Traditional institutions are undergoing a crisis of leadership as a result of reputational rows. Only one out of five people polled internationally for the Trust Barometer report carried out by Edelman every year believe that a business leader or a politician say the truth when facing a sensitive situation. Alan Van der Molen, Edelman’s Global Vice President, believes that these data clearly reflect that while trust in institutions – companies and governments – is low, it is even lower with respect to those people who manage and represent these institutions: in the case of politicians and governments the difference is 28 ppt. That is why leaders are advised to change their leadership style and introduce more open, participative and inclusive elements in their leadership behaviour, thus encouraging dialogue, transparency and awareness of the opinions of different stakeholder groups. This document was prepared by Corporate Excellence – Centre for Reputation Leadership and contains references to the statements of Alan Van der Molen, Edelman’s Global Vice President, Ángel Alloza, CEO of Corporate Excellence, Alberto Andreu, Telefónica’s Director for Corporate Reputation, Institutional Relations and Social Innovations, Alberto Artero, Director of Elconfidencial.com, and Ana Sainz, General Director of Seres Foundatio, made during the presentation of 2013 Edelman Trust Barometer 2013 held in Madrid.

1. Insights&Trends
I38/2014
Reputation
Trust, Key to Achieve
Legitimacy and Credibility
Traditional institutions are undergoing a crisis of leadership as a result of
reputational rows. Only one out of five people polled internationally for
the Trust Barometer report carried out by Edelman every year believe that a
business leader or a politician say the truth when facing a sensitive situation.
Alan Van der Molen, Edelman’s Global Vice President,
believes that these data clearly reflect that while trust
in institutions – companies and governments – is
low, it is even lower with respect to those people who
manage and represent these institutions: in the case
of politicians and governments the difference is 28
ppt. That is why leaders are advised to change their
leadership style and introduce more open, participative
and inclusive elements in their leadership behaviour,
thus encouraging dialogue, transparency and awareness
of the opinions of different stakeholder groups.
Corruption, fraud, incompetence and bad economic
results as well as some erroneous incentives used in
different business or institutional policies are some
of the main reasons that drive respondents to doubt
credibility of current leaders in 26 countries where the
survey was held. These judgements are confirmed by the
data revealed by Alberto Andreu, Telefónica’s Director
for Corporate Reputation, Institutional Relations and
Social Innovations: 60% of crisis triggers are of internal
origin, especially those linked to corporate culture
(remuneration systems, control, management, etc.)
Trust in Experts and Peers is Growing
In 2012, persons described as peers (friends, colleagues,
family members, etc.) and experts (academics and
technical professionals) enjoyed more trust than chief
executives and politicians, including leaders of nongovernmental organizations. In 2013, this trust grew
significantly and reached twice the level of institutions’
official representatives. At the same time, employees’
position in this respect declined while trust in financial
analysts grew by five points.
Angel Alloza points out that democratization of trust,
influence and authority have become undeniable trends,
and their importance grows at a gigantic pace. These
trends mean that recommendations and comments
made by peers play the key role in our decisions, and
this may have both positive and negative implications.
In the traditional vertical pyramid of authority, top
positions are taken by chief executive officers in the
corporate segment and politicians in the government
segment. These are followed by directors, experts,
technical experts, employees, journalists and the general
This document was prepared by Corporate Excellence – Centre for Reputation Leadership and contains references to the statements
of Alan Van der Molen, Edelman’s Global Vice President, Ángel Alloza, CEO of Corporate Excellence, Alberto Andreu, Telefónica’s
Director for Corporate Reputation, Institutional Relations and Social Innovations, Alberto Artero, Director of Elconfidencial.com, and
Ana Sainz, General Director of Seres Foundatio, made during the presentation of 2013 Edelman Trust Barometer 2013 held in Madrid.

2. Trust, Key to
Achieve Legitimacy
and Credibility
Graph 1: Trusted sources are experts and peers
Credible spokespeople
2012
2013
Academic or expert
68%
Academic or expert
Technical expert in the
company
66%
Technical expert in the
company
A person like yourself
65%
69%
A person like yourself
67%
61%
Regular employee
50%
Financial or industry
analyst
51%
NGO representative
50%
NGO representative
51%
Financial or industry
analyst
CEO
Government official or
regulator
“Leaders need
to change their
leadership
style and
introduce
more open,
participative
and inclusive
elements thus
encouraging
dialogue
with their
stakeholders
and
transparency”
46%
38%
29%
Regular employee
CEO
Government official or
regulator
50%
43%
36%
Source: Edelman, 2013.
public. This hierarchy is compensated by the horizontal
community pyramid, where the general public finds
itself between the management and other actors, such
as employees, consumers and social activists. The
two pyramids shape what came to be called the new
diamond of influence.
In order to become leaders, companies need to secure
support of their stakeholders. Stakeholders no longer
accept the dictatorship of organisations who impose
a one-way relationship. Instead, organizations feel
the need to initiate dialogue with stakeholders and
secure their cooperation. Thus traditional control
gives way to autonomy, and rigidity of relations
transforms into flexibility.
According to Ana Sainz, General Director of the
Seres Foundation, these circumstances offer a clear
opportunity for all those companies who understand
this new context and are able to substitute old values
for new vectors, change the focus from authority to
community and place socially responsible policies at
the heart of management.
The best way to do it is to design management
models aimed at achieving trust by accepting this
new paradigm and adapting to the new rules of the
game. As Corporate Excellence’s CEO Ángel Alloza
put it, trust is not an abstract social capital, but a key
prerequisite for any successful exchange.
The Need for Inclusive Management
Results Do Not Match the Expectations
Without a doubt, the boom of telecommunications
as well as social networks and the mass media largely
accounts for the change in the influence pyramid and
emergence of a new paradigm. In this new paradigm,
the role of traditional sources of influence and public
opinion, such as official leaders, the mass media,
experts, etc, is changing and decreasing. However,
Elconfidencial.com’s Director Alberto Artero says
that the new media still have not squeezed out
traditional media in terms of trust.
No matter whether it is because expectations are
too high, or results are too low, or both at a time,
the fact is that there is an important gap between
the results and the expectations. The attribute that
reveals the largest gap (37 points) is fair treatment
of employees, while the smallest gap is demonstrated
by the attribute describing presence in the rankings
of best employers or the most admired companies.
The list of the most significant gaps between results
and expectations (30 points difference and higher)
is presented below:
Greater authenticity, empathy, courage, integrity
and dynamism of stakeholders lead to consolidation
of the new social leadership (or collective leadership,
to use the terminology of Artero who contrasts this
phenomenon with personal leadership), based on
these new growing social values and the environment
governed by behaviours and coherence between
what is said and what is done, as described by Van
der Molen.
1. Fair and correct treatment of
the employees: 37 points.
2. Prioritizing consumers’ interests
over profits: 36 points.
3. Responsible crisis management: 33 points.
4. Transparent policies and practices: 33 points.
5. Meeting customers’ needs: 32 points.
6. Open and transparent
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3. Trust, Key to
Achieve Legitimacy
and Credibility
communication: 31 points.
7. Ethical business practices and codes: 30 points.
Edelman’s Vice President believes that trust
is essentially stakeholders’ expectation that a
company will behave in the way it promised to
behave. He agrees with the CEO of Corporate
Excellence – Centre for Reputation Leadership
that trust may be built by the employees internally
and then projected outwards.
All attributes (16 in total) are divided into five
categories. Seven attributes included in the
list belong to two out of these five categories:
commitment (59%) and integrity (58%). Other
three categories are products and services (54%),
objective (47%) and operations (39%) with gaps
smaller than those included in the list.
Conclusion: the Recovery Period
Several years of the economic crisis and perception of
its effects on the economy and society caused severe
damage of trust. However, in 2013 we are observing
signs of recovery in some countries, especially in the
business segment, as opposed to the institutional
segment (only in South Korea more trust is placed
with institutions than with businesses). The number
of countries where trust is recovering and comes back
to the 2011 values is growing.
Undertaking and Fulfilling a Commitment
According to Andreu, trust does not have a clear
definition: it is not defined as long as it is not
expressed in the form of an explicit commitment.
The capacity to undertake and fulfill commitments
is the shortest path to trust. A good example of this
approach is the corporate culture of such companies
as Johnson & Johnson, where employees and
directors have to follow five specific steps before
taking any decision that may affect the company.
According to Alloza, reputation is a tool that helps
to transform trust into an operational value for
companies, whereas long-term vision is an adequate
instrument for turning these commitments into
reality and meeting the expectations of stakeholders,
always moving from inside outwards.
Corporate cultures, especially those in the financial
sector, are viewed as the main cause of bad economic
conditions and rows that led to the fall of trust in
banking institutions. Maybe it is not accident that
Graph 2: Embrace the new mandate: inclusive management
Activate across media cloverleaf, based in grounded leadership
PYRAMID OF
AUTHORITY
(Vertical)
Government
Officials
I. V
IS
IO
N
&
GENERAL POPULATION
Employees
Action consumers
Traditional
Hybrid
Search &
Content
Owned
Social
II.
E
SOCIAL
ACTIVISTS
RE
HA
Board of Directors
Academics
Technical Experts
Elite Media
“Grounded Leadership builds legitimacy in
key constituent groups and is based in personal
dynamism, empathy, authenticity, inspirational
goals and courage.”
Jeffrey Sonnenfeld
S
VE MANAGEM
USI
EN
CL
T
IN
IV.
T
AC
AP LUSIVE MANAGEME
D
T
NT
C
A
IN
CEO
ST
LI
N
III
.
“Trust is not
an abstract
social capital,
but a key
prerequisite
for any
successful
exchange
between
persons”
In terms of industries, Edelman’s Trust Barometer
is still topped by technologies, the automotive and
consumer sectors internationally, followed by the
mass media, finance and insurance. If there was an
element that could explain low trust in companies,
it would have to do with commitment and integrity.
PYRAMID OF
COMMUNITY
(Horizontal)
Source: Edelman, 2013.
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4. Trust, Key to
Achieve Legitimacy
and Credibility
truth has become the main victim of this crisis:
citizens believe that truth is incompatible with
business leaders when it comes to delicate situations
and their personal interests.
Insights&Trends
4

5. Leading by
reputation
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lead and consolidate professional reputation management as a strategic asset, fundamental for building value of companies around the world.
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