Economic, trust issues dominate Davos discussion

The European debt crisis, high unemployment in the US, and a lack of trust between consumers, governments, and businesses are topics dominating the agenda at the World Economic Forum in Davos.

The European debt crisis, high unemployment in the US, and a lack of trust between consumers, governments, and businesses are topics dominating the agenda at the World Economic Forum in Davos, Switzerland, this week.
 
Industry executives attending the forum say it will influence where they allocate spending and how they communicate with important stakeholder groups throughout 2012.
 
“The common theme is that there are serious issues that have to be addressed,” says Michael Roth, CEO of Interpublic Group, who cited the future of the Euro and unemployment as two issues on the minds of VIPs at the event. “Some of the things we determine are which of the markets are growing, which are healthy markets, and where clients will put their money. Forums like this one give us some sense about where global clients are expanding and which issues they're tackling.”
 
Nick Ashooh, global VP of corporate affairs at Alcoa, also says the economic future of Europe and the growing discontent with government officials and businesspeople are major themes.
 
“The Europe debt situation is hanging over everything,” he notes. “There is also a lot of attention on the subject of income inequality and whether or not that can lead to discontent more than we have seen – and how we address that.”
 
The forum is taking place as the level of trust between consumers and businesses, as well as between citizens and governments, is plummeting, according to the 2012 Edelman Trust Barometer.
 
Trust in government fell nine points to 43% globally compared with the 2011 survey. Trust in businesses dropped three points globally to 53%, while CEO credibility decreased by 12 points to 38%, according to the report. Yet despite government's low approval, nearly half (49%) of global respondents say governments do not regulate businesses enough.
 
Richard Edelman, global CEO of the eponymous agency, says chief executives are “realistic” about the challenges they face and realize they have to communicate with stakeholders more often.
 
“They're getting the message that they can't sit in their offices and that they have to talk to employees and tell them why, how, and what it's really like,” he says, adding that there will be 10-year trust-rebuilding process between banks and consumers. “It's really like public diplomacy – it's private-sector diplomacy.”
 
Ashooh adds that both the forum and the survey are reinforcing the need for effective internal communications.

“[Davos] actually influences a lot,” he says. “It makes you much more sensitive to the issues that are top of mind today. It influences everything from the voice of the company to how you relate to employees.” He adds that consumer trust of business executives is low, but trust of “someone like me” is high.

“That reinforces that a person in my position needs to make sure we are communicating effectively with employees,” he explains, “and that we are comfortable, know the issues, and then guide communications from that foundation.”
 
While the European debt crisis and inequality are the key topics of this year's conference, communications executives are also taking notice of the prevalence of social media.
 
“New media is a very dominant subject from a lot of different directions,” notes Margery Kraus, CEO of APCO Worldwide. “There is a group of people, entrepreneurs under 30 with big ideas, and they have been organized into the community. You can see there is a generational tension with the younger people realizing that nothing seems to be happening [with government and business].”
 
Roth agrees that there is a generational gap in terms of trust issues and that businesses have to create authentic messages to overcome that.
 
“Certainly, younger people have less trust in the federal government and business, and you do see that spilling over,” he explains. “That has to do with branding and PR. We have to make sure the messaging is trustworthy and relevant. If not the messaging fails.”
 

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