BUSINESSES today find themselves in a new situation of strength — a unique position that translates into an opportunity to help mend the trust divide that has long existed with consumers.
Jonathan Lutkowski of Edelman explained during the recent American Feed Industry Assn. Nutrition Symposium in New Orleans, La., that in the face of change, the business world is the most trusted to keep pace. In fact, he said businesses are gaining ground when it comes to trust, even compared to non-government organizations (NGOs), the government or the media. This is very good news for businesses and business leaders alike, he noted.
Every year, Edelman surveys consumers globally to determine the current trust landscape. In 2016, no institution recorded a larger gain in trust among the general population than business — an occurrence aided, in part, by a gradual recovery of the financial services sector.
Registering an eight-point rise in trust over the last five years, financial services moved to 51% in the 2016 survey — a larger gain than any other sector. Technology remained on top as the leading industry sector.
The uptick for business in general is a global phenomenon, Lutkowski said. In 25 of 28 countries, trust in business increased or remained steady. As a result, he pointed out that businesses are closing in on the historic lead held by NGOs as the most trusted institution.
Compared to government, 21 of 28 countries are now more trusting of business. This reality is particularly pronounced in Mexico, Brazil and South Africa, which each had a more than 40-point trust differential between business and government, Lutkowski said.
Whereas 59% believe that it is the government's role to regulate, 80% say it is the responsibility of businesses to play a leading role in solving societal problems.
In fact, eight in 10 individuals believe that a company can take specific actions that both increase profits and improve economic and social conditions in the community in which it operates. For businesses, this represents a growing expectation — up from 74% in 2015.
Among the issues cited as most critical for businesses to address were: access to education and training, access to health care, protecting and improving the environment, improving human and civil rights, addressing income inequality, creating or maintaining a modern infrastructure and reducing poverty.
Role of CEO
Adding to the newfound position of strength for businesses is the recharged credibility of the chief executive officer as a spokesperson. Lutkowski noted that CEOs experienced an eight-point uptick in credibility — more than experts, analysts, employees or even "a person like yourself."
At the same time, though, he noted that this year's "Trust Barometer" indicated that the focus of CEOs, in some cases, may be misaligned with what the general population believes to be most important. For instance, consumers said they believe CEOs focus too much on short-term financial results and lobbying rather than on job creation and making a positive long-term societal impact.
Specifically, 80% of consumers agreed that CEOs should be personally visible in discussing societal issues, while 72% believe CEOs should be visible when discussing financial results.
Having the right focus influences trust, Lutkowski said. In fact, 45% of consumers attribute a business's contribution to the greater good as the reason their trust in business has grown. Conversely, of those whose trust in business decreased, half cited a business's failure to contribute to the greater good as the main driver.
Changing trust landscape
From a historical perspective, Lutkowski said a significant shift in trust occurred in 2005, 2006 and 2007, when "peer-to-peer trust" took hold over "trust of authority and the establishment." This shift, he noted, was when social media came into being.
While consumers have since become a lot less trusting of social media, at the time, it was thought that information coming through social media channels would be more objective and closer to the source. Over time, however, that has not proved to be the case, and consumers have come to realize that social media is flush with agenda pushing.
In 2007, right before the recession started, business was more trusted than the government, but that very much reversed course afterward and only recently started to move back to a position that is more favorable to business. Whether or not people agree with the bailouts that happened at the time, the actions did elevate the government in the eyes of consumers, Lutkowski said.
Interestingly, it was noted that a separation is happening today in how the mass population and the "informed public" extend trust. The informed public is defined as people 25-64 years old, college educated, in the top 25 of household income per age group in each country and who report significant media consumption and engagement in business news. The mass population is the whole population minus the informed public and represents 85% of the total global population.
"You probably are always going to have some kind of gap," Lutkowski said, but what is happening is that the gap is increasing — and surprisingly so in the GDP5 countries (the U.S., China, Japan, Germany and the U.K.). One would think the gap would be increasing in third-world countries, but the opposite is happening. People in first-world countries have the most distress when it comes to trust.
That being so, what does it take to be a leader in a divided world? Lutkowski explained that it all comes down to actions, values and employee advocacy and engagement. In today's business environment, why a business does what it does has become equally as important as what it does, he said.
At present, the food and beverage industry enjoys a high trust rating among consumers (64%) compared to business in general (53%). Furthermore, trust for the sector goes up the closer to the farm a business is perceived to be. The sector still has some work to do when it comes to safety, security and various societal issues, but it is making progress.
Three key takeaways for business leaders from Edelman's 2016 "Trust Barometer" are:
1. Express your values through honest, ethical engagement in which you share your story.
2. Ignite your most powerful advocates — your employees.
3. Engage across channels to meet stakeholders where they are to discuss what most interests/concerns them.