Trust & Purpose Survey 2011

EVIDENCE-BASED COMMUNICATIONS. INFORM. MONITOR. MEASURE. SUCCEED

2

Burson-Marsteller commissioned Penn SchoenBerland (PSB), the global market research andconsulting firm, to carry out the Trust & Purpose survey. PSB completed 3,161 online interviews among the general population in the following countries from 5 May to 16 May, 2011:Belgium, Denmark, Estonia, France, Germany,Greece, Italy, The Netherlands, Norway, Portugal,Spain, Sweden, Switzerland and United Kingdom.Data was weighted to age and gender demographics for each country.

ABOUT THE SURVEY

3Introduction

We live in turbulent times. The continued uncertainty stemming from the global economicand financial crisis that erupted in 2008, togetherwith the corporate and banking excesses thatwere uncovered during this period are having a fundamental impact on consumer confidence.The result - as shown by our first European Trust &Purpose survey - is a steep decline in trust in arange of organisations.

It is not an exaggeration to say that the downturnhas had a catastrophic impact on trust in corporationsand the people who lead them. The financial crisisand banking collapse have transformed the waypeople view companies and corporate leadership.And while trust in business is not high, it is even lower in media, central government and religious leaders.

Trust in business varies and depends on a combination of factors. Overall, Europeans trustlocal companies the most, national a little less andinternational least of all. Similarly, people trustfront-line staff to tell them the truth about a corporation, as opposed to its CEO, who is seen asmotivated by personal profit and greed. Trust is nolonger something that companies and their corporate leadership can take for granted – it has to be earned by nurturing a close relationship withconsumers and other stakeholders and consistentlyproving a commitment to the values that are important to them.

So what can business do to re-build trust with theirstakeholders? The study shows that over two thirdsof people believe that having a strong CorporatePurpose is important. Almost 80% say they wouldrather pay more for products and services that are delivered and produced responsible and fairly.However, the challenge for companies and thosewho communicate on their behalf, is that a majority

sees companies as dishonest and believes thatmost communications from companies are lies.

In 2010 we carried out our first Purpose ImpactRanking together with IMD business school.The study ranked 213 European companies in 10industries according to the effectiveness of theirCorporate Purpose. It also carried out analysis whichdemonstrated that a strong and well communicatedCorporate Purpose can impact financial perfor-mance by up to 17%. Corporate Purpose requirescompanies to be honest about what they do – andhonesty builds trust. So Corporate Purpose is a fundamental part in rebuilding the trust betweencorporations and the people that matter to them.

The European Trust & Purpose survey shows thatrebuilding trust is one of the most fundamentalchallenges faced by companies operating in Europe.Purpose helps guide companies by acting as thestandard against which all business decisions arevalidated. Companies need to show they are trust-worthy – not just say it. Companies with a Purposelook at the imprint they and their products leave onsociety as a whole, including their employees andcustomers. Their Purpose is embedded into theiroverall corporate strategy, well communicated andunderstood both internally and externally. Having a Corporate Purpose and sticking to it, even whendeviating from it would be more convenient orfinancially rewarding in the short-term, builds trustover time and companies who are successful atcommunicating their Purpose will be the leaders in the challenge of restoring trust.

Jeremy GalbraithCEO, Burson-Marsteller Europe,Middle-East & Africa

4 Local is best

While local businesses are most trusted, overalltrust in companies and organisations is very low.CEOs and central government are the leasttrusted and trust in them has decreased significantly compared to two years ago(chart 1).

The decline in trust in corporate CEOs is the mostmarked in Spain, Portugal and Sweden (chart 2).Least trusting of central government are Portugal,Greece and Spain. Trust in central governmentis also low in Belgium (at the time the survey was carried out Belgium had been withoutcentral government for 11 months).

Over 50% of Europeans are more likely to trustcompanies from Europe. In terms of which foreign countries are most trusted, companies fromAustralia, Japan and the US are the most trusted, withtrust for companies from the BRIC countries beingvery low very low. 64% of respondents say they don’ttrust companies from Russia (charts 3 & 4).

5

Chart 1

Local companies

& businesses

21

Local companies and businesses

Front line staff

National companies and businesses

International organizations(e.g. United Nations)

Nationally-ownedcompanies

International companiesand businesses

European Parliament

European Commission

My local government

Foreign-owned companies

Corporate CEOs

Central government

UK

25

-10

-35

-14

-25

-40

-51

-52

-43

-56

-54

-53

FR

19

-5

-24

-10

-16

-37

-27

-31

-23

-36

-49

-46

IT

-10

-7

-16

0

-24

-19

-16

-21

-44

-19

-44

-52

DE

38

17

1

-11

13

-27

-40

-41

-14

-46

-29

-44

SP

6

-1

-6

-7

3

-22

-23

-18

-46

-26

-68

-77

SE

25

-32

-7

-23

-22

-45

-44

-47

-41

-38

-59

-47

NO

26

12

0

9

-18

-39

-51

-41

-18

-49

-52

-46

NL

34

14

-8

-13

10

-14

-34

-33

-12

-36

-39

-27

CH

41

17

23

-8

22

-36

-30

-23

-15

-36

-52

-48

BE

17

-11

2

-19

12

-24

-26

-19

-39

-43

-37

-68

EE

-16

15

-20

-21

0

1

-12

-5

-38

-58

-37

-47

DK

42

12

4

3

-13

-25

-41

-42

-11

-46

-42

-26

GR

7

3

-18

-53

-78

-17

-29

-40

-65

-16

-51

-78

PT

-7

-43

-20

-3

-11

-5

-13

6

-9

-30

-64

-84

1

-9 -11 -12

-28-32 -33

-36

-48 -51

Frontline staff

National companies &

businesses

International organizations

Nationally-owned

companies

International companies &

businesses

European Parliament

EuropeanCommission

Foreign-owned

companies

Corporate CEOs

Central government

Provenance is a key factor in trust in business and organisations

• While local businesses are most trusted, overall trust in companies and organisations is very low.CEOs and central government are the least trusted

Chart 2 Most trusting of companies and organisations per country

• Overall, trust is very low across all markets towards industries and companies

Compared to two years ago, are you more or less trusting of..? (Showing Among All, Net Trust (Much more + Somewhat more trusting) – (Somewhat less + Much less trusting))

Compared to two years ago, are you more or less trusting of..? (Ranked by Among All, Showing Net Trust (Much more + Somewhat more trusting) – (Somewhat less + Much less trusting))

-33

My local

government

6Chart 3 Trust is strongest on the home front

• Trust is far stronger for national companies over foreign-owned ones through over a quarter say the origin does not matter

Which of the following is closer to your opinion? (Showing Among All)

66

34

12

2959

I would be lesslikely to trustcompanies thatare foreign-owned

I am more likely totrust companiesthat are fromEurope

The origin of a company does notmatter to me; I trustthem all equally

I am less likely totrust companiesthat are fromEurope

I would be more likely totrust companies thatare foreign owned

Chart 4 Australia, Japan and the US are the most trusted countries

• Australian companies rank the highest• Trust for the BRIC countries is very low

Trusted Unsure Not trusted

56

55

48

21

18

14 24

14

12 22 64

29 56

61

20 61

26 54

25 27

22 24

28 16

Thinking about foreign-owned companies, how much do you trust companies from each of the following countries?(Showing Among All)

7The reputation of traditional thought leadershas been severely damaged – honesty and good value are importantMany industry groups are more trusted than tra-ditional thought leaders. Trust in computer tech-nology, supermarkets, food & beverage and auto-motive is higher than in media, central govern-ment, religious leaders and politicians; religiousleaders and politicians are even less trusted thanthe financial services sector. Social Media isslightly less trusted than traditional media.

The most important characteristics for consumerswhen considering which companies to buy goodsand services from are “honest and trustworthy”and “products and services are good value”. Fairtreatment of employees and high quality productsand services are also important (charts 5 & 6).

Charts 5&6 Many industry groups are more trusted than traditional thought leaders

• Technology, food and beverage and car companiesare the most trusted, traditional community leaders (NGOs, the media, government, politiciansand religious leaders) are least

Honest & Trustworthy and good value are important when purchasing products

• People tend to focus on the basics of good valueand honest and trustworthy companies over tra-ditional CSR and philanthropy

12

14

9 55 64

10 52 62

7 49 56

7 48 55

8 49 47

6 38 44

55 69

59 71

6 35 41

4 34 38

7 31 38

3 25 28

3 21 24

4 20 24

2 11 13

Computer, Harware& Software

Online sercices(Google, MSN,...)

Supermarkets

Food

Beverage Manufacturers

Automotive

NGOs

Entertainment& Television

Energy Providers

Media

Social Media(Facebook, Twitter,...)

Financial Services

Government

Religious Leaders

Politicians

40

39

28

28

23

19

18

18

16

13

11

10

9

5

5

3

Honest& trustworth

Products & services are good value

High quality products & services

Treats its employees fairly

High standards inproducts & services

Environmentally conscious

Socially responsible

Useful products & services

Inexpensive products & services

Ethical executive leadership

Cares aboutthe community

Strong corporate purpose

Innovative

Hires & promotes minorities & women

Good growth in revenues & profits

History of charitable contributions

For each of the following, please indicate how trustworthy you consider each group or industry to be...? (Showing Very/Somewhat Trustworthy on a four-point scale for Among All)

Thinking about what is important to you about companies,which of the following would you say important whenconsidering which companies to purchase products or services from? (Showing Among All – Respondents allowed to pick up to three)

8 CEO Reputation has taken a severe hit

Corporate leadership is under attack as neverbefore. Banking bonuses, the financial crisis andgolden parachutes have all undercut trust inCEOs.

Overall, CEOS are seen to be motivated by perso-nal profit and are seen as less trustworthy thanemployees. Three-fifths believe that CEOs are lesstrustworthy than the average employee andnearly half believe that their motivation is perso-nal profit. Only 3% believe that executives aremotivated by a desire to contribute to societythrough delivering quality products or services.

The lack of trust in CEOs also means that consu-mers want to hear about a company’s values fromits front-line staff rather than from the board orsenior corporate leadership.

9Trust and Corporate Purpose

The phrase most closely identified with CorporatePurpose is “Balancing making money with actingresponsibly” (chart 7). This fits with the theme ofour 2008 survey which concluded that companiesthat deliver on Purpose & Performance* are viewed as role models and are more trusted.

Two thirds of respondents in the European Trust& Purpose survey said a strong Corporate Purposeis important and close to 80% said they wouldrather pay more for products and services thatare delivered and produced responsibly and fairly(chart 8) – this does not mean they all would butit is an important indication of consumer intent.While consumers believe a company’s highestpriority should be its consumers, the majority feelhowever that companies put profits first. Evenmore worrying, many feel that companies havebecome more dishonest over time and that mostof their communications are lies (chart 9).Companies’ websites are regarded as less trust-worthy than personal contacts, third party watch-dogs, search engines and national TV news.Corporate websites are perceived as dishonestand externally-focused, designed only to sell pro-ducts and services.

The 2010 Purpose Impact Ranking found thata strong, strategically coherent and well communicated Corporate Purpose is associatedwith up to 17 % better financial performance andbuilds trust with stakeholders. CommunicatingCorporate Purpose more effectively is also a growing trend as companies increasingly understand its impact on financial performanceand the importance of their social role. CorporatePurpose explains up to 8% of the variation of thefinancial performance of leading European companies within the same industry.

Corporate Purpose communication is therefore an increasingly important strategic tool forcompanies and one that few business managersand corporate communications departments can afford to ignore – especially in these timesof declining trust.

Chart 7 Corporate Purpose goes hand-in-hand with business performance

• While acting responsibly is important, money making is seen as part of the definition

31

22

18

17

11

Balancing making money with acting responsibly

Making money and driving profits

A company's guiding principles for making decisions beyond profit making

Producing goods and services for their customers

The organisation's approach to doing business

* In 2008 Burson-Marsteller conducted a proprietary survey on the theme of Purpose & Performance in cooperation with Penn, Schoen & Berland in11 European countries amongst 200 leading corporate executives and opinion-makers (CEOs, presidents, government officials, financial analysts, academics,NGOs, journalists, and communications heads / managers). The research evidenced that 40 % of a company’s reputation is determined by its Purposeand 60 % by its Performance. Striking a balance between substance and responsibility in a world where corporations are expected to deliver on profitand ethics is imperative. However, there is an in-built tension between the two objectives, and management must find a way to strike the right balance.

Which of the following do you think most closely defines ‘Corporate Purpose(Showing Among All)

10

Chart 8

68

32

23

77

A company that has astrong corporate purposeis important to me

I would rather pay more for products and services that aredelivered and producedresponsibly and fairly

I would rather payless for productsand services and notknow about howthey are deliveredand produced

A company's corporate purpose is not importantto me

Responsibility and fairness are important

• A strong corporate purpose is important• And consumers say they would rather pay more for products and services that are produced responsibly

Chart 9

61

39

5644

2872

Generally, corporationsand their spokespeopleare dishonest, and mostcommunications fromcompanies are lies

I'm generally relaxedabout the data thatcompanies store on meand my family, as theytypically only use it formarketing and customerfeedback

Companies weremore trustworthy

when I was a kid

Companies are more trustworthytoday than whenI was a kid

I'm generally suspiciousabout the data thatcompanies store on meand my family, as I thinkit can often be used in a way that infringes onmy privacy

Generally, corporations and their spokespeople arehonest, and mostcommunications from companies are the truth

And companies are seen as dishonest

• Many feel that companies have become more dishonest over time and that they cannot be trusted with personal information

Which of the following is closer to your view?(Showing Among All)

Which of the following is closer to your view?(Showing Among All)

1 2 3 4 5

Identify internal and external

stakeholders – thesewill range from

senior managementand other employees

to consumers,regulators, media

and other audiences.

Develop yourCorporate

Purpose - what isour “reason for

being”? What is thestandard against

which our businessdecisions are

validated?

Agree and communicate

Purpose internally –and ensure it is

received and understood.

Remember thatemployees are yourAmbassadors and

most trusted spokesmen and need

to buy into the strategy and

message first.

Integrate Purposewith the broader

corporate strategyand link it to all

key strategic initiatives.

CommunicatePurpose externally to stakeholders – and ensure it is

received and understood.

Key steps to agreeing and communicatingCorporate Purpose 11

Jeremy GalbraithCEO, Burson-Marsteller Europe,Middle-East & Africa+ 32 2 743 66 11jeremy.galbraith@bm.com

Burson-Marsteller EMEA 37 Square de Meeûs B-1000 Brussels + 32 2 743 66 11 www.burson-marsteller.eu