Public trusts brands, not 'business' in 2004

Leslie Dach, vice chairman at Edelman, gives an interesting answer to a question that arises stemming from his company's sixth annual Trust Barometer.

Leslie Dach, vice chairman at Edelman, gives an interesting answer to a question that arises stemming from his company's sixth annual Trust Barometer.

When asked why so many companies saw their individual trust ranking increase in 2004, while the business sector, as a whole, experience less trust from consumers, Dach likens the business sector's plight to that of Congress.

"You may not like the institution, but you like your own guy," Dach says. "There may be issues about the sector, but the better brands rise above it."

Edelman released its sixth annual Trust Barometer, which asked 1,500 "pinion leaders to answer a multitude of questions about corporate, government, media, and non-governmental organizations responsibility in January. The trust percentage for businesses in general has remained relatively steady in the mid-40% range since Edelman began the survey in 2001, falling to its lowest rate of 41% in June 2002 and rising to its highest in January 2004. Consumer trust, despite falling 3% points to 48% in 2004, increased in 23 of the 29 companies, and only two companies saw trust in them fall.

R. Edward Freeman, academic director at the Business Roundtable Institute for Corporate Ethics, did not think the findings were too surprising.

"There's a lot of companies out there doing good stuff, making great products, and creating value," Freeman says.

However, he adds, "Business, in general, has lost the public's trust."

The thought that business and ethics are separate from one another and oxymoronic still pervades, Freeman says, and it's up to the business community as a whole to challenge that.

"The public has come to expect unethical behavior," Freeman says. "It has to be regained company by company, and product by product."

Dach says companies should never be satisfied with performing on par with an index, and the smart ones have striven to go beyond the minimum expected of them.

"Companies have recognized they have to deliver the message of the corporate brand and realize they have to communicate not to just influencers, but more broadly," Dach says.

In November 2004, Wired Magazine declared the decline of brands, citing consumers' desire and ability to garner more information about their beloved companies than ever before and make conscious decisions to switch based on what they find.

In that article, James Surowiecki wrote, "In this environment, companies that slip up - even if it's simply failing to match customer tastes - can no longer count on their good names to carry them through. And consumers have become far more willing to experiment with products, because the amount of information out there makes taking a chance far less risky."

Many embattled companies that saw their trust ratings decline previously, rebounded in 2004.

McDonald's well-publicized battle fending off obesity lawsuits and its swarm of negative publicity that stemmed from Morgan Spurlock's documentary Super Size Me did not stop the brand from seeing its trust increase from 53% in 2004 to 58% this year.

Nike, which has never experienced any quality concerns but faced a barrage of negative publicity due to sweatshop allegations, has seen its trust increase from 40% 2001 in 62% in 2005.

"If brands weren't important, you wouldn't see them outperform the sector," Dach says. "Companies that do well have a strong brand and corporate messaging and have a stronger reservoir of goodwill."

But Dach adds that we're still in the wake of the corporate scandals that sent the trust in business plummeting.

"We've put time between us and [the public company scandals]; you don't see it in the papers everyday," Dach says. "But it's too fresh to be forgotten and [the progress] could be arrested with a very small transgression."

However, Freeman does not find any lack of trust too dependent on the scandals.

"There have always been scandals, but the good thing about the [recent ones] is that it [begs the] question of how we put business and ethics together once and for all?" Freeman says.

Steve Holmes, UPS' PR manager, says the company's approach was to analyze its trust from all stakeholders and with respect to all measures of a company's performance, including "business in general."

UPS received the highest ranking of any company for the second year in a row. In 2004, its first year of being tracked by the poll, 81% of respondents said they greatly trust UPS to do what's right. In 2005, that number jumped to 89%. No other company has received a ranking above 80%.

"I don't talk to my family about UPS any differently than I talk to customers," Holmes says.

Holmes, who has not seen the entire survey, guesses that the companies who have seen increases has something to do with opinion leaders believing in established brands that have put the trust issue at the forefront of their operations.

"We're concerned with every single aspect of trust," Holmes says. "The way we're able to manage that is by having consistency in everything we do."

Freeman says that the companies that are flourishing are starting to move their opinions of trust beyond specific philanthropic initiatives.

"The real issue here isn't just about philanthropy, it's about how [a company] treats its customers, suppliers, and community," he says.

Freeman thinks that too many companies have been "captured by the short-term myth of the shareholder," which he says is often a "storekeeping mechanism" that doesn't accurately reflect how all stakeholders are managed.

It's too difficult to paint every stakeholder having a particular set of criteria for trust, Freeman says, adding that some customers need to trust the entire supply chain to trust a company, others just need to be comfortable that the company they are buying products from is responsible, and others just don't care.

"Customers can be part of the motivation, but they can't be the only thing," Freeman says.

Freeman says that companies need to go back to their basic value proposition of making each stakeholder better off and communicate how they are doing that.

"PR professionals play in a large part as the leaders and facilitators of stakeholder dialogue," Freeman says. "And that only comes through dialogue with the community and critics."

Freeman concedes that every decision a company makes will be at odds with some stakeholder, but it's up to the firm to navigate that give and take and try to improve the overall stakeholder value.

The communicating part of that trust has become decentralized and what many, including Edelman CEO Richard Edelman have called "democratization of information."

Barometer respondents decided they trust a person like themselves (56%) much more than CEOs of a company (25%), PR representative (9%), regular employee of the company (30%), and others. The survey also found that it was not a good year for the media, Dach says. Even though trust in the media rose from 24% in 2004 to 32% in 2005, the media has not enjoyed a ranking above 40% during the course of the survey.

"The lesson isn't to reduce the thought leadership of your CEO," Dach says. "But with the democratization of information, the symbol of the CEO - while necessary - isn't as important as before."

With the ever-expanding sphere of influencers, information, and trusted sources, the speed in which trust can increase or decrease for any particular company has certainly been hastened.

Dach concludes: "All your customers are now looking to a web of audiences for information."

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