Roadmap to Building Trust

Presented byRichard Edelman

Bridging Cultural GapsAlfred Herrhausen Society for International Dialogue

17th March 2003

Agenda

1. Quantified differences between U.S. and Europe.

2. Roadmap for bridging cultural differences.

Cultural Differences Are Magnified

Difficult economic environment.

Prospect of war.

Divergence -- left-leaning Europe, right-leaning U.S.

Stronger interest in maintaining local culture.

Companies are put in between home country and need to adapt to local market.

U.S. and European Views are Diverging

Trust in business has increased in the United States, but eroded in Europe.

In the U.S., perception is that business is sound.

In the United States, trust in government has slipped from its post-9/11 high, and remains low in Europe.

“Trust void” in Europe.

NGOs are growing in influence and authority. They are ranked equal to businesses in the U.S., but in Europe outrank business, government, and media.

Media maintains some strength, but is off its 9/11 high.

Trust in Institutions 2003

48% 49%39%

28%35%

45%

25%32%

0%

20%

40%

60%

80%

100%

Business NGOs Government Media

US Europe

Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. [TOP FOUR

BOXES SHOWN]

U.S. Trust in Institutions (Tracked 2001-2003)

44%

36%

20%

41%

35%

27%

44%48%

30%

43%38%

41%39%

28%

49%48%

0%

20%

40%

60%

Business NGOs Government Media

Summer 2001 Winter 2002 Summer 2002 Winter 2003

Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST

THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. [TOP FOUR BOXES SHOWN]

European Trust in Institutions (Tracked 2001-2003)

32%

48%

36%

23%

51%

26%

33%

42%45%

25%

32%

41%

20%

26%

43%

35%

0%

20%

40%

60%

Business NGOs Government Media

Summer 2001 Winter 2002 Summer 2002 Winter 2003

Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. [TOP

FOUR BOXES SHOWN]

Across all regions, technology, consumer durables, and consumer packaged goods sectors command high levels of trust.

However…

In the U.S., scandals and criminal investigations have contributed to making energy, telecommunications, and professional services (including accounting) the least trusted industries.

In Europe, investment/insurance and retail financial services sectors are least credible, while healthcare and airlines are highly trustworthy.

Industry Sectors Under Siege

Benchmark: Trust in Sectors

Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST

THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”.

42%

44%

47%

38%

55%

59%

36%

36%

38%

40%

42%

43%

45%

48%

51%

65%

66%

66%

30%

42%

54%

54%

51%

58%

0% 20% 40% 60% 80% 100%

Telecomm

Energy

Professional services

Healthcare

Retail financial services

Investment & insurance services

Pharma & drug

Airlines

Automotive

Technology

Consumer packaged goods

Consumer durables

US

Europe

Rank order by US data

Opinion leaders report highest levels of trust in the company they work for

In the United States, mega-brands like Microsoft and Ford command higher levels of trust than NGOs like Greenpeace.

But, U.S. tracking data show’s that NGOs are gaining in the ranks.

The most trusted brands in Europe are NGOs, but the gap is closing between the least trusted NGO and the strongest corporate brand.

Certain U.S. consumer brands (notably McDonalds and Coca-Cola) are less trusted in European markets.

However, major European brands (e.g. Deutsche Bank) maintain comparable trust levels in the United States and in Europe.

Brand Evaluator

Brand Evaluator – U.S. 2003

13%16%

25%29%30%

35%36%36%37%

40%41%

45%47%47%

49%52%

54%55%

56%59%

66%69%

0% 20% 40% 60% 80% 100%

HSBC*Oxfam*

Unilever*Royal Dutch/ Shell

Deutsche BankExxonMobil

MonsantoBASF

CiticorpDow Chemical

GreenpeaceAmnesty

NikeMerck

World Wildlife FundPfizerBayer

McDonalds

Ford MotorMicrosoft

Coca-ColaJohnson & Johnson

* “Never Heard Of % ” over 15

Brand Evaluator – Europe 2003

12%14%

16%21%22%

25%27%28%

30%32%

34%34%

36%37%38%

42%47%

49%51%

62%62%

34%

0% 20% 40% 60% 80% 100%

Monsanto*Citicorp*

Dow Chemical*Pfizer*

McDonaldsHSBC*Merck*

ExxonMobilDeutsche Bank

Royal Dutch/ ShellNike

Johnson & JohnsonUnilever

BASFCoca-Cola

Ford Motor CompanyBayer

Microsoft

OxfamGreenpeace

World Wildlife FundAmnesty International

* “Never Heard Of % ” over 15

How do we bridge gaps in a world filled with mistrust, and facing a difficult geopolitical and economic environment?

What can business do?

The Road Map

Must look beyond traditional constituencies of Wall Street, regulators.

Must bridge cultural gaps from the “inside out.”

Speak simultaneously with all audiences – “paradox of transparency.”

Take position on key issues – global trade, intellectual property.

Business’ Action Plan

Inside-out Approach

Opinion leaders report highest levels of trust in the company they work for.

Natural affinity toward companies perceived to be local

Credibility declines as companies are perceived as more “global”

Build brands from the “Inside Out,” -- start with employees

Local subsidiary must be given the latitude to interpret and respond to cultural differences without jeopardizing the company’s core values.

71%

55%

31%39%57%

49%

28%36%

0%

20%

40%

60%

80%

100%

The companyyou currently

work for

Localcorporations

Largenational

corporations

Globalcorporations

US Europe

Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. [TOP FOUR

BOXES SHOWN]

Credibility Declines for Global Firms

Change the Communications Mix

Information conveyed through news media is significantly more trusted than advertising.

Print (business magazines and news weeklies) has high credibility across the board, particularly business magazines.

Radio and TV news are significantly more trusted in Europe than in the United States.

Overall, advertising is not seen as a source of credible information about a company.

Opinion leaders are skeptical of information conveyed through advertising.

17%

20%

45%

58%

37%

44%

52%

4%

5%

20%

32%

35%

45%

49%

0% 20% 40% 60% 80% 100%

Corporate advertising

Product or serviceadvertising

TV news coverage

Radio news coverage

Articles in newspapers

Articles in newsweeklies

Articles in businessmagazines

US

Europe

Types of Media Coverage

Percentage saying source is “Extremely” or “Very Credible”

Rank order by US data

In general, how credible do you feel each of the following sources is for information about a company? Is information about a company that you get from (INSERT SOURCE) extremely credible, very credible, somewhat

credible, or not credible at all?

Advertising vs. Articles in Media

86%

12%

1%

83%

7%9%

0%

20%

40%

60%

80%

100%

I believe informationthat I get from articlesor news stories more…

I believe informationthat I get from

advertisements more…

Neither

U.S. Europe

Please tell me which statement you agree with more.

I believe information that I get from advertisements more than I believe information that I get from articles or news stories

I believe information that I get from articles or news stories

more than I believe information that I get from advertisements

The most trusted spokespersons are those who are seen as having no vested interest in the company.

Across all regions, this includes academics, doctors, and representatives of NGOs.

In Europe, doctors, lawyers, academic, broadcasters and regular employees, are the most credible. There is a much higher regard for media in Europe than the U.S.

U.S. are more skeptical of all audiences, but favor academics, doctors, NGO rep. and the U.S. president.

Those perceived to be in the pay of companies are the least credible spokespersons.

Across all regions, this includes corporate public relations representatives, entertainers/athletes, and union reps.

Use Outside Experts

Credibility of Information Spokespersons

Percentage saying source is “Extremely” or “Very Credible”

Rank order by US data

16%

14%

19%

26%

40%

48%

33%

31%

40%

43%

54%

1%

7%

8%

10%

13%

13%

14%

22%

23%

25%

32%

18%

24%

28%

46%

26%

36%

37%

43%

0% 20% 40% 60% 80% 100%

Entertainer/ Athlete

Company's PR rep

Union rep

Legislator / parliamentarian

Broadcaster

Lawyer

CEO of company

Average person, like yourself

Banker

Religious leader

Regular employee of company

President/ Prime Minister/ Chancellor

NGO rep

Doctor or healthcare specialists

Academic

US

Europe

In general, when forming an opinion of a company, if you received information from (INSERT PERSON) about this company, how credible would the

information be? Would it be extremely credible, very credible, somewhat credible, or not credible at all?

A single source of information no longer exists.

Multiple stories in the media generate higher levels of trust than single sources.

Primary players in the “web of trust” are friends, family and independents.

Opinion leaders are more likely to trust a regular employee than a CEO to give them credible information about a company.

Use Multiple Channels

Frequency of Communications

64%

77%

79%

87%

0% 20% 40% 60% 80% 100%

I am skeptical about the truthfulnessof communications if I only see, read

or hear it one time

I usually don’t believe something thefirst time I see, read or hear it; I am

more likely to believe something I see,read or hear from many different

sources

Europe US

Percentage saying they “Agree” or “Strongly Agree”

Credibility of Communications Sources

26%

27%

32%

34%

33%

42%

51%

40%

11%

13%

19%

19%

25%

25%

26%

35%

38%

35%

0% 20% 40% 60% 80% 100%

Information conveyedby CEOs/ CFOs

A company Web site

Communications issuedby company

The Internet in general

Information conveyedby regular employee

Communications issuedby third parties

Stock or industryanalyst reports

Friends & family

Colleagues

US

Europe

Rank order by US data

Percentage saying source is “Extremely” or “Very Credible”

In general, how credible do you feel each of the following sources is for information about a company? Is information about a company that you get from (INSERT SOURCE) extremely credible, very credible, somewhat

credible, or not credible at all?

Cultural bridges are built on trust, openness, transparency and dialogue

Local subsidiary must be given the latitude to interpret and respond to cultural differences without jeopardizing the company’s core values.

Business retains enough credibility in the United States to take a leadership role. There is a clarion call to European business to step up to fill a trust vacuum in the region.

Move from a “BUY IT” to a “BE IT”

Engage with critics, such as NGOs

Interact with multiple stakeholders and go outside traditional constituencies

Inside-out approach – start with employees

Deliver your message repeatedly, across multiple channels

Trusted relationships are built by engaging audiences in dialogue, not the traditional model with uses advertising for message frequency and control.

Conclusions