Edelman Trust
                             “Person like yourself or your peer” is seen as the
                             most credib...
2006 Annual Trust Barometer

                Trust makes the world go round
                                 It’s long ...
2006 Annual Trust Barometer

The Me Revolution
clearly the deep trust void facing traditional institu-           There is sharing of content because now we can do
tions ...
2006 Annual Trust Barometer

The state of trust
Numerous factors are now influencing trust around the world

Michael D...
US trust in institutions: five-year trend
How much do you TRUST each institution to do what is right?

2006 Annual Trust Barometer

         What we’re seeing with                                             Q: As compar...
2006 Annual Trust Barometer

Why trust is important
A look at the consequences of lost trust to the business world

2006 Annual Trust Barometer

The Trust Pyramid
Trust is derivative of a corporation’s country of origin, industry, as w...
The trust house
Certain attributes build trust for top corporations all over the world

The days of delivering a reliable ...
2006 Annual Trust Barometer

“The impact of globalization – offshoring, outsourcing – does not                Indeed, c...
Country of origin
                                                                                US companies can rally i...
2006 Annual Trust Barometer

Trust across borders
A view of how the world’s nations trust foreign-based corporations

took the US as Japan’s leading trading partner,the history between            ern region.“At the end of the day,though,it ...
2006 Annual Trust Barometer

Trust by sector
Trust in a company often corresponds to how its sector is perceived

The ...
The most trusted sectors                                                                 readily assume that whatever happ...
2006 Annual Trust Barometer

Building trust
The steps organizations must take to build trust

Edelman vice chairman Le...
Credibility of information sources
How credible is each of the following sources of information about a company?

Edelman Trust Barometer 2006
Edelman Trust Barometer 2006
Edelman Trust Barometer 2006
Edelman Trust Barometer 2006
Edelman Trust Barometer 2006
Edelman Trust Barometer 2006
Edelman Trust Barometer 2006
Edelman Trust Barometer 2006
Edelman Trust Barometer 2006
Edelman Trust Barometer 2006
Edelman Trust Barometer 2006
Edelman Trust Barometer 2006
Edelman Trust Barometer 2006
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Edelman Trust Barometer 2006


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  1. 1. A SPECIAL SUPPLEMENT TO PRWEEK 2006 Annual Edelman Trust Barometer
  2. 2. “ “Person like yourself or your peer” is seen as the most credible spokesperson about a company and among the top three spokespeople in every country surveyed.” Disclosure At the time the Trust Barometer was compiled, Edelman had a client relationship with the following companies mentioned in this brochure: Heinz; Johnson & Johnson; Kraft; Microsoft; Nissan; Samsung; Starbucks; Unilever; UPS Cover photos (l-r, beginning on back cover): former FEMA director Mike Brown; Morgan Stanley; baseball stars Mark McGwire and Rafael Palmeiro; Bank of Italy; Save The Children; former Enron CEO Ken Lay; Dove “Real Beauty” campaign
  3. 3. 2006 Annual Trust Barometer Trust makes the world go round It’s long past time to abandon the old Inside adage that “love makes the world go ‘round.”Today,if anything keeps the world turning,it’s trust.Without trust,there’s no bene- fit of the doubt given,everyone becomes a hapless fact-checker, The Me2 Revolution and nothing gets done,no governmental decisions made,and lit- 2 Richard Edelman discusses an tle gets bought or sold in the marketplace.The Edelman Trust evolving approach to communications Barometer shows that this year – and over the last six years – some revolutionary changes are unfolding. 4 The state of trust First,trust in established institutions like government and the A conversation with Michael Deaver media remains shaky.How these institutions have responded to 7 Why trust is important events such as Hurricane Katrina,urban riots in France,and the The consequences of lost trust Leslie H. Gelb latest news reporting fiascoes hasn’t helped. All this jibes with Counselor to Edelman and 8 The trust house other surveys,as well as anecdotal material,that suggests people president emeritus of the Certain attributes build trust for top increasingly find government and the media to be self-serving and Council on Foreign Relations corporations all over the world even untrustworthy.Interestingly,business,after a very bad start to 12 Trust acrossborders this century,has recovered somewhat from the rash of scandals. The challenge facing national brands However,the biggest change among major institutions has been the rise of trust expanding across borders in NGOs,which are becoming the most-trusted institution.As people seek new 14 Trust by sector institutions and individuals in which to place their trust,they turn to NGOs,even Trust in a company often corresponds though many have powerful interests in the arenas in which they operate.Green- to how its sector is perceived peace, for example, gets high trust marks for information on the environment. The Edelman Trust Barometer has tracked the steady decline of trust in tradi- 16 Building trust tional figures of authority,and the increase in the credibility of the “average per- The steps organizations must take to build trust son.”This year we reached a possible tipping point, with trust in “a person like me”surpassing even academics and doctors in most countries.This is underscored 19 Power to the people by the growth and increasing credibility of internet communications,which pro- The company’s best spokesperson has changed.An interview with Pam Talbot vides much greater access to peer opinions. Other Edelman surveys show that bloggers and websites have established themselves,notwithstanding their often 23 United States intemperate tone and frequent biases. Trust is built through a dialogue with multiple stakeholders Conversely, the “mainstream media” face declining readership, viewers, and ad revenues.This is part of an in-with-the-new, out-with-the-old phenomenon, 24 Europe and the pattern has been pretty consistent over the six years of Edelman Trust The region stays true to its reputation as “the skeptical continent” Barometer surveys. Keep in mind, however, that our respondents are opinion leaders who are well-paid,highly educated,and have almost universal access to 25 Asia broadband.They are presently better equipped to check multiple sources than Three countries that share a region, but not the same standards of trust average citizens – although the gap is narrowing. Finally,one other point that jumps out is the ever-weightier impact of trust on 27 Brazil business and consumer decisions.Our study found that if respondents lose trust The South American nation is among the world’s most trusting inacompany,they are highly likely (70% to 80%) not to purchase its products or services.Worse,people do not simply internalize their doubts;they talk to others 27 Canada and spread distrust – with up to 33% now using the web to post their views.To be When it comes to global business, sure,if investors see a good deal,they’ll invest;if buyers like a product,they’ll buy the Maple Leaf is a trusted symbol it.But when concerns appear,consumers and investors can change their patterns 28 Powering relationships quickly. Trust is the backbone of stakeholder engagement This report explores the influence of industry,country of origin,and other fac- tors that drive trust in global companies.It provides the beginning of a road map to build trust across every key market.Happy motoring... This supplement was commissioned by Edelman and produced by Haymarket Media, Inc. 1
  4. 4. 2006 Annual Trust Barometer 2 The Me Revolution source for information about a company, giving insight from the front lines. The consumer has be- come a co-creator,demanding transparency on deci- sions from sourcing to new-product positioning. Smart companies must reinvent their communica- tions thinking, moving away from a sole reliance on top-down messages delivered through mass adver- tising. This is the Me2 Revolution. What is now required is a combination of outreach to traditional elites,including investors,regulators,and academics, plus the new elites, such as involved consumers, empowered employees, and non-governmental organizations. The most profound finding of the 2006 Edelman Trust Barometer is that in six of the 11 countries sur- veyed,the “person like yourself or your peer”is seen as the most credible spokesperson about a company and among the top three spokespeople in every coun- try surveyed.This has advanced steadily over the past three years. In the US, for example, the “person like yourself or your peer”was only trusted by 22% of respondents as recently as 2003, while in this year’s study, 68% of respondents said they trusted a peer. Contrast that to the CEO,who ranks in the bottom half of cred- ible sources in all countries, at 28% trust in the US, near the level of lawyers and legislators.In China,the “person like yourself or your peer” is trusted by 54% of respondents, compared to the next highest spokesperson,a doctor,at 43%. Meanwhile,“friends and family”and “colleagues” rank as two of the three most credible sources for The traditional approach tocorpo- information about a company, just behind articles in rate communications envisages a controlled process business magazines. Again, in the US, the “col- of scripted messages delivered by the chief executive, leagues” number has jumped from 38% in 2003 to first to investors, then to other opinion-formers, and 56% in 2006.We facilitated the revolt by employees only later to the mass audiences of employees and of Morgan Stanley against top management, solicit- consumers. In the past five years, this pyramid-of- ing opinions through their futureofms.com website, influence model has been gradually supplanted by a which then led to stories in traditional media. peer-to-peer, horizontal discussion among multiple Why the change, with increased reliance on those stakeholders. The employee is the new credible you know? The Edelman Trust Barometer shows “ Smart companies must reinvent communications thinking, moving away from a reliance on top- down messages delivered through mass advertising.” 2
  5. 5. clearly the deep trust void facing traditional institu- There is sharing of content because now we can do tions including business,government,and the media. it easily, quickly, and colorfully.The Pew Center for Government scandals in the past year alone Media noted that 60% of US teens have created and include the termination of Antonio Fazio, the Gov- shared content on the Internet. ernor of the Bank of Italy, for passing confidential How can companies embrace this future of information on a merger, the Gomery Commission empowered stakeholders? Speak from the inside finding of illicit payments to ad agencies in Quebec, out, telling your employees and customers what is and the failure of the US government to respond happening so they can spread the word for you. Be adequately to the devastation caused by Hurricane transparent, revealing what you know when you Katrina. know it while committing to updating as you learn Business has also had several major issues,includ- more. Be willing to yield control of the message in ing the termination for cause of long-time AIG CEO favor of a rich dialogue,in which you learn by listen- Maurice Greenberg for alleged self-dealing,the con- ing. Recognize the importance of repetition of the viction of Tyco CEO Dennis Kozlowski for cheating story in multiple venues, because nobody believes shareholders, and the spectacular collapse of Refco something he or she hears or sees for the first time. only four months after its IPO worth $2 billion. Embrace new technologies,from employee blogs to Beyond the lack of confidence in the traditional podcasts,because audiences are becoming ever more sources of information lies a more fundamental segmented. Co-create a brand by taking on an issue change,a yearning to move beyond the simple act of that makes sense for your business,such as GE’s Eco- consumption of information to social networking. magination campaign where green is truly green. The rise of MySpace, Facebook, and Wikipedia is In 1850, author Ralph Waldo Emerson com- premised on sharing of content with a group of like- mented on the rising importance of newspapers to minded individuals. It is the wisdom of the crowd, the young American republic. He said,“Look at the with constant updating of content based on personal morning trains (with their commuters)...into every experience. Media companies like the BBC have car the newsboy unfolds his magic sheets,two pence already harnessed this powerful force – most notably a head his brand of knowledge costs.” during the horrific London bombings of July 7,2005 We are now at the point of reinventing the experi- – to bring stories from citizen journalists on the scene ence of communications, the essence of the Me2 to its BBC.com. Revolution. 3
  6. 6. 2006 Annual Trust Barometer The state of trust Numerous factors are now influencing trust around the world Michael Deaver is Edelman’s vice chair- and I think you can point man, international, and EVP/director of corporate affairs.As for- to a few reasons for that. mer deputy chief of staff in the Reagan administration and a People realize that the top advisor to numerous corporate CEOs, Deaver offers a economy is more or less uniquely qualified perspective on what factors influence trust strong. around the globe. We’ve done a lot as a government and a society Q: Is it possible to give a blanket assessment on “the state of trust” to correct some of the among stakeholders? perceived abuses within Deaver: There are certainly lots of moving parts and variations, big corporations – the but for a big-picture snapshot:Continent-wise,you see the highest Enrons and the World- level of trust in the world in Asia and Brazil, though the countries Coms of the world. I’m surprised about the gov- Michael there really don’t trust each other a whole lot. In Europe, you see Deaver the lowest levels of trust and some pronounced anti-US sentiment, ernment numbers, but at which is probably a result of the war in Iraq. the same time, I’m not. Maybe some people can’t get past the war In the US, trust has stayed pretty consistent over the years of in Iraq, the Bush administration, and the perception, whether the study. Trust in government is down over a four-year period true or not, that they’ve been lied to. Government’s response and trust in media is about the same. Business has done very well, to Katrina was also perceived as being poor. The media, too, “ You can’t say something once anymore. A single statement used to take care of it. But now, people get information from all kinds of sources: TV, local media, etc. Trust in institutions: 2006 How much do you TRUST each institution to do what is right? NATIONALITY OF RESPONDENTS * ** USA EUR ASIA CAN BRA Business 49 42 56 57 62 38 33 54 36 21 Government Media 30 30 56 45 53 NGOs 54 57 48 61 60 Top 4 Box (6-9) *Europe=UK, France, Germany, Italy, and Spain; **Asia=Japan, China, and South Korea 4
  7. 7. US trust in institutions: five-year trend How much do you TRUST each institution to do what is right? 60 55% 54% NGOs 51% 49% 49% 50 48% 48% 48% Business 48% 47% 44% 44% 40 41% 38% Gov’t 39% 35% 32% 30% Media 30 28% 24% 20 2002 2003 2004 2005 2006 European* trust in institutions: five-year trend How much do you TRUST each institution to do what is right? 60 51% NGOs 52% 50 45% 45% 41% 41% 40 40% Business 38% 36% 33% 35% 31% 31% Gov’t 32% 30 28% 26% Media 28% 27% 27% 25% 20 2002 2003 2004 2005 2006 *Europe=UK, France, and Germany only 5
  8. 8. 2006 Annual Trust Barometer “ What we’re seeing with Q: As compared to people in the various Asian markets that the study looked at? NGOs is that they’re Deaver: Exactly. There are some blips, of course. I don’t think willing to do what other groups the government is perceived particularly well in South Korea, but overall, people there are seeing that they can fly as high as aren’t, which is work closer with they want to for the first time in their lives.There’s enormous trust in the future and enormous faith that they’ll get to where they business to get things done. want to go. have experienced their fair share of scandals – from Dan Rather to Q: In a big-picture sense, how has the state of trust evolved in the Jayson Blair. years since Edelman began this study? Deaver:The thing that jumps out at you is what we’ve been calling Q: What do people expect companies to do, other than simply pro- “the democratization of information.”The growth of the Internet, vide goods and services? and the amount of trust it now has, has surpassed all expectations. Deaver: Companies need to be involved.They need to let the cus- What this means is that people can control the information they tomer and client know that we’re all in this together.If you’re sell- get,which I think fosters more trust in institutions and in the future. ing cars, people might respect you and trust you. However, if you When you’re doing the picking and choosing, you probably won’t also say,“We’re interested in quality of life for our consumers,that think somebody’s keeping something from you. our employees have good benefits and can plan for the future,that our cars are friendly to the environment,that all of society gets an Q:What companies have managed the challenges particularly well? education” – that’s when the trust needle starts to move. Deaver: UPS has done this well globally. Johnson & Johnson has Maybe you’ll get away with it for a little while, but ultimately people want more. GM and Ford’s focus on SUVs contrasts “ The growth of the sharply to Tokyo’s success with hybrids. Internet, and the amount Q: This would seem to touch upon why NGOs have surged in trust in the US. of trust it now has, has surpassed Deaver: Yes.Trust in them has gone up 15% in the last five years. everybody’s expectations. People view NGOs as very honest and always trying to solve big problems – as opposed to the government or the media, where there are still issues that haven’t been worked through. What we’re seeing with NGOs is that they’re willing to do what done it very well globally, especially on health issues, even specific other groups aren’t,which is work closer with business to get things disease issues that have nothing to do with their products.Microsoft done. They’ll cooperate with whomever it takes to get solutions. has had to fight for the past 10 years to protect its reputation,and I And they do what they do in the interest of good – they appear think they’ve come out of it pretty well.They’ve been great at pro- interested in solutions for you and me, as opposed to political moting education. The fact that Bill and Melinda Gates are the power or money. world’s most generous philanthropists only helps. With these companies, CEOs and local presidents around the Q:You alluded to the climate of skepticism and mistrust in Europe. world are very visible and involved, both on issues that affect con- What has contributed to this? sumers and societies in general. Deaver: I don’t know what the reasons are for the skepticism,but Europeans, particularly in France and Germany, have the lowest Q: What are the companies that don’t “get it” doing badly or failing trust anywhere on the globe.The numbers for France were bad a to do at all? few years ago, and they’ve only gotten worse. Overall, I think you Deaver: You can’t say something once anymore. A single state- have to point a finger at government. In Europe, government is ment used to take care of it. But now, people get information from seen as less effective in solving problems, plain and simple. The all kinds of sources: TV, local media, etc. You have to cover the chaos around the recent German elections and the response to the whole spectrum of information to get your message out. urban riots in France are indicative of the leadership void in these Whoever’s in charge also has to be visible and part of the com- countries.While trust in government in the UK, Italy, and Spain is pany’s brand and message. Moreover, it’s all about being local. If similarly low, trust in business is significantly higher in those you’re going to expand beyond your home base, you have to have nations than in France and Germany. NGOs are really strong in local faces for your products and services.You can’t put an Ameri- Europe, which hasn’t changed much over the years, but there’s a can manager in another market anymore and expect to be success- sense that they can only do so much. ful, especially in the event of a crisis. 6
  9. 9. 2006 Annual Trust Barometer Why trust is important A look at the consequences of lost trust to the business world “Trust is more than a virtue,”saysMatthew More than half of all respondents in North America and Europe Harrington,president,Edelman’s Eastern region.“It’s an imperative.” said they had intentionally ignored attempts to communicate with Sony BMG recently ran afoul of customers when a blogger revealed them by companies that had earned their distrust. its practice of embedding anti-piracy software in CDs,which left users As a chairman of a leading global financial company recently told vulnerable to viruses.The issue moved from the blogosphere to the Harrington,“[All] companies sell just one basic product – trust.” mainstream media, alienating customers and the label’s artists.The Addressing trust deficits is tougher than ever as individuals have impact of this trust erosion may eventually hit Sony’s bottom line. more channels through which to air grievances.“An opinion leader Trust is more than a bonus;it is a tangible asset that must be created, telling someone they know they’ve lost trust in a company and itsprod- sustained,and built upon.While based heavily on perceptions of qual- ucts or services can set off an epidemic of viral protest,”says Harrington. ity of products or services,companies must also build trust deep within Beyond this,opinion leaders,by their nature,are prone to activism, their organizations,in the way they address the financial marketplace and report a willingness to extend that activism to spreading their mis- and treat employees, the environment, and other key stakeholders. trust of an enterprise. More than 40% of survey respondents in all Just as trust benefits companies, mistrust or lost trust has costs.At countries, except France and Brazil, have supported legislation con- least 64% of opinion leaders in every country surveyed said they had trolling or limiting the activities of companies they do not trust. refused to buy the products or services of a company they did not trust. “Sophisticated organizations now recognize and treat reputation Roughly half of opinion leaders surveyed in the US,Canada,France, and the manner in which they communicate as areas that need to be Germany, and Spain had refused to accept employment with a com- managed from a risk perspective,” says Harrington.“In fact, trust is pany they didn’t trust.In Japan and China,the figure exceeded 60%. at the center of comprehensive risk management.” The importance of trust Tell me if you have ever done this in relation to a company you do not trust. I USA 100 I EUROPE* I ASIA** I CANADA 84% 81% 81% I BRAZIL 80 77%76% 77% 76% 75% 75% 74% 72% 72% 69% 67% 64%64% 63% 62% 61% 60 57% 55% 52% 49% 49% 45% 45% 40 I 36% 31% 28% 27% 24% 22% 22% 19% 20 14% 0 Refused to Criticized Refused Refused Refused Shared your Actively buy their them to to do to invest to work opinion and demonstrated products people that business in them for them experiences or protested or use their you know with them on the web against them services *Europe=UK, France, Germany, Italy, and Spain; **Asia=China, Japan, and South Korea 7
  10. 10. 2006 Annual Trust Barometer The Trust Pyramid Trust is derivative of a corporation’s country of origin, industry, as well as its own behavior. It is conveyed through communications programs combining a channel mix, paid and earned media, credible spokes- people, frequency of communications, and the coupling of local and global communications. 8
  11. 11. The trust house Certain attributes build trust for top corporations all over the world The days of delivering a reliable product Company behaviors at a good price being enough to earn a good reputation are Of the three factors, com- over. Expectations are higher than ever. There is no question pany behaviors – or the that cultivating a local perspective, focusing on customer service, manner in which a com- and a long track record of success are still important. But today’s pany engages with its higher expectations combined with the reality of media fragmenta- stakeholders – is the lone tion and information clutter make it even tougher for companies factor that companies can to stand out. exert some control over. Trust is not driven by one particular audience’s viewpoint; The data indicates that regional variations require multifaceted programs of extraordi- the business transaction is nary depth.The Edelman Trust Barometer surveys opinion leaders paramount among these behaviors. Indeed, above Michel in 11 different nations precisely because patterns of trust vary glob- all else, respondents trust Ogrizek ally.And though perspectives differ around the globe, the corner- stones upon which trust is built remain fairly consistent. Common quality.The quality of a firm’s products and services contributes most themes emerge through in-depth analysis of the research. to the perception of credibility.In every market,quality ranks among The diagram on the opposite page represents the main factors the top three attributes. It is the most cited factor in the US and currently driving trust: company behaviors, industry, and country Canada. In Brazil, Italy, Spain, Japan, and South Korea, more than of origin. 90% of stakeholders stress its importance. “If you put your name on your products, that’s a fundamental symbol that you are accountable for quality,” explains Michel Trust discount for US brands Ogrizek,vice chairman of Edelman.“People trust that.” in Europe Ogrizek notes that the association of a venerable name with well- loved products is a reason why Johnson & Johnson scores so high, How much do you trust each company or organization to do year-after-year,in the Barometer. what is right? “Since Unilever has put its corporate brand on its packaging, 0 20 40 60 80 100 trust in the company has increased 30% in Japan and China,24% in 84% 55% Brazil,and in all countries where people are very sensitive to brands UPS 53% and corporate leadership,”he says. “Attentiveness to customer needs” is the second most important 75% 46% Kraft attribute in building trust, finds the survey, ranking first in the UK 26% 47% and tied for first in France.While the means for reaching customers 7 proliferate with new technologies, attentiveness – which might be 74% Johnson & characterized as good old-fashioned “customer service”– will likely Johnson 50% differentiate the most trusted companies from their competitors. 46% 70% Though the “importance of fair pricing for products and services” Procter & Gamble 25% 44% doesn’t rank quite as high in most markets as product quality and cus- tomer attentiveness,it may become increasingly significant. 65% Regional variations exist.For instance,strong employee and labor Coca-Cola 41% relations remain critical across Europe and in Brazil.“There is a real Isensitivity toward those issues in certain places,” Ogrizek explains. I USA 51% McDonald’s It is also an opportunity, he adds. Unlike other factors impacting I EUROPE* 30% trust, employee relations is seen as a corporate behavior, notes 2 *Europe=UK, France, and Germany only Ogrizek.“It’s a mindset that can, with effort, be changed,” he says. 9
  12. 12. 2006 Annual Trust Barometer “The impact of globalization – offshoring, outsourcing – does not Indeed, consumer tech companies enjoy strong levels of trust in help build trust in corporations and leadership in Western countries.” nearly every market,while sectors like pharmaceuticals and energy Brand familiarity also builds trust in a handful of markets,notably are less trusted across several markets.These disparities are built on the US (where it is cited by 60% of opinion leaders) and South Korea ingrained perceptions and business realities that are most often out (84%).And though the “celebrity CEO” seems to be cycling out of of the hands of the individual companies operating in their sectors. fashion,a highly visible CEO can help build trust,particularly in Ger- Ogrizek notes that the pricing difference between technology and many and Japan.Strong financial performance is also deemed a piv- pharmaceuticals is a telling example of how this plays out. otal building block of trust in the US,South Korea,and Japan. “The more innovation we see in technology,the less we pay for it,” “There’s this assumption in some places that if you make money, he says.“Laptops used to cost thousands; now they cost less and do you must be doing something right and that you’re contributing to more.Compare that with the drug companies.The more potent the society through job creation,”says Ogrizek.“That engenders trust.” product,the more expensive it becomes.” Social responsibility,such as disaster aid,tends to build trust more Consumers may perceive that as a serious disconnect,and overall than shareholder returns in some markets in Europe and Asia. perception of the pharma industry may be negatively affected by “In Italy, China, and especially Japan, there is a long tradition of realities beyond its control. Not surprisingly, overall ratings for the big companies, especially foreign ones, getting involved in society industry lag in several markets,including the US,Germany,and Italy. through philanthropy,”he explains.Hurricane Katrina and the spot- Ironically, this dynamic seems to work in reverse for the pharma- light it put on both government and corporate responsiveness ceutical industry in nations like Canada,where generous state-sub- pushed the issue of CSR higher on the agenda. sidized healthcare programs have made access to the latest in Companies like Wal-Mart found favor in their disaster responses. pharmaceutical technology affordable and nearly universal. “After what we saw this year,with tsunamis,earthquakes,and hurri- In recent years,some companies have focused on distancing their canes, I’d be surprised not to see this become more implicitly re- brand from negative public perceptions about their industry. Fore- quired of businesses,” Ogrizek affirms.“People increasingly have most among these efforts is BP’s “Beyond Petroleum” campaign, confidence in public-private partnership – between companies,gov- which highlights the energy company’s research into alternative fuel ernments, and NGOs – because they understand nobody can solve technology.The campaign implicitly addresses the perception that problems alone,but it places higher expectations on corporations.” petroleum companies profit by perpetuating global dependence Authenticity and brand alignment must be at the forefront of any on petroleum despite the long-term environmental implications. CSR program, Ogrizek adds.“For CSR to drive reputation, it must MICROSOFT GETS PERSONAL be completely aligned with the corporation’s business objectives,” he says.“Jeff Immelt, CEO of GE, was transparent when he said, ‘Green is green’ to explain his firm’s multiyear,multimillion invest- Hugh Davies, head of PR, Microsoft UK ment in sustainable technologies.That’s CSR that drives credibility.” Trust is vital for success, especially Ogrizek cites Nike as a stellar example of successfully repairing when you mean something different to lost trust by changing a company behavior. Once on the receiving each audience. We know that trust is end of mass criticism for its subcontractors’ treatment of Third World driven by quality of products, treatment factory workers,Nike,over the past decade,launched a high-profile of customers and employees, perceived value of products and services, and the campaign to document the conditions of its factories overseas. It is the company’s financial performance. now reaping the benefits in terms of increased trust. We know that people judge Microsoft Hugh “Nike went through a phase of criticism when they first started Davies mostly on their personal experience of being more open because one necessary side effect of transparency using our products, whether we develop is revealing things that people didn’t know – about subcontractors’ software applications to make a business more competitive, edit footage of the latest family celebration, check e-mails between meet- working conditions,”Ogrizek says.“But Nike has regained trust and ings, play games, or listen to music. then some,because people saw that it took measures to fix the prob- I believe that our high trust ratings are driven by two factors: lems while continuing to operate transparently.” I Product Innovation. UK consumers have sought to experience a Nike’s trust has risen 40% to 56% in the US, and 25% to 45% in wider range of innovative products in entirely new settings. Today, we Europe in the past five years – proof that a company’s concerted use software to check e-mail or messages, compete in Xbox Live vir- tual game tournaments or organize our music and photos on our PCs. trust-building efforts across marketing, production, and corporate I Communications Strategies. We now talk less about the techni- activities have the potential to effect meaningful change over time. calities of our products and more about the benefits to individuals – at work, home, school, or play. While we are a global organization, we Industry tailor communications strategies and activities to local audiences. The two other factors heavily impacting company trust are elements We also work hard to communicate at a national and local level about key factors that drive any company’s reputation: our approach companies have little sway over:industry and country of origin. to CSR and the fact that we are independently recognized as a great The Barometer shows that the perception of a company’s sector place to work. exerts a gravitational pull over the level of trust a company receives. 10
  13. 13. Country of origin US companies can rally in Europe Even as many multinationals have gained widespread brand recog- nition across dozens of markets, nationality still matters.The “trust 0 10 20 30 40 50 60 discount”for iconic US brands operating in Europe may be the most visible representation of this.For example,while P&G boasts a 70% 55% trustworthiness rating in the US, it only gets 38% in Germany and 43% Ford Motor 29% in Spain.This discount seems particularly pronounced for con- I Company 46% sumer-facing brands: McDonald’s is trusted by 51% of US opinion 26% leaders,but only by 24% in France,28% in Britain.Similarly,Heinz’s 70% ranking in the US plunges to 31% in France,22% in Italy. 56% “The discount is very real,” Ogrizek says.“Certainly, a lot of this 40% has to do with the unpopularity of the Iraq war,but it also expresses Nike a European cultural reaction to globalization.There is a misunder- 46% standing in Europe – many people think globalization is American- 25% ization.This is simply not the case, and the Asian footprint on the world’s economy will demonstrate it.” 38% However,the effect of nationality in this instance is real and poses 31% a challenge for US companies trying to woo qualified employees for Exxon Mobil their work with local and regional regulators. Ogrizek says that his- 26% torically US firms think legally first,not politically or culturally. 17% Nevertheless, nationality can confer positive effects on a com- pany’s trust level.Many Western brands command high levels of trust I USA 2006 I USA 2001 in Japan, China, and Brazil.And Coca-Cola, the quintessential US I EUROPE 2006 brand, enjoys a significantly higher trustworthiness ranking in all I EUROPE 2001 *Europe=UK, France, and Germany only three countries than it does in the States. No cross-border deficit for non-US brands How much do you trust each company or organization to do what is right? I USA 100 I EUROPE* I CANADA I JAPAN 83% 80% 79% 80 74% 70% 64% 61% 60% 58% 57% 58% 60 49% 41% 40 36% 35% 24% 20 0 Sony Samsung Nissan Unilever I *Europe=UK, France, and Germany only 11
  14. 14. 2006 Annual Trust Barometer Trust across borders A view of how the world’s nations trust foreign-based corporations In his bestselling book,“The World Is Flat,” There were protests in New York Times columnist Tom Friedman posits that the rapid communities when Swiss deployment of communications technologies around the globe is food giant Nestlé tried building an interconnected world market where labor and products to acquire Hershey, the are available to nearly anyone with a broadband connection. American candy icon, in One of Friedman’s central points is that this burgeoning global 2002. Similarly, several interconnectivity is forging a world where a country’s desire to par- European countries, such ticipate in the global economy will trump borders.In contrast to this as France and Italy, have harmonious vision of the future,the Edelman Trust Barometer indi- taken steps to protect cates that national tensions and suspicions of other countries still national companies. inform the distrust that many feel toward particular companies. In every market, Chi- Matthew Tensions will often emerge during the merger of two companies nese firms are trusted con- Harrington headquartered in different countries. That reality was apparent siderably less than those when Chinese state oil company CNOOC saw its attempt to companies headquartered elsewhere. Brazilian stakeholders trust acquire US-based Unocal fall apart amidst US congressional con- Chinese firms the most (37%).The percentage hovers around the cerns over Chinese ownership of an American oil company. Pride low 30s in Europe, hits 31% in the US, and falls into the 20s in of national ownership extends beyond vital industries like oil. Canada and South Korea.Despite the fact that China recently over- Trust in companies headquartered in other countries How much do you TRUST global companies headquartered in the following countries to do what is right? NATIONALITY OF RESPONDENTS USA CAN UK FRA DEU ITA ESP JPN CHN KOR BRA Location of co. headquarters CANADA 71 81 79 79 71 84 75 86 64 82 78 59 70 66 77 68 85 83 91 75 88 87 GERMANY UNITED KINGDOM 70 72 79 63 57 82 70 85 69 81 81 JAPAN 62 70 67 62 66 77 78 91 35 61 87 FRANCE 39 58 58 73 67 79 69 79 71 85 85 UNITED STATES 70 53 42 55 41 69 69 80 68 69 67 SOUTH KOREA 40 40 37 31 30 33 35 30 68 66 51 INDIA 49 41 40 33 25 41 20 30 27 28 38 31 28 33 30 34 33 32 16 68 20 37 CHINA Top 4 Box (6-9) Trust levels below 50% shaded blue 12
  15. 15. took the US as Japan’s leading trading partner,the history between ern region.“At the end of the day,though,it was obvious to anybody those two nations influences growing economic ties when it comes paying attention, whether you were a Chrysler employee or just to corporate trust. Only 35% of Chinese believe Japanese-based somebody watching the news, that it was a takeover and the Ger- firms usually do the right thing,while a mere 16% of Japanese stake- mans would be running the show.They’d have been better off if they holders believe Chinese-based firms will do so. were just candid about who was going to be in the driver’s seat from Beyond the Sino-Japanese relationship,the study noted that only the get-go.” » 42% and 41% of UK and Germany opinion leaders, respectively, David Brain, Edelman’s European CEO, points to the union of trust global companies headquartered in the US to “do what is Belgian-owned Interbrew and Brazilian-based AmBev as an exam- right.” European countries have little trust in firms based in South Tensions will often emerge Korea and India.Trust ratings for South Korean and Indian compa- nies among German stakeholders hover at 30% and 2%, respec- during the merger of two tively. Only 53% of Canadians trust organizations headquartered companies headquartered immediately south of their border to do the right thing. India receives low levels of trust from some of its upstart rivals, in two different countries. including China and Brazil.Although opinion leaders in the most established Western economies have higher-than-average levels of trust in Indian-based firms, stakeholders in the US, UK, and Italy ple of smart multinational communications throughout a cross-bor- mistrust Korean-based firms. der merger process.The resulting company, InBev, one of Brain’s clients,is a company with 70,000 employees in 35 markets,speaking Making cross-border mergers work 30 different languages. German firms consistently get high marks around the globe. How- “In addition to outlining the strategic vision years into the future, ever, this did not help the merger of German-based Daimler and there was a conscious effort to present it as a merger of the best of US-based Chrysler.Although the merger satisfied regulators,it has two cultures,rather than one company – and thus one culture – swal- not assuaged the concerns of employees. lowing up the other,”Brain says.“It was called a ‘combination’ and “With Daimler and Chrysler,the deal was positioned as a merger portrayed as a marriage of two equal partners – which it always was of equals,”says Matthew Harrington,president of Edelman’s East- from the start.” Mistrust in foreign companies acquiring national companies Which foreign company would you be least likely to TRUST if it acquired a domestic firm in the following countries? NATIONALITY OF RESPONDENTS USA CAN UK FRA DEU ITA ESP JPN CHN S. KOR BRA Location of co. headquarters CHINA 43 35 24 38 28 36 24 65 9 51 33 21 15 30 21 16 28 23 13 3 2 17 S. KOREA INDIA 5 13 8 13 20 17 32 11 34 15 25 UNITED STATES 3 21 13 21 22 11 13 6 1 15 18 JAPAN 2 5 2 3 1 1 1 1 50 14 2 FRANCE 16 1 8 1 3 2 3 0 1 3 1 GERMANY 2 1 3 0 0 1 0 0 0 0 0 SWITZERLAND 2 1 0 1 1 1 0 0 1 0 0 2 3 4 1 4 0 0 0 0 0 0 UNITED KINGDOM Top 4 Box (6-9) Top 4 mistrusted nationalities shaded blue 13
  16. 16. 2006 Annual Trust Barometer Trust by sector Trust in a company often corresponds to how its sector is perceived The Edelman Trust Barometer finds a because of the conver- strong correlation between the level of trust a company enjoys gence of so many sectors – and the perception of the sector(s) in which it operates. Across consumer with health- nearly all regions,the technology industry is among the most trusted care, entertainment with sectors, with companies such as Samsung ranked among the most technology, retail with trusted companies globally. By contrast, the energy sector contin- consumer products – com- ues to rank among the least trusted industries, with several energy panies must transcend companies experiencing a “trust deficit” in key markets. However, their industry and define there can be a wide variance in the perception of a sector from mar- themselves.” ket to market. For example, Johnson Nancy Turett, chair for Edelman’s Global Health Practice, & Johnson, one of the more trusted companies Nancy says companies should strive to ensure that their reputations rise Turett above that of the sector in which they operate. as measured by the Trust “If they don’t,” she cautions,“they can find themselves dragged Barometer, is an example of a company that has achieved a down by a broad, and sometimes unfavorable, definition of positioning that transcends the multiple arenas in which it their industry. Besides, in a world where definitions are blurring operates. Trust in industries How much do you TRUST businesses in each of the following sectors to do what is right? NATIONALITY OF RESPONDENTS USA EUR* ASIA** CAN BRA HIGH RANK Retail Technology Technology Retail Technology 1 Technology Retail Automotive CPG Automotive 2 CPG CPG Energy Professional Svcs CPG 3 Investment/ Professional Svcs Retail Pharmaceutical Retail 4 Insurance Media/ Telecom Professional Svcs Automotive Financial Services 5 Entertainment Telecom Telecom Pharmaceutical Technology Energy 6 Financial Services Pharmaceutical CPG Telecom Financial Services 7 Investment/ Media/ Automotive Financial Services Pharmaceutical 8 Insurance Entertainment Financial Media/ Pharmaceutical Professional Svcs Telecom 9 Services Entertainment Investment/ Media/ Energy Automotive Professional Svcs 10 Insurance Entertainment Investment/ Investment/ Media/ Energy Energy 11 LOW Insurance Insurance Entertainment *EUR=UK, France, Germany, Italy, and Spain; **Asia=China, Japan, and South Korea; CPG=Consumer Packaged Goods 14
  17. 17. The most trusted sectors readily assume that whatever happened wasn’t an isolated incident.” Technology, retail, and consumer products are the most trusted The telecommunications industry also receives a tepid trust rating sectors globally,as each ranks among the top three in most markets. across several markets, particularly in the US, Canada, and Europe. There are key differences by market, with automotive scoring very Yet,it’s more trusted in Asia. high in Asia and Brazil but receiving lower levels of trust in the “The telecoms industry has not seen a benefit from any of the tech- US and Europe. nological progress associated with improved connectivity,broadband “Technology has played a very positive role in the lives of so access, or customer service, despite the billions of dollars spent on many people,”Turett says.“Companies in this sector have done an ads,”Turett says.“People increasingly view telecoms as a price-sensi- excellent job of positioning their industry as one about the future, tive commodity industry.In contrast,the retail industry has success- as a standard-bearer for innovation.They also speak from many lev- fully communicated its innovations in the online arena,personalized els, through charismatic CEOs like Larry Ellison, Steve Jobs, and customer attention, loyalty programs, choice, design, and value.” Jeff Bezos, as well as unbridled employee bloggers and citizen jour- Differences by market nalists. They give the impression that they have nothing to hide. The Trust Barometer underscores that transparency is central to trust If trust counts,the old US maxim of “as GM goes,so goes the nation” in a brand. no longer applies.The auto industry is now just the sixth most trusted “Leaders of companies in other industries would do well to take sector in the US.By contrast,the Japanese have continued to solidify a page from tech’s playbook,” she adds. “GE, for example, with their dominance in the sector,and Toyota is on the verge of becoming its focus on renewable energies, has demonstrated leadership on the world’s leading carmaker. Accordingly, the Japanese trust the future issues.” automotive sector.This difference among markets is also true of the energy sector, which receives low trust ratings in the West, but sub- The least trusted sectors stantially higher ones in the developing economies of Asia and Brazil. Entertainment and media (together) and energy are generally The Barometer tracks significant differences in trust in sectors the least trusted industries. In the US, the media and entertain- across countries.Retail,financial services,and the investment/insur- ment sector is the second least trusted; it ranks last in Asia, eighth ance industries register low levels of trust across several markets, in Europe. even though stakeholder trust would appear to be more critical to “The convergence of entertainment media with news and in- their industries than just about any other.In Asia,a fast-growing mar- formation media has decreased media’s credibility,” notes Turett. ket for financial services, the investment and insurance industry is “Plus we see new tech companies, whether it’s Apple (iPod), second to last in trust.Meanwhile,the professional services sector has Microsoft (Xbox),or Sony (PlayStation),really driving innovation – very low levels of trust in Brazil and Asia, but is highly regarded in not the media companies. The industry is also probably hurt by Canada and Europe. being the one most publicly associated with trying to control “The financial services industry has its work cut out for it in the advances in technology, albeit because of legitimate concerns over developing economies,”Turett says.“Though times are mostly good intellectual property rights.” in Brazil and Asia, people there remember last decade’s economic As many recent product – and scandal-related – incidents have crisis – bank failures and widespread financial trauma.The industry’s shown,companies must recognize the impact that trouble in one sec- challenge is to demonstrate a sense of stability and long-term com- tor has on the perception of their business in others.“The real brand mitment to those markets.We know it can turn around in develop- problems occur when there’s a repeated ‘insult’ to an industry’s trust- ing markets. In the US, where many problems were experienced worthiness,”Turett adds.“Stakeholders are less forgiving and more a decade ago,it certainly has.” PHARMA’S CHALLENGE Despite a host of product recalls and high-profile litigation, pharma years ago, this was a b-to-b industry,” Turett notes. “Companies had one remains quite resilient in terms of trust. In most markets, trust levels sit customer: doctors. Now they have hospitals, government, and consumers.” comfortably around 60%; only in three do they dip below 50% (49% in To account for these challenges, pharma firms must make their funda- Italy, 48% in the US, and 36% in Germany). Overall, trust in pharma is on mental culture of R&D and innovation more visible to the external world. par with trust in both the professional services and retail financial services At the same time, they need to communicate more transparently about sectors, though it ranks below health providers and hospital services. the protocols for clinical trials – for example, disclose the factors that To hear Nancy Turett, chair for Edelman’s health-related practices, tell it, determine when they should be discontinued – as well as make public the pharma industry faces a trust dilemma that is in part inherent to the the steps they’re taking to address pricing concerns. industry itself. “People benefit from these products every day,” she explains. “Because pharmaceuticals are seen as a public utility and a private- “But sometimes the business is seen as profiting from peoples’ vulnerabili- sector capitalist product, pricing is a very complicated issue,” Turett notes. ties. The older people get, the more they rely on these products. So a level “Virtually all of the companies have taken steps over the past few years to of resentment and mistrust is probably impossible to erase completely.” make products available to people who can’t afford them. There’s always a Further complicating the industry’s task is the number of audiences to possibility of being accused of showboating if you talk about this, but that which the industry must communicate. “People forget that up until a few doesn’t mean companies shouldn’t talk.” 15
  18. 18. 2006 Annual Trust Barometer Building trust The steps organizations must take to build trust Edelman vice chairman Leslie Dach offers media channels.Dach says, his opinion for building trust.“It’s about responsible behavior,” he “Our research shows that says.“It’s about communicating.It requires institutions to do more people will still turn to things simultaneously,every day,more effectively.” local sources first.” Busi- Trust starts with a company’s business promise.Audiences first ness publications are also relate to whether a company makes a good product or provides a highly credible. But reach- valuable service.If it has a reputation for poor products or customer ing people is more difficult service, it begins at a huge trust deficit.The next benchmark is how than ever.“Because of the companies treat their customers, communities, and employees, number of choices avail- which may be connected to sustainability, philanthropy, wages and able to consumers, it takes benefits,or all of the above. a lot more coverage in Leslie To communicate the behaviors and values that build trust,Dach, order to move minds,” he Dach a former top US political advisor,stresses the importance of work- says. “You must connect ing across a range of mediums.“We approach the task like a cam- with audiences continually across a broad array of channels,through paign,” he explains. “You have to be on TV for people to see the various stakeholders,to truly engage people.” pictures, in print for people to read the facts, on the web for people The Internet and peer-to-peer communications to interact,and on the streets to have a conversation.” The availability of new media is no reason to neglect the traditional TV is still the medium most opinion leaders turn to first for trust- Corporate attributes that build trust How much do each of the following attributes contribute to your trust? NATIONALITY OF RESPONDENTS USA CAN UK FRA DEU ITA ESP JPN CHN S. KOR BRA 68 67 72 79 87 95 90 91 75 91 96 Quality products and services 67 65 76 79 80 93 86 82 74 85 95 Attentiveness to customer needs Fair pricing for products 61 57 69 69 53 91 85 89 75 83 94 and services Good employee and 60 53 64 74 76 86 80 73 72 71 98 labor relations 63 54 63 49 60 85 75 95 71 85 85 Strong financial performance 55 49 62 68 66 85 75 86 78 74 93 Socially responsible activities 60 56 66 60 52 71 77 78 78 84 88 Well-known corporate brand 48 48 53 47 63 69 57 76 60 75 86 Dialogue with all stakeholders 45 37 46 47 75 59 64 76 58 67 70 A visible CEO 27 34 30 45 42 44 47 54 70 55 57 Employee or CEO blogs Top 4 Box (6-9) 16
  19. 19. Credibility of information sources How credible is each of the following sources of information about a company? 0 10 20 30 40 50 60 70 80 66% Articles in business 53% 75% magazines 66% 53% 58% 53% Friends and family 73% 57% 55% 56% 58% Colleagues 53% 47% 42% 52% Stock or industry 45% 64% analyst reports 63% 47% 52% Articles in 51% 58% newsweeklies 45% 39% 48% 42% Radio news coverage 54% 55% 54% 44% 51% Articles in newspapers 54% 46% 54% 42% Information conveyed 36% by regular company 32% 34% employee 38% 39% 27% The internet in general 45% 40% 37% 39% Communications 33% issued by 50% 43% third parties 42% 38% 45% TV news coverage 53% 43% 55% 27% Information conveyed 26% I USA I 37% by CEOs/CFOs 24% I EUROPE* 39% I ASIA** 17% I CANADA 23% Weblogs or blogs 17% I BRAZIL 19% 25% *Europe=UK, France, Germany, Italy, and Spain;**Asia=China, Japan, and South Korea 17
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