Before I head off to Montreux for a few days’ rest, here’s a quick response to today’s FT report on Edelman’s trust survey’s mid-year update. Once again the survey’s findings are topsy turvy, particularly when it comes to how Edelman interprets its own data.
First, I’ll risk summarising Richard Edelman’s take on the survey’s findings as reported by the FT:
(1) Trust in government and business used to be inverse, now they’re less so.
(2) The public trust firms which focus on good products and happy employees rather than merely on shareholder value.
(3) Firms need to talk more about their value to society (not merely) shareholders, and they (firms) don’t like that.
But (and more to my taste) the survey also says that the market is believed to be as likely to contribute to a return to growth as business or government are. And trust in business is back, though trust in government is back even more.
Edelman’s know I am friendly and admiring critic of their surveys, and the following remarks are in that vein.
On (1), it would be a bit surprising if people weren’t a bit wobbly about business in 2008 and a bit less wobbly now. And presumably they feel they can trust business more because they have learned that they can trust government to do its best to fix business’ problems (especially if it poses systemic risk). It isn’t a surprise that people enjoy wondering whether they trust business or government more, but of course business and government are mutually dependent. That was always so, even if the balance between the two shifts as circumstances do. Moreover, different societies frame that relationship differently (in some, tension is regarded as productive, in others, symbiosis is.)
On (2), isn’t this the same thing as saying that people now trust firms that they believe are trustworthy: ie, likely to be building long term value without social controversy rather than going in for spivvy short termism? It doesn’t surprise me that people are looking for wider signs of trustworthiness granted that share prices have proved an unreliable indicator.
On (3), firms may indeed need to talk about their resilience and sustainability; that is, their commitment to long-term shareholder value. But that rather contradicts Richard Edelman’s downgrading of shareholder value’s importance (or reframes it). Long term business sustainability is probably a good proxy for social value and approximates to the kind of social value a firm can actually think and act – talk – about usefully. This will only apply to some firms. (Not, for instance, to a firm designed to produce one film and then disband.)
We should also look beneath the surface at the relationship between trust government and business in places like China, a one-party dictatorship, and the UK, a Western democracy.
I fear that Edelman make two opposite mistakes. On the one hand, they sometimes take too much of the opinions they record at face value. Not least when they diss trust in the media, which I have long-argued is a popular sport that people don’t take seriously. The media remain the main vehicle for formulating a picture of the wider world precesely because it is more trusted than not. On the other hand, Edelman believe business need to engage more and more widely with society, and beyond commonplace business criteria (such as shareholder value). For me, this forces firms into talking nonsense. I’d rather firms framed their commercial objectives as clearly as they can, including a desire to thrive in the long term (if they do).