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KETCHUM'S ONLINE MAGAZINE YEAR 2008    ISSUE 3

EXPECTATIONS & FRUSTRATIONS: HOW THE PUBLIC PERCEIVES CORPORATIONS AND CEOS

Key Findings

It's no secret that public trust in corporations and CEOs, as well as most other major institutions, is low. Ketchum's survey, Expectations & Frustrations: How the Public Perceives Corporations and CEOs, paints a fascinating picture of growing public distrust of the corporate world among developed nations while a more optimistic view prevails in developing countries. In both cases, it's clear that corporate and CEO performance consistently falls short of expectations. But the survey also makes clear that the demands on both corporations and CEOs are extraordinarily high – with influential consumers expecting companies to take on a growing role in solving societal problems and CEOs to be much more engaged in managing relationships with a wide range of corporate stakeholders.

Here are some of the key findings:

  • Trust in major institutions – governments, NGOs, corporations, religious institutions and the media – is low around the globe.
    • Influentials in the developing world are more trusting, while those in North America and the U.K. are the least trusting.
    • Media is the most trusted institution in general, but in the U.S., religious institutions are the most trusted.
  • Despite this low level of trust, Influentials expect companies to play almost as large a role as government in solving major societal problems, such as mitigating poverty, sustaining peace and improving water and air quality.
    • Environmental issues, particularly global warming, are seen as most important followed by poverty and access to adequate healthcare.
  • Influentials' expectations of companies are not being met.
    • First and foremost, Influentials want corporations to achieve these things:
      • Be good environmental stewards
      • Be honest and ethical
      • Put people – employees, consumers, communities – ahead of profits
    • “Environmental stewardship” is the area where the gap between expectations and performance is greatest, followed closely by “communicating honestly” and “compensating employees fairly.”
    • Environmental stewardship is more important to European Influentials than Influentials in North America, China or India.
    • Areas where expectations and performance are most closely matched are “generating profits,” “being a leading source of innovation” and “creating shareholder value.”
  • There is deep distrust of CEOs but also recognition that the CEO's job is tougher than ever.
    • Honesty, ethics and fairness top the list of the most important personal characteristics that Influentials look for in a CEO, but these are the areas where the shortfall in performance is greatest.
    • At least half of Influentials around the globe believe the job of CEO is becoming more difficult, primarily due to greater demands and increased public scrutiny.
    • Indeed, most Influentials in the developed world wouldn't want to be a CEO, although their counterparts in the developing world would.
    • CEO compensation is a significant concern across most regions and affects how Influentials view companies. Acceptance of CEO pay tends to be higher in developing markets.
    • Strong financial results continue to be the most important factor when evaluating CEO performance, followed by building a strong management team.
  • Globally, research and development is seen as a particularly important corporate priority.
    • In a series of “trade-off” questions,” Influentials were asked to play “CEO for a day” and decide between two possible actions. In general, Influentials opt for choices that favor R&D. For example, they would rather take these actions:
      • Increase R&D spending rather than enhance the performance of a public pension fund portfolio
      • Develop new products rather than provide ethics training
      • Increase R&D to create new jobs rather than improve health benefits for current employees
      • Invest in new technology to increase gas mileage rather than provide healthcare benefits to retirees
    • The only exception to this R&D orientation is in North America, where Influentials are very concerned about job security and employment issues.
      • North American Influentials rate “keeping jobs in the U.S./Canada” as the most important area for corporate investment
      • In general, N.A. Influentials would rather take these actions:
        • Increase product costs by 15 percent rather than move operations where wages are lower
        • Continue to provide healthcare benefits to retirees rather than invest in new technology to increase gas mileage
        • Prefer to see the value of a stock drop rather than lay off 10 percent of the workforce