February 19, 2020 • Johannes Steffens
Why does trust matter? Who and what creates trust? How is trust won and lost? Why do people trust—or distrust—societal institutions and organizations? For 20 years, public relations firm Edelman has provided answers to these and other questions with the annual Edelman Trust Barometer.
In the 20th edition of the Edelman Trust Barometer, which Edelman released at the World Economic Forum in January 2020, CEO Richard Edelman states that “we are living in a trust paradox.” Despite a strong global economy, declining poverty rates and high levels of employment, trust in government, businesses, NGOs and the media is decreasing. Here, we will explore the history of the Edelman Trust Barometer, the findings of the 2020 report and potential implications for organizations in the 2020s.
Trust can be defined as the firm belief in or assured reliance on the honesty, reliability, ethics, competence or benevolence of another party while accepting some level of risk or vulnerability that the other party may not fulfill its stated commitments. While trust often connotes personal relationships, the concept can also be extended to organizations and institutions. In his 1995 book, Trust: The Social Virtues and the Creation of Prosperity, Stanford political scientist Francis Fukuyama argues that mutual trust is a positive cultural value that fosters economic growth through cooperation. Trust, social capital and sound legal frameworks enable people to conduct business cooperatively and flexibly, and facilitate the creation of large, nongovernment-owned companies.
The Edelman Trust Barometer is an annual survey of people’s trust in governments, business, NGOs and the media. It is considered one of the most important research reports by PR firms and has captured insights from more than 2 million individual respondents, 145 companies, 80,000 employee reviews, and 23 million measures of trust.
Francis Fukuyama’s book and two milestone events a few years later influenced the introduction of the Edelman Trust Barometer in January 2001. Mass protests at the 1999 World Trade Organization meeting in Seattle articulated growing concerns over globalization. A year later, Edelman committed to serving as a volunteer PR firm for the United Nations Global Compact, a non-binding strategic initiative to encourage global companies to adopt sustainable and socially responsible business policies and to report on their implementation.
The inaugural Edelman Trust Barometer surveyed 1,300 thought leaders in five western markets (United States, United Kingdom, Germany, France, and Australia). It revealed that NGOs were the most trusted source institutions at the time and that people were dissatisfied with the effectiveness of traditional leadership by governments, companies and the media. Over the next two decades, the scope and complexity of the surveys rapidly increased as the Trust Barometer tried to capture significant shifts in trust following milestone events. These events included:
Trust in the four pillar institutions has fluctuated significantly in the 2000s and 2010s. More importantly, trust gaps between institutions have widened, as the 2020 Trust Barometer demonstrates.
The 20th annual Edelman Trust Barometer is Edelman’s largest trust survey to date, with a sample size of more than 34,000 respondents in 28 markets on six continents. Respondents were grouped into two categories:
As noted above, trust in government, business, NGOs, and the media is decreasing, undermined by a growing sense of inequity, fears about the future, concerns about the impact of new technologies, and skepticism about current economic systems. More than 50 percent of respondents in developed markets reported that they do not believe they will be better off in 2025 than they are today, and that capitalism in its current form is doing more harm than good. Globally, 83 percent of employees are worried about losing their jobs for a variety of reasons, including automation, lack of training, foreign competition, immigration and the gig economy.
The trust gap between the informed public and the mass population decreased slightly from a 16-point gap in 2019 to a 14-point gap in 2020. The number of markets with double-digit trust gaps increased to 23 of 28 markets, with trust gaps reaching new record levels in Australia (a 23-point gap), France (21), Germany (20), Ireland (17), Spain (17), Italy (16), Brazil (11), and Russia (14).
Trust is based on competence (effectiveness) and ethics (purpose, honesty, vision, fairness). A majority of survey respondents stated that they did not regard any of the four societal institutions as both competent and ethical. Business was considered most competent (64 percent), and NGOs were viewed as most ethical (62 percent). More specifically, survey respondents ranked businesses as most competent at being the engine of innovation, driving economic prosperity and generating value for owners.
The 2020 Trust Barometer made it clear that competence is no longer enough: It accounts for only 25 percent of a company’s trust capital, with ethical behavior accounting for the other 75 percent. Businesses need to act more ethically and become a catalyst for change. Companies and their leaders are expected to walk the walk, not just talk the talk. They must speak up, act decisively, and lead from the front to resolve key contemporary issues in partnership with government, NGOs, and the media in order to help overcome the trust paradox. Companies must also realize that customers, employees and communities are deemed more important than shareholders to the long-term success of a business.
Some companies have already received the message and are increasing wages, offering more training opportunities, redefining their purpose, and engaging with customers and communities on key global issues such as climate change.
However, these measures won’t fully resolve the trust paradox in the new decade. To lead the way (and move the needle on the 2021 Edelman Trust Barometer), businesses also need to look to their past as well as the future. They must use their organizational history and data to develop authentic storytelling content that highlights past instances of competent and ethical behavior, and share this authentic content to effectively convey their values and character.
Executives, marketers and other communicators don’t need to look long and far for case studies and best practices. Numerous companies have successfully used authentic storytelling to navigate crises and milestone events. For example, Wells Fargo, which reeled following a series of scandals in the mid-2010s, rebranded and crafted a thoughtful advertising campaign with the goal of earning back the public’s trust. The campaign highlighted Wells Fargo’s commitment to innovation (competence) and customer service (ethical behavior) for more than 160 years.
When U.S. telecommunications companies began to deploy 5G wireless technology in 2018, Verizon introduced a series of “First To” commercials. Archival video footage showed how Verizon and its predecessor companies competently led the industry in earlier mobile telecommunications revolutions, building trust that Verizon will lead the 5G revolution, as well.
History Factory has more than 40 years of experience developing content that inspires institutional trust and can help you craft a story no one else can tell. This story can help drive transformation and growth that’s a natural extension of your heritage. Contact us today to learn more.
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