1. Roadmap to Building Trust Presented by Richard Edelman Bridging Cultural Gaps Alfred Herrhausen Society for International Dialogue 17 th March 2003

2. Agenda 1. Quantified differences between U.S. and Europe. 2. Roadmap for bridging cultural differences.

3. Cultural Differences Are Magnified  Difficult economic environment.  Prospect of war.  Divergence -- left-leaning Europe, right-leaning U.S.  Stronger interest in maintaining local culture.  Companies are put in between home country and need to adapt to local market.

4. U.S. and European Views are Diverging Trust in business has increased in the United States, but eroded in Europe. In the U.S., perception is that business is sound.  In the United States, trust in government has slipped from its post-9/11 high, and remains low in Europe.  “Trust void” in Europe.  NGOs are growing in influence and authority. They are ranked equal to businesses in the U.S., but in Europe outrank business, government, and media.  Media maintains some strength, but is off its 9/11 high.

5. Trust in Institutions 2003 Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. [TOP FOUR BOXES SHOWN]

6. U.S. Trust in Institutions (Tracked 2001-2003) Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. [TOP FOUR BOXES SHOWN]

7. European Trust in Institutions (Tracked 2001-2003) Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. [TOP FOUR BOXES SHOWN]

8. Across all regions, technology, consumer durables, and consumer packaged goods sectors command high levels of trust. However…  In the U.S., scandals and criminal investigations have contributed to making energy, telecommunications, and professional services (including accounting) the least trusted industries.  In Europe, investment/insurance and retail financial services sectors are least credible, while healthcare and airlines are highly trustworthy. Industry Sectors Under Siege

9. Benchmark: Trust in Sectors Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. Rank order by US data

10. Opinion leaders report highest levels of trust in the company they work for In the United States, mega-brands like Microsoft and Ford command higher levels of trust than NGOs like Greenpeace.  But, U.S. tracking data show’s that NGOs are gaining in the ranks. The most trusted brands in Europe are NGOs, but the gap is closing between the least trusted NGO and the strongest corporate brand. Certain U.S. consumer brands (notably McDonalds and Coca-Cola) are less trusted in European markets.  However, major European brands (e.g. Deutsche Bank) maintain comparable trust levels in the United States and in Europe. Brand Evaluator

11. Brand Evaluator – U.S. 2003 * “Never Heard Of % ” over 15

12. Brand Evaluator – Europe 2003 * “Never Heard Of % ” over 15

13. How do we bridge gaps in a world filled with mistrust, and facing a difficult geopolitical and economic environment? What can business do? The Road Map

14. Must look beyond traditional constituencies of Wall Street, regulators. Must bridge cultural gaps from the “inside out.” Speak simultaneously with all audiences – “paradox of transparency.” Take position on key issues – global trade, intellectual property. Business’ Action Plan

15. Inside-out Approach Opinion leaders report highest levels of trust in the company they work for. Natural affinity toward companies perceived to be local Credibility declines as companies are perceived as more “global” Build brands from the “Inside Out,” -- start with employees Local subsidiary must be given the latitude to interpret and respond to cultural differences without jeopardizing the company’s core values.

16. 71% 55% 31% 39% 57% 49% 28% 36% 0% 20% 40% 60% 80% 100% The company you currently work for Local corporations Large national corporations Global corporations USEurope Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. [TOP FOUR BOXES SHOWN] Credibility Declines for Global Firms

17. Change the Communications Mix Information conveyed through news media is significantly more trusted than advertising.  Print (business magazines and news weeklies) has high credibility across the board, particularly business magazines.  Radio and TV news are significantly more trusted in Europe than in the United States. Overall, advertising is not seen as a source of credible information about a company.  Opinion leaders are skeptical of information conveyed through advertising.

18. Types of Media Coverage Percentage saying source is “Extremely” or “Very Credible” Rank order by US data In general, how credible do you feel each of the following sources is for information about a company? Is information about a company that you get from (INSERT SOURCE) extremely credible, very credible, somewhat credible, or not credible at all?

19. Advertising vs. Articles in Media Please tell me which statement you agree with more. I believe information that I get from advertisements more than I believe information that I get from articles or news stories I believe information that I get from articles or news stories more than I believe information that I get from advertisements

20. The most trusted spokespersons are those who are seen as having no vested interest in the company.  Across all regions, this includes academics, doctors, and representatives of NGOs.  In Europe, doctors, lawyers, academic, broadcasters and regular employees, are the most credible. There is a much higher regard for media in Europe than the U.S.  U.S. are more skeptical of all audiences, but favor academics, doctors, NGO rep. and the U.S. president. Those perceived to be in the pay of companies are the least credible spokespersons.  Across all regions, this includes corporate public relations representatives, entertainers/athletes, and union reps. Use Outside Experts

21. Credibility of Information Spokespersons Percentage saying source is “Extremely” or “Very Credible” Rank order by US data In general, when forming an opinion of a company, if you received information from (INSERT PERSON) about this company, how credible would the information be? Would it be extremely credible, very credible, somewhat credible, or not credible at all?

22. A single source of information no longer exists. Multiple stories in the media generate higher levels of trust than single sources. Primary players in the “web of trust” are friends, family and independents.  Opinion leaders are more likely to trust a regular employee than a CEO to give them credible information about a company. Use Multiple Channels

23. Frequency of Communications Percentage saying they “Agree” or “Strongly Agree”

24. Credibility of Communications Sources Rank order by US data Percentage saying source is “Extremely” or “Very Credible” In general, how credible do you feel each of the following sources is for information about a company? Is information about a company that you get from (INSERT SOURCE) extremely credible, very credible, somewhat credible, or not credible at all?

25. Cultural bridges are built on trust, openness, transparency and dialogue Local subsidiary must be given the latitude to interpret and respond to cultural differences without jeopardizing the company’s core values. Business retains enough credibility in the United States to take a leadership role. There is a clarion call to European business to step up to fill a trust vacuum in the region.  Move from a “BUY IT” to a “BE IT”  Engage with critics, such as NGOs  Interact with multiple stakeholders and go outside traditional constituencies  Inside-out approach – start with employees  Deliver your message repeatedly, across multiple channels  Trusted relationships are built by engaging audiences in dialogue, not the traditional model with uses advertising for message frequency and control. Conclusions