Category 'Reputation'

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Explaining America

Government Affairs, Insights, News, Public Affairs, Reputation, Trade

Last night’s election of Donald J. Trump as President of the United States not only stunned the pundits, but confirmed many of the trends we’ve seen in populist movements worldwide. It signifies the potential for dramatic change to come in American policy on issues ranging from foreign policy and immigration to the environment and health care. It appears America chose to turn inward.

Last night’s election of Donald J. Trump as President of the United States not only stunned the pundits, but confirmed many of the trends we’ve seen in populist movements worldwide. It signifies the potential for dramatic change to come in American policy on issues ranging from foreign policy and immigration to the environment and health care. It appears America chose to turn inward.

This was a declaration by working class white Americans, who have suffered a decline in living standard and fear for their future in a globalized world, echoing the Brexit vote in the United Kingdom. It was a profound rejection of the establishment, especially of the mainstream media, which uniformly endorsed Secretary Hillary Clinton. Here are a few thoughts on the implications of the election.

Why this happened:

1. Inequality of Trust and Income Has Consequences — The 2016 Edelman Trust Barometer found that the informed public/elites (college plus education, top 25 percent of income, report significant media consumption) had much higher trust levels in institutions, than the mass population, particularly in the U.S. and UK (respectively). Income inequality correlates with trust inequality, with a 31 point gap between high and low income respondents in the U.S. on trust in institutions. Trump’s victory is a vote of no confidence in institutions and in the establishment.

2. Twitter Triumphs over The New York Times  Trump went direct to the people, mostly through his community of 14 million followers on Twitter. The mainstream media, notably The New York Times, broke stories on Trump’s non-payment of taxes, his failed Trump University and his questionable behavior with women. None of those stories ultimately were enough to change the tide. There was a near-universal set of editorial endorsements of Clinton. Trump used this disparity to his advantage, to claim media bias and unify his base of supporters. Social media coverage captured the angry tone of the country better than mainstream because it relies on a ‘person like me,’ doing away with the hierarchical in favor of the personal.

3. Genuine and Authentic Beats Intellectual and Measured — The short-form, speed and consistency of communication by Trump beat Clinton’s nuanced, detailed and long-form communication. Trump came across as more genuine, Clinton as less than transparent. Trump engaged directly with his community, Clinton spoke through the media in a careful and less frequent manner.

4. Advertising and Celebrities Hurt the Cause — The dominant advertising advantage of Clinton, with spending of 10 to 1 over Trump, reinforced the perception that she was trying to buy, rather than earn, votes. Her emphasis on negative campaigning, focused on Trump’s persona, instead of on economic issues, proved ineffective. The use of celebrity spokespeople may have rallied her base, but among swing voters it only exacerbated the feeling Clinton was part of the establishment, out to protect its own interests.

What must happen next:

1. Business in the Dialogue, Not Bystander — The temptation might be for business to use the Republican dominance in both Houses of Congress and in the Executive Office to seek less oversight in environment, financial services, and health care. This would be a mistake of monumental proportions, seen as the politics of self-interest. His Republican party can be deeply hostile to business. The need for Business to lead has never been more evident, whether on supply chain, pushing for free trade, or on immigration. CEOs should fill a leadership void, educating employees and their communities on issues such as trade while creating movements such as Starbucks’* 100,000 Opportunities jobs program.

2. Business Must Calm the Resentments — The election reflects a deep suspicion about the pace of change, the threat posed by globalization and the rise of the sharing economy. The Trump campaign slogan, “Make America Great Again,” is a simple line that relies on nostalgia. There must be a better explanation of the How and the Why, not simply the What. Any sense of cultural condescension must go away, in favor of a narrative that can be shared with employees and their families.

3. Recognize that Much of Your Audience Rejects Established Authority — The usual cultivation of academic experts and opinion leaders on issues is insufficient, if not counter-productive. We have to find voices who are believed by the average person, from long-tenured employees to passionate brand enthusiasts.

4. Consider the Impact of Nationalism and the Power of Local — We must recognize the rejection of long-accepted brands in favor of upstart locally sourced brands. National identity will be deeply important. The foreign companies seeking to prosper in the U.S. will have to emphasize their community involvement, training programs and local executive talent. There will be a much higher hurdle for brands from developing markets such as China.

5. Every Company Needs to Be a Media Company — Institutions are better served by going direct to end users, establishing a channel for direct dialogue and feedback. It is a world of many to one, not one to many. The predominant axis of communication is horizontal, that mass population relies on search and social, not mainstream media. Our content has to be short-form, shareable and with an opportunity for consumer generated response and engagement.

6. Truth Matters More Than Ever — In the campaign, there were several instances of exaggeration or part-truths. The hashtag #NeverHillary spread lies like wildfire. In a post-election context, there will be a need to prepare for similar pressure through social channels, best answered by passionate consumers and well-informed employees.

In January, in my essay on the findings of the 2016 Edelman Trust Barometer, I suggested that the Grand Illusion of the elites was coming to an end. The illusion was premised on three concepts: that elites had superior information, that elites were acting in the best interests of the mass population, and that someday a few in the mass population could become elites. The results of the Brexit vote and the U.S. election have confirmed the idea that the Pyramid of Influence, with elites at the top holding authority and influence, has been flipped on its head, with mass population now in control and wielding influence.

Historical context is vital. Many were concerned that the election of Ronald Reagan in 1980 would provoke nuclear war with the Soviet Union; ultimately he reached a deal on nuclear weapons with Soviet leadership. The populist sentiment unleashed by Trump has unsettled minority and LGBT populations. We would be advised to remember this is a country of laws, with a three-branch government designed by the Founding Fathers to check any momentary popular impulse. As an American running a global business, I have faith in our system, in our Constitution’s mandate to the balance of powers. President Obama said this morning that “Ultimately, we’re still on the same team.” Gridlock will cause government to walk away from key issues, giving the private sector an opportunity to fill this void. Edelman employees should also get more deeply involved in volunteer work for non-profits, to take up some of these societal challenges. Together, it’s our time to lead.

Richard Edelman is president and CEO.

*Edelman client

What It Will Really Take To Rebuild Our Trust in CEOs. Take a stand.

Australian Business, Insights, Reputation, Trust

This year’s Trust Barometer, our firm’s annual survey, sheds surprising light on how CEOs are perceived as change agents, and suggests that a new model of CEO leadership is emerging – provided CEOs take specific actions. While most CEOs believe that their duty is to centre their communications on the operational and financial aspects of a company, today 78 percent of Australians say that a CEO should be personally visible in discussing societal issues and 74 percent expressed the importance of CEOs communicating about the future of their industry.

This year’s Trust Barometer, our firm’s annual survey, sheds surprising light on how CEOs are perceived as change agents, and suggests that a new model of CEO leadership is emerging – provided CEOs take specific actions.

The Edelman Trust Barometer reveals that the Australian general population trusts business as an institution more than it trusts its leaders.  A majority of survey respondents view business as the institution most capable of keeping pace with the changing demands of the global economy (compared to government, NGOs and media), yet almost two thirds of the people surveyed in Australia (39 percent) do not trust CEOs to do what is right.

This trust gap is partially explained by a misalignment between what CEOs have traditionally needed to focus on – near-term gains – and what people now expect them to care about and act on, which is long-term solutions. For instance, in Australia, most say that CEOs focus too much on short-term financial results (72 percent) and lobbying (49 percent), and not enough on job creation (60 percent) or positive long-term impact (60 percent).

Further, there is a sense that CEOs are unrelatable (64 percent agree), perhaps fuelled in part because they are seen as being paid too much in relation to everyone else (67 percent agree) and because people are looking for leaders to share more openly about their personal values (79 percent).

But there’s a deeper change in play. While most CEOs believe that their duty is to centre their communications on the operational and financial aspects of a company, today 78 percent of Australian say that a CEO should be personally visible in discussing societal issues and 74 percent expressed the importance of CEOs communicating about the future of their industry.

With expectations for business higher than trust in CEOs, there’s a clear need for more engaged and purpose-driven leadership to bridge this critical trust gap.

 

A New Leadership Model: The Engaged CEO

To understand the shifting expectation of business and its leaders, it’s helpful to trace how the public persona of the CEO has changed over the past few decades.

Back in the 1980s and ‘90s, business leaders could engender attention both for their thriving businesses and their status as pop culture icons. And while the current popularity of Donald Trump in the United States might suggest otherwise, the era of the celebrity CEO essentially ended with the recession of 2008-2009.

Faced with growing government regulation and activist investors, CEOs went underground and turned “invisible.” Instead of being present at public-facing activities or weighing in on the issues of the day, chief executives put their heads down and turned inward, focusing solely on increasing revenues and decreasing costs.

It’s not surprising, then, that today 39 percent of Australian Trust Barometer respondents said that they cannot name any CEOs.

The time has come for the invisibility cloak to come off because expectations of business and its leaders are changing. People now expect CEOs to re-balance their attention to near-term gains with action on long-term solutions.

The call for CEOs today to be not just present on the business side, but also to be visible, real and human on the public side is driving the need for what we call Engaged Leadership.

How can a CEO heed the call?

Meeting Great Expectations

If you are a CEO, shareholders may evaluate you based on your balance sheet. But a broader range of stakeholders shape their opinions and decide whether they trust you through four lenses: your actions; your perceived values; how you treat employees (and what they say about you); and how you engage with the community. People told us that the most important attributes to build trust are around “leading integrity” and there are several ways to communicate integrity to key audiences:

Be visible. Your stakeholders fully expect to hear from you frequently and openly about your dual mandate of earning profits and providing societal benefits. Speak beyond spreadsheets and address industry trends and social purpose. According to Australian respondents, 74 percent expressed the importance of CEOs being personally visible in communicating about the future of an industry.

Take a stand. Be purpose-driven and have a point of view on how your company and industry contributes to society in positive ways. Eight in ten Aussies (78 percent) feel CEOs should be personally visible in addressing societal issues like income inequality.

Tell your story. Be open and share your story in a way that is personal, honest and relatable. According to Australian respondents, the following types of information are important to building trust in a CEO: personal values (77 percent); obstacles overcome (63 percent); personal success story (60 percent); education and how it shaped you (53 percent).

Put employees first. Engage employees directly and frequently. Let them serve as your ambassadors and advocates to help tell and humanize the company’s story. Eighty-one percent of Australian respondents agree that employees are a CEO’s most important audience, even more so than investors and analysts.

Make yourself accessible. Express your values and purpose through direct engagement with stakeholders. Fifty-six percent of Australian respondents expressed the importance of placing the customer ahead of profits, and with an increasing number of communications channels there is a wide variety of ways to engage.

The survey does reveal a direct link between CEO awareness and CEO trust. There was a staggering 24 point rise in trust in CEOs when Australian respondents could name CEOs (63 percent of those who could name two or more CEOs said they trusted CEOs). So if they know you, they are more likely to trust you. 

A Meaningful Opportunity

Recently, several global CEOs have stepped forward on a range of important industry and social issues. Mark Zuckerberg (the only CEO who achieved double-digit recall globally in the Trust Barometer) consistently shares a mix of content and commentary across personal, company and industry interests.

These global CEOs know that finding the right balance between attention to financial progress and advancing the societal good truly matters because it has a real impact on business. The Barometer shows that 42 percent of Australians attribute a business’ contribution to the greater good as the reason that their trust in business has grown. Conversely, of those respondents whose trust in business decreased, half cited a business’s failure to contribute to the greater good as the main driver.

CEOs have an incredible opportunity to build and strengthen relationships by carrying themselves and communicating in a way that is transparent and open. As the data indicates, business leadership as usual won’t cut it in today’s world. The remit is now broader, not unlike what citizens expect of a presidential candidate or other major government leader.

But change does not begin and end with the CEO. As Satya Nadella, CEO of Microsoft, noted, “As CEO, I see my role ultimately to be chief curator of culture. Without the right culture, transformation is impossible.” But only an Engaged Leader can create a culture of integrity, setting the right tone through their actions, values, purpose, and employee advocacy.

View the global findings of our Trust Barometer CEO Supplement here: Trust and the CEO

A collapse in trust: Australia’s 2016 Federal Election

General, Government Affairs, News, Public Affairs, Reputation

It seems that in democracies across the world, trust in government is a commodity in short supply.

Back in March, the release of our Trust Barometer showed a sharp decline in trust throughout Australia, including government. Edelman Australia CEO Steve Spurr observed, “trust in all institutions has mirrored the volatility that has characterized recent politics in Australia.”

Less than six months later we have endured an election that saw both major parties receive some of their lowest shares of the popular vote in living memory. Not to mention that over a week later the Australian Electoral Commission is yet to formally declare a winner.

In the week following the election result, Edelman hosted a Soundbites session focused on the underlying causes of the country’s political gridlock, drawing upon the sharp insights of an experienced and deeply knowledgeable panel including Sam Crosby, Executive Director of the McKell Institute; John Scales, Managing Director of JWS Research; and, Nic Jarvis, Head of Public Affairs Edelman Australia.

From Nick Xenophon’s NXT to Pauline Hanson’s One Nation, voters are rushing towards minor parties and single-issue politicians. We are hardly alone in this respect. In fact, we may even be late adopters. Europe has been rocked by a surge in support for right-wing fringe parties; Britain has voted to leave the European Union; and Donald Trump will soon be the Republican Nominee for the presidency of the United States.

It seems that in democracies across the world, trust in government is a commodity in short supply.

The panel agreed that we are moving away from the traditional twin pillars of Australian politics. Whether it was the length of the campaign, a lack of consistent and bold leadership, policy reversals or untrustworthy party leaders, we can no longer take the two-party system for granted.

So what happened?

This election showed us that scare campaigns could still be immensely effective. Malcolm Turnbull barely spoke about Medicare, and never gave any indication that his party’s policy was to privatize it. But did voters believe him? John Scales, Managing Director of JWS Research, shared the results from the first major post-election survey, which his firm conducted. It showed that 38% of voters said Medicare was the most import issue when choosing how they voted. This was second only behind hospitals and healthcare at 39%. By comparison, 30% said that they valued employment and jobs the most.

Unfortunately for the Coalition, 30% said that they valued employment and jobs the most. Only 4% cited innovation. This shows the downside of a major campaign platform that fails to resonate with the needs of voters. As Nic Jarvis, head of Public Affairs at Edelman Australia, asked, can the 50-year-old factory workers really relate to campaign slogans about the need to be agile and nimble?

In another indictment of the Turnbull campaign, JWS Research’s survey found that 23% of voters decided who they would vote for on the day of the election. This has to cast serious doubt over the wisdom of Turnbull’s decision to run an eight week campaign. On the other hand, this data confirms that Labor seemed timed their scare campaign to perfection.

What about the impact on business?

As the panel pointed out, we now have a politically divided country. We have a Coalition government that has claimed victory, yet will have to manage deep dissent within its ranks and rely upon cross-bench support in the Senate. We also have an emboldened Opposition unified under the leadership of Bill Shorten.

With this in mind, foreign investors and companies have reason to fret over foreign ownership laws. A number of the Senate cross-bench have voiced their opposition to foreign ownership and free trade agreements, and last year the Labor party initially set out to block the China Australia Free Trade Agreement. With these factors in mind, some commentators are questioning the likelihood that both houses will ratify the Trans-Pacific Partnership. Even if he does have a mandate to govern outright, Malcolm Turnbull can just about say goodbye to his proposed company tax cut from 30% to 25% over the next decade.

One lesson from the panel was that we need to be more prepared to call out false narratives when we see them. John emphasized Bob Katter’s claims that Chinese investment was taking over the country. It is not. Sam Crosby, McKell Institute’s Executive Director, reflected on a survey he had been involved with in Victoria where a significant number of people surveyed believed that all immigrants entering Australia are Muslim. This is far from the truth.

We will not know what impact the election will have on foreign businesses, foreign ownership and future free trade agreements until we know the full makeup of both houses. Until then we will have uncertainty. We also know that we live in an era where reform minded politicians and party leaders are in short supply.

So what happens now?

The panel uniformly agreed that Prime Minister Malcolm Turnbull will, one way or another, reach enough seats to form government. As has since become clear, Turnbull looks set to win with a majority of one or two seats. Yet this election was anything but a victory for the Prime Minister. His popularity has sunk dramatically since he took over last September, his own party is deeply divided with many against him, he was comprehensively out campaigned by Opposition Leader Bill Shorten, and any majority in the House of Representatives that he ends up with will be wafer thin, bidding farewell to any chance of a progressive agenda.

Not to mention his double-dissolution gamble has backfired spectacularly as the Senate now looks even more chaotic!

Perhaps the one key takeaway from the 2016 Federal Election is that trust in government and politicians is, if not already there, on its way to an all-time low in Australia.

Dexter Gillman – Assistant Account Executive, Edelman Australia

dexter.gillman@edelman.com

2016 Edelman Trust Barometer

Insights, Reputation, Trust

Diverging trust levels within Australian society is at an all-time high, with low levels of optimism and concerns over income inequality make for a complicated election year.

Navigating the Great Dividing Gap

Diverging trust levels within Australian society is at an all-time high, with low levels of optimism and concerns over income inequality make for a complicated election year. A slowing economy, contracting commodities sector, unaffordable homes and a new prime minister every year – trust in Australia must be at an all-time low, right? Wrong – it is actually at a five-year high.

The Edelman Trust Index is the average trust across the institutions of government, business, media and non-governmental organisations.

Within this index Australia has risen from 52 to 63 percent – shifting Australia from a neutral trusting nation to a trusting nation in the 28 country study amongst the informed public.

So what is driving this increase in trust? The big changes are trust in the institutions of business – up a staggering 17 percentage points – and government – up 11 points. The jump for business is one of the biggest changes in the global study, suggesting that the new Turnbull government and a perceived better business environment have given a significant bump to trust.

This improvement in trust is also mirrored in the general population, with an increase from 42 to 49 percent, however, the rise is smaller and shows a different picture from the Australian population, remaining in the distrusting category. Although trust is increasing amongst the general population, it is much higher and rising faster amongst the informed public. If you further analyse the gap by removing the informed public from the full data set, the Edelman Trust Index of this remaining group – that we have named the mass population – is 47 percent. In Australia, a 16 point difference in trust exists between the informed public and the mass population, while globally the gap is 12 points.

This trust gap has a tangible impact on expectations of our economic prospects over the coming five years. The informed public is 10 percentage points more optimistic than the mass population (41 versus 31 percent) although neither score is a ringing endorsement from the country – Australia is the fourth least optimistic nation in the survey after Japan, France and Germany. If expectations set reality, we are in for a tough time.

This is a significant and troubling gap and it is important that we try to understand what is driving this disparity.

First, this isn’t a brand new trend. In 2012, the Australian gap between the informed public and mass population was 14 percentage points. It is interesting then that Australia, tied with the Netherlands, had the second largest gap globally, after Sweden. Other nations are catching up to an issue that the Australian public was already concerned with back in 2012. Unlike the Netherlands and Sweden, who have managed to reduce their trust gap over the last five years, Australia is still growing at 16 percent and is only smaller than the U.S. and U.K.

Second, Australia bucks global trends on trust differentials driven by income differences. When looking at the richest quartile versus the poorest quartile, the gap in trust is only 7 points, one of the smaller gaps in the study.

Finally, if income does not account for the differential, we need to look at the other demographic differences between the informed public and mass population.  These are 1) active engagement with news media and 2) an interest in current affairs. This would suggest that being an active participant in the information economy and engaged in current affairs drives trust within Australia. Conversely, lack of engagement and interest in the institutions that shape our lives leads to distrust and pessimism.

I have no doubt that part of the trust jump among the informed public is due to the survey taking place a few months after the departure of gaffe-prone Tony Abbott, gifting Malcolm Turnbull a bounce that will soon wear off if action does not quickly follow. The data suggests that the answer lies in bringing more people into the information and ideas economy. Turnbull’s recently unveiled innovation policy could deliver just that, but it has to engage and reach the general population to make a meaningful change in Australian society. Given Australia is in the top-five nations most trusted as a global corporate headquarters, helping business capitalise on brand Australia needs to be both a business and government objective.

With an election looming, Turnbull has to be careful that he has a message for every Australian. The recent large and increasing gaps in the U.K, U.S and France between the informed public and mass population have led to the emergence of populist politics that the informed public often does not understand. Turnbull has to ensure that his campaigning and plan for the economy resonates with everyone if he intends to stay in power.

The five key lessons for business in the Trust Barometer when it comes to the general population are:

  • Leaders need to be authentic and human– sharing values and personal challenges are the two largest drivers in building trust in leaders, rather than relying purely on their credentials for the role.
  • Use the right people to convey the message – a person like yourself is as trusted as an academic, expert or spokesperson on a topic (all at 59 percent or 60 percent) despite having no quantifiable credentials to guide opinion other than that they are relatable to your audience. The next most valuable spokesperson is an employee (55 percent).
  • Focus on your response as a business to address income inequality. Australia is the only country surveyed where addressing income inequality is the most important for business to address beyond their day-to-day business and 77 percent believe it is your duty to improve social and economic conditions in Australia as well as deliver on your business results
  • Communicate how you are helping Australians keep up with the times – Australians believe you have more licence to act in this regard (63 percent) than government (44 percent).
  • Choose a broad media mix and invest in your own media channels – search tops the most trusted media source (55 percent) for the third year running. Social media slips from third to fifth as both online and owned media are now trusted more.

It is imperative that NGOs, government, business and the media unite to ensure we overcome the great dividing trust gap that exists in Australia. If this does not happen, we are likely to derail the country’s transition from a resources-led to an innovation-focused economy.

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