Posts Tagged ‘Reputation Institute’
One study comes from Echo Research and Reputation Dividend. They found that corporate reputations contribute to a total of $3.2 TRILLION to market cap in the S&P 500. Big number.
Reputation Institute released a new global survey report among corporate reputation officers (CROs), Navigating the Reputation Economy. The respondents are those senior officers who identify themselves as the senior-most person responsible for “setting their company’s corporate reputation, marketing, corporate communications/public affairs and business strategy.” One of their most important findings mirrors what we learned in our study on the company behind the brand. RI found that 80% of CROs say people’s willingness to recommend their company as a place to work or as an investment is driven by the perceptions of the company overall. Same for direct purchases — 38% say that purchase decisions are driven by the company behind the product or brand rather than what is actually for sale.
What is most particularly illuminating about the RI study is their depiction of where companies fall on the reputation management continumm. They describe a five-phase journey that companies go through from phase 1 (exploring reputation) to phase 5 (integrating reputation into business planning and company strategy). Phases 2 (customization of measurement and management) and 3 (business planning integration) come before phase 4 (cross functional implementation and accountability). Not surprisingly, only 13% of companies fall into the Advanced Phase among the 318 companies in the study. Most companies fall into phases 2 and 3 (69%). Eighteen percent fall into the phase 1 exploration phase. My experience agrees with this assessment. Most companies are in the phase 2 and 3 phase. Few really fall into the most advanced stage.
The distinctions between Early Phase and Advanced Phase companies could not be clearer, according to RI’s results . Advance Phase companies are 2-3 times more likely to:
1. Understand reputation across stakeholders and markets
2. Understand specific business impact of reputation
3. Have an internal council or steering committee to champion action
4. Have senior executives accountable for corporate reputation KPIs
5. Have reputation integrated into long-term enterprise vision, goals, and priorities
The favorite communications channels for reputation management are the company website, the annual report, stakeholder events and CSR reports. Advanced phase companies are more intense in their usage of nearly all the channels. However, as we have seen in elsewhere and in fact our own research, social media is the one channel where early phase and advanced phase companies are nearly the same. My sense is that this is because social media is still fairly new and experimental in the eyes of CROs and everyone is using it in the same way without being sure about what works and what does not work. All they know is that they have to do it!
Every week I think nothing new is happening in the world of reputation. And I am always wrong. There are always CEOs coming and going, companies that get into trouble and lose reputation points and new things to learn. That’s the best part. Here’s a few:
1. Booz Allen released their fabulous CEO Succession report. I read it every year and welcome the insights. This year they focused on new CEOs, a topic dear to my heart and book. This year they found that 14.2% of CEOs of the world’s 2500 largest public companies changed over. This is a sizeable increase from last year when the turnover rate was 11.6%. This increase makes sense because as boards battled the recession, it was not the opportune time to change chief executive reins. Better to batten down the hatches when times are tough. Strikingly, Bozo found that outsider CEOs are making a comeback. In 2011, 22% of all new CEOs were outsiders compared to 14% in 2007. That’s definitely surprising to me since the trend has been in favor of insiders for a while now. The possibility is that companies need fresh new ideas and outsiders with global experience as they now look to grow. You should check out the report because there always is a lot of fascinating information on the world of CEO transitions. For example, outsider CEOs are more likely to lose their jobs, the number of CEOs being appointed chairman has declined and nearly 90% of new CEOs have not been a CEO before. That last fact is astounding and perhaps why we get asked about our services on CEO First 100 Days as often as we do. In another post, I will provide Booz’s insights on advice on CEO’s first year in office.
2. Reputation Institute released its worldwide reputation findings on the Most Reputable Companies. Their headline reads, “Reputation Is Impacted More By What You Stand For Than What You Sell.” In their research, they found that “People’s willingness to buy, recommend, work for and invest in a company is driven 60 percent by their perceptions of the company and only 40 percent by their perceptions of their products.” That’s an important finding and mirrors Weber Shandwick’s results on the importance of the company behind the brand. We are on the same wavelength, clearly. They also found that only 11% of the top 100 companies have better reputations abroad than at home. “It’s because reputation isn’t something that’s easy to export,” says Nicolas Georges Trad, Executive Partner at Reputation Institute. Love that quote.
3. I also attended Spencer Stuart’s CMO Summit this week on innovation. It was illuminating in how innovation gets baked into companies from the head marketing honcho. Whereas one company CMO panelist was analytical in her approach, another was more artistic and qualitative. Goes to show that culture drives execution. From the panel, I learned about another usage of HIPPO which is always a bonus to me – it is a reference to the Highest Paid Person’s Opinion. Everyone in business knows what that means.
Just read an article in The Economist (which I love) that questions the business of reputation management. The columnist attended a recent meeting in London held by the Reputation Institute (RI) on their new RepTrak results for British companies.
The writer rightfully acknowledges that we are living in a “reputation economy” where institutions and individuals literally trade on the currency of reputation and this type of exchange makes “intuitive sense” in a society where Facebook is worth more than many Fortune 100 companies. Reputation Economy is the term used by RI and its professionals, led by Charles Fombrun, and continue to provide valuable, far-reaching insights to companies around the world. The writer, however, raises several interesting objections to the effectiveness of the reputation management industry as it stands today.
First, he/she (have no clue) objects to the idea that many different factors as disparate as product quality and corporate citizenship are all rolled up into one understanding of what reputation means. That may be true, but I am not sure why that is bad in such a complex and fragmented world where every individual becomes an interest group. For us reputologists (I just made that up), the factors contributing to corporate reputation vary depending on the company’s history, industry and situation they are facing. For example, in the financial industry, unlike say the automotive industry, it is often difficult to distinguish one company from another by focusing only on their products and services. Their reputations are far more likely to be built on sheer trust in the perceived integrity of their leadership and governance.
The columnist’s second objection to reputation management today is the assumption that companies with positive reputations will find it easier to attract customers and withstand crises. As evidence of the supposed weakness of this assumption, the columnist cites many companies with strong bottom lines despite terrible reputations: e.g., tobacco companies (harmful product), Ryanair (poor service) and Daily Mail (mean spirit). Yes, there are always companies that will make gobs of money despite wrong-doing and poor service. Nevertheless, these companies have and will continue to have a hard time attracting and retaining the best talent. But in this online world where advocates and fans matter more than ever, it will be harder to keep that bottom line as stable as it once was.
But the greatest objection to the reputation industry, according to the columnist, is and I quote… “its central conceit: that the way to deal with potential threats to your reputation is to work harder at managing your reputation.” He/she continues with… “The opposite is more likely: the best strategy may be to think less about managing your reputation and concentrate more on producing the best products and services you can.” Here I agree at least in part with the columnist’s thinking. The best way to build reputation is to “have a customer” as Peter Drucker always said. Without customers, there is no business to have a reputation worth building. The reputation industry, however, does not urge industries to ignore producing the best products and services in favor of managing reputation. To the contrary, building the best products and services is part and parcel of a good reputation. Also, however, today’s society is much more complicated and often it behooves a corporation to do more than just having great products and services. Apple, for example, may have the best products but if it does not give a damn about how it treats employees or contributes to society, it will face problems that if allowed to accumulate may well threaten its bottom line. We see that now with regard to questions about their handling of factories in China.
I think that the columnist should rename the article to Why companies should worry MORE about their reputations or else.
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.
America’s Most Reputable Companies list is out from Reputation Institute. Just saw an article in PRWeek. And read the RI press release for more detail. The list also appears in Forbes. In addition to reading about the various companies that made the best and least best (polite way of saying it) reputation list, several interesting facts came out that immediately drew my attention. They are below.
- The survey found companies with excellent reputations were 2.5 times more likely to put their CEO in charge of positioning and telling the corporate story. This is music to my ears. Today, CEOs are the content providers of the highest order. Great to have another source say this besides us.
- Highly-regarded companies are 15 times more likely to manage reputation across company functions. Reputation is of enterprise importance and not just a PR issue. Good point.
- Highly-regarded companies were 1.5 times more likely to include reputation metrics as part of their senior management dashboard, and 1.7 times more likely to seek outside assistance with corporate reputation management.
I was very pleased to see RI asking these questions which only add to the reputation library of information. Thanks to the RI team!
I was a panelist at a thoroughly enjoyable event for NYU masters of communications students earlier this week. Joining the panel was Ray Jordan, corporate VP of public affairs and corporate communications at Johnson & Johnson. He began his presentation on the importance of reputation in this ever changing world and talking about how he was convinced that reputation is not a noun but a verb – something that is done. The three steps to reputating are to make sure people understand who you are, second to do the right thing and third get caught doing the right things. The ideas of getting caught at doing the right things is plain infectious!
At the Reputation Institute, their fine work focus on “reputable” companies and companies of ”repute.” I guess no matter what you call it, reputation is still all about building one’s good name for lasting advantage.
Over the past few weeks, there have been several reputation rankings released. I am stunned by the proliferation of rankings on reputation. It is getting harder to keep track of whose ranking is whose and what’s behind the numbers. Whereas there used to only be one or two major reputation rankings, today there are scores. We (my team at Weber Shandwick) knows because we keep track of them every day in our database called Scoreboxx. We must have over 700 primetime corporate rankings that companies can compete on and receive recognition. These rankings fall into broad categories such as corporate responsibility, workplace, diversity, leadership, etc. Years ago, a company only had to worry about Fortune’s Most Admired Companies survey. Now you have to be on the alert for lists that give you a thumbs up or thumbs down.
In the past few weeks, we have seen the release of Harris Interactive’s Reputation Quotient, Reputation Institute’s Pulse Survey and Millward Brown’s Global Brands (BrandZ). All good and “reputable” lists. However, they are all coming out at about the same time and comingling in people’s minds. Years ago when I was at Fortune, we conducted a landmark survey about business readership of business magazines. A few years later, Forbes conducted their own readership survey of business magazines with a twist that confused the marketplace. The two surveys were similar but because many people still confused Fortune and Forbes, Fortune’s competitive advantage was weakened.
My reputation advocate friend Joy Sever is right when she says that all these lists are diluting one another because most people do not understand the differences between them and how the data are gathered. She was right to also say that pretty soon it will all be about the reputation of the reputation rankings. It seems like that has already begun.
The most important way to measure reputation is to take these reputation rankings into account but focus primarily on your own customized research that drills down into your most important stakeholders’ perceptions and most critical reputation dimensions. By tracking your own company reputation vs. competitors over time, reputation-building has its best shot.