Awards

Last week I came across something that stopped me in my tracks. Actually I was going nowhere because I was on the subway but it struck me (and I shuddered) that I had a moment of insight into a news story that had tremendous implications for companies and their abilities to create lasting reputations. The Pulitzers were announced last week and The New York Times won four. What was so startling to me was that two of the highly prestigious and acclaimed Pulitizers (50%) were for indepth, investigative reporting on the overseas behavior of two different companies. One was a series of reports on alleged corruption at one company and another Pulitzer was won on the costs of human capital in a company’s manufacturing products abroad.

Here is why this is so important — leading companies, the best we have to offer, must safeguard their reputations at all times and not let up for one minute because the spotlight on them is only growing brighter. And just because business operates differently in other cultures or regions, if the behavior does not align with the company’s values or is morally correct, it’s reputation-damaging and wrong no matter where on earth it happens. Earning the right to operate is given to companies through governments or regulators but the license to operate is still very much dependent on the perceptions of communities and consuming public around them and online. How a company behaves matters today and consumers buy based on how companies treat their employees, vendors, customers, communities and others everywhere. Our recent research on the company behind the brand shows that in spades.

These Pulitizers are an early warning sign to companies to carefully consider their behavior on all counts if they want their reputations to be shatterless.

It is November and I remembered that the World’s Best Multinational Companies to Work For list must be out. I went to the Great Place to Work Institute and there it was. The list was released last week. I have to say that between Hurricane Sandy, the election and the Noreaster we had in New York, we lost two entire weeks to chaos. So I must have missed the awards announcement on November 12th.

To make it to this premier ranking is not easy. Companies have to meet the following criteria — chosen from 350 companies, appeared on at least five national Best Workplace lists, have at least 5,000 employees worldwide and have at least 40% of the workplace based outside the home country.

Some of the amazing facts about these companies are:

• On average, returning companies on the World’s Best Workplaces list increased their revenue by 9% this year.
• Over the past 12 months, these 25 companies created 120,000 new jobs globally.
• Furthermore, voluntary turnover at 15 of the 25 companies was at 8 percent per annum, compared with the all industry average in the United States of 9.1%, according to CompData Service.
• Country with the most companies on the list — Mexico.
• Average number of national list recognition awards — nine
• Percent of women in executive/senior positions — 27%
• Greatest improvement in Trust Index — work/life balance, professional development
• Region with the most companies on the list — Europe
• Most represented industry on list — Manufacturing and Production

The reputation of the companies on the list are all stellar. I am, however, trying to understand why the logo of this award uses a dinner plate. Or am I being too literal? Perhaps it is the dinner plate from a white-tie dinner. You think?

I have had China on my mind lately. Weber Shandwick just announced the launch of a new specialty called Emergent China. It advises China-based multinationals and their CEOs on strategic expansion into global markets, including North America, Latin America, Europe, Africa and the Middle East. So I have been more attentive than usual to how Chinese companies build their reputations outside China.

Ironically, as I was reading my Wall Street Journal this morning, I saw a paid advertisement taken from China Daily with the headline, “COSCO Enjoys Success.” The sub-head was “Chinese shipping titan earns respect and gratitude in U.S.”  I read the China Daily article about the robust and successful development of COSCO shipping operations in the U.S.  

Then I turned to the Marketplace Section of the WSJ and saw a fairly negative article about Cosco’s poorly timed expansion that was damaging its financial standing and its dominance.

Although my assumption is that Cosco tried to cushion the fallout from its reporting tomorrow on the first half’s earnings, the timing was unfortunate and not a good working reputation-building strategy. Reputation for emerging Chinese companies needs to be managed for the long-run and a better understanding of how the U.S. media works seems to be in order.  I can’t help but think that better relations with journalists would have helped Cosco with getting a heads up that this criticism was about to appear. I could be very wrong but the two articles (one paid, one not) just screamed for REPUTATION MANAGEMENT.

I give them the benefit of the doubt because they seem fairly savvy. I had noticed two years ago that Cosco was using its Awards and Recognition effectively on their web site. When I was visiting China to talk about reputation, I used their site to show how Chinese companies were using these rankings wisely. So let’s see what happens as more Chinese companies make waves in the U.S. and communicate their positioning and initiatives.

You have probably read enough about our survey The Company behind the Brand: In Reputation We Trust. The first segment of the study, released in early 2012, reported on the growing interdependence of product brand and corporate reputation. The findings alerted marketing and communications executives to a tectonic shift in communicating the voice of the “enterprise” to key stakeholders. The survey, conducted with KRC Research, was among nearly 2,000 consumers and executives in two developed markets (U.S. and U.K.) and two developing markets (China and Brazil). The second release focused on CEOs and their role in reputation-building from the viewpoint of consumers and executives. This third release, just issued today, explores how executives in companies that market their products under multiple brand names differ from those companies who market mostly under one single brand name in their approach to building reputation. It addresses why it may be critical for product brands to be transparent about their ownership, even in cases where a company has made thoughtful and strategic decisions to lessen the exposure of the corporate brand.

We learned that 75% of executives at companies that manage products under multiple brand names now believe that a strong parent brand reputation is as important as the company’s individual product brands. As I was quoted in today’s release and executive summary: “Historically, multi-brand organizations more extensively marketed their product brands over their corporate brands, but their future success might entail determining how to bring the corporate brand forward to realize the full potential of all their reputational assets.”

I always get asked what surprised me. First, despite the advantage of leveraging the parent brand to enhance the reputation of the product brands, the survey found that many multi-brand executives aren’t fully embracing consumers’ increased scrutiny of the company behind the products they buy. While more than eight in 10 single-brand executives recognize that consumers are increasingly checking labels and doing research to identify the company behind the brand, significantly fewer multi-brand executives recognize how proactive and discerning consumers are about what they buy.

 The second surprise was that despite the fact that multi-brand executives say they are promoting company reputation as much as product reputation (81 percent and 80 percent, respectively), they fall short in communicating some key drivers of company reputation compared to their single-brand counterparts, particularly how employees are treated. There was a particularly large gap between single- and multi-brand companies when it comes to communicating about their workplace (73 percent vs. 52 percent, respectively). Companies that are proud of their records for employee satisfaction should not be reluctant to communicate these qualities and tout their awards or placement on ‘best of’ lists. These credentials help drive the overall reputation of a company, regardless of how many brands it markets, and possibly influence purchasing behavior.

Take a look at the summary for greater detail. When I was talking to PRWeek about the findings, they said they were surprised how little information was available on this topic. We agree. When we did the background research on the increasing indivisibility of the corporate and brand reputation today, we were floored by how little had been done and how companies had been relying on “this is how we’ve done it” thinking. We hope that we at Weber Shandwick are filling in some critical gaps on this dimension of corporate vs. brand reputation in a no-secrets-consumer-is-in-the-driver’s-seat Internet world.

Barron’s World’s Most Respected Companies came out last week.  It is a highly coveted list for companies and must please CEOs and boards.  Barron’s lists are definitely worth following because the ratings are gathered from money managers, not consumers which seem to be the stakeholder of choice these days. Apple was number 1 this year which is not a great surprise.  Interestingly, the writer mentions that the problems Apple has faced with FoxConn appear to only be a distraction for now. As always, the ups and downs of company reputations are revealing, particularly among this money-centric set.  As much as I like the list, I like the write up more because there are usually interesting nuggets of information.  This year, these stood out:

·         Investors gave more thumbs ups to US based multi-nationals.  Barron’s says that this is because of the outperformance of domestic stocks in a year of global tumult and the outperformance of quality mega-cap shares as global growth expectations diminished.  Six of the top 10 are among the 30 members of the DJIA.  This was more pronounced than usual.  Even though the money manager sample is US based, Nestle managed to sneak into the top 10 which says a lot for that company’s prospects.

·         What drives perceptions of the world’s most respected companies among this select set? Strong management and sound business strategy top the list, followed by business ethics, product innovation and then financial performance.  In the past two weeks, it seems that I have had more conversations about Ethics and reputation than I usually do. I have been asked to define business ethics, trust and reputation and how they are interchangeable and need better defining.  And as you see below, ethics ranks #3 among money managers in their respect for companies.

·         Russian and Chinese companies did not perform well in the rankings. Clearly there is a perception of “untrustworthiness,” says Barron’s.

·         They predict that the global healthcare companies might be due for a reputational upgrade.  Barron’s says that right now all the pharma companies are cast into one big “ugly” bucket of drug-patent expiration, reimbursement head winds and weak development pipelines.  “Funny, it would seem a forward-looking investor could make the case that aging populations in the developed world and growing medical spending among the emerging middle-class could boost these giants’ fortunes in the coming years.”

The New York Times had a very interesting article yesterday for a variety of reasons. But one reason that hit the spot was about how consumers make decisions and how the author went about choosing the right baby formula for his infant. After he and his wife researched every possible formula on the market and found that they were all basically the same, he came to this conclusion:

“Despite knowing this, I still insist on paying twice as much for Enfamil, which its maker claims is “scientifically designed.” (Aren’t they all?) I splurge because Mead Johnson is a 107-year-old company that has been promoting a single baby-formula brand for more than 50 years. I figure that it’s less likely to squander its name by skirting the rules or engaging in shoddy manufacturing than a company with less to lose. This peace of mind costs me about $7 per day.”

This is emblematic of our research on how the company behind the brand matters more than ever. The author was reassured in his purchase of Enfamil because he learned that the company behind it, Mead Johnson, had been around long enough that they were not going to risk their century-old reputation by messing around with the manufacturing and production of  its baby formula.  The parent company made a significant difference in a confirming to the writer that this was the better buy, even at a premium. And not only did this infant get to taste Enfamil but the writer blasted his choice around the world. There you go for serendipity public relations.

After reading this gem which was fairly upfront in the article, I kept reading.  The Enfamil example led into the article’s main message which is that information overload is plaguing us all and making it increasingly hard to find what we are looking for unless we want to devote days to researching.  ”Too much information, it turns out, is a lot like no information.”  Therefore to deal with this information smog, people need guides orsherpas to guide their way through the data chaos. According to the author, “economists have a name for these cues that companies employ to convey their hidden strength: signaling.”

Reputation-building uses the strategy of signaling.  Good reputations serve as a shorthand to identify whom you want to buy from. A company that is a best place to work for or most sustainable or trains its leaders best helps to narrow the choices between products. Do I want to buy my infant formula from a company that treats its people right? You bet.  The thinking goes like this: if they treat their employees well,you can make the leap that they turn out safe products.  In our research on parent brands, we had an open-ended question on why the parent company mattered when buying a product brand. Over and over, consumers mentioned that knowing the parent brand helped them sort out which products to buy. For example, one consumer said: “The integrity of a company will ultimately show in its products.”

The article also made me think about anniversary celebrations. Many companies make a big deal about how long they have been in busines — 50, 100 or 200 years. It turns out that it is good to do so in order to remind consumers and other stakeholders that there’s alot of reputational equity behind those promises.

The premier list for CEOs….Barron’s World’s Best CEOs list came out this weekend. Although you have to have a subscription to the magazine, I can tell you a few things. Number One — this is a very hard list to get on. CEOs have to have been on the job for at least three years (although they actually prefer five years) to show the impact that a CEO has on a large company. They have to have market values of at least $5 billion and the list is global  (Eighteen CEOs come from the U.S., seven from Europe, three from Asia, and one each from Australia and Canada.)  Every year they have a different slant to how they choose their CEOs. This year they applied the Warren Buffet rule:

“As Warren Buffett sees it, the best CEOs always think like business owners. What he means is that great leaders combine passion, commitment, creativity, and an entrepreneurial drive. That mix isn’t easy to find, but Buffett definitely is onto something. So, as Barron’s drew up its annual list of the 30 best CEOs around the world, we looked hard for ownership mentalities.”

 Many of the usual suspects are on the list such as Jamie Dimon, Howard Schultz, David Novak, Larry Fink, Paul Otellini, Jeff Bezos, Steve Jobs, Peter Loscher and others (including Buffett).

What I particularly liked about the article besides giving CEOs their fair due was the close to the article. They humbly said:

“If you think we put the wrong people on the list or want to make a suggestion for next year, please write to editors@barrons.com. We take advice seriously.”

I think that is a great way to solicit opinion. It makes you feel comfortable about taking them up on their offer, in fact.  Impressive.

Each year Fortune publishes the 100 Best Companies to Work For in the U.S.   While the bulk of the company evaluation rests on a comprehensive employee survey, Fortune publishes a wealth of employer statistics about benefits, diversity and jobs. Weber Shandwick has been cataloguing this data since 2006, enabling us to look at how each factor changes over time.

Consistent with the improving job market in the U.S., the Fortune 100 Best Companies to Work For listing reflects some uptick in the areas of diversity and job statistics. While all of these Best Companies tend to offer a variety of perks to their employees, the number of these employers offering such perks have either plateaued or dwindled. Below are insights into some of these trends.

Jobs

The average Best Company enjoyed its highest job growth rate since 2008 (9%). 2010 and 2011 were bleak years, with growth of just 1% and 2%, respectively. Even more gratifying to report is that the number of companies with negative job growth is at its lowest level since 2009 (11%) when Fortune began providing job growth for all listed companies.  It had been as high as 45% in 2011. While there may be a self-selection factor in this, i.e., companies that experienced very high attrition simply didn’t enter into the list competition this year, it does mean that layoffs do not preclude a company from making it onto this important list. Perhaps, it is the way in which these companies manage their layoffs from a communications and operations perspective that result in their employees voting them onto the list. In fact, only 19% of these highly regarded companies have never had a layoff.

An interesting statistic that we assessed this year for the first time is the number of applicants per job opening. We went back to 2010 to see how this has changed, and change it certainly did! In 2012, the average number of applicants per job opening is 312 vs. 83 in 2010. Most likely this is a reflection of an improving job market (employees once cautious to leave stable jobs simply weren’t applying for new jobs), or it may show the effects of the good reputations of these particular companies. (And of course it may reflect the number of people looking for jobs in general but we’d expect the figures in 2010 and 2011 to be more equal.)

Diversity

While the average percent of women and of minorities in Best Companies do not show any gains since 2006, we see that 100% of Best Companies now have gay-friendly policies and the trend for gay-friendly benefits continues to edge up from 70% in 2008 to 89% in 2012.

Benefits

The most pronounced change over time in the offerings Best Companies extend to employees has been job sharing. In 2007, 71% of Best Companies offered job sharing and in 2012 it is down to 53%. Also a noticeable change since last year is the number of Best Companies that subsidize employees’ gym memberships, down as well (71% vs. 61%). All other benefits are fairly flat from last year.  Perhaps this is an outcome of a prolonged a down economy where employees’ satisfaction with having a job drives their satisfaction with their employer, regardless of job sharing or gym benefits.

Engagement

We wanted to see how many Best Companies represented their organization on the Fortune site with a picture of people (presumably their employees, but we can’t say for sure). The majority did – 64%. However, it begs the question as to why the rest would choose not to showcase their employees when the ranking is so employee-focused and is such a great recruiting tool. Most other pictures were of the corporate headquarters building.

*Too many companies on list with “NA” to calculate

A few interesting things crossed my mind and desk this week that I thought I would share. All reputation-related of course.

1. The World Economic Forum released its report on the top risks facing the world in 2012. Social unrest and income inequity were at the top. Natural disasters such as the earthquake in Japan were also high on the risk list. And as pointed out, one risk affects another creating a domino effect. “The Internet, meanwhile, can magnify and spread the effects of a disaster in other ways. Rumors, even if incorrect, spread quickly on social networking sites — sometimes more rapidly than emergency services can communicate accurate information. As word of disasters like the terror attacks of Sept. 11 or the earthquake in Japan spreads globally, consumers hunker down in front of their computer screens or televisions, rather than going about their daily lives. This increases the economic effects of a crisis, even in areas far removed from the source.”  Disasters such as the horrific earthquake, tragic 9-11, death-defying financial crisis, massive oil spills and nasty ash clouds coming from Iceland all heighten other risks in some way. And risk spells reputation damage depending on how a company or country responds and solves the problem.

2. The report from WEF also mentioned that risks are on the horizon as leadership transitions are in full force this year. It is not just the U.S. presidential election that poses risk and stirs up emotional angst. There are leadership transitions underway this year in France, Russia and China as well. Add to that the sudden transitions in the Arab world this past year and we see upheaval and uncertainty. When CEO transitions are underway, the first few months can be risky so as we see world leaders change, tighten your seatbelts. The public will be more socially active than ever. We’ve already seen that in Russia.

3. I’ve written here about rankings and so-called “worst of” lists where companies, CEOs and environmental records are put on notice that they are not making the grade. In most Januarys, TripAdvisor.com comes out with its “dirtiest hotels” in the world.  No more. The CEO Stephen Kaufer says, “We want to stay more on the positive side, so we’ll continue to feature the best destinations, the top hotels.  We’re slicing and dicing the ‘best of’ in different ways this year, more than focusing on the negative.”  Although the article where I learned about this says there were potential legal considerations and competitive reasons for abandoning the January list, it also mentioned that the original “worst of” list was done for PR reasons and that TripAdvisor is less interested in that now.  Perhaps there is a reputation-reason afoot here. There is so much negativity online on some of these sites and it is so easy to find what you are looking for that a list of the 10 worst may be hardly worth alienating visitors to your site. Everyone worries about the detractors and the praisers. Maybe it is time to just worry about the average site visitor who does not want snarky comments and lists, but just the plain old straight forward facts to plan a plain old relaxing get-away.

          I think about rankings and scorecards all the time. Afterall, I cut my teeth on Fortune’s Most Admired Companies years back.  At the time, there were not many competing scorecards. And, afterall,  today we have an active rankings practice at Weber Shandwick that we call Scoreboxx. We help companies all the time understand what rankings are important to pursue and which are not worth the time. There is barely a day that I don’t hear about a new scorecard or as I have mentioned in a post I wrote on reputation trends, a newworst-of  list.  In fact, I have started collecting worst-of lists because they fascinate me as much as best-of  lists. Strange hobby but who knows, they could be worth something in the future. Not really.

Today’s New York Times had a fascinating article on the rankings and metrics obsession that we seem to live by.  The writer even predicted how the frenzy will only rise as we enter the serious election campaign. Little did she probably know that the op-ed page in today’s NYT had a chart on how Donald Trump was measuring up as a front runner in several polls as a presidential candidate.  Here are some the quotes from the rankings article that I highlighted for sakekeeping. They go far in explaining our rankings addiction.

“Numbers make intangibles tangible,” said Jonah Lehrer, a journalist and author. “They give the illusion of control.”

“The trouble, though, is when we mindlessly and blindly rely on those numbers to tell us everything,” said Sherry Turkle, a professor of social studies of science and technology and director of MIT. “Just because we have the skills and ability to put metrics on everything doesn’t mean we should.”

“This reliance and overweening trust in numbers is to some extent generational,” said Howard Gardner, a professor of cognition and education at Harvard Graduate School of Education. “For almost anybody in the United States under the age of 25, the only models are quantifiable rankings,” he said.

 A few comments. I don’t think we can blame everything on the younger generation although Gardner has a point about everything being quantified for them (SATs), so why shouldn’t they apply it everywhere else?  The truth is that all age cohorts use rankings to pick the best restaurant, best travel location, best employer and best college to apply for.  We’re all hooked.

The article also goes into how authors end up measuring themselves by Amazon rankings of books sold.  As the author of two books, people always ask me how many books did you sell? Personally, I have no idea since I wrote the books out of love for my topic, reputation, and much much less for my status on the number of books sold.  However, I sometimes think I am not a very good author because I don’t know the answer to this frequently asked question and I’d be a better person if I at least knew. Despite that, I have to get better at checking Google Analytics to see how many people read my blog. When I have looked at it in the past, I could not figure out whether I should be blogging on Fridays or Mondays or Thursdays and just gave up. I have to get better at this because I don’t know how I fare!

Another element in the article certainly caught my eye. It referred to a blog posting on Online Status Anxiety by Jonah Lehrer who has a new book out on How We Decide.  He is so right. People are obsessed also with the number of followers and fans and likes.  Our social ranking is now quantified.  Yikes. Here is a selection I took out of Jonah Lehrer’s blog posting:

“Now that the social web is maturing – the platforms have been winnowed down to a select few (Facebook, Twitter, LinkedIn, etc.) – some interesting commonalities are emerging. The one shared feature that I’m most interested in is also a little disturbing: the tendency of the social software to quantify our social life. Facebook doesn’t just let us connect with our friends: it counts our friends. Twitter doesn’t just allow us to aggregate a stream of chatter: it measures our social reach. LinkedIn has too many damn hierarchies to count. Even the staid blog is all about the metrics, from page views to unique visitors.”

I think I am going to check out my blog postings metrics today! Enough slacking on the metrics. My online reputation should be the measure of my life!