Edelman’s 2014 Trust Barometer and Turkish businesses

Originally appeared on Bosphorus Consulting on 12 July 2014

Edelman, the world’s largest PR firm, has been publishing its Trust Barometer since 2000. Offering a comprehensive view of trust in businesses by country, the trust barometer is based on the results of the views of 33,000 respondents, including 500 members of “informed publics,” predominantly in the US and China. In the 2014 Trust Barometer, Turkey ranks poorly, even more poorly than other emerging markets such as Indonesia and Mexico, two of Turkey’s fellow MINT countries. For example, Turkey scored 41% trust among informed publics and 39% among the general public; Indonesia scored 72% and 62%, respectively, and Mexico 59% and 53%. Generally, the report shows that companies based in emerging markets face a trust deficit compared to those based in Western countries, and it is this deficit that Turkish companies seeking foreign investment must continually overcome.

Worldwide, the banking sector is performing the most poorly in terms of trust, according to the 2014 report. It is notable that although Garanti Bankası and Turkiye İş Bankası made it into the top ten for some of the sub-categories in Fortune Turkey’s May 2014 list of the most-admired Turkish companies (see our previous research note, featured on FTSE Global Market’s website), there are no banks in the top ten overall ranking of Turkey’s most-admired companies. While companies based in emerging markets generally face an uphill struggle for investor trust, banks in emerging markets – already seen as risky – find the struggle twice as hard.

Of the four factors that the Trust Barometer claims to shape trust, one is “leadership/CEO trust.” Similarly, one of the key recommendations of Edelman’s 2013 trust survey for emerging markets-based companies seeking to do better internationally was to use academic experts and regular employees as company spokespersons rather than CEOs. The survey found that academics or regular employees commanded much greater credibility as spokespersons than CEOs or company executives when presenting the emerging market business in a developed market. Similarly, the 2014 report found that regular employees are more trusted in all source areas than CEOs, activist consumers, or media spokespersons.

Nihat Narin, Turkcell’s Investor Relations Director, told us that “The company does not hesitate to communicate its messages through other employees who can share a more hands-on, detailed perspective with their respective audiences on issues that they are more personally involved with.” This regular-employee-as-spokesperson positioning, as recommended by Edelman’s study, reflects and constitutes the company’s broader commitment to good practice and is arguably crucial to its success in continuing to attract investors.

It is notable that Turkcell was awarded the best company in Turkey for investor relations by Investor Relations Magazine, which earlier in the year highlighted Turkcell’s transparent international presenceas important to its success. We spoke to Tim Human at Investor Relations Magazine, who told us that the magazine has no editorial involvement in choosing the best companies. Instead, winning companies are selected as a result of a survey of 722 investors and analysts across Europe. Interestingly, Turkcell has a very active IR department, regularly announcing the company’s activities, openly and transparently.

Transparent and open business practices are, perhaps unsurprisingly, one of the Edelman Trust Barometer’s specific attributes that build trust. According to Narin, Turkcell adopted the highest standards of transparency, accountability and reporting standards “years before” its peers. He added that this solid foundation has become part of Turkcell’s “company culture” and a key component of its “outstanding business performance,” and it was through these that the company was able to build “a relationship of trust” with its international counterparts. Noting the positive effect the adoption of these standards had on Turkcell’s activities, Narin welcomes the Turkish regulator’s introduction of these standards, saying he believes that “Turkish business as a whole will benefit immensely from this effort.” It is worth noting that Turkcell is the only Turkish company to trade on both Borsa Istanbul and the New York Stock Exchange, “a powerful yardstick,” Narin adds, “with which both national and international stakeholders can measure us.”

Edelman Turkey General Manager Serra Büyükfırat further noted that the main reason for the mistrust in business in Turkey, according to the 2014 results, was the lack of involvement on the part of CEOs in the important debates going on in the business world, adding that “people want to see a transparent CEO who takes action … and who leads the discussion in business policy.” Büyükfırat added that the 2014 report suggests that “the financial services industry should be a more active participant in the broader debate over the future of Turkey’s banking system.”

In an increasingly difficult economic climate for emerging markets, generally, and with the Turkish market, in particular, sometimes receiving negative attention, Turkish businesses need to go to greater lengths to communicate to potential investors that they are transparent and reliable. As we reported in our research note from last week, our customers are telling us they are hungry for more, better-communicated information. Turkish businesses need both to improve their commitment to transparency and also to better communicate their transparency efforts. Edelman’s report illustrates very clearly some of the problems Turkish businesses face while also offering constructive solutions.

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