In the wake of the recent financial crisis, business leaders should work to better integrate public communications into their overall strategy, according to a study by Tuck School of Business professor Paul Argenti and Doremus, a New York-based communications agency. The study, perhaps unsurprisingly, found that the public no longer trusts business executives.
Argenti and Doremus presented their research at the Chief Marketing Officer Summit in New York on Tuesday.
We were interested not only in what companies were doing as they were coming out of the recession, but what were some of the things that might be good for companies to do after the crisis," Argenti said in an interview.
The team reviewed secondary research on marketing and looked at recent advertising, according to Argenti. Based on that background research, the researchers then interviewed communications executives at companies like IBM, JP Morgan Chase and Ford, which just reported a $997 million third-quarter profit, that were weathering the recession successfully, Argenti said.
"We talked to people from a variety of industries about social responsibility, their values, new social media," he said.
The "old order," in which businesses acted unrestrained in free markets, is over, the study said. Less than 50 percent of Americans believe the free market should function independent from government involvement, according to the 2009 Edelman Trust Barometer, produced by the Edelman global public relations firm, which was cited in the report.
Although just a few years ago the general perception of business was positive, the public now distrusts corporations, the study's authors found, pointing to government bailout protestors and critics of General Motors executives who testified on Capitol Hill.
Corporate executives are now among the least trusted spokespeople, while academics and peers are considered more trustworthy, according to the Edelman Trust Barometer.
There has also been a steady decline in the number of people who believe businesses act responsibly, the study found. In 1968, 70 percent of respondents thought businesses acted responsibly, while in 2008, only 20 percent did, according to a CNN/USA Today/Gallup Poll cited in the study.
To address declining public confidence, marketing executives should work more closely with other departments like human resources and finance so communications staff can do more than "spin" strategy that is already decided upon, Doremus' director of research Hope Picker '80 Tu '82 said in an interview.
"The alignment of communication with strategy sounds amazingly obvious, and some leading companies are doing it already, but usually communications doesn't get into the picture until after the strategy has been formed," she said.
Companies should focus on strengthening their core values, the study found, citing Walmart's commitment to helping its customers "save money" and "live better."
Companies should also stop focusing on the problems of the past year and work to develop potential solutions instead, according to the study, as Ford did after its rivals filed for bankruptcy.
Because of new social media like Facebook and Twitter, executives should rethink the definition of communication because institutions no longer have complete control over what is being communicated, Picker said.
"Now that everybody and their brother has a blog and a Facebook page and Twitter, you just don't have the degree of control that you used to have," she said. "You can't fight that or ignore that, you just have to embrace it and enter the conversation."
Picker said she also believes that business news is now more widely reported than it was before the recession, pointing to Rolling Stone magazine's July cover story about Goldman Sachs, which she said would not have been written a few years ago.
