Besides losing our trust for big business we now realize we lost it for our governments as well
May 12
Today we are witnessing a serious lack of trust among citizens around the world. Consumers are questioning the way big business is doing business. Consumers, citizens and taxpayers shocked by the collapses in the financial and real estate sectors, don’t trust big business anymore. And this mistrust has snowballed and affected almost all sectors of the economy. But even more serious is the deterioration of trust of the citizens for their governments and politicians. And this phenomenon is enhanced by the deep effect of social media.
Today we are witnessing citizens rioting in the face of the austerity measures that put their very lives in jeopardy. They are angry because they feel that governments and politicians were not honest and they shamelessly lied to them.
For too many years people in most countries were relying heavily on their government for the creation of wealth, the smooth functioning of the markets and for providing a safety net when in need. But today after the recent economic disaster we have lost the trust in our government as well.
We all must keep one thing in mind: trust is a very fragile concept. When it is cracked or damaged it’s very difficult to repair it.
If we consider our behavior as consumers we still buy our favorite brands or services from companies we know but our trust and esteem for them has seriously deteriorated. Especially after the global crisis we are much more demanding and more ready either to punish or reward businesses and brands. Extensive research in more than 30 countries (see link below GLOBESCAN) reveals that consumers and citizens are asking demanding questions about corporate citizenship and the ethics and transparency of management. We now associate trust not only with the quality and performance of products and services but also with the performance of business as a corporate citizen. Exactly the same holds true with the way we look at governments and politicians.
We might trust a brand’s or a politician’s competence and abilities but we don’t want to support them with our money or vote. The reason is simple: we feel they are not entirely honest and don’t treat us with respect.
Businesses in their effort to remedy this situation are resorting in the use of CSR and are investing even in the face of difficult financial conditions. However, they must be very careful because consumers are suspicious and question their good intentions. If they believe that a business is investing in CSR activity solely for its own good and gain, its efforts will be in vain.
If we ask what our politicians and our governments can do to gain back our lost trust the answers are a lot more difficult to find and the healing process will definitely be much longer. I’ll intend to come back to this issue on my next post.
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May 13 at 19:09
Dimitri ,I like you see “trust” in its true colours.
I am sure you also beleive that trust is a mental state. The degree to which one party trusts another is a measure of belief in the honesty, fairness, or benevolence of another party. A trusted party is presumed to seek to fulfill policies, ethical codes, law.
It is obvious that in order to build up trusted citizens,businesses and politicians we must first revise our current policies,ethical codes and law (for example we must revise the opinion that what is legal is “ipso jure” moral ,or revise the law regarding politicians´s liability etc)
May 13 at 20:46
Dimitri,
Very interesting and practical approaches to indeterminate terms. Confidence / trust is a timeless two-way process that requires education and culture. Requires also Respect for People. Education and Culture are lost. Confidence disappeared. For us in Greece, the trust has been lost 2.500 years. From “Sfikes” of Aristophanes and speech of Demosthenes against Androtionos. After 2.500 years, other people, see today what we Greeks knew already. Just now 2.500 years the need for change is imperative. How? is the new question. The answer is a new philosophical search for people.
Best Regards. Thank you for the pleasure to think.
May 14 at 02:25
Interesting and very relevant article Dimitri. I know that as the Financial crisis was in its prime Paul Stewart said that we would be seeing social unrest follow – and indeed it has.
Like you say, trust is fragile. For companies to build that trust back they must ensure their people understand what factors influence that trust – and align their behaviours around it. Unfortunately greed still prevails but lets hope that we learn from this.
This is not, as some predicted, a cyclical event. It requires a long hard look at the systemic issues that have created the disregard for fairness and treating people well.
May 14 at 15:04
The citizens lose their trust in business, due to low quality of their products/services or because of high prices.
Now, they lose their trust in governments and politicians due to low quality of their decision or because of their low honor.
And what a surprise!!!!
In the Greek – English dictionary «price» and «honor» have the same meaning!!!!!
May 16 at 21:25
It should be taken as fact that the ruling classes of Greece today (Politicians, Media,and their Mob ) have more to gain by at least persuading, if not manipulating or deceiving us, than they do by informing us, and possibly empowering us. Because of this alone, we should not trust a media which is run for and by this class.
Even further, when you consider just how much of a science is behind the power of persuasion, and how much is invested in this science, it would be foolish to not assume that the results of this science are not utilised to the highest degree possible given what is at stake.
A couple of years ago I watched a documentary by the BBC called the Century of Self, which focuses on the rise of the Public Relations industry primarily through focusing on Edward Bernays, one of its founders.
Bernays was Sigmund Freud’s nephew and put many of Freud’s theories into practice.
In his book Propaganda, a word which he used in the positive sense, not the pejorative, he wrote:
“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…….who understand the mental processes and social patterns of the masses. It is they who pull the strings which control the public mind.”
This wasn’t a criticism, remember, it was a justification.
It is up to us– do we trust people who admit they think they should be pulling our strings instead of leveling with us?
In conclusion in 2003 Ross and Nightingale said:
If ‘the people’ are ill-informed, then the question has been asked, who is to blame? The politicians for not disseminating their policies well enough or the media for not reporting them often well enough?”
Of course the more cynical may think that the recent phenomenon of mistrust displayed by the masses is also a manipulated outcome by the afore mentioned <> who in fact for its own dark purposes may be cultivating the reactions of the masses to suit their aims.
Regards
Michael Tsogas
May 16 at 21:27
From: Antigoni Voulgaraki .
Date:
May 13, 2010.To:
Dimitris Mavros .Status:
Pending.Very interesting. Perhaps we are in a time of universal deceit. I do not know about other countries, but in Greece people are more than certain (not just feel) that governments and politicians were not honest and they shamelessly lied to them. And certainly the healing process will be long and difficult, but if they are really interested to gain back our lost trust, they should start taking at least some steps…As Abraham Lincoln said: “It is true that you may fool all of the people some of the time; you can even fool some of the people all of the time; but you can’t fool all of the people all of the time.”
May 16 at 21:37
The governments and the politicians are becoming obsolete, by their own choice, as all the power is in the hands of multinationals.
The multinationals hold all the banks, financial sectors, major retail chains, and all the money flow is in their hands.
The multinationals are considered to be ‘above-national’, their only faith is money, and they answer only to themselves, so they could not care less if the jobs are lost in some country as long as they make a profit out of that.
The major developed countries already privatized many of their activitis like security, police, army, and the government services, so soon they will have nothing to run.
The governments are only statisticians, giving monthly reports, making false promises, just buying time in the offices.
Posted by Savo Djukic
May 23 at 16:44
First, I would have to say this; in a nutshell, I really think people everywhere are having difficulty trusting anyone or anything, be it corporate or government or even socially. As for businesses, they are always going to seek to make profits and there is nothing wrong with that. I suppose it is not detrimental for them to make profits according to what the market will tolerate. However society and its citizenry will at some point have to understand they are playing both sides of the coin though. On one side they want good wages and on the other side they want to purchase goods cheaply. Higher wages means higher cost and higher cost means more expensive goods. There is just no other way to break it down.
When the governments regulate the various industries and their activities in order to protect their citizens the fallout is bigger governments, at least in the policing of those policies. The bigger the government the more expensive it is to live under that government. The government and big corporations are made up of citizens. We cannot forget that. So then, the social responsibility still lies with the citizens.
Social media has had a tremendous impact in the area of sharing opinions and in many cases holding policy makers accountable. Never before have commoners been so informed about what is going on in businesses and the governments across the globe. Regarding Corporate Social Responsibility (CSR), it seems to me to be another case of individuals off-loading their own responsibilities to someone else so they are not to blame when there are problems. We are all responsible for what goes on around us whether we are in Greece or anywhere.
OK, I have said too much…
Posted by Joe Turner
May 23 at 16:45
The big majority of the world governments sold themselves to the multinationals, so these governments just pretend to govern, but they are just:
- reading the statistics for the past period and
- making empty promises.
All the multinationals have only one CSR strategy: ‘will do anything for money, money will do everything’, and they buy their ‘green’ & ‘fair’ & ‘human’ image.
For the 99.99% of multinationals the CSR is only another spin, to deflect an attention from their acts and to prevent the law cases.
The only way to regain the trust would be to introduce ‘the right to recall the politicians’, if the population is not happy with their performances.
Posted by Savo Djukic
May 23 at 16:47
The deterioration of trust in government Demitrus is referring to is growing out of big business’ control of government via a corporate oligarchy. The banking industry’s efforts to spend billions in lobbying, political campaign contributions encroachment in government via Presidential cabinet posts, and advertising campaings. Our own industy is responsible for this and will have to deal with the consequences of it. In our efforts to produce sales we indebted consumers and nations worldwide to a level that is unsustainable and may bring on a depression at a level we have never dealt with before. 50% of our customer base is the wealthy top 10% who are prospering as a separated plutonomy dispite this financial crisis, while the other 50% is the 90% of the consumers we buried in credit card and other debt under the advertisied promise of “you to can become one of the meritocracy.” We sold hope and gave them debt that would crush them into employer servitude.
Posted by George Stiller
May 23 at 16:49
Hi Dimitris
As much as we read about the negatives in business I regularly see organisations of all sizes pushing the boundaries of social responsibility and creating ‘fully empowered’ organisations that we would all be proud to be part of. Unfortunately, for some reason, this doesn’t appear to be ‘newsworthy’ in todays media age.
Maybe we need Groups like this to show the benefits of ‘good governance’ so that it can be embraced by the younger generation coming through. It’s the ‘bad apples’ that are creating the negative image for the rest of business to live with – but we don’t get the full picture.
As for Government, again I think the media love a disaster and scandel and are disproportionate in their coverage. Are Governments perfect, no, have they made huge mistakes, yes, – but the main question is are they trying to make things better? As much as they mess up, I’d like to think that they are trying and hope that the new generation of potential political leaders will challenge the status quo, even further. As much as there have been bad things, maybe we need, occasionally to remember the good.
At least we’re begining to expose the ‘cheats’, and more regularly, which maybe is a sign that, rather than things getting worse, things are actually improving (as they weren’t caught before). So maybe it’s a first step in the right direction, as painful as it is for us now. I’m not sure we’ll ever be totally happy with governments and ‘big’ business, but maybe that is part of progress, where we continually set new standads – sometimes we have to look back to see how far we have really come.
Best wishes
Nigel
Posted by Nigel Brownbill
May 28 at 17:19
believe it is not necessarily a decrease in trust, but instead people tend to form their own opinion on everything, based on the increased access to information.
It is not so easy anymore to position your business/actions based only on statements. A slogan or a CSR action-plan is not enough anymore. People know and understand more, they need solid proofs and they can easily check others’ experiences and opinions before making up their own minds. Almost everything is shared. Social media has its role in it, but only as part of the internet-based globalization of the info.
Businesses and governments need to DO the real things in order to get people’s trust. And communicate it well. Or to “beautifully lie” with much more attention to details and Google’s search engines methods…
Posted by Cristina Osiescu
May 28 at 17:21
You can fool some of the people, some of the time – but the internet gets your message to everyone.
The world is no longer about sleazy little deals in back rooms mainly to benefit the participants with people only being told the bits the decision makers want them to know.
If people want to buy a product, they no longer need to believe the vendor – a quick search will find the product, the competitors, the price and even a host of reviews. Thus they are much harder for a marketing department to fool. Marketing is now about making the company excel at every touchpoint with the consumer, not about pushing the information they want to tell them.
Politicians need to work in the same way. Discontent is rapidly spread and a soundbite or denial doesn’t cover it any more. What is needed is true involvement in the decision making process. Share the options, statistics and opportunities and there is nowhere for deception to hide – or for people to imply deception where there isn’t any.
Unfortunately this involves a much bigger change than any government so far is willing to make. It means experts at the head of each department – not a merry go round of short-term ministers whose job is to spin departmental decisions to claim credit for them in terms of party policy. It means less emphasis on making the “Right” decisions and having the “Right” policies, instead showing how it is all about testing and making small changes on the tiller.
It will change party politics forever – for the better in my view.
Posted by Peter Johnston
May 28 at 17:23
I prescribe to the economist’s idea that an incentive structure determines (general) human action.
Therefore, if its one thing I do trust, is the inevitability of an incentive structure’s influence. In governments, if politicians have an incentive to take money in exchange for favors, for example, then you can bet it will happen. In a private organization, if there is an incentive to not concern oneself with how customers are treated because the incentive is placed on how many are spoken to in a set period (customer service), or to ignore new customers to whom sales have been finalized, because the incentive is on the next sale, then what will happen is clear.
What we define as corruption, to me are nothing more then misaligned incentives.
Posted by Fernando Bravo
Jun 30 at 19:53
Most reputations can be repaired over time (e.g. Perrier) but my sense is a solid CSR strategy could accelerate the process. But it still won’t happen overnight, and part of that strategy needs to include listening to critics and demonstrating that you are acting on what you hear. Obviously BP will be a case study for this. In fact, it would be a great PhD thesis to measure their reputation now, track what CSR activities they undertake (if any) and how this affects their reputation 6 months, 1 year, 3 years and 5 years from now.
Posted by Josh Cobden
Jul 01 at 18:40
Not only does CSR help with external perception, but internally, employees certainly feel good about their company when they choose to do good.
Measuring is tough, but take a look at the Timberland study…
Posted by Joe Pagano
Jul 01 at 18:41
It could be and it has to do so. Not an easy task and not an easy challenge as well but a solid CSR strategy can put new objectives, can serve to inform and to communicate the way it has to be. It is not easy but a constructive dialogue with stakeholders can make a change. That’s truth that a damaged reputation is difficult to be changed… because we are talking about change here. However, an appropriate CSR strategy in such a case could have as objective this progressive and deep change. And for be optimistic and positive, we have to try to find out even if somme cases seems to be irreversible.
Posted by Marianna Maglara – Morneau
Jul 02 at 03:13
Hi Dimitris,
I guess you’re right and there are several roots to that.
On economic, I think the main root is the de-connection between economic and real life. It is always surprising to see financial funds investing mainly in financial funds… but deeper than that is the short term approach. When investors only look to 2 years return, at most 5, it is becoming much shorter than the insight of common people. You don’t trust someone you can’t rely on i the coming years, there is no reason you would trust a company acting that way. That’s why in my opinion the time factor is so important in every CSR approach.
Your second topic is about effect of social media. It is actually effect of Internet. Internet is a network and build connection. But it is a network with no center. Thus connection are much wider than with an other network. It would have been very unlikely to chat together with the previous network… Connected people talk. The second consequences of Internet is everybody can write on Internet, which was nit the case with previous information channel (only journalist and politics were “allowed” to talk. Thus more people think, write, comments. There are more in many minds than in few, so investigation on what is actually done is deeper, expectancies too.
BR
Pierig
Posted by Pierig Vezin
Jul 02 at 23:07
A solid CSR policy only begins when the company demonstrates the intrinsic value of CSR to the organization by staffing a CSO level position and enabling them with the proper resources to do the job.
Ideally an individual with vision, talent, strong technical skills, perhaps a little sales/marketing prowess (but not a marketing pro turned CSR), and a proven track record with the likes of EPA/DOE along with various NGOs covering issues from environmental policy, energy, sustainability, to quality of life for indigenous people.
Posted by Jack Pouchet
Jul 04 at 14:57
Sorry to be picky however a strategy wont do anything until it is executed.
BP has had a CSR strategy for years From my observations they have failed to execute it in the Gulf of Mexico both in preventing and fixing the disaster. BP can recover and I hope they do Firstly the spin must stop otherwise whatever changes they make will be seen as being for the wrong reasons.
Many companies (indeed most of the big ones) say CSR or CR is integral to what they do. As yet only a few back up their talk with their behaviour on a consistent basis such as Interface, Seventh Generation, Timberland to name a few.
What we must all do in my view is help organisations with good CSR/CR strategies to actually execute them
Posted by Ian Berry CSP FAIM
Jul 14 at 14:53
Richard Branson is a master at it. His philosophy is to own up to a bad situation as soon as possible even if you are not directly to blame. Apologize as soon as possible if you are the one responsible for the situation. Believe it or not, even in this world, it is still a very human trait to forgive.
I believe there are societies and cultures out there that believe it is a weakness to bring yourself to say your sorry when in reality that is all most people expect.
Posted by John Fronza