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strategy and business
 / Fall 2005 / Issue 40(originally published by Booz & Company)


Daniel Yankelovich: The Thought Leader Interview

S+B: You’ve been quoted in our pages and elsewhere as saying that the United States has just entered a new phase of public mistrust of business — and that it looks likely to last a while. What led you to this conclusion?

Yankelovich: One thing is trend data. Our firm does an annual study of public attitudes in the U.S., in which we ask, “Can you trust businesspeople to do the right thing, most or all of the time?” In 2002, 36 percent of those polled said yes. This year, it’s 31 percent. The last time we saw lows of that sort was in the 1970s.

Then the levels of trust went back up; by the early 1990s, majorities of people we surveyed were saying that they trusted business to do the right thing. People saw innovativeness, creativity, and improved productivity in American corporations: They saw the success of companies like Microsoft. It no longer looked like Japan was taking over. And so there was an enormous sense of relief: Yes, American business is basically credible. Then, as more people invested their retirement money in stocks during the 1990s, the concept of shareholder value took on a loftier meaning. It came to mean preserving the interests of long-term middle-class investors.

And then came the end of the bubble. The people who got hurt were precisely the people who had assumed they were supposed to benefit from shareholder value. They realized that “shareholder value” had come to mean stock options for management tied to short-term earnings.

S+B: Hasn’t this tension with shareholder loyalty been present since at least the 1980s — the era of the films Wall Street and Other People’s Money?

Yankelovich: There was one difference. In the 1980s, business could not hide behind a moralistic notion of shareholder value. When people can rationalize their work as positive and ethical, then they can do the most unscrupulous things while feeling honorable about them.

For example, I’m always appalled at how unethical university officials can be. They believe that “We are good people; therefore, by definition what we do is good.” And then they do things that would make an Al “Chainsaw” Dunlap blush with shame. Similarly, when shareholder value became a quasi-ethical rationale for self-enrichment and cheating in the 1990s, that gave businesspeople who took part in this a feeling of self-justification.

S+B: How did loss of trust then show up in the survey data?

Yankelovich: We saw it in the statements consumers made. Today, when asked what quality they like most in the businesses they patronize, people talk about plain old garden-variety honesty: saying what you mean. They felt that the worst thing Enron did was to show bad faith to its employee–shareholders — sucking them in and then leaving them bereft.

In general, loyalty to customers and employees is now perceived as a one-way street. Companies are perceived as demanding loyalty; but they then outsource jobs, leave towns, and lay people off even when the company is doing well. Citizens and consumers have come to see these practices as meaning that the company doesn’t give a damn about either customers or employees.

S+B: Does that mean that these are counterproductive practices?

Yankelovich: Not necessarily. But if they are accompanied by scandals, misbehavior, and conflicts of interest, then they translate directly into a low level of employee commitment. Only 20 percent of the employees we survey say they are giving the very best they can to their jobs. And the longer people have stayed at their company, the lower that commitment tends to be. Meanwhile, in a global economy, especially for the United States, committed employees can make a big difference. You can see the extra edge that companies like Starbucks and Southwest Airlines get from their employee commitment.

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