Posts Tagged ‘Research’
I mentioned this new survey on reputation from McKinsey on my blog a few weeks back but what I did not mention was how perplexed I was by the artwork they chose in the report. This is not to knock the great work they do but to raise the question about why they would not question artwork of men saluting each other when it comes to a serious business topic. I know that they regularly use this artist and look in their reports but I flipped through the pages to see if there was a mirror image with a woman or two in it. There was none. And I realize that this harkens back to an earlier style when men ruled the business suite. I understand the style because I saw plenty of it while at Fortune and still love the look. Yet, all in all, I was surprised that they chose this image when we have a paucity of female CEOs and women at the top. Women are getting ahead but glacially so. And in defense of women, women are already adding value to the reputations of some of our largest, most prestigious corporations.
What spooks markets the most? If you closely follow crises, you probably think about how many different types of crises there are. For example, how do the markets react to a crisis that is due to the questionable behavior of the company or employees? What about product recalls? Or litigation? What about loss of customer data? All good questions to ask about reputational damage. International law firm Freshfields Bruckhaus Deringer decided to investigate how the markets react to different crises and how long the crisis lingers. This chart below is from their study:
Behavioral crises (company or employees acting questionably or illegally) have the greatest short-term impact on shares and the only type where the companies have the possibility of regaining their market share after six months. However, they spook the markets the most and can cause shares to crash by 50% or more on the day they become public, according to the researchers. Investors, however, forgive these types of crises more quickly than others.
Operational crises (when the company’s functioning is halted due to a major product recall or environmental disaster) have a modest impact in the first two days of the crisis breaking but the greatest long-term effect on share price…down almost 15% after six months. One quarter are still down one year later. These type of crises strike fear in companies and reputations are hit for the longest period of time.
Corporate crises (companies where the financial wellbeing is affected such as liquidity issues or material litigation) made up more than one quarter of companies experiencing a share drop on day one. Most often, these companies recovered quickly.
Informational crises (when companies IT such as system failures or hacking) were of moderate concern to the markets. They did not fall more than 3% on day one. According to the research, none saw shares fall more than 30% within a year of when the crisis struck. Possibly, investors figure these can be resolved and its everywhere today, not necessarily at the core of the company’s business.
As the research states, “Our research shows that directors typically benefit from a window of 24 to 48 hours, during which financial market reaction to news of a major reputational crisis will be relatively constrained.” In the public relations world, we often refer to the first hour after a crisis breaks as the “golden hour.” According to Freshfields, it sounds like there is an even longer” golden window.”
The natural question to raise is why does operational crises do the worst? Freshfields answers appropriately, “Crises that strike at a business’ core have a greater long-term impact on share price as markets are more likely to lose faith in a management team that cannot resolve a crisis that is intrinsic to its operations.” As Oxford Metrica’s research in 2012 for AON showed, management response is showcased for all to see when crisis strikes. The kind of CEO or executive response can make or break reputations and create reputation loss of great magnitude if done poorly. To prevent such reputation loss, prepare!
I wanted to share some new research we just launched at Weber Shandwick. Although this blog is usually about reputation, the reputation of women is always a topic I like to muse about. So here we are.
We wanted to identify some new and interesting segments of women that marketers might be overlooking. We all know how important moms are (I am one) but that does not tell the whole story about women today. In fact, I work with many non-moms and I have always admired how involved they are in the lives of their nieces and nephews or their friend’s kids. With that objective in mind, we teamed with KRC Research to survey 2,000 women in North America. The first segment we looked at are PANKs®. What’s that? PANKs are Professional Aunts No Kids. We learned that they are quite an attractive demographic for marketers looking to grow their business and better define their portfolio of female target audiences. Let me explain — PANKs are women who do not have children of their own but have a special bond with a child in their lives. PANKs may include: aunts, godmothers, cousins, neighbors, and moms’ and dads’ friends. Our research, The Power of the Pank: Engaging New Digital Influencers can be found here. We provide you with an executive summary, infographic (cool-looking), slideshare and more.
How did we get this idea? Easy. We were introduced to Melanie Notkin, CEO and creator of SavvyAuntie and the person who coined the term PANKs. Melanie is a digital influencer herself. We thought about how great it would be if we could add more dimension to the concept of PANKs, size the market and determine its scope. And that is what we did. And, momentously, the research is covered in this Sunday’s New York Times. Thank you to Melanie for all her advice and guidance on this amazing segment of influential women, many of whom are socially savvy.
Who are these PANKs? Good question and we have the answers. Here are the salient facts:
- PANKs are a sizable segment of the population. One in five women (19 percent) is a PANK, representing approximately 23 million Americans.
- PANKs spend money on kids and assist kids’ parents financially. PANKs estimate that they spent an average of $387 on each child in their lives during the past year, with 76% having spent more than $500 per child. This translates to an annual PANK buying power estimate averaging roughly $9 billion. PANKs also offer economic assistance by providing kids with things kids’ parents sometimes cannot or will not offer them and many have given gifts to parents to help them provide for their kids.
- PANKs are avid info-sharers. PANKs are sharing information on a wide range of products and services. They are exceptionally good sharers of information about clothing, vacation/travel, websites/social networks sites, and products for digital devices but also index higher on traditional “mom” categories such as groceries/food and beverages, home appliances and decorating goods.
- PANKs are well-connected and ahead of the online media consumption curve. PANKs consistently consume more online media than the average woman does. While PANKs are no more likely to be on social media than the average woman, they do have more accounts and nearly 200 more connections – driven by Facebook friends and YouTube channel subscribers – and spend slightly more time per week using social networks (13.4 hours vs.12.1 hours, respectively).
So when you think of women today, don’t forget that you might be having dinner with a PANK, working with a PANK, shopping next to a PANK, traveling with a PANK or buying from a PANK. While we were doing this research and telling people about the topic, we were constantly confronted with women who told us with great pride that they were a PANK. The New York Times reporter is a PANK, the videographer for the Times article is a PANK, a few of our clients we spoke to about the research are PANKs. There is a whole community of PANKs who just want to be engaged with, communicated with and shared information with. It’s all very heartening.
I could have told them so. Research (noted by WSJ’s Leslie Kwoh) from Lehigh University found that shareholders do think CEOs matter. They analyzed shareholders’ reactions to the unexpected deaths of chief executives by measuring the stock performance the day after the announcement as well as at other intervals leading up to 30 trading days afterwards. There was a 5.6% swing in share price on the day after the announcement that the CEO unexpectedly died (i.e., heart attack, plane crash). The swing was even more pronounced one month later, at 14.6% on average. Interestingly, this swing has grown considerably since the 1950s, 1960s and 1970s. CEO reputation and the CEO’s impact on the company’s performance MATTERS. Decades ago, people believed that companies ran themselves pretty much. The CEO’s decision-making, strategic direction and ability to motivate employees and outbeat the competition is clearly understood today to have a profound effect on corporate performance and by extension, reputation. Good proof to add to my deck on why CEOs matter. Thanks to Lehigh’s Tim Quigley and researchers!
While I am on the subject of the corporate brand, I thought I would mention another interesting group of findings from our research. We asked consumers several questions on what influences them when it comes to company perceptions. They report that among other things, the importance of awards/recognition (63% of consumers mention) as well as leadership communications (59% of consumers mention) are influential. As expected, word of mouth ranks at the top of the influence list, regardless of region. Clearly, despite the fire hose of information aimed at us every day, some things are getting across when it comes to distinguishing companies from one another and influencing our decisions to buy some products over others easier. Recognition of companies for doing good or just simply doing well is making a dent after all these years. And leadership communications seems to matter to consumers if CEOs are talking about something that matters. Figuring out what resonates with the public is the hard part for communicators although jobs and education would be two good starts. And a third good start would be the safety of our natural resources. One additional factoid to add for a Sunday in January: In Brazil, awards and leadership communications are even more influential than what consumers in the U.S., U.K. and China say in our study. Brazilian consumers seem to be more receptive to what leaders say in Brazil. Will have to figure out why. Perhaps the connection between the economy and business is more direct than in the U.S. and U.K and China while we are at it. More to come on this challenging subject of the interdependence between the corporate brand and product brand.
This week we launched our excellent survey on what it takes to socialize a brand. It is among top marketing and communications executives in companies around the world. One of the drivers of world class social brands is being ever so careful about the assaults on a brand’s reputation. We learned in the survey conducted with Forbes Insights that executives of world class social brand companies are 35% more likely than the average global company to report that their brand experienced an online crisis in the past year that affected its reputation. These social champions who have dealt with a recent online crisis are no stranger to the risks of the hyper-connected world — two-thirds (66%) report that they deal with negative online commentary on a daily basis (vs. 51% of total global companies). The latter point was good news to me although perhaps not so for companies. The reason I say that is because I often get asked about how often companies experience reputation crises and I quickly respond “daily.” Our research reveals that nearly two-thirds of socially aware companies are dealing with reputation threats and its just the tip of the iceberg. Just this week we saw Netflix and RIM in the news — some self-inflicted and some not. If you want to read more about the blackberry crisis and my comments, go here. These types of online crises will only increase as the world gets smaller, more people go online and more are eager to share their opinion about brands. Being vigilant is the job of everyone. Lets not fool ourselves — we all have to play cop.
Globalization. Everything is different and everything is the same.
In an interview with the Dean of Harvard Business School, Nitrin Nohria noted: “When I came to Harvard Business School in the 1980s, the vast majority of people were interested in studying America, because this is where they hoped to have job opportunities. As late as 1988, when I joined, less than 5% of our case [studies] were outside of the United States. Last year more than a third of our cases were global.” Similarly, Fortune‘s Most Admired Companies survey used to be broken into the America’s Most Admired and World’s Most Admired lists as if they were two different beasts. Fortune now combines them into one big list of the World’s Most Admired and rightfully so. As we are seeing with the ups and downs of the stock market, we are all interconnected. The reputation of UBS or Sony or Procter & Gamble matters the world over.
Global everything is on my mind because I am off to Asia to give a speech on reputation and how to build it, safeguard it and defend it. I’ve been catching up on how reputation plays out in Asia Pacific so that I can be a bit more relevant to my audience. As I am preparing, an article I found struck me as a good example of how things are the same and yet different.
As a keen observer on how reputations get damaged in a crisis, I am always on the lookout for estimates of that damage. A recent article provided me with some valuable information on how Chinese companies perform when scandal touches them. Scandal plays out slightly differently in China and on their balance sheets than it does in the US and Europe/EMEA. An academic study examined hundreds of scandals linked to companies traded on the Shanghai and Shenzhen stock exchanges between 1997 and 2005. Revelations of financial fraud and various other similar crimes, such as embezzlement and kickbacks, definitely impacted share price as it does in the US. The researchers found, however, that to really create a cataclysmic collapse of a company’s stock among Chinese companies, there had to be an additional element. “The study found that companies caught up in mere accounting scandals saw their shares drop by an average of 8.8% over the six months on either side of the incident. In those involving the bribery of government officials or theft of state assets, on the other hand, the stock fell by almost a third.” As they conclude, “In China and other less developed markets….business is done on the basis of political and social relationships, not numbers.” Companies are all impacted by financial scandal but if you undermine the government in China or any of its officials, expect that your financial damage will be compounded by losing discounted financing, access to trusted suppliers, loss of customers, land acquisitions and other benefits that can come with good government relations. Thus, being on good terms with government is critical to success in China. In many ways, this is also becoming the norm in the US as government plays a more visible hand in business affairs.
For the second year in a row, about two-thirds, or 65% of Americans say that civility is a major problem, according to our annual Civility in America poll by Weber Shandwick and Powell Tate in partnership with KRC Research. The timing for this survey is pretty right on. I just read that presidential candidate Jon Huntsman pledges that there will be a climate of civility in the race to the top if it is up to him. You would think he spoke to us first! If you read the results regarding perceptions on civility when it comes to politics, you will quickly see that the presidential race could literally depend on the civility factor.
The perceived lack of civility in the United States has far-reaching implications for the reputation of the USA with 91 percent saying that incivility has negative consequences for the nation. Those polled said that incivility in government is harming America’s future; that incivility in American life is harming our standing in the world; and that incivility prevents the country from moving forward. About half of the respondents (49 percent) said that the U.S. was among the most civil countries in the world.
The 2011 online survey was conducted in May among 1,000 American adults to assess attitudes towards civility online, in the workforce, in the classroom and in politics.
Check out the executive summary. We have our work cut out for us.
Harris Interactive just released their annual RQ (reputation quotient) survey among the U.S. public. This is year 12 for the Harris RQ – that’s a long time and underscores the value that this kind of research brings. Harris conducts the survey among consumers on what they call the most visible companies in the US along with others that represent major industries. The study starts by asking people to nominate or name the companies that stand out as having the best and worst reputations overall. The most nominated companies form the core group asked about. For this reason, one usually finds that those companies that have been in the headlines for reputational scandals are measured. Besides the usual ranking of who’s on first and who’s struck out, Harris identifies several trends:
- Among their “elite” reputation winners (i.e. most highly regarded), two reputation drivers stand out – “looks like a company that has high ethical standards” and “tends to outperform its competitors.” Again, this underscores the importance of speaking up and being an industry leader.
- How companies communicate also drives reputation according to Harris – communicating Sincerely, Accurately and Consistently correlates highly with positive reputation. Transparency and empathy count.
- An additional theme that Harris highlights is that those companies that “support the infrastrucuture” of Americans’ lives at work and at home also drives positive corporate perceptions. This means that companies that help people get their jobs done easily at home and at work tend to be esteemed. Interesting notion.
- All the major industry sectors saw year over year reputation improvements — particularly automotive.
Of course, there are always clouds and rays of light in any silver lining. And here it is….66% say that the reputation of corporate America is not good but there’s hope for improvement. This figure has not moved much from the 65% who said the same thing last year. So I’d say a solid thumbs down with cautious optimism. However, 22% say the reputation of corporate America is good with room for improvement (up four percentage points from last year). Not so terrible. A miniscule 1% says corporate America’s reputation is great and can’t get any better (same as last year). I sure would like to find out more about them to see what they are thinking or or if they are living in the clouds! Thankfully only 12% of the American public say corporate America’s reputation is terrible and there is little that can be done about it. That’s pretty definitive. So all in all, hope is alive for corporate America and for those of us in the reputation management arena, it is in our hands.
How rewarding can the job of CEO be afterall? Research by NYSEEuroNext and ORC asked global CEOs this very question and they were not asking about compensation. That’s a whole other subject.
Turns out that 50% of CEOs in 2010 say that the job is more rewarding now vs. three years ago. This is a nice lift from one year ago in 2009 when 38% said it was more rewarding. Apparently 2008 was a better year since 60% of CEOs said it was more rewarding than three years earlier. The bounce back in 2010, however, is heartening considering how tough the job has become and how bad the economy has been altogether. Alas, lets not overlook that one out of two CEOs this year are not chiming in that the job is more rewarding vs. three years ago. One of the reasons may be that a full 97% or just about every CEO says that the job is more time-consuming that it was three years ago and this high figure has not changed over the past five years. No matter what year, the CEO job never ends just because it is the weekend or post dinner hours. The world has been turned on its head and the job is undeniably 24/7.
Interestingly, non-US CEOs see the job as more rewarding than US CEOs (62% vs. 40%), a pattern that has held for five years. What do non-US CEOs know that US CEOs don’t know about enjoying their lives? Perhaps they worry less about their reputations but I don’t think that is the case. Perhaps non-US CEOs don’t jump online every minute to read all the uncivil comments that are written about them by dissatisfied customers or former employees? Or perhaps non-US CEOs have more time off on vacation to recharge their batteries and unwind. Since more non-US CEOs have separate chairmen, perhaps they get to share some of the responsibility of leadership which makes the job nore rewarding vs. here in the US where the trend is still predominantly CEOs and chairmen being one and the same. Would require deeper analysis but is a thought.
Let’s hope that 2011 shows a continued trend to adding some more enjoyment into the job — especially because CEO leadership does impact us all, one way or the other. We certainly don’t need strung out leaders at the helm.
[Not sure why I chose a hammock as my graphic but I thought that perhaps CEOs need to kick back alittle in August]