The nation’s CEOs continue to attach greater importance to corporate reputation as a factor in their companies’ success, and to recognize their responsibility to maintaining a good reputation, but many are still struggling to find a way to measure reputation, according to a new study conducted by Yankelovich Partners on behalf of Hill & Knowlton and Chief Executive magazine.
The third annual Corporate Reputation Watch survey found almost universal agreement among CEOs that reputation is a key factor in corporate success: 94 percent agreed that reputation was “very important.” It also found that more than three-quarters of CEOs (77
percent) consider themselves ultimately responsible for reputation and that almost two-thirds (64 percent) say they would “give substantial weight” to the ability to manage reputation when choosing a successor.
According to H&K’s U.S. president Tom Hoog, “With each of these surveys we are seeing a higher and higher percentage of CEOs saying that public relations is important, and that it is the CEO’s responsibility.”
But if the 77 percent of CEOs who take personal responsibility for their companies’ reputation is the good news in the study, the bad news is that only 3 percent of respondents consider the chief communications officer to be the key figure in managing the company’s reputation. More (5 percent) identified the chief marketing officer as they person responsible for reputation, with the chief operating officer (3 percent) and chief financial officer (2 percent) also receiving votes.
Harlan Teller, executive vice president and director of H&K’s worldwide corporate practice, sees a link between CEOs’ increasing sensitivity to corporate reputation issues and recent highly-publicized CEO turnover at the top of many well-known corporations. “CEOs know that they will be held accountable if corporate reputation issues are not dealt with effectively,” says Teller. “As a result, they increasingly believe that they and their potential successors must take personal control over this management function.”
The importance attached to reputation is also reflected in the growing number of companies attempting to measure their reputations. Two out of five companies (42 percent) say they have a formal measurement system in place, compared to 37 percent in the 1999 study and just 19 percent in 1998. More encouraging is the fact that two-thirds (66 percent) of those companies are using custom research rather than relying on published rankings (31 percent) and media coverage (30 percent).
“The use of formal measurement has doubled in the past 12 months,” says Teller. “There is clearly an increased willingness to invest in tracking reputation, and more companies are doing in the right way, spending on custom research rather than relying on informal feedback or using published rankings such as the Fortune survey.”
Survey respondents identified customer opinions (96 percent), employee opinions (88 percent) and the CEO’s own reputation (84 percent) as the three most important factors contributing to corporate reputation.
“The fact that customers rank first overall is terms of their effect on reputation suggests a need for greater synergy between marketing communications and corporate communications,” says Teller. “I have always been an advocate of greater integration between marketing and corporate PR.” Teller said he was not surprised—but was encouraged—by the importance placed on employees. “I think with all the emphasis on the role of employees delivering on the brand promise, more companies recognize the impact internal stakeholders have on external perceptions.”
Of moderate importance were print media, industry analysts, shareholders, financial analysts, regulators and government agencies, the Internet, and broadcast media. Government was not surprisingly considered more important by regulated companies such as utilities and healthcare providers, while technology companies considered the Internet more important. The influence of plaintiffs’ attorneys and labor unions was discounted by most respondents.
There is also evidence of increasing concern about the role of the Internet in spreading negative information about corporations. Almost three-quarters of respondents (73 percent) said they were worried about negative information on the Internet, up from 60 percent in 1999, and CEOs expressed the greatest concern about unhappy customers criticizing their companies on the Internet. Still, while 57 percent of companies said they had a strategy for managing their reputations on the Internet, only 15 percent said they monitored what was being said about their company online “very closely.”
Other interesting findings:
While CEOs at all companies consider reputation important, it is slightly more important to CEOs at larger companies, and more important to companies in the consumer products and financial services arena than it is to companies in the technology and business services sectors.
Companies in the healthcare sector (70 percent) were most likely to have systems in place to measure corporate reputation. Companies in the distribution sector (26 percent) were least likely to have formal measurement systems.
Focusing on customer satisfaction (20 percent) is considered the most important thing CEOs can do to improve corporate reputation, followed by maintaining corporate culture (18 percent), and employee communications (13 percent). Just 6 percent thought greater community involvement was the most important factor.