Reputation Quotient Study Casts Light on Murky Subject
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Holmes Report

Reputation Quotient Study Casts Light on Murky Subject

“A company’s reputation is more than an abstract concept—it crystallizes what people think and feel about a company and is closely tied to corporate performance,” according to Fombrun

Paul Holmes

After years of complaining that the Fortune Most Admired Companies survey—by limiting those surveyed to members of the business and financial—measure business performance rather than the impact of reputation on business performance, the emergence this week of a rival reputation survey is one we surely ought to applaud. If the “Reputation Quotient” study, developed by the Reputation Institute and conducted by Harris Interactive, is just as flawed as its Fortune counterpart, it at least provides another perspective and shines some much-needed light on a shadowy subject.
The study, designed by New York University professor Charles Fombrun, is based on online and telephone interviews with about 3,000 people nationwide, who were asked to nominate companies with the best and worst reputations, and an online survey of about 10,000 people to provide detailed ratings of the 30 companies that were best regarded, as well as others that rated poorly. They were asked to rate the importance of various attributes—including social responsibility, workplace environment, financial performance, and “emotional appeal”—and then to rate each company on those attributes.
“A company’s reputation is more than an abstract concept—it crystallizes what people think and feel about a company and is closely tied to corporate performance,” according to Fombrun
While a significant number (25 percent) said they had boycotted companies because of their policies or actions, the survey provided a reality check for public relations people who believe they can control their organizations’ reputations: the quality of a company’s products and services is the most important factor for consumers. The other most important attributes are social responsibility, vision and leadership, financial performance (which ranks second with men, fifth with women), and workplace environment.
Johnson & Johnson emerged as the top rated company, with a “reputation quotient” of 83.4. It was followed by Coca-Cola, Hewlett-Packard, Intel, and Ben & Jerry’s. J&J also came out tops in emotional appeal, quality of products and services, and workplace environment. Ben & Jerry’s was number one in social responsibility, while Microsoft (15th on the list of 30) was rated highest for vision and leadership and financial performance.
Four of the RQ’s top ten firms—Coca-Cola, Intel, Wal-Mart, and Disney—also show up on the Fortune top ten, but Fortune’s most admired corporation, General Electric, is only 12th on the RQ list, and two companies in Fortune’s top ten—Berkshire Hathaway and Merck—don’t even make Fombrun’s list of 30 companies.
“The survey respondents were representative of the general public, not the investing public,” says Fombrun, who noted that about 18 percent of survey respondents made trades in the stock market in the past year. “They weren’t as interested in or informed about financial results.”
While the company rankings—and the omission of some big spending marketers such as American Express—will probably generate the most media attention, the most interesting findings concern the different perceptions of various demographic groups. For example, older respondents rate companies more favorably, with consumers aged 18 to 24 giving companies an average RQ of 70.5, compared to 75.3 for those over 55. Women (73.3) give companies higher marks than men (72.5). Those who are college educated (72.5) give lower marks than those with a high school education (73.4). And those in larger companies (71.3) are less impressed with corporate America than those who work in an entrepreneurial environment (73.3).
Obviously, this information adds to the growing database of information on reputation, but as a measure of the importance of reputation, it leaves a great deal to be desired, in part because it casts its net awfully wide.
“What is most remarkable about the RQ Gold is the diversity of the companies that make the list,” said Joy Sever, senior vice president at Harris Interactive and RQ project manager. “They’re not the standard winners that only investors or customers would pick. Here they cross sectors. Some are young, some are well established. But clearly they’ve managed to build strong reputations that people value.”
Actually, what is most remarkable—though not surprising, given the methodology—is how much the companies that make the list have in common. With the exception of Boeing, 30th on the list of 30, they all market their products to consumers, with heavy television advertising.
One of the things that makes reputation so difficult to study is that different companies target different publics. A company like Berkshire Hathaway, for example, cares little (and should care little) about what average consumers think of it. Similarly, some of the companies on the list (Federal Express, IBM) devote considerably more energy to wooing the business community than to ordinary consumers. Any meaningful comparison of their reputations would take into account the views of that business audience.
The largest flaw with the RQ approach is that it reduces reputation to something akin to a popularity contest, in which the company with the warmest, cuddliest external image—Ben & Jerry’s is an example—wins. That’s a simplistic view of what reputation is and what it does.
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