How credible and trusted are different sources of news and information in people’s opinions? When putting PR programs together, it pays to understand how well different spokespersons are respected and to focus on the most trusted for best results. Below is the graph from the annual Edelman Trust Barometer global survey 2021, which shows the extent to which various sources of information are credible in the opinion of the 33,000 respondents. In general, in the midst of the COVID epidemic, how credible and trusted are different spokespersons?
Most trusted spokespersons at a time when there is a massive loss of trust within society
Annual research commissioned for the 21st annual Edelman Trust Barometer global survey in 2021 (Edelman is the biggest PR firm in the world) asked respondents:
“Below is a list of people. In general, when forming an opinion of a company, if you heard information about a company from each person [in a list shown], how credible would the information be – extremely credible, very credible, somewhat credible, or not credible at all?”
The most trusted spokespersons were experts and peers, as shown in the above table. But even experts and peers had lost credibility since the previous year.
The global results reflect the lack of trust within society for leaders of organizations. There is a 9% gap between the credibility of CEOs compared with the next highest rating, which is “a person like yourself.” The inference to draw from the findings is that company technical experts and academic experts are the best persons to speak on relevant issues. Even though “a person like yourself” and “a regular employee” are next in line with their personal credibility, they are highly unlikely to be suitable organizational spokespersons. They may well suit being quoted in print, but unlikely to suit video roles. Therefore, the important spokesperson role belongs to the CEO as the logical spokesperson. The CEO should therefore take part in extensive media training to ensure he or she can handle the role successfully.
Trust in business improves in 2021 survey
Interestingly, since the COVID pandemic brought catastrophe to many societies around the world, business in many ways has responded in a positive way to provide support to employees who have been struggling to cope with the impact. As a result, global trust in the business sector improved to 61 points, which is a clear lead over the next highest result, 57 points for NGOs.
Despite scandalous pay at the top
Employed workers, especially in large corporations, understand the massive pay their CEOs receive. Such pay is scandalous. Some CEOs in large companies are paid 1,000 times more than the median salary of their employees, after taking stock allocations into account, as reported in a New York Times article in 2019, which also stated:
“Acording to a study by the Economic Policy Institute, C.E.O. payouts rose about 1,000 percent between 1978 and 2017 in 2017 dollars. The Standard & Poor’s 500, by contrast, rose 637 percent, while the typical worker’s salary increased all of 11.2 percent. The average American worker’s wages were flat in real terms from 2000 through 2018 before picking up this year .” [The S&P 500, or simply the S&P, is a stock market index that measures the stock performance of 500 large companies listed on US stock exchanges.]
In 1970, University of Chicago economics professor Milton Friedman wrote a famous article in the New York Times, in which he basically justified corporate profit maximization ahead of any other priority: “The Social Responsibility Of Business Is to Increase Its Profits.” The article “helped launch a half century of ‘shareholder capitalism,'” according to Claudine Gartenberg and George Serafeim, the two business professor authors of a 2019 Harvard Business Review article.
This shareholder primacy attitude was echoed in the 1987 movie Wall Street, in which Michael Douglas, starring as Gordon Gekko said, “Greed, for lack of a better word, is good.” Influential corporations have started to acknowledge that other stakeholders are just as important as shareholders. Image: Michael Douglas as Gordon Gekko in ‘Wall Street.’
Business support for ‘stakeholder capitalism’
On 29 August 2019, the US Business Roundtable issued an open letter titled “Statement on the Purpose of a Corporation.” A prominent business lobby group, the Business Roundtable, includes the CEOs of 181 leading companies representing nearly 30% of total US market capitalization. The letter contained a one-page declaration that ended with: ‘Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.’” According to the statement, corporations are accountable to 5 constituencies, of which shareholders are only one. The others are customers, employees, suppliers, and communities. In that sense it is a classic articulation of ‘stakeholder capitalism.’ The letter has generated public support such as the opinion expressed in the New York Times of 23 September 2019: “The Virtuous Corporation Is Not an Oxymoron.”
The growing public support for ‘stakeholder capitalism’ is reflected in the overall attitude found in the 2020 Edelman trust survey – around 87% of respondents agreed with the statement: ‘Stakeholders, not shareholders, are most important to long-term company success.’ They ranked the 4 institutional groups in terms of their perceived importance to a company achieving long-term success as Customers 38%, Employees 37%, Shareholders 13% and Communities 12%.
Around 74% of survey respondents from the public around the world agreed that ‘CEOs should take the lead on change rather than waiting for government to impose it.’ Nevertheless, it is likely that companies will change slowly. The two US business management professors, Vijay Govindarajan and Anup Srivastava, who wrote the article, “We Are Nowhere Near Stakeholder Capitalism,” published in the Harvard Business Review in January 2020 believe:
“If you read the headlines coming from the 2020 World Economic Forum at Davos, you may start believing that public corporations have fundamentally changed their raison d’être: from creating value for shareholders to benefiting society-at-large. In our opinion, this conclusion is premature. We haven’t seen real change yet, and we won’t without first transforming firms’ performance measurement systems.”
CEOs need to become more engaged as influential spokespersons in society
Edelman research also found that trust in institutions is built on competence and ethics. In the Edelman 2021 survey, members of the general public perceive business as the only sector that is both competent and ethical. However, overall public trust has dropped for all societal leaders (page 17).
CEO reputation matters greatly
Long-term research consistently underscores that CEO reputation is one of the fundamental drivers of corporate reputation — and significantly contributes to market value. Executives estimate that 44% of their company’s market value is attributable to the reputation of their CEO. This
extraordinary interdependence between CEO reputation and market value demonstrates that leadership is a resource worth investing in and cultivating.
Over time, expectations placed upon a CEO have increased – a CEO is expected to take a stand on social or environmental issues that matter to people and the planet, but are not always related to short-term profits – or even shareholder expectations.
According to Weber Shandwick/KRC Research:
“CEO engagement today encompasses a range of activities, from a CEO’s internal and external communications to their willingness to be accessible to the media to having an online presence. Taken as a whole, the degree of a CEO’s engagement is something that he or she can control, dial up, dial back, or calibrate depending on the situation.” To become accomplished as the chief organizational spokesperson, the CEO needs to spend the time and attention to ongoing, intensive coaching in that role.
A Reputation Institute 2018 study found that the business drivers of what defines reputation are based on perceptions of 4 factors – influence, responsibility, leadership and management. Perceptions of responsibility is considerably the most important factor. Responsibility is defined in the study as acting responsibly, behaving ethically, and caring about social issues.
The findings from the 2020 Edelman Trust Barometer survey are on the same wavelength – many people around the world want CEOs to more actively address societal challenges in the public arena. For instance, the proportion of people who agree that “It is important that my employer’s CEO speak out on one or more of these issues”:
- 84% Training for jobs of the future
- 81% Automation’s impact on jobs
- 81% Ethical use of tech
- 78% Income inequality
- 77% Diversity
- 73% Climate change
- 62% Immigration
In view of these prevailing perceptions of responsibility, ethics and caring, CEOs need to work on building trust in their own role as spokesperson and the role of their business in clearly engaging in ethical activities that build reputation.
You can read more about CEOs as organizational spokespersons in my article, “CEOs are vital spokespersons, but not trusted.”