The cost of reputation and trust: priceless

Even Edelman's fiercest competitors would admit that the firm's Trust Barometer is one of the best gauges of corporate and institutional reputation out there and company boss Richard Edelman was at the World Economic Forum in Davos, Switzerland this week to launch the 2012 edition of the report.

Even Edelman's fiercest competitors would admit that the firm's Trust Barometer is one of the best gauges of corporate and institutional reputation out there and company boss Richard Edelman was at the World Economic Forum in Davos, Switzerland this week to launch the 2012 edition of the report.

It's interesting to look back at predictions and see how they match up with reality. In last January's edition of PRWeek, Richard Edelman said: “There will be big issues [in 2011] around the ‘haves' and ‘have-nots': 20% of people with high-school diplomas are unemployed, [compared to] 5% of those with college diplomas.” In retrospect, in the context of the rise of the Occupy Wall Street movement and increased dissatisfaction with governments and business – especially the financial industry - we can see that this was a remarkably prescient comment.

Edelman's 2012 Trust Barometer contains some alarming findings for communicators and backs up last year's prediction by the agency's eponymous CEO. It shows that trust in governments and CEOs suffered their biggest drop since the study started over 10 years ago. Consumers want governments to regulate business more – even though they don't particularly trust governments. But reputation is determined by what is done more than by what is said – so perhaps this is a reflection of that fact.

The only institution where trust increased was the media, with business, government, and NGOs all declining. That is surprising in a year when the media came under more scrutiny than ever before, especially in the UK with the phone-hacking scandal and subsequent closure of News International's News of the World.

Other companies are also getting on the trust bandwagon and today, also at Davos, Burson-Marsteller launched the inaugural version of its Global Corporate Reputation Index. It highlights the importance of citizenship in forging a positive corporate reputation, defining citizenship as a measure of the less tangible aspects of reputation and things companies do beyond their basic business functions. This brings in areas such as philanthropy, cause marketing, CSR, and environmental efforts.

The tech industry scores well, with banking and oil and gas lagging behind in their reputation scores. Amusingly, given Burson's ill-fated efforts last year on behalf of Facebook to damage its image, Google is pulled out as one of the top 25 consumer companies with the strongest corporate reputations.

The Burson study quotes a statistic that reputation accounts for 16% of a corporation's value. And Edelman suggests the financial industry is only at the start of a reputation rebuilding process that will take 10 years to complete. But all companies – and governments – must invest much more effort and resources if they are to reverse the worrying trends highlighted in this year's Trust Barometer.

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