The trust deficit … Samsung’s executive corruption to United beating up passengers … people trust business less than ever

May 11, 2017

Samsung was once the challenger brand loved by millennials across the world. Then the batteries of its new phones, the Galaxy Note 7, started exploding impulsively and were banned from flights across the world. Soon after Samsung’s top executive Jay Y Lee was thrown in prison for corruption. Consumers no longer trusted the products, but also the company that makes them.

Not long after that, the one-time hero of the sharing economy, Uber was on the rails for abusing the rights of their drivers, refusing to pay tax or insurances, but also for the abusive treatment of employees, for hindering police enquiries, and much worse. At first it seemed like Uber was simply challenging the old world order, but now it seems their way of doing it was reckless and irresponsible.

Weeks later, an innocent passenger was seen around the world being beaten up and dragged off a United Airlines plane because of the the company’s over-zealous overbooking policy, and the highly-aggressive removal by staff. This is the airline which says “Come fly the friendly skies”. Hours later, CEO Oscar Munoz appeared on TV defending his staff, and saying they were just following standard procedures.

No wonder people don’t trust business.

Of course, this has been a trend for more than a decade. Most significantly it has been a decline in trust in governments, brought on by the transparency of always-on media where publics could now see a small elite of decision-makers out of touch with the vast and diverse needs and opinions of their peoples. In a world where anybody can communicate anything, people felt left out, and began to use their new found voice. They expressed their likes and dislikes on Facebook and Twitter and soon their opinions influences millions of others, and the impact was quickly amplified.

Then the economic crisis brought a real hatred (I don’t like the word, but it expresses the anger, the dislike and distrust which people developed) of banks in particular. The greedy deals that led to a west-coast sub-prime crisis that engulfed the world’s financial markets. And to see these same bankers bailed out, and rise again because governments couldn’t live without them, just made the distrust in both banks and governments a million times worse.

The 2017 Edelman Trust Barometer reveals that trust is in crisis around the world.

The general population’s trust in all four key institutions — business, government, NGOs, and media — has declined broadly, a phenomenon not reported since Edelman began tracking trust among this segment in 2012. Institutions such as governments and media are distrusted significantly more than business, but all are in decline. And the figure heads of communication, leaders and spokespeople, are typically distrusted more than anybody else (trust in CEO’s is at an all-time low).

With the fall of trust, the majority of respondents now lack full belief that the overall system is working for them. In this climate, people’s societal and economic concerns, including globalization, the pace of innovation and eroding social values, turn into fears, spurring the rise of populist actions now playing out in several Western-style democracies. Trump, Brexit and much more, are some of the consequences.

To rebuild trust and restore faith in the system, institutions must step outside of their traditional roles and work toward a new, more integrated operating model that puts people — and the addressing of their fears — at the center of everything they do.

Business, and in particular their brands, can play a significant role in regaining this trust, recreating a positive vision for the world and locally, and to reengage people in a new way of working between institutions and people. Consumers, for example, have taken to trusting friends of “people like me”, much more than any business message pushed at them. PatientsLikeMe.com is a great example of how people turn to each, enabled by social media, to be guided by each other, rather than brands or experts. Brands therefore need to work with these new dynamics to be able to add value, and at least influence again.

Richard Edelman shares insight on the 2017 Edelman Trust Barometer, which revealed that two-thirds of the countries surveyed are now “distrusters”.

The report reveals the largest-ever drop in trust across the institutions of government, business, media and NGOs. Trust in media (43 percent) fell precipitously and is at all-time lows in 17 countries, while trust levels in government (41 percent) dropped in 14 markets and is the least trusted institution in half of the 28 countries surveyed. The credibility of leaders also is in peril: CEO credibility dropped 12 points globally to an all-time low of 37 percent, plummeting in every country studied, while government leaders (29 percent) remain least credible.

The Trust Barometer found that 53 percent of respondents believe the current overall system has failed them—it is unfair and offers little hope for the future—while only 15 percent believe it is working, and approximately one-third are uncertain. Even the elites have a lack of faith in the system, with 48 percent of the top quartile in income, 49 percent of the college-educated and a majority of the well-informed (51 percent) saying the system has failed.

The gap between the trust held by the informed public and that of the mass population has widened to 15 points, with the biggest disparities in the U.S. (21 points), U.K. (19 points) and France (18 points). The mass population in 20 countries distrusts their institutions, compared to only six for the informed public.

“The implications of the global trust crisis are deep and wide-ranging,” said Richard Edelman, president and CEO of Edelman. “It began with the Great Recession of 2008, but like the second and third waves of a tsunami, globalization and technological change have further weakened people’s trust in global institutions. The consequence is virulent populism and nationalism as the mass population has taken control away from the elites.”

Current populist movements are fueled by a lack of trust in the system and economic and societal fears, including corruption (40 percent), immigration (28 percent), globalization (27 percent), eroding social values (25 percent) and the pace of innovation (22 percent). Countries coupling a lack of faith in the system with deep fears, such as the U.S., U.K. and Italy have seen the election of Donald Trump, the Brexit vote and the failed Italian referendum.

The cycle of distrust is magnified by the emergence of a media echo chamber that reinforces personal beliefs while shutting out opposing points of view. Respondents favor search engines (59 percent) over human editors (41 percent) and are nearly four times more likely to ignore information that supports a position they do not believe in.

“People now view media as part of the elite,” said Edelman. “The result is a proclivity for self-referential media and reliance on peers. The lack of trust in media has also given rise to the fake news phenomenon and politicians speaking directly to the masses. Media outlets must take a more local and social approach.”

There is evidence of even further dispersion of authority. A person like yourself (60 percent) is now just as credible a source of information about a company as is a technical (60 percent) or academic (60 percent) expert, and far more credible than a CEO (37 percent) and government official (29 percent).

Of the four institutions, business is viewed as the only one that can make a difference. Three out of four respondents agree a company can take actions to both increase profits and improve economic and social conditions in the community where it operates. Moreover, among those who are uncertain about whether the system is working for them, it is business (58 percent) that they trust most.

Yet business finds itself on the brink of distrust, and perhaps most concerning for business is the perceived role the public sees it playing in stoking their fears. A majority of the global population surveyed worries about losing their jobs due to the impacts of globalization (60 percent), lack of training or skills (60 percent), immigrants who work for less (58 percent), jobs moving to cheaper markets (55 percent) and automation (54 percent).

“Business is the last retaining wall for trust,” said Kathryn Beiser, global chair of Edelman’s Corporate practice. “Its leaders must step up on the issues that matter for society. It has done a masterful job of illustrating the benefits of innovation but has done little to discuss the impact those advances will have on people’s jobs. Business must also focus on paying employees fairly, while providing better benefits and job training.”

Other key findings from the 2017 Edelman Trust Barometer include:

  • Trust in business (52 percent) dropped in 18 countries, while NGOs (53 percent) saw drop-offs as high as 10 points across 21 countries.
  • Employees, on average, are trusted 16 points more than CEOs on messaging around employee/customer relations (53 percent), financial earnings (38 percent), crises (37 percent), innovation (33 percent), industry issues (32 percent) or programs addressing societal issues (30 percent).
  • Half of the countries surveyed have lost faith in the system, led by France (72 percent) and Italy (72 percent), Mexico (67 percent), South Africa (67 percent) and Spain (67 percent).

Trust in traditional media fell 5 points to 57 percent, the steepest decline among platforms since 2012, followed by social media (41 percent), which dropped three points. By contrast, online-only media (51 percent) received the biggest bump in trust at five points.

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