

…To Brazil, India and China

As a whole, emerging markets like Brazil (in the top spot), India, Italy and China rose to the top of the business trust category. The U.S. fell near the bottom to within five points of Russia.

China, followed by Brazil, claimed the top spot for government trust, while the U.S. was again near the bottom, just one point over Russia; Germany took a steep nosedive into last position.

In a composite ranking, where the scores of all sectors were averaged, the U.S. sank from No. 4 in 2008, to No. 10 in 2011 (just above U.K. and Russia).

TRUSTWORTHY INDUSTRIES

Technology is First; Automotive Finishes a Surprising Second

Technology remains the most trusted industry by more than 10 points, but the fact that automotive is in second place is pretty astounding. Remember, that just in 2009, many opposed the government bailout of GM. But the barometer seems to indicate that the industry has managed to regain almost half the trust it lost that year: In the U.S. alone the sector gained 17 points.

Contributing to this rebound, according to Gary Grates, president of Edelman change and employee engagement is the amount of work that has gone into addressing its shortfalls like capacity, quality, and competitive wages, and the public is taking note. Also, one in every five jobs being created is automotive-related (behind only technology).

Banks Hit Rock Bottom

On the other end of the spectrum, insurance, banks (a whopping 46 point plunge since 2008), and financial services are at the bottom, with media only slightly ahead.

And finally, four takeaways, according to President and CEO Richard Edelman:

1. It’s Official – Again. Business Purely for Profit is Not Part of the New Global Business Culture

Yet another set of data bears out the new business reality that companies need to be concerned with community—as well as profit—moving forward. (Yes, all of us who voiced strident dissents to the Freeland and Karnani pieces, this is the time to feel vindicated!)

The multiple crises of the last decade motivated Edelman to reconstruct its trust framework from a top-down model that emphasized businesses working independently, tightly controlling information, and focusing solely on profit, to an entirely new architecture.

This new triangle is predicated on the following objectives:

• •What: Expectation for companies to act collaboratively to benefit society, not just shareholders;
• •How: To be transparent about their operations and profit engines; and
• •Where: Engage using a range of spokespeople and all forms of media—mainstream, new, social and owned.

"Trust is no longer a commodity that is acquired, but rather a benefit that is bestowed, says the report.

2. Communication: Redundancy is Key – Tune into Multiple Channels

Two of the four takeaways stressed by Edelman involve communication: how to communicate, how much to communicate and who should do the communicating.

Although consumers are hesitant to trust the media, the top places people go to find information about a company are (in order):

• 1.Search engines
• 2.Online news sources
• 3.Print
• 4.Broadcast media

To make things harder, consumers are not willing to believe something until they have heard it multiple times, so Edelman stresses that organizations need to make use of multiple media outlets and restate their message multiple times and in multiple ways.

Also worth noting is that in the Old Trust Framework, the company expected to control the message. In this New Trust Architecture that makes use of multiple media outlets, companies can’t expect the control the message, thus increasing the importance of reputation and public perception.

3. Delivering a Message? Bring in the Experts – How About the CEO?

A few years ago, consumers trusted communication from their peers, but now people want expertise and accountability, i.e., a technical expert or the CEO.

At the same time that peer credibility was waning, CEOs rose into the top half of trusted communicators, especially during crisis.

4. Trust Protects Reputation

How important is trust in business? According to Edelman, when a company is distrusted, 57 percent believe negative information after hearing it once or twice. Positive information has a harder time getting through with only 15 percent believing it after hearing it once or twice.

On the other hand, in better times of trust, 51 percent believe positive information, and 25 percent believe negative information after hearing it once or twice. Does this explain why Toyota was able to weather their recall storm relatively unscathed and HP withstood Mark Hurd’s embarrassing departure with minimal impact?

A Changing Business Reality

Consumers continue to cite quality products, transparency, trustworthiness, and treating employees well as the most important elements in determining corporate reputation.

Financial performance and admired leadership are at the bottom of the list.

So, as businesses begin recovering from the onslaught of trust crises in the past decade and seek to regain consumer confidence, repair our economy and move forward, trust and reputation must become the new powerful currency.

For more information, see:
Edelman 2011 Trust Barometer Presentation
Edelman 2011 Trust Barometer Executive Summary

--By Andrea Newell

Andrea Newell is a frequent contributor to Triple Pundit and has more than 10 years of ERP consulting experience with companies such as Lucent Technologies, BP, Marathon Oil, Cordiem, Covisint, Texaco, and Steelcase. She can be reached at andrea@3p-media.com (@3pmedia).