Corporate trust on the rise

Despite Enron, WorldCom and Martha, Canadian trust in global corporations is steadily rising - showing that corporate governance and 'the new PR' can be very good for business

Something strange is going on.

Despite the brisk stream of corporate scandals over the last several years – from Enron to Hollinger to Martha and points in between – consumer trust in big companies is on the way up. At least, that’s what numbers out of the World Economic Forum say. Maybe corporations are getting it right after all.

In a 2004 study done for the WEF by Gallup International and GlobeScan, trust in global companies increased between 2000 and 2003 in 10 out of 18 countries measured. Canada was one of those 10. Trust went up from 46% in December 2000, which was just prior to the Enron scandal, to 48% in 2002 and then to 53% in 2003.

Blame it on corporate governance, says Chris Coulter, director of corporate social responsibility research at Toronto-based GlobeScan. ‘[Since the Enron and Worldcom scandals] a lot of stuff has happened, particularly in the States, around corporate governance issues and people going to jail,’ says Coulter. ‘And high-profile things like Martha Stewart resonate with the public. All those visible signals, along with all the SEC regulations, signaled to people that stuff was being done.’

The trust figures represent two metrics: those who say they have ‘a lot’ of trust in global companies and those who say they have ‘some trust.’ Coulter says that in all countries tracked, the group that says the former is still ‘quite small,’ suggesting that there’s work to be done before anyone uncorks the bubbly.

‘No one really trusts anyone a whole lot,’ he adds. ‘But in Canada [54% is] a good number.’

‘It’s certainly heartening and what it suggests to me is that Canadian companies are doing the right thing,’ says Geoffrey Rowan, managing director of Toronto-based Ketchum Public Relations. ‘They saw what happened in the U.S. and how devastating [financial scandal can be]. They saw what happened to Arthur Andersen. This was a huge firm which, based on a reputation issue, went out of business in a very short period of time.’

Other observers, such as David Dunne, professor of marketing at the University of Toronto, have different explanations for why the numbers are going up. ‘I would guess that in an era when corporations seem so much more powerful than governments, that maybe [consumers are] placing their trust where they can, as opposed to where they traditionally would have – in government.’

Whichever explanation one chooses, marketers are saying they’re taking the issue of corporate governance seriously and adjusting PR strategies to go beyond issuing press releases and denying wrongdoing.

Ralph Marranca, senior manager, media and PR at BMO Financial, says the bank has made a conscious effort to pay more attention to its PR activities along the aforementioned lines.

‘Where we’ve paid most attention is in terms of how we do our business and understanding what our principles are and adhering to those.’

He says that means explicitly demonstrating an adherence to high standards, but more importantly, proving that you’ll do what you actually say, ‘whether it’s in terms of commitments and the way you deal with customers, or whether it’s simply in the way you manage your operations.’

Having standards in place that are clearly understandable to the public and being open about how the business is run are also critical to good PR, he adds.

If this sounds familiar, that may be because it’s reminiscent of the long-running campaign by Montreal-based Standard Life and its signature TV spots that feature Standard Life employees ruminating on their commitment to ‘do what they say.’ Trust is the central theme of the spots.

Maxime Bernier, VP corporate affairs and communications for Standard Life, says the company did internal and external research to come up with this insight and that it wasn’t precipitated by any trouble. ‘It’s very selfish in a sense – it was not oriented because ‘in our industry you have some scandals’ or something like that.’

In fact, Bernier insists the insurance industry is relatively free of public mistrust because it is so heavily regulated. However, that hasn’t stopped the company (whose parent is in the U.K.) from embarking on PR initiatives of its own. Bernier says the company is ‘very active’ within the industry through the Canadian Life & Health Insurance Association. ‘And within our industry we’re in some committees to try and educate the public,’ he adds.

Over at Microsoft, which operates in an industry that has seen its share of scandal – think ‘dotcom boom and bust’ – Brian Stock, corporate communications director, says the Mississauga, Ont.-based software giant has been doing things differently in the wake of not only the aforementioned challenge, but others such as its contentious anti-trust battle in the U.S.

‘Our industry is maturing. We’ve come through an era that was fast and furious and now there’s a lot more of a sense of responsibility among corporations, especially in Canada, to demonstrate our commitment to the country and that we’re investing in the country.

‘But I would hesitate to say it’s PR. [The work is] a reflection of our understanding that it’s not enough these days to only talk about the benefits of technology, but to also address some of the issues that have come along with technology.’

Some of that work includes an anti-sex offender initiative called CELTS (Child Exploitation Linkage Tracking System) being developed in concert with the Toronto Metropolitan Police that will use technology to help authorities track evidence online to take down pedophiles. On the home front, Microsoft has also recently taken the step of moderating its MSN chatrooms, as well as requiring a password and sign-up fee, to further protect children. Stock also describes a third initiative to educate parents. All of the efforts came out of research Microsoft did to find out how the company could listen to solutions from others, rather than simply imposing a solution.

To get the word out, Microsoft is working with the Ottawa-based Media Awareness Network and Bell to develop www.bewebaware.ca and launch an advertising campaign around issues of online safety. Stock says the difference between how this is being done and how it might have been done in the past, is that Microsoft is now making PR an integral part of how the company works in the community, rather than something tacked on to curry favour or hide a problem.

‘We took a back seat – it wasn’t like we went out there and said that we were the experts for parents on how to handle their kids’ Internet experience. We went to the experts and had them do it and provided our marketing and industry expertise to try and get that word out. We’re spreading the word in what I would call a more organic way.’

Organic. Baked in. These are the kinds of words author and educator Don Tapscott uses when he declares in one breath that ‘PR is dead’ and that marketers need to adopt ‘the new PR.’

Tapscott, adjunct professor at the University of Toronto, CEO of Toronto-based New Paradigm Learning Corp., and co-author of The Naked Corporation: How the Age of Transparency Will Revolutionize Business, says trust and transparency have to be a day-to-day part of a marketer’s regimen. And he has a warning for marketers and PR professionals alike.

‘If you are a company that is inherently more trustworthy than your competitors, then by all means develop a transparency strategy whereby you communicate that to the rest of the world – better still, where you engage people to show them through your actions that it’s true. But companies that are having these advertising or public relations campaigns around trust but haven’t baked [it] into their corporate DNA are setting themselves up for disaster.’

The old PR is dead, he says, because consumers have more access than ever, primarily as a result of the Internet, to information about companies. They can take you to the cleaners if you try to spin. And attacking these people, who are part of what he calls the ‘stakeholder web,’ just makes it worse.

‘Companies need to diagnose their stakeholder web and develop an engagement strategy,’ he explains. ‘So PR is shifting from being public relations to public relationships.’

His audience seems to agree. Microsoft’s Stock says this exactly describes the company’s PR strategy.

‘People are smart enough to know when a company is doing something for PR reasons. As a company we’ve made a conscious decision to do good things and have others say good things about us, rather than going out and beating our chests and trying to tell the world about all this great work we’re doing.

‘In terms of the corporate initiatives, our whole approach is to get involved with the right partners who are the leaders in the industry, do all the right things with them, and provide our industry leadership to try and help them get messages out. If they then become supporters of us, that’s ultimately a bigger impact for us than to try and tell people ourselves.’

Meanwhile at Standard Life, which is privately held, the company is taking steps to behave like a public one in terms of transparency, especially since there may be a vote in 2006 to actually take the company public. For the last couple of months, it has been sending its financial reports to industry analysts and making them public. ‘We want to be more transparent,’ says Standard Life’s Bernier. ‘We don’t have the same obligation to be as transparent as a public company, but we know that it’s important.’

This from an insurance company? Strange days indeed.