Holmes Report 04 Aug 2011 // 11:00PM GMT
Despite the toxic operating environment that followed the global financial crisis, negative headlines about product recalls, government bailouts, insider-trading and CEO scandals, eight of the largest 150 companies in the US were still able to earn excellent corporate reputations in 2011, according to a new study by private consulting firm Reputation Institute, in partnership with Forbes Media.
Companies like Amazon.com, Kraft Foods, Johnson & Johnson, 3M, Kellogg's, UPS, FedEx, and Sara Lee are able to gain the highest levels of trust, esteem, admiration and good feeling from consumers in such a challenging environment.
And the Institute says two common themes for building reputation resilience and a positive legacy with stakeholders stand out. First, companies with the strongest reputations have moved beyond products and services when communicating what the company stands for. Second, it is the CEO at these companies who is leading the reputation management strategy.
"The people of 3M have always understood the compelling nature of character and integrity as the defining elements of our reputation," said George Buckley, CEO of 3M. "This reputational foundation is the critical element in building the trust of our customers in 3M as we work towards their success, as well as our own. Technology and integrity are the combined 'glue' that holds 3M together."
Reputation Institute's analysis of the seven dimensions of corporate reputation shows that perceptions of the enterprise (workplace, governance, citizenship, financial performance and leadership) trump product perceptions (products and services plus innovation) when it comes to driving behaviors.
The five enterprise dimensions drive 61 percent of purchase consideration and 58 percent of recommendation/advocacy behavior with consumers. This provides further proof of what Reputation Institute calls the "reputation economy" – a place where people increasingly choose among competing products and services based on their impressions of how the companies behind them behave.
"The reputation economy of 2011 is characterized by a heightened focus on three things: trust in companies and leaders rather than product brands, multiple stakeholders and their interactions, and building a connection between a company's reputation strategy and its business strategy," says Anthony Johndrow, managing partner at Reputation Institute. "Today's best 'chief reputation officers' combine cognitive, analytical, process, communication and organizational skills to give voice to their companies and connect the enterprise to stakeholders."
In search of what separates weak from average and strong from excellent companies, Reputation Institute asked "chief reputation officers" (either the chief executive officer, chief marketing officer, or chief communications officer) responsible for reputation management from these 150 companies about the challenges they face in their role. This second study found that companies who scored in the excellent range of reputation (80+) were:
• 2.5 times more likely to have the CEO set the strategy for their enterprise positioning
• 1.5 times more likely to include reputation metrics as part of their senior management "dashboard"
• 15 times more likely to manage corporate reputation across company functions
• 1.7 times more likely to use an outside partner to assist with corporate reputation management
Other survey highlights:
• The automotive (69.35/+5.75 points) and banking (61.5/+2.03 points) industries' reputations began to rebound with the general public, while the diversified financial services and insurance industries continue to struggle in the wake of the global financial crisis.
• The top three drivers of corporate reputation with the U.S. general public remain products and services (17.7 percent), governance (15.8 percent), and citizenship (14.3 percent).
• The top individual companies by reputation dimension include 3M (products and services), Apple (innovation), Google (workplace), Amazon.com (governance), Kellogg's (citizenship) and Berkshire Hathaway (leadership and financial performance).