Declining Public Trust in U.S. Business
Although there is a considerable decline of trust in businesses at global levels, U.S. has had a significant impact [...]
February 5 2009 by Fayazuddin A. Shirazi
Although there is a considerable decline of trust in businesses at global levels, U.S. has had a significant impact this year with America now comparable to France and Germany, considered as the lowest ranking nations on trust parameters. According to the 2009 Edelman Trust Barometer ratings, the dwindling trust is mostly attributed to the staggering financial losses and the government bailouts in the country. The tenth edition of Barometer survey sampled 4,475 opinion leaders in two age groups (25-34 and 35-64) in 20 countries.
“Trust in business has collapsed in the U.S. with American attitude toward its private sector now comparable to that in France and Germany, which is historically the lowest among all nations surveyed,” says Richard Edelman, President and CEO of Edelman, the global independent PR consulting firm, commenting on the declining trust in U.S corporate world.
According to him, the trend is in stark contrast to Asian and Latin American countries, where public trust in business remains strong, with increases in markets like Brazil and China, and high overall trust levels in Japan, India and Indonesia, which was a new country surveyed in this year’s Barometer.
Writing for his blog – 6 AM – Edelman says that the staggering losses in financial markets, the need for government bailouts of key industries and the revelation of corporate misbehavior has taken a toll on trust in all institutions. “The impact is most profound in the corporate sector, especially in the U.S. The problems of corporate trust in 2001-03 were limited largely to New Economy enterprises such as Enron and Global Crossing. This time, companies that are mainstays of the global economy are in serious trouble,” he says.
In his latest blog posting – Paradise Lost – Edelman calls for an immediate need for business to change its approach to policy and communications. “We have moved from a shareholder to a stakeholder world and to meet its challenges, business must change its approach to policy and communications,” he says.
However, trust in government did not rise to offset lower trust in business; Business is still more trusted than government in 13 of the 20 markets surveyed. And while NGOs remain the most trusted institutions in nearly every market surveyed, they are not considered the most responsible for solving global problems, and the public still looks to Government agencies for resolving issues at global levels, writes Edelman.
The most trusted spokespeople for information about companies are experts, such as academics or financial analysts, while the least trusted are CEOs and government officials. Interestingly, in the U.S., CEOs are now regarded at a level comparable to the post-Enron period, says the survey.
According to the study, nearly two-thirds of informed publics (62 percent) trust corporations less than they did a year ago. When respondents in the U.S. were asked about trust in business in general, only 38 percent said they trust business to do what is right — a 20 percent plunge since last year — and only 17 percent said they trust information from a company’s CEO. Both are lower levels of trust than those Edelman measured in the wakes of Enron, the dot-com bust, and Sept. 11.
“It has been a catastrophic year for business, well beyond the evident destruction in shareholder value and need for emergency government funding,” says Edelman. “Our survey confirms that it’s going to be harder to rebuild our economies because no institution has captured the trust that business has lost — trust is not a zero-sum game. Business must recast its role in society and move beyond simply generating ROI to its shareholders. It must partner with government and other institutions to assume societal responsibilities.”
There is also an increased appetite for more government regulation, with 3:1 respondents believing government should intervene to regulate industry or nationalize companies to restore public trust.
Globally, the call for government intervention also extends to issues like energy costs, global warming, and access to affordable healthcare, as respondents by at least a 2:1 margin say government has the primary responsibility for solving these issues. But business must collaborate: Two-thirds (66 percent) expect business to partner with governments and NGOs to solve these issues.
“You have heard my appeal to the corporate sector for Public Engagement. At Edelman we’ve witnessed its effectiveness through private sector diplomacy, in which business works in cooperation with NGOs and government to address major global issues; through mutual responsibility, a combination of cause-related marketing and corporate social responsibility; through shared sacrifice in the face of the global recession, not just in equitable compensation, but also in supply chain management; and continuous conversation with stakeholders, one characterized by agility, timeliness, and contribution—not control,” remarks Edelman.