Surveys Show That Big Business Has a P.R. Problem
By Claudia H. Deutsch New York Times
Friday, December 9, 2005
More than ever, Americans do not trust business or the
people who run it.
Pollsters, researchers, even many corporate chiefs
themselves say that business is under attack by a majority
of the public, which believes that executives are bent on
destroying the environment, cooking the books and lining
their own pockets.
Even as corporate scandals like Tyco's recede, fresh
complaints - over high energy costs and soaring oil company
profits, planned layoffs in the auto industry, bribery and
conflicts of interest in military contracting - fuel the
And every report of high-dollar executive compensation -
Philip Purcell's $113 million payout to leave Morgan
Stanley, James M. Kilts's $165 million for selling Gillette
to Proctor & Gamble - strengthens the feeling that business
funnels money from the workers to the elite. The trial of
Enron's former top executives, which begins in January, is
likely to renew anger about the scandal that touched off
this wave of distrust.
"There is a sense that business is a zero-sum game, that if
companies are making a lot of money, it must be coming out
of someone else's pocket," said Michael Hammer, a management
consultant who writes frequently about business.
Executives ruefully agree with his assessment. "This is a
challenging time for big corporations," said John D.
Hofmeister, who runs the United States operations of Shell
Oil Company. The modern feeling, he said, is "big is bad."
It is not clear whether such views will bring significant
change, but it is clear that the disaffection is spreading.
In a Roper poll conducted from July 28 to Aug. 10, 72
percent of respondents felt that wrongdoing was widespread
in industry; last year, 66 percent felt that was the case.
Only 2 percent checked off "very trustworthy" to describe
the chief executives of very large companies, down from 3
percent last year. And only 9 percent said they had full
trust in financial services institutions, down from 14
percent last year.
Nor do Americans expect much help from Washington: 90
percent of respondents to a Harris poll, conducted Nov.
8-13, said big companies had too much influence on
government, up from 83 percent last year.
Business is certainly not the only big institution viewed
with suspicion. Recent surveys by the Pew Research Center
show that a growing number of Americans believe that
government is inefficient. And 68 percent of the respondents
to the Harris Poll said the news media were too powerful,
while 43 percent said unions were too strong. About 35
percent felt even religious leaders had too much power.
But animosity toward executives as a class, not just the
institutions they work for, seems to be rising to a new
level. "Society has come to believe that the term 'crooked
C.E.O.' is redundant," said Robert S. Miller, the chief
executive of Delphi, the bankrupt auto parts company.
Perhaps unsurprisingly, some politicians are picking up the
antibusiness scent. Representative Barney Frank, a
Massachusetts Democrat, recently introduced a bill to
require shareholders to approve executive compensation and
force companies to take back bonuses that were based on
"Income distribution in America is seriously out of whack,
and there is zero correlation between C.E.O. pay and C.E.O.
performance," Mr. Frank said. He conceded that the bill's
chances of passage were "bleak" but said he hoped it would
"become a factor in the 2006 elections."
Even Republicans have joined the attacks. At a recent
Congressional hearing, senators from both parties demanded
that oil executives defend their record profits. And now
some Senate Democrats, unsatisfied with what they heard, are
clamoring for the oil executives to be called back again,
this time to testify under oath.
Many executives, while acknowledging the public antipathy,
adamantly dispute the criticism. They note that some
companies were more helpful than government in the wake of
the tsunami in Asia and the Gulf Coast hurricanes. They
argue that they are disclosing more financial information,
and have cracked down on unethical behavior.
James R. Houghton, chairman of Corning, said he felt little
animosity in Corning, N.Y., even though his company had cut
thousands of jobs there. "Maybe I'm in an ivory tower, but I
think society realizes that 98 percent of businesses are
doing the right thing," he said. "The press doesn't write
that, because it's the world's most boring story, and
because business does a really lousy job of promoting
Business is trying to rectify that. Commercials for Wal-Mart
show its employees lauding their benefits and career
opportunities. The American Chemistry Council has earmarked
$20 million for an education campaign to stress the role of
chemicals in daily life. The Business Roundtable has stepped
up its corporate ethics programs and just introduced what it
calls Sea Change, a program to get big companies to pursue
environmentally sound growth.
"We don't think it's productive to just say society is
wrong," said John J. Castellani, the roundtable's
president. "A lot of pain and suffering has come from
business's wrongdoing, and we must again foster trust."
Business has faced similar problems in the past. Theodore
Roosevelt was following popular sentiment when he sought to
break up cartels at the start of the 20th century. College
students in the 1960's ran Dow Chemical's recruiters off
campus, furious that Dow's napalm was used on villages in
Vietnam. The term "military-industrial complex" -- rarely
used in a flattering way -- has been around for 44 years.
But these days, even institutional investors no longer give
corporate executives the benefit of the doubt. "We're
operating in a caveat emptor world, one in which you have to
check everything that management tells you against what else
you know and hear," said William Riegel, a managing director
of TIAA-CREF, the huge teachers' pension fund that
commissioned the Roper poll.
But why the rampant distrust?
Some executives concede that business brought the opprobrium
on itself. "Today's companies are run not by entrepreneurs,
but by traders who are increasingly preoccupied with
short-term gain and profits," said Henry B. Schacht, the
former chief executive of both Cummins and Lucent
Technologies. (Mr. Schacht serves on the board of The New
York Times Company.)
But other say that middle-class Americans are seeking
villains to blame for their losses in the stock market
implosion of 2000, and for the high oil and gas prices
"John Q. Public was burned, and asked, 'Where were the
directors and external auditors?' " said Dennis M. Nally,
chairman of PricewaterhouseCoopers. "The trust equation was
Others point out that the gap between the income of the top
10 to 20 percent and the rest of the work force keeps
"There's always been a tendency to dislike the big guy, and
it has been intensified by concerns over global competition
and the widening gap between the winners and the losers,"
said Henry M. Paulson Jr., chairman of the Goldman Sachs
Technology has given the angry voices a more public outlet.
The blogosphere is rife with postings castigating Coca-Cola,
Wal-Mart and other big companies, citing everything from
unfair labor practices to dangerous smokestack emissions.
Hollywood has long recognized that portraying sleazy
business executives as bad guys is a crowd-pleaser. Michael
Douglas won an Oscar in 1987 for his portrayal of a
consummate greedy trader, Gordon Gekko, in the film "Wall
Today, though, unscrupulous businesspeople are practically
stock characters in movies. "You have to be so politically
correct that the only guy you can safely portray as a
villain is a business guy in a suit," Dr. Hammer, the
That is not entirely true, of course. Terrorists and
crooked athletes show up in movies, too. And top actors and
athletes have been plagued with their own scandals regarding
substance abuse, behavioral tantrums and swollen paychecks.
But, experts day, when actors and athletes stop delivering
huge box-office returns or home runs, their paychecks
plummet. In contrast, "there is a real perception that we
continue to pay for failure," Mr. Castellani of the Business
Still, many executives insist that society must share blame
for the business practices it so despises. They say that
people who blame McDonald's for their obesity still order
the large fries, and that those who complain about low wages
still insist on low prices.
"I don't see investors refusing to buy because they think
the chief executive is overpaid, and I don't see union
members boycotting nonunion stores that sell attractively
priced foreign good," Anthony M. Maramarco, a managing
director at Babson Capital Management, said.
That certainly is Wal-Mart's take on it. Mona Williams,
vice president for communications, said Wal-Mart's own
surveys, done at the behest of board members worried about
the company's image, indicated that only 8 percent of
consumers refused to shop at Wal-Mart because they were
opposed to its practices.
"The people who criticize us most do not have a Wal-Mart in
their town, and can afford to shop elsewhere anyway," Ms.
Even so, businesses like Wal-Mart are actively trying to
regain public trust. Wal-Mart has set up an office of
diversity, has added environmental safeguards to many stores
and has fired managers who abused workers.
Mr. Miller, the Delphi chief, cut his own salary to $1 this
year and is not partaking in bonuses allocated for the top
executives when Delphi emerges from bankruptcy. The reason,
he said, is so that he "could look Delphi's hard-working
people in the eye when I tell them that they have to tighten
And many companies are disclosing even more financial
information than tightened laws require. Eastman Kodak,
erroneously listed an $11 million severance cost in its
second-quarter earnings. No money had changed hands, so
Kodak added the amount back into its third-quarter earnings,
a move its accountants remain certain was permissible under
Kodak restated earnings for both quarters anyway. When
asked why, Robert H. Brust, Kodak's chief financial officer,
cited a "heightened sensitivity" about financial reporting
and a desire to adhere to the "spirit" of regulatory change.
Experts say such moves may help, but doubt that they will
pull people back into industry's corner.
"Executives seem to believe that they will be O.K. as long
as people want the products they make," said Rosabeth Moss
Kanter, a professor at Harvard Business School. "Well, Big
Tobacco used to say, 'We're satisfying demand,' too. Look
how far it got them."