Edelman Trust Barometer 2010

trust

2010 | ANNUAL GLOBAL OP IN ION LEADERS STUDY


2 2010 EDELMAN TRUST BAROMETER

Trust in Business Rises Globally, Driven by Western Economies

On the heels of the Great Recession, when trust in business sunk to historic lows, the 2010 Edelman Trust Barometer reports a modest global rise in trust in business.

The rebound is fueled by a spike in a handful of Western countries, especially the United States where trust in business jumped 18 points to 54 percent. It remains high in three of the four BRIC countries, with Brazil, India, and China above 60 percent. In Russia, the outlier among this group, trust in business dropped 10 points (figure 1). The overall rise is tenuous, however, with nearly 70 percent saying business and financial companies will revert to old habits when the financial crisis is over (figure 5, page 4).

A number of actions may have contributed to the boost in trust in the U.S., including a rise in the stock market, and a growing trend among U.S. corporations to listen to and engage their stakeholders, treat their employees well, and play a role in solving major societal challenges.

Underscoring the renewed U.S. confidence in business, 71 percent of Americans now say they trust global companies headquartered in the United States, an increase of 11 points from last year’s survey. The world at large also reflects the increased trust in U.S.-based business (figure 2).

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U.S. Germany France U.K. Italy China India Brazil Japan Russia

62% 62% 63%57%

71%67%

34%40%

34%40%

52%

42%46% 49%

30%36%

67%62%

36%

54%

+18

33%

59%

+26

2009 2010

-10

Responses 6-9 only on 1-9 scale; 9=highest Informed publics ages 25 to 64 in 20 countries

Figure 1: Global business trust rise driven by gains in a few countries; remains high in three of four BRIC countries

Top 10 Countries by GDP



How much do you trust business to do what is right?

Figure 2: U.S. surges as trusted site for global headquarters

How much do you trust global companies headquartered in the U.S. to do what is right?

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Global China RussiaU.S. Germany

71%72%

51%

61%

2009 2010

+10+11

+29

+1960%

71%

26%

45%

28%

57%

3

Trust in Government and in NGOs Trend Up

Media continues its three-year decline, now ranking lowest among four institutions studied.

Figure 3: Trust in government is largely stable; U.S. and Russia move in opposite directions

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U.S. France Germany China India U.K. Russia

42% 43%36%

43%

30%

46%

+16

34%

43%

+972% 74%

40% 38%

48%

38%

-10

2009 2010

30%

46%

+7

Responses 6-9 only on 1-9 scale; 9=highest Informed publics ages 25 to 64

How much do you trust government to do what is right?

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U.S. U.K./France/Germany India China

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

48%

52%

36%

31%

56%

58%

55%

53%

36%

54%

Figure 4: Across regions, influence of NGOs rises over time

Informed publics ages 35 to 64in U.S., U.K./France/Germany, India and China

How much do you trust NGOs to do what is right?

Globally, trust in government wit-nessed a modest increase. As with trust in business, a handful of countries sparked the global rise (figure 3). In the United States, trust in government climbed 16 points in one year. France also noted a sharp uptick, with a 9 percent rise. For the most part, in large economies trust in government remains stable, particularly in China where trust in government has always skewed high (see figure 13, page 8 for a long-term look). Russia is the outlier, falling 10 points to 38 percent.

Throughout most of the Western world, NGOs remain the most trusted institution. Across all regions, trust in this institution has increased over time. In no country is this more evident than in China, where trust in NGOs has surged by 25 points since 2004 (figure 4). This surge may be attributed to a growing affluence and the resulting demand for environmental responsi-bility, education, and public health.

The only institution to lose trust around the globe is media. Over the last three years, trust in media has fallen from 48 to 45 percent among older informed publics. With the dispersion of tradi-tional media’s authority and the rise of opinion journalism, trust in the institution as a whole has waned.


2009 2010

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India Germany China France U.K. Italy Russia Brazil U.S. Japan

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10082%76% 74%

67%64% 62% 60% 59%

49%

78%

Figure 5: Most expect business and financial companies to return to old habits

Informed publics ages 25 to 64

Top 10 Countries by GDP

After the recession is over, do you expect business and financial companies to return to “business as usual”?

Trust Is Fragile

The fragility of trust is further under-scored by a large percentage of respondents who pointed to short-term actions that companies seemed to have taken as a result of the financial crisis. In the U.S., Western Europe, and BRIC countries, more than 70 percent say that actions such as firing non-performing managers, repaying bailout money, or reducing the pay gap between senior executives and rank and file workers would restore their trust in the company. In the U.S., the numbers skew even higher—with almost 90 percent of respondents citing firing non-performing managers and repaying bailout money as pathways to trust.

This state of fragility is particularly per-tinent to the banking industry, a sector that has seen its credibility crumble in the Western world. Since 2007, trust in banks has dramatically declined in most Western countries. In the U.S., this decline is steepest, with banks losing 39 points in three years. The freefall sits in stark contrast to what has happened in technology. In the U.S. and other major economies, trust in this sector has risen from levels that were already high (figure 6).

Although trust in business is up, the rise is tenuous. Globally, nearly 70 percent of informed publics expect business and financial com-panies will revert to “business as usual” after the recession (figure 5). In addition, most expect government to influ-ence banks and financial institutions in the future.

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Tech

nolog

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Bank

sTe

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Tech

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2007 2010 2007 2010

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77%83%

75%78%

70%77%

67%74%

62%

77%

87% 88%

75%

85%

76%83%

17%

34%

-1743%

27%

-16

68%

29%

-39

41%

21%

-20

China India U.S. France U.K. Germany China India U.S. France U.K. Germany

Responses 6-9 only on 1-9 scale; 9=highest Informed publics ages 35 to 64

Figure 6: Since 2007, trust in banks down while trust in technology holds strong

How much do you trust the following industries to do what is right?

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Tech

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Bank

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2007 2010 2007 2010

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77%83%

75%78%

70%77%

67%74%

62%

77%

87% 88%

75%

85%

76%83%

17%

34%

-1743%

27%

-16

68%

29%

-39

41%

21%

-20

China India U.S. France U.K. Germany China India U.S. France U.K. Germany

Technology Banks

5

0 10 20 30 40 50

Stock or industry analyst reports

Articles in business magazines

Conversations with friends, peers

Conversations with employees

Online search engines

Corporate communications

Social networking sites

TV news coverage

News coverage on the radio

Newspaper articles

67%

38%Corporate or product advertising

49%

44%

41%

38%

37%

36%

35%

34%

32%

19%

17%

Figure 7: Specialist sources most credible

Informed publics ages 25 to 64 in 20 countries“Extremely credible” and “very credible” responses only; selected sources

How credible do you believe each of the following is as a source of information about a company?

Who Do We Trust?

In a year fraught with economic confusion and uncertainty, informed publics place the most trust in expert spokespeople and information sources, while trust in traditional media outlets continues to erode.

Figure 8: Expert voices most trusted

Informed publics ages 25 to 64 in 20 countries“Extremely credible” and “very credible” responses only

If you heard information about a company from one of these people, how credible would the information be?

Industry analyst or stock reports and articles in business magazines held strong as the most trusted sources of information about a company (figure 7). However, trust in traditional media continues to wane. Among older informed publics, over the past two years the credibility of television news dropped 20-plus points in the U.S.; radio news coverage dropped by 20 points in the U.K.; and televi-sion news and newspapers declined by more than 15 points each in the BRIC countries. “Conversations with

friends and peers” as a source of company information saw sizable drops in trust in the U.S., U.K./France/Germany, and the BRIC countries.

In a volatile year, it seems that informed publics value guidance from credentialed experts over a “person like me,” which lost ground as a credible voice of information for a company (figure 8). This desire for substantial information points to why academics and experts, and financial or industry analysts are

the most trusted spokespeople for a company.

Trust in corporate communications such as press releases, reports, and e-mails as sources of information about a company jumps five points globally, to 32 percent, while the credibility of corporate or product advertising remains low, at 17 percent (figure 7). Trust in a CEO as a company spokesperson showed notable re-covery in many markets (see “The Role of the CEO,” on page 7).

0 10 20 30 40 50 60 70 80

NGO representative41%

45%

Financial or industry analyst49%

52%

Academic or expert62%64%

Regular employee 32%

32%

2010 2009

Government official29%

35% +6

CEO31%

40% +9

Person like yourself44%

47%-3

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NGO representative41%

45%

Financial or industry analyst49%

52%

Academic or expert62%64%

Regular employee 32%

32%

2010 2009

Government official29%

35% +6

CEO31%

40% +9

Person like yourself44%

47%-3

Figure 6: Since 2007, trust in banks down while trust in technology holds strong


The New Corporate Reputation

For the first time, this year’s Trust Barometer shows that trust and transparency are as important to corporate reputation as the quality of products and services. In the U.S. and in much of Western Europe, these two attributes rank higher than product quality—and far out-rank financial returns, which sits at or near the bottom of 10 criteria in all regions. This milestone is in stark

contrast to 2006, before the financial crisis hit, when financial performance was in third place in a list of 10 attributes shaping trust in the United States (figure 9). In the key European markets and China, the relative importance of financial performance as a factor in trust in a company or in corporate reputation remained the same from 2006 to 2010.

Partnerships rooted in advancing societal good also are now a conduit to earning trust. The overwhelming majority of informed publics say they would be more likely to trust a company that partners with NGOs to solve global challenges such as climate change, poverty, or disease, this year’s data shows.

A vastly different set of factors—led by trust and transparency—now influences corporate reputation and demands that companies take a multi-dimensional approach to their engagement with stakeholders.

The questions were asked differently in 2006 and 2010.

2006: When you think of companies that you trust, how much, if at all has each of the following attributes contributed to your trust? Please use a nine-point scale where one means it “has not contributed at all” and 9 means it “has contributed a great deal.” (Top 2 Box) Informed publics ages 35 to 64.

2010: How important are each of the following factors to the overall reputation of the company? Please use a nine-point scale where one means that factor is “not at all important” and nine means it is “extremely important” to overall reputation. (Top 2 Box) Informed publics ages 35 to 64.

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Quality products and services

Attentiveness to customer needs

A well-known brand

Strong financial performance

Socially responsible

Dialogue with stakeholders

Employee/CEO blogs

Good employee relations

Fair pricing

Visible CEO

53%

47%

42%

38%

37%

35%

33%

23%

23%

12%

Transparent and honest practices

Company I can trust

Treats employees well

High quality products or services

Prices fairly

Top leadership

Financial returns

Good corporate citizen

Communicates frequently

Innovator

83%

83%

79%

75%

72%

64%

58%

48%

47%

45%

Figure 9: In 2010, financial performance least important to corporate reputation

U.S. 2006 U.S. 2010

What shapes your trust in a company? How important are these factors to corporate reputation?

7

When a CEO makes business decisions for his or her company, which stakeholder should be most important to his or her decision?

Figure 10: A stakeholder, not a shareholder, world

Informed publics ages 25 to 64 in 22 countries

All stakeholders are equally important

52%

Investors/Shareholders14%

Customers 13%

Employees7%

Society at large11%

3 to 5 times 60%

Government3%

Building a Mosaic of Trust

Globally, when asked which stake-holder should be most important to a CEO’s business decisions, 52 percent said that “all stakeholders are equally important”—as much as a 4:1 margin against individual stakeholders (figure 10), underscoring that this is no longer a shareholder but a stake-holder world.

Last year, we learned that people need to hear something about a company three to five times to believe its verac-ity, pointing to the importance of a multi-channel and multi-spokesperson approach (figure 11).

Taken together, these two findings suggest that to advance reputation, companies need to be everywhere, engaging everyone. They must build a mosaic of trust by cultivating a wide circle of expert spokespeople, communicating through a variety of channels, and partnering with NGOs to advance the common good.

As the nature of trust has changed, so too has the way that companies must earn it.

How many times in general do you need to hear something about a specific company to believe that the information is likely to be true?

Figure 11: Multiple information sources enhance credibility

Informed publics ages 25 to 64 in 20 countries

2009 Edelman Trust Barometer

3 to 5 times 60%

Don’t know/refused

7%

4 or 5 times25%

6 to 9 times 6%

10 or more times

5% Twice 16%

Once 6%

3 to 5 times 60%

3 times 35%

“Very credible” and “extremely credible” responses only Informed publics ages 35 to 64

If you heard information about a company from a CEO, how credible would the information be?

Trust in a CEO as a spokesperson

for a company showed notable

recovery in many markets. The

improvement may be attributed, in

part, to those CEOs who view trust

as a line of business. Today’s stake-

holders are looking for leaders who

will deliver performance, communicate

frequently and honestly, and consider

the role of business in society.

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44%51%

+7

The Role of the CEO: Credibility on the Rise


The 2010 Edelman Trust Barometer is the firm’s 10th annual trust and credibility survey. The survey was produced by research firm StrategyOne and consisted of 25-minute telephone interviews using the fielding services of World One from September 29-December 6, 2009. The 2010 Edelman Trust Barometer survey sampled 4,875 informed publics in two age groups (25-34 and 35-64). All informed publics met the following criteria: college-educated; household income in the top quartile for their age in their country; read or watch business/ news media at least several times a week; follow public policy issues in the news at least several times a week. For more information, visit http://www.edelman.com/trust or call +212-704-4530.

About the Edelman Trust Barometer About EdelmanEdelman is the world’s leading independent public relations firm, with 3,200 employees in 51 offices worldwide. Edelman was named Advertising Age’s top-ranked PR firm of the decade, PRWeek’s “2009 Agency of the Year” and “Large Agency of the Year” (for the third time in the last four years), and Holmes Report’s “Agency of the Decade” and “2009 Best Large Agency to Work For.” Edelman owns specialty firms Blue (advertising), StrategyOne (research), and BioScience Communications (medical education and publishing). Visit http://www.edelman.com for more information.

Trust Over the Decade

The Time Is Now

In the past decade, both business and government have violated stake-holder trust—and demonstrated how plainly its loss can corrode reputation. Fraud at Tyco and Parmalat. False reports about weapons of mass destruction. High-risk trading ven-tures that crippled Wall Street and Main Street and led to the failure of long-established companies like Lehman Brothers and GM. As a result, we have seen business and gov-ernment become more transparent, invite outside opinion, and join forces to tackle global issues like energy, education, and healthcare. Trust has emerged as a new line of business—one to be developed and delivered. Companies that embrace the new reality, where the interests of all stakeholders must be consid-ered equally, will see their credibility rise accordingly. Now is the time for companies and CEOs to deliver performance, communicate frequently and honestly, and consider the role of business in society. Now is the time for business to prove its commitment to profit and purpose.

Richard Edelman President and CEO, Edelman

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Enron, the dot-com bust and September 11

Worldwidefinancial crisis

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Figure 12: Trust in business, 2001-2010

Figure 13: Trust in government, 2001-2010

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44%

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Low Trust

High Trust

2007 2008 2009 2010

36%

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Informed publics ages 35 to 64 in the U.S., U.K./France/Germany, and China

Informed publics ages 35 to 64 in the U.S., U.K./France/Germany, and China

How much do you trust business to do what is right?

How much do you trust government to do what is right?

© Edelman, 2010. All rights reserved.

On the cover, from top left: Chinese medical workers inject students with H1N1 flu vaccine in Jinjiang city; Jamie Dimon, chairman and CEO of JP Morgan Chase & Co.; GM headquarters in downtown Detroit; Bernard Madoff exits a federal court in Manhattan; Detroit resident holds an employment guide while attending a job fair in Livonia, Mich.; Chancellor of the Exchequer Alistair Darling launches an analysis of Tory spending plans.

Edelman Trust Barometer 2010

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