Weber Shandwick

Years ago at my former job, the research we did caught fire due to one simple finding. In fact, I used to think of myself as the 50 percent woman. Our research on CEO reputation revealed that 50 percent of a company's reputation was attributable to the CEO. For some reason, this one simple factoid traveled around the world like wild fire. People just found it incredibly memorable. Part of the reason that the "50%" was so radioactive was because CEOs had became better known (Jeff Bezos, Steve Jobs, John Chambers, Jack Welch, Bill Gates, Carly Fiorina) and no one had really asked the question. Reputation as a body of knowledge was still nascent (not like it is now) but it was just about to tip. And tip it did. In our new survey on the corporate brand, we asked the question again.  It's been about 10 years since that earlier study. And despite all the ups and downs in the stock market, CEO compensation issues, scandals, Occupy Wall Street, celebrity CEOs, the Internet, etc etc, the executives in our study reported that 49% of a company's reputation is due to the CEO's reputation. As interesting, when we asked consumers -- the general public -- 66% say that their perceptions of top leadership also affect their opinions of company reputations a great deal to a moderate degree. Only 7% say that there is no link between the two.  So CEO reputations arenot going over their heads whatsoever. Thus as much as it might be politically incorrect to admit that the reputation of the CEO plays a significant role in how companies are viewed, it does. Of course, product quality matters most but leadership from the top, how they behave and what they communicate is not to be ignored. A large 59% of consumers cite leadership communications as influencing company perceptions. It no longer pays to be silent.

Another exciting day (despite the clouds and threatening rain here in NY). Weber Shandwick's research was covered in today's WSJ. B8. In the print edition. Can't send you a link (although here is one if you can get in) to the online version since you have to subscribe! But you can get all the relevant info here from the press release and the executive summary. Back at the beginning of the year, we released a terrific study (I really feel an affinity for this one) about the growing indivisibility of reputation and product brand. We had so much great data that we figured we would release at intervals. So here we are with the second installment of the global research, The Company behind the Brand: In Reputation We Trust – CEO Spotlight which explores the importance of executive leadership and communications to helping reverse the tides of waning trust in companies and solidify reputation. Here are some big learnings from the survey with KRC Research among 1,950 consumers and executives in two developed (U.S. and U.K.) and two developing markets (China and Brazil) :

• A full two-thirds (66 percent) of consumers say that their perceptions of CEOs affect their opinions of company reputations. Executives, like consumers, don't overlook the importance of a leader’s reputation – they attribute nearly one-half (49 percent) of a company’s overall reputation to the CEO’s reputation. Say goodbye to the days when purchases were made solely on product attributes. Today’s consumer is savvy, well-informed and privy to a wide array of purchase options. Decisions are now increasingly based on additional factors (yes siree) such as the company behind the brand, what the company stands for and now....even the standing of its senior leaders. 
• Nearly three in 10 consumers (28 percent) report that they regularly or frequently talk about company leaders with others. When consumers are asked what influences their perception of companies, approximately six in 10 (59 percent) say they are influenced by what top leaders communicate. Things have radically changed when you can say that consumers -- the public square -- are reacting to what leaders say. Corporate leadership communications are important across the globe, but to an even greater extent in emerging markets. Nearly two-thirds of Chinese consumers (64 percent) and nearly three-quarters of Brazilian consumers (72 percent) rely on executive communications when learning more about a company. For those companies growing in emerging markets, this is important.
• Respect for corporate leaders – CEOs and other corporate leaders – has taken an especially large hit in developed markets – 72 percent of U.S. and 71 percent of U.K. consumers have lost respect in the past few years. Not such a surprise to me because the past few years have been hard on everyone. A bit different in developing markets however: Chinese consumers are evenly split on their changing opinions of corporate leadership (35 percent lost respect vs. 38 percent who increased respect). Brazilian consumers are more likely to have increased their respect for top executives than decreased their respect (33 percent vs. 21 percent, respectively).

Here's the last word that holds a lot of punch in my book....a large 60 percent of a company’s market value is attributed to its reputation. Sixty percent. That's no small change. Get those execs on the communications trail sooner than later.   .

P&G is announcing its new corporate campaign that is a "global serenade to mothers." It is covered in an article today. The reason this is big news to me (and I am not an Olympian's mother) is that it is part of the P&G initiative to focus on the corporate brand behind the products they sell. Our research on The Company behind the Brand: In Reputation We Trust is all about the increasing interdependence between corporate and product brand reputation. As the global CMO says, "P&G is in the business of helping moms." Or he could have said that P&G is in the business of building its corporate brand reputation. The new campaign is focused on the moms of athletes, particularly Olympians. Right on. As we learned in our recent survey, 87% of executives report that the corporate brand is as important as the product brand. And consumers also agree -- 70% of consumers in markets around the world say that they avoid buying products if they do not like the company behind the brand. We are releasing some more information shortly from the study on the link between CEO and reputation as well as the impact of leadership communications so check here soon.

A week or so ago, I started a new Twitter account on social media for CEOs -- @social4ceos . As you know, I'm interested in how CEOs are adopting social media at all stages of their tenure -- in the first 100 days, year one, year two and so on.  At Weber Shandwick, we did an audit on Fortune 500 CEOs and their participation in social media... Socializing Your CEO  and we are working towards the sequel. Just wanted to let you know that I will be providing information a la Twitter on the topic of Social CEOs to help steer CEOs and their executives towards the social side of the wired hemisphere.

Reputation Institute came out this week with their RepTrak Pulse survey for the US. It measures the reputation of 150 largest US public companies among consumers.  In addition to the usual who's up and who's down, RI reveals some interesting stats that confirm our research results on Companies Behind the Brand. I was delighted. As RI says in its press release, "Since 2009, U.S. companies have been competing in a new Reputation Economy, where WHO THEY ARE matters even more than WHAT THEY PRODUCE, according to general public sentiment. Framing this in the context of critical consumer behaviors, including purchase consideration, loyalty and recommendation–company or “enterprise” perceptions explain 60% of these behaviors, with product perceptions only accounting for 40%." This is a big shift which we agree with. In addition, RI asked Chief Reputation Officers (CEO, CMO and CCO) several questions and learned that 51% name the CEO as the person with the responsibility to set reputation strategy. Fascinating results.

There’s no avoiding the bad odds of maintaining a coveted top shelf reputation spot in one’s industry. Each year Weber Shandwick measures the rate at which companies lose their #1 most admired position in their respective industries on the Fortune World’s Most Admired Companies survey. We call this the “stumble rate.” Between 2011 and 2012, 49% of the world’s largest companies experienced a stumble, up from last year’s 43% but exactly the same as 2010’s rate.  With 1-in-2 companies losing their enviable industry position during the past year, the stumble rate highlights just how difficult a good name is to keep.  Looking at this finding another way, #2’s have good odds of becoming #1’s in their industry. Either way, reputational equilibrium is hard to keep. Companies have to continually manage their reputations and watch out for vulnerabilities. Perhaps companies should apply "stress tests" in the same way they are applied in medicine -- determining how the organization's core equity responds to external stress or crisis in a controlled environment. Very much like scenario planning.

2012 Reputation Stumble Rate from

Fortune's Most Admired Companies Survey

 

The industries that have the same #1 this year as last year are:  Aerospace & Defense, Beverages, Computers, Consumer Food Products, Delivery, Electric & Gas Utilities, Electronics, Entertainment, Food Services, Health Care: Insurance & Managed Care, Health Care: Medical Facilities, Health Care: Pharmacy & Other Services, Home Equipment & Furnishings, Information Technology Services, Insurance - Property & Casualty, Internet Services & Retailing, Mining, Crude Oil Production, Network Communications, Pharmaceuticals, Securities, Semiconductors, Soaps & Cosmetics, Specialty Retailers: Apparel, Specialty Retailers: Diversified, Superregional Banks, Trucking, Transportation & Logistics, Wholesalers: Diversified, and Wholesalers: Office Equipment & Electronics. Seven industries have had a new number one each year since 2009. The industries with the most churn are Airlines, Energy, Food & Drug Stores, Life & Health Insurance, Motor Vehicle Parts, Telecom and Tobacco. During the past three years, a total of 40 industries have seen at least one stumble, so with nearly 60 industries represented on the ranking each year (it varies year to year), few are immune to reputational stumbling. We also looked at the rankings within each of the nine reputation drivers that survey respondents assess companies on to help understand why companies stumbled. Of the stumblers between 2011 and 2012, we learned that...

• One stumbler experienced a ding to just one of its drivers. Sometimes it just doesn’t take much when you have strong reputational competition.
• Two stumblers lost ranking across all nine drivers.
• The most pervasive loss of reputation was in the areas of Use of Corporate Assets and Social Responsibility. Nineteen stumblers’ rankings went down on these two drivers, followed closely by Management Quality with 18 stumblers losing rank on this driver.
• What may have degraded perceptions of these drivers? A 2011 media analysis of the largest drops suggest that survey takers may have been sensitive to management changes (e.g., one CEO step-down announcement considered by analysts to be too far in advance of his intended departure date and one long-term CEO retiring) and management of assets (e.g., property spin-offs and failed asset funding). As for social responsibility, no stumbler experienced particularly steep drops on this driver so nothing reported in the media popped as a clear reason for the dings. Perhaps CSR activities are once again being more closely scutinized by peer survey takers as CSR becomes expected behavior.
• The driver least damaged was Global Competitiveness with 12 stumblers losing position.

 

I am fascinated by CEOs who use social media. At Weber Shandwick, we took a look at the sociability of CEOs.  A recent survey (Summer 2011, not so recent) by NYSE Euronext among 317 listed company CEOs, 119 CEOs of emerging companies and 205 MBA students found that most CEOs recognize the impact that social media will have on their companies -- 79% think it will be significant and 91% of nonlisted ones and MBAs think it will be significant.  However few of the listed company CEOs -- 31% -- are actively using it, compared to 55% of emerging company CEOs.   This compares with the 36% we found of Fortune 50 CEOs worldwide who are engaged in social media. The survey also found that CEOs of listed companies believe that maintaining and strengthening their company's reputation is the most important activity for them this year. Those in non-listed companies say not only is supporting reputation important but extending the brand into other product categories and expanding into other geographies are high on the list. Wonder if by 2050, 50% of Fortune 500 CEOs will be users of SM. I bet so in some shape or form.

CEOs get the importance of corporate responsibility. At the recent Board of Boards CEO Conference in New York where heavyweight CEOs from around the world meet annually, the discussion on doing well by doing good was front and center. In an article on that meeting in Barron's, the attending author said,

"How the times have changed. Whether investors like it or not, this era’s consumers do care deeply that the products they purchase are both cheap and do no harm to the environment, or, better yet, positively contribute to the state of the world. A full 59% of the queried CEOs felt consumers were “demanding greater levels of transparency regarding their companies’ community engagement initiatives;” 69% claimed such efforts on their part were “rewarded by consumers.” Because consumers care, investors should care. Fact is, when a company’s cool and progressive spirit—it’s intangible goodwill— is undermined by the firm’s community-damaging business practices, investors often wind up paying the price."

I was glad that CEOs noted that consumers care because that is what we found in our recent The Company Behind the Brand: In Reputation We Trust. Consumers are no longer passive about the companies that make the products they buy. They care and do not like being surprised if they find that the product they adore is made by a company they detest. At the meeting, CEOs were asked whether their company's community and social engagement was "rewarded" by its shareholders and I agree with the author that the response was positive. More than one-half (56%) believe shareholders reward firms for their corporate citizenship. And yes, we all know that it comes down to having the right metrics. It is awfully hard to pin down. What is most interesting to me over the next 12 months is seeing how Apple's reputation fares as the Foxconn issue of employee mistreatment stays in the news. I believe that companies get just so many chances to soar above the damaging reputational news and then it reaches the tipping point where it surely matters. I often refer to the BP Effect. BP had three chances to make their reputation right -- the Texas City refinery episode, the Alaskan pipeline debacle and then the Gulf of Mexico oil spill. The third one did them in.

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.

 

 

	2006	2007	2008	2009	2010	2011	2012
Jobs
Average Job Growth	7%	9%	9%	8%	1%	2%	9%
% Companies with Negative Job Growth	N/A	N/A	N/A	22%	41%	45%	11%
Average Voluntary Turnover	N/A	N/A	N/A	12%	7%	7%	8%
% Companies that Never had Layoffs	N/A	N/A	N/A	9%	17%	15%	19%
# Applicants per Job Opening	N/A	N/A	N/A	N/A	83	N/A*	312
Diversity
% Companies with 50% or More Women	42%	40%	40%	41%	46%	42%	44%
% Women (Average)	N/A	N/A	49%	49%	49%	48%	47%
% Companies with 50% or More Minorities	7%	8%	6%	8%	8%	8%	9%
% Minorities (Average)	N/A	N/A	28%	30%	29%	29%	30%
% Companies with Gay Friendly Policies	N/A	92%	95%	95%	96%	99%	100%
% Companies with Gay Friendly Benefits	N/A	N/A	70%	79%	83%	88%	89%
Benefits
% Companies with Unusual Perks	7%	5%	15%	8%	16%	13%	12%
% Companies with On-Site Child Care	33%	32%	29%	32%	32%	30%	31%
% Companies with Fully Paid Sabbaticals	25%	22%	18%	19%	19%	21%	23%
% Companies with 100% Paid Health Care	14%	16%	21%	15%	13%	14%	14%
% Companies with Job Sharing	N/A	71%	63%	61%	68%	56%	53%
% Companies with On-Site Gym	N/A	N/A	69%	69%	69%	67%	69%
% Companies with Subsidized Gym Membership	N/A	N/A	59%	78%	72%	71%	61%
% Companies with Compressed Workweeks	N/A	N/A	82%	75%	81%	81%	80%
Employee/Employer Engagement
% Companies with Posted Comments on their Best Companies Page	N/A	N/A	N/A	N/A	N/A	N/A	15%
% Companies Displaying Images of People on their Best Companies Page	N/A	N/A	N/A	N/A	N/A	N/A	64%

 

*Too many companies on list with "NA" to calculate

We have been very busy this month. We also released a survey on where the most powerful women in business spoke in 2011. Using the Fortune Most Powerful Women in business list that includes U.S. and non-U.S. professional executives, we audited where they spoke to determine how much they were in demand and what podiums they were invited to.  There were several interesting findings that are worth noting since one way to build professional reputation, get company messages across to important audiences as well as build corporate reputation is to leave those four walls of the C-suite.  In fact, I was speaking to someone at Forbes the other day who confirmed to me that the executive conference business was booming. As it were, women are in great demand.  

• These most powerful women spoke at 218 unique events in 2011.
• The leading speaking forums in 2011 for these top women executives included Fortune’s Most Powerful Women Summit, The World Economic Forum/Davos, India-US CEO Forum, Women Corporate Director’s Global Institute, the Paley Center for Media International Council Summit and the APEC Women and the Economy Summit.
• We also provided insights on what types of conference events they spoke at – from industry-specific events (e.g., World Food Prize Conference and FICCI-IBI Conference on Global Banking) and conferences geared toward job function (e.g., Techonomy and ANA Conference), followed by women’s leadership and academic forums.
• Our research also found that the digital category (e.g., Digital Life Design and South by Southwest) is starting to emerge and is crossing women business leaders’ radar screens.

We do this type of analysis every year and sometimes we analyze all CEOs and top level executives --men and women. However, we thought that looking at where executive women spoke was past due. So here we are.