As we start a new decade, one of the main questions on the minds of company CEOs, boards and executives around the world is: what drives company reputation? And crucially: how can I influence my company’s reputation?
Companies are under increasing scrutiny concerning everything from the quality of their products, services and customer experience to their ethics, values, and leadership.
And consumers, stakeholders, shareholders, investors, employees and the general public’s expectations are changing. As a result, they want companies to deliver on their promises AND make a positive contribution to society, the communities in which they operate and be more open and transparent than ever before.
What drives company reputation?
According to Weber Shandwick’s report The State of Corporate Reputation in 2020: Everything Matters Now, company reputation today is ‘omnidriven’. This means that a company’s reputation no longer relies on a few select factors. But that today, and in the future, everything matters.
At Igniyte we totally agree that companies need to know everything that will influence and shape their reputation. Why? Because it’s what enables and empowers companies to establish, build and protect their company and brand reputation.
Among the global executives surveyed, respondents say that 63% of their company’s market value comes from its reputation. And, of the companies that have experienced a crisis in the past two to three years that impacted their reputation, 76% of them say the crisis was actually preventable. This level of both importance and high risk means that companies need to be hypervigilant about what drives company reputation.
The top 5 factors contributing to corporate reputation are:
- Quality of products or services
- Quality of employees
- Quality of customer service
- Safety of products or services
- Respect for customer or employee privacy
The quality of the goods or services, the people providing them, and the customer service are critical to your corporate reputation. While not surprising really, it does underline how important and relevant it is to be seen to be prioritising these factors. Making quality highly visible is key. Product and service safety and privacy are also crucial, as much as it is to communicate openly when things go wrong.
Next up in order of contribution to company reputation are:
- Product or service innovation
- Industry leadership
- Financial performance
- Value for the cost or price of products and services
- Ethics and values
- Technological advancement
- Corporate culture
- Corporate purpose
- Quality of CEO or chair
- Training and support for employees
- Marketing and communications
- Quality of senior leadership other than CEO or chair
- Diversity and inclusion of the workplace
- Community relations
- Environmental responsibility
- Global presence
- Philanthropy or charity support
There’s no doubt that reputation is a company’s biggest corporate asset. It’s also one of the most competitive factors at a time when public opinion is so readily accessible online.
Which marketing factors contribute to corporate reputation?
Marketing and communication factors also influence company reputation.
Over half of those surveyed cite the following contributing factors:
- How a company responds to and addresses any crises, issues or problems.
- Ability to communicate and deliver on its mission, vision and values.
- Communications with the public.
- Communications with employees.
- Award wins or “best of” lists a company ranks on.
- Social media communications and interactions.
- Participation of company leaders at business forums, conferences or industry events.
- Leaders’ presence on the company website and social media.
What is different to say 10 years ago, is that corporate reputation is on the radar of company leadership at the very top. Nine in 10 executives (91%) say their company’s reputation is important to their board of directors, with about half (52%) reporting it to be very important to the board. Which shows that it is moving up the corporate agenda.
And executives say that these are the benefits enjoyed by companies with strong reputations:
- Customer or client loyalty
- Competitive advantage
- Better relationships with suppliers and partners
- Attracting high-quality talent
- Employee retention
- New market opportunities
- Higher stock price
- Crisis resilience and risk minimisation
- Greater support from policymakers and regulators
- Ability to charge premium prices
- More favourable media coverage
- Less shareholder activism
How does the ‘reputation elite’ do better?
Then, there is a group that the report calls the ‘76 Percenters’, those whose reputation yields the biggest dividend. They actively focus on reputation management, which pays off. The ‘76 Percenters’ actually score higher than the average global executive on every one of the 23 reputation drivers, and they lead by at least 10 percentage points on nearly half. The top differentiators are a focus on industry leadership, ethics, and values, corporate culture, training and support for employees and community relations.
83% of the 76 Percenters say their senior leadership actively measures or monitors the company’s reputation vs 71% of those outside the 76 Percenters. And those with the best reputations also attribute a greater percentage of their company’s reputation to the visibility of their senior leadership – 80% in fact (vs 58%).
Weber Shandwick produced the State of Corporate Reputation in 2020: Everything Matters Now report with KRC Research after examining companies in 22 global markets across industries. The 2,227 respondents included mid-to high-level executives at companies with at least $500 million in revenue in developed countries and $250 million in emerging markets.