Ipsos MORI Thinks

Trust and business

CARL PHILLIPS Research Director

The widely accepted ‘narrative’ is that public trust in business is broken and getting worse. This has been the established ’truth’ for several years now and has been supported by a wide range of publications, academic institutions, and consultancies, as well as headlines. The LSE’s Business review, for instance, points out that the value of trust, that we all “depend in our social, business, financial, and political affairs” has been devalued. The 2017 Edelman Trust Barometer press release claimed that “trust is in crisis around the world”. This narrative extends to all sectors – business, government, NGOs, and media.

Intuitively, of course, the crisis narrative feels right, which is no doubt why it has been accepted so widely. How could the many corporate scandals of the last 20+ years in various sectors have not dented levels of public trust more generally? This is especially plausible when you overlay the major changes in the media landscape that have occurred over the last forty years – starting with the advent of 24-hour news in 1980 and culminating in the current social media landscape. Together, these factors have created an environment where public scrutiny of companies has never been easier, and rolling news ensures that reputational crises are not easily, and quietly, dealt with.

But is this narrative of broken trust in business really borne out by the evidence? If it is, we would be able to see clear evidence of ruptures in long-term trust or confidence in business trends. Of course, this way of thinking infers a direct link between trust in individual businesses or sectors and trust in business in general. But judging by the available evidence, this link does not hold that well. When we zoom out from specific companies or sectors and take the long-term view, we predominantly see periods of stability – including over the last decade – punctuated by times of change (notably a decline around the turn of the century). That said, the story is not necessarily a positive one, so the accepted narrative is at least partially correct.

A crucial caveat is that long-term trends in trust specifically are few and far between, which forces us to look at trends for other, similar concepts such as confidence in business as a proxy for trust in business. While not perfect, the interconnectedness of the two concepts is such that any change in one will likely be mirrored (directionally rather than exactly) in the other.

Let’s start in the US where Gallup has been running its Confidence in Business tracker since 1973. Over the period 1973 – 2008, confidence in big business (% a great deal/quite a lot) has fluctuated from a high of 34% in 1975 to a low of 16% in 2009, although the year on year changes have been small and only twice being greater than 4 points. Over the same period the proportion of people who say they have very little or no confidence in business has fluctuated similarly, with similar, low levels, of year on year changes. Crucially, in 2001 those with very little or no confidence in business started to dominate, and they have outnumbered their more positive counterparts ever since. Clear evidence of the accepted narrative? Partially, yes, a negative viewpoint is certainly stronger than positive, but this has been the case for nearly 20 years with no significant change – certainly attitudes towards business are not getting worse. A very similar pattern can be seen if you examine the “confidence in major companies” data (also starting in 1973) collected as part of the General Social Survey, or GSS, run by NORC at the University of Chicago. It’s also worth noting that since the late 1990s Gallup has consistently found a clear majority say they have confidence in small business, at least twice and even three times the number who say they have confidence in big business, and this trend shows no sign of decline over that time (if anything, a
marginal improvement).

Looking at the European Values survey data (% a great deal/quite a lot, confidence in major companies) shows a similar trend to the US – from a high in the early 90’s to a more negative position today. In Europe there does seem to be more evidence to support the narrative of a decline in trust, certainly in Germany confidence in major businesses has nearly halved between the early 90s and the late 2000’s, and other countries such as France and Italy have also seen a sharp decline. However, although there is a decline on average since the early 1990s, some countries are stable (such as Norway and Ireland), and others even see some improvements, such as in Denmark and the Baltic states.

Edelman’s own figures also show that there has been little change when it comes to levels of trust in global business over the last five years. Even when breaking it down further to look at individual sectors, the story is one of stability rather than decline.

Despite this it is certainly possible to find data that challenges this picture of stability or gentle decline. For instance, looking at confidence in business across China, Germany, India, Japan and the US using data from the World Values Survey tells a different story where the US opinion is much more volatile and German opinion is far more stable.

What does this mean for our understanding of trust and how it has changed over the last few decades? Critically it seems to indicate that trust in business is not in constant freefall around the world as some people may assume – it has periods of stability (even sometimes rises) and different patterns in different countries, and this is despite sectors like banking and technology experiencing major problems with trust during the time periods we are looking at. Furthermore, it looks like the major shift in opinion, from being generally more positive to being generally more negative, towards business happened nearly 20 years ago rather than recently, and that since then opinion has changed little.

This stability could well reflect the idea that the system represented by ‘business’ is still seen as trustworthy, despite parts of it failing periodically. After all, companies build trust daily with their customers through routine interactions, and the vast bulk of businesses are competent and trustworthy in their actions.

So, despite the scandals that have rocked individual companies, and entire sectors, over the past 40 years, trust is more stable than most of us might have believed. In fact, while it is tempting to regard trust as unstable, and that we are in the midst of a burgeoning trust crisis on the macro level, the evidence does not seem to be there.

That said, it is certainly true that, right now, the public across much of the world is more likely to say that major industry sectors are untrustworthy than trustworthy. Using data collected from the Ipsos Global Trustworthiness Monitor we can look across the world and see not only where different sectors are seen as trustworthy (or not) but also how they perform across the eight factors that we believe are critical to any proper understanding of this metric.

Let us start with trustworthiness overall. The most notable finding is that despite a genuine annus horribilus (otherwise known as “techlash”) the technology sector is the only one of the five sectors measured which is rated as more trustworthy than untrustworthy. That said, two fifths (45%) of the public on a global level opted for the mid-point on the scale, or did not know, suggesting that a sizable minority are neutral or have yet to make up their minds.

The picture for the other sectors is bleaker – from a global perspective, more people see the Pharmaceutical, Oil & Gas, Banking and Food & Drink sectors as untrustworthy than trustworthy. It is little wonder, therefore, that the narrative tends to be one of “crisis in trust”. Global averages also conceal substantial regional differences that need to be highlighted.

Firstly, it is certainly true that attitudes in North America and Europe to the Oil & Gas, Banking and Pharmaceutical sectors is poor – all three are seen as far more untrustworthy than they are trustworthy. The Food & Drink sector, while not attracting the same level of opprobrium, is still net-negative when the public rate its trustworthiness. There is some variation in attitudes between North American and Europe; the Europeans rate the Banking sector more negatively than North Americans do, while the reverse is true for the pharmaceutical sector. Neither is surprising given the profile of the pharmaceutical sector in North America (especially the US) and attitudes to the banking sector in Europe post-2008.

In direct contrast are the APAC countries where each of the sectors measured is regarded as more trustworthy than untrustworthy. Some of this is cultural difference – the region contains several countries where it is ‘normal’ to rate companies and sectors more positively than other parts of the world. Furthermore, the online nature of the sample may also mean that more educated groups are interviewed in those countries, who may be more trusting.  That said, the largest group in the population prefers to express neutrality than a positive or negative opinion on each of the five industry sectors.

The tech sector aside, the story in LATAM is interesting. While LATAM respondents see Banking and Oil & Gas as untrustworthy, for the other sectors the population is evenly split between positive and negative views.

So, what is going on? Why is the tech sector, despite the cascade of negative media attention over the past 18 months, still seen as more trustworthy than these other sectors? Perhaps it is the accumulated baggage that these sectors have, given their age relative to the tech sector, that is dragging their scores down? Or perhaps they simply lack the profile of the tech sector?

Looking at how the tech sector performs across the trustworthiness drivers goes some way to explaining why tech leads the other sectors. Simply put, the tech sector out-performs the others on every metric measured – they are comfortably the sector most regarded as being good at what it does and being well led. Furthermore, and despite their year of bad press on this issue, fewer people agree that the tech sector would try and take advantage of them than with the other four sectors measured.

Potentially more interesting, though, is that while many people were unable to give an answer one way or the other across the tech sector’s trust drivers, the sector also has, relative to the other sectors at least, very few people disagreeing with any of these metrics. That the tech sector is open and transparent about what it does, its worst score, was disagreed with by only 23%, while the other sectors all have scores above 30% on at least one metric. Oil & Gas and Banking both have five.

Simply, when it comes to two core areas that drive trustworthiness, role competence and reciprocity, the tech sector outperforms their older peers on a global level.

Looking across the trustworthiness drivers for the other four sectors is revealing. While none reach the same levels of performance as the tech sector, around two-fifths agree that these sectors are good at what they do, and around a third agree that they are well led. This is unsurprising given that, whatever people may think of them from a moral viewpoint, all these sectors are very successful from a financial perspective. Clearly, role competence is not
their issue.

Where things begin to be problematic for these sectors, and Oil & Gas and Banking in particular, is their behaviour, especially in their relationship with the public. Firstly, over a third disagree that these two sectors act with the best of intentions, share the same values as the public or behave responsibly. Secondly, a third disagree that either sector keeps its promises, while even more (45% and 52% respectively) agree that the Oil & Gas and Banking sectors would try to take advantage of them if they could. On top of that, neither are regarded as open and transparent. Clearly, both sectors have multiple, overlapping issues that are dragging down their trustworthiness scores.

The Pharmaceutical and Food & Drink sectors outperform Oil & Gas and Banking because they have fewer weaknesses. For both sectors their key areas of negativity, where disagree outweighs agreement, relate to transparency and the belief that they would take advantage of the consumers if they could. However, both are net positive when it comes to sharing values, behaving responsibly and keeping promises – all issues that Oil & Gas and Banking are struggling with.

It is hard to see what steps these sectors need to take to improve things, as their areas of weakness are both hard to define in a real-world situation and hard to disprove, even when defined, to sceptical members of the public. A policy of radical transparency, already popular and commonly advocated for as a business strategy, will help to address some of these issues but only if the public believe such transparency is genuine. Dealing with the issue of keeping promises may be impossible in the short term, as that sentiment is likely deep-rooted and related to historical behaviour. Time may be the only salve for that damage to the sector’s reputation. On the other hand, understanding what the public wants from, say, the Oil & Gas sector, when it comes to sharing common values in responsible behaviour and intent almost certainly boils down to maintaining a balance between a sector’s traditional business model and the public’s changing expectations about that sector. In such a situation, a sector, or a company within it, may choose to accept relatively poor trustworthiness ratings in the short to medium-term because their ability to fundamentally change their behaviour is limited to the long term only.

A key recommendation, however, is for the sectors to focus on converting the people who are neutral towards them, rather than those who are negative or who rate the sectors as untrustworthy. Compared to other metrics we commonly use, such as favourability, the threshold to rate a sector trustworthy or untrustworthy is high and many people instead choose to sit on the fence either consciously or through ignorance of the sector or its issues. Over two-fifths of the public fall into the neutral category across each metric – a vast pool of potential for any sector willing to change their behaviour and also capable of convincing the public that they are acting in good faith and for the long term.

“In the U.K, nurses are the most trusted profession – 96% of us trust them to tell the truth – followed closely by doctors at 92%IX”

Trust: The Truth?

We decided to write this report because we wanted to test if the prevailing narrative matched the data. The ‘truth about trust’ is that trust is complex, and takes many forms (many of these forms are not in crisis or decline). Without some degree of trust society simply would not function…