American consumers are far less optimistic about the future than business leaders or financial analysts, according to a new study from Hill & Knowlton, which also points to a wide disparity of opinion about the priorities major companies should have during the current economic crisis.
According to H&K’s global chairman and chief executive officer Paul Taaffe, the new study “also provides clear direction for companies looking to strengthen ties with customers, employees and shareholders in this economy. Consumers, business leaders and financial analysts all agree they most admire companies that display a sense of optimism, honesty and creativity in dealing with this current crisis."
According to the study, only 47 percent of consumers say they are optimistic about the future, compared with 65 percent of business leaders and 64 percent of the financial analysts surveyed.
Overwhelmingly, consumers blame the American government (71 percent) and business (69 percent) for the current economic crisis.
But while only 27 percent of consumers believe the new administration can solve the current crisis, they generally agree with the administration’s policy priorities:
· Sixty-seven percent of consumers believe the international trade agreements need stronger labor, environmental and safety standards in order to ensure the United States is getting a fair deal;
· Sixty-three percent of Americans believe the government economic stimulus program should focus on bolstering the middle class; and
· Fifty-four percent of consumers say clean energy technologies are a top priority for economic recovery.
Despite the broad support for clean energy, climate change does not yet resonate as a top priority among American consumers. Only one-third of consumers say it should be the planet's top priority, even during difficult economic times.
U.S. consumers also have a warning for American companies regarding their conduct during the economic crisis. Seventy-five percent of Americans say that companies will be judged on how they treat employees, and 71 percent say businesses should focus on the fundamentals. According to consumers, one fundamental is charitable contributions and commitment to community.
In the current economy, consumers, business leaders and financial analysts agree it’s critical for companies to be more responsible to their communities. Three-quarters of Americans say companies need to be even more responsible to the communities where they operate during difficult economic times. Seventy-seven percent of business leaders and 68 percent of the financial analysts surveyed agree that companies must maintain their commitment to corporate responsibility in order to keep customer loyalty during difficult times.
Yet nearly half of the business leaders surveyed say they are cutting community relations activities, and only 54 percent of the financial analysts surveyed say it’s important for companies to maintain their charitable contributions.
"While the economic realities may dictate cuts in expenditures, it is essential that companies communicate those reductions in a way that demonstrates compassion and minimizes the pain for those affected. Consumers are saying they will judge companies over the long term on how they respond to this crisis." says Sean Murphy, senior vice president of Hill & Knowlton’s corporate practice.
The study also shows a clear difference of opinion between business leaders and financial analysts on corporate priorities in the current economy:
· Ninety-six percent of the financial analysts surveyed say companies must maintain investment in research and development even in the current economic situation. However, 44 percent of business leaders say their company is cutting back on R&D investments.
· Ninety-two percent of the financial analysts say companies must maintain investment in technology during the current economic situation. Yet 48 percent of business leaders surveyed say their company is cutting back on technology investments.
· Fifty-seven percent of the financial analysts surveyed say companies must maintain investment in environmental initiatives in the current economic situation, while 37 percent of the business leaders surveyed say their company is cutting back on environmental programs.
· However, two-thirds of business leaders say their companies are maintaining capital expenditure programs while only 50 percent of the financial analysts say it is a priority.
Finally, the study also shows a significant disparity between what companies and investors say and do with regard to corporate reputation. By overwhelming majorities, both business leaders (71 percent) and financial analysts (74 percent) say a company's reputation is critical to its financial success, yet only 54 percent of the business leaders surveyed say they are maintaining their investment in advertising and communications.