A Tall Order for Big Companies
By Doug Pinkham
Public Affairs Council President
September 10, 2015
Why don’t people trust major corporations? And why don’t they give them credit for trying to be responsible and sustainable?
These may sound like simple questions, but they’re not.
That’s because the public looks at big companies kind of like teenagers look at their parents. Corporations are big, powerful and easy to criticize. When they make mistakes or say something controversial, people get outraged or ridicule them. And yet most people are glad big companies are around because they provide important services.
This relationship can be frustrating for corporate leaders. But when companies start preaching about how hard they work and all the great assistance they provide, they sound like, well, me when my two sons were younger; it doesn’t go over well.
To address reputation issues, companies need to understand their unique reputation challenges and the nuances of stakeholder attitudes. A new poll by the Public Affairs Council provides much-needed data in this effort. The Public Affairs Pulse survey of 1,600 U.S. adults sheds light on American attitudes toward corporations, trust differences between industries, the value of reputation and what affects opinions about business.
We Like You, but We Don’t Trust You
Overall, public opinion of business is surprisingly positive. Two-thirds (67%) of Americans have a favorable view of major companies. While this score doesn’t compare to the 92 percent approval rating of small businesses, it’s far higher than the federal government’s 45 percent rating.
Yet most people believe corporate responsibility often takes a back seat to corporate profits. While 45 percent of the public think major companies “generally strike a fair balance between making profits and serving the public interest,” 52 percent disagree. And 18 percent completely disagree with the notion that such a balance exists at all.
In addition, nearly half (46%) of Americans say they have little or no trust in major companies to behave ethically.
Why do large firms still look villainous to many people? It turns out that big business’ positive favorability score is not directly related to corporate responsibility efforts. For the most part, favorability comes from the public’s perception of the usefulness of products and services and the ability of large firms to please stockholders and customers.
Fewer than 50 percent say corporate America is doing a good job supporting local communities, protecting the environment, creating employment opportunities or managing compensation issues.
High Expectations for Corporate Behavior
The survey also finds public expectations for corporate behavior to be extremely high. Ninety-six percent say it’s important that companies make sure employees behave ethically and 93 percent believe firms ought to minimize any negative impact on the environment.
Right behind these expectations are ones that call for a commitment to corporate philanthropy (88%), taking a leadership role in society (85%), volunteerism (83%) and offering to help government solve problems (76%).
In other words, simply being a good corporate citizen is no longer a major differentiator for most companies in most industries. It’s something that internal and external stakeholders require.
Given these attitudes and expectations, large corporations need to understand the full spectrum of factors affecting their reputations. Some companies can ride a wave of good feeling associated with a new technology or service. The Pulse survey shows the technology sector still tops the charts when it comes to being the most trusted industry (though its scores have slipped a bit since 2014 and it is now tied with manufacturing).
Other firms face unique challenges that make it difficult for them to gain the public’s trust. Fairly or unfairly, sectors such as health insurance, pharmaceuticals and financial services start each day with a trust deficit. They must show an extraordinary commitment to quality, service and responsibility to gain — and maintain — the public’s confidence.
Responsiveness Builds Trust
Smart companies have taken corporate responsibility a step further by integrating it into all areas of their operations — from supply chain management to marketing — which has allowed them to build stronger stakeholder relationships. They have also realized that addressing public concerns about issues such as the environment, job creation and compensation practices can improve trust with customers, employees, government officials and others.
Actions speak much louder than words, of course. No amount of pontificating about being the most admired, sustainable or responsible company on the planet will help a corporation when it is in deep trouble. In addition, a major investment of time and resources in reputation-building can be wasted if a company doesn’t do the right thing when facing a serious disaster or scandal. The Pulse survey provides proof of this in its series of questions about crisis management.
According to the poll, when a company makes a mistake related to its products or services, being authentic and transparent are key to restoring the public’s trust and confidence. In fact, in deciding whether to buy from a company in the future, Americans say a firm’s honesty and responsiveness in dealing with the crisis is much more important than its long-term reputation.
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