Posts Tagged ‘Edelman Trust’

When trying to make sense of complex concepts, we like to use metaphors. We frequently think of money having the properties of water, as in “cash flow” and “liquidity”. These metaphors have important consequences, because they make certain decisions and policies more plausible. Take for example how that once we think of the drug problem as a “war” rather than an “epidemic” certain policy solutions become more plausible (wars are won by armies, not public health professionals, and methadone programs don’t fit).

When we consider corporate trust, one of the most influential metaphors is the “bank account”. Companies “make deposits”, and can “make withdrawals” if necessary. This seems plausible enough, but it suggests certain inferences that are not supported by evidence.  For example, if today I put $100 into my checking account, I can take $100 out tomorrow. Putting aside bank failures and the like, the money will be available when I need it.

In some of our recent research based on laboratory experiments, however, we find little evidence for these claims. In a crisis context, previous “good deeds” are swamped by current actions (good or bad). Trust it seems can’t easily be deposited, it must be earned.

But there is another way to think of the potential benefits of a long-term record of trust. That approach works more like a currency (the fact that currencies require trust adds another interesting wrinkle to this idea). Currencies act like multipliers (not “linearly” as the bank account suggests). That is, if a currency is strong, purchasing power increases for all sorts of goods.  So, what does this mean in the context of trust? The idea is that the same statement carries more weight, has more impact, if it comes from a trusted company.  Or alternatively, a company with a strong record of trust (“strong currency”) will need to do less than a company with a lower record of trust (“weak currency”).

Some recent evidence from the 2011 Edelman Trust Barometer  2011 Edelman Trust Barometer supports this intuition.

Company Trusted Will believe negative information if hearing 1-2 times Will believe positive information if hearing 1-2 times
High 25% 51%
Low 57% 15%

In case of “low trust” we find the well-known negativity bias. A negative message has roughly 4 times as much impact as a positive message. But, strikingly, the situation is reversed in the “high trust” case. Now a negative message has only half as much impact as a positive one.  So, by moving from a high to a low trust “currency,” a company gets an eight-fold increase of positive information impact. Not bad, right?
Now, these results are to be treated with some caution. Ideally, one would want to replicate this intended behavior in a controlled laboratory setting. I would be surprised if the absence of negativity bias (indeed a positivity bias) in the “high trust” case would hold up with experimental subjects, but the prospects are intriguing.

Perhaps this approach also can explain Apple’s (and to a lesser extent, Google’s) “Teflon” effect: The apparent limited impact of issues such as the iPhones’ dropped calls/antenna problem and smartphones’ transmission of consumer data. What’s more, survey data from Harris Interactive consistently puts the high-tech industry on top of the most trusted industries. So, even a less than stellar response strategy may have a stronger impact than a comparable (or even better) strategy by a less trusted bank or insurer.

A 2007 Harris Interactive survey measured the public's perception of companies based on key attributes. Source: Harris Interactive's Reputation Quotient Survey, Wall Street Journal.

Bottom line: If the results survive in other research contexts, the case for investing in trust is strong. And don’t think about it as a bank account, but as maintaining the strength of your currency through a record of trusted actions.


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