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Corporate Reputation

in a Global Setting:
MSLGROUPs Reputation
Impact Indicator Study

The MSLGROUP
Reputation Impact Indicator
A major global survey and report that
combines both intuitive and rational
dimensions when studying the
reputation of leading multinationals.

Foreword
The reputation of a corporation is its license to
operate. It has a decisive impact on the success
of the organization and is generally regarded
as one of its most important assets. And yet,
we would argue, there is clearly a need for a
much deeper understanding of the multifaceted
elements that contribute to corporate reputation
than currently exists today.

Anders Kempe
EMEA President for MSLGROUP

MSLGROUP has chosen to take a somewhat atypical approach to


the study of reputation. Moving beyond simple rankings, or analyses
of drivers of reputation alone, we take a more holistic look at how a
company must act to build a strong reputation that can facilitate success
over time. The result of our research is this, the Reputation Impact
Indicator study, part of MSLGROUPs ongoing efforts to create better
knowledge and tools for corporations to better understand how they can
influence their reputation.
In the study, we have chosen to look at corporate reputation among a
global general public. General public, because how they, as consumers
and citizens, view corporations has a substantial and increasingly
important impact on how other audiences view them. Global, because we
live in an always on and on-demand world, where different audiences
are constantly connected to each other. Today, more than ever, a multistakeholder perspective is necessary.
Among many new findings, the study also confirms a long-held
assumption: actions speak louder than words. The factor with the largest
impact on an organizations reputation is simply how well it delivers its
products and services, and if they are delivered in an ethical manner
(you can of course follow rules and legislation, yet still fail in the court of
the public opinion). In short, the study confirms that being perceived as
a company that consistently delivers high-quality products and services
in an ethical way is what matters most when it comes to building and
maintaining a reputation.
If actions do speak louder than words then does this mean that
communication is of less importance in the building of reputations than
we may have thought? No, on the contrary communication has a very
significant role that should not be underestimated. Not least when we
consider, as our study shows, that while brands may be global, corporate
reputation is most definitely local. Assuming broad brand awareness
across multiple countries for the well-known global brands covered in
the study, it seems clear that how a company communicates with people
in different countries or regions influences what those people think of
a company, how robust its local reputation is. In this sense, we should
think of global corporate reputation as the sum of a company or brands
local reputations.

Foreword

Our study findings


underline that it is this more
qualitative approach to
brand awareness that is
key to establishing a robust
reputation. And authenticity
and engaging storytelling
are undoubtedly at the heart
of any such approach.

Underlining our commitment to a more holistic view of corporate


reputation, we analyzed how people retrieve the information that they
then use to form an opinion about a company. What we found is that
thisis largely an intuitive process, and that abstract knowledge about
acompany is not enough to engender a strong reputation in the publics
minds eye. A significant part of a companys reputation is a matter of
instinct, based on how relatable that company feels. We refer to this
asthe Mind Space the company occupies. Here, communication plays
an important role, as an organization needs to communicate its actions
repeatedly and engage with its stakeholders, so as to build clear
associations linked to its core business that can easily be held
inapersons mind. Our study findings underline that it is this more
qualitative approach to brand awareness that is key to establishing
a robust reputation. And authenticity and engaging storytelling are
undoubtedly at the heart of any such approach.
That an organizations reputation is shaped most by intuitive, gut-felt
pieces does not however mean that reputations can be quickly built.
Instead it means that we have to think in advance: always have the
communicative aspect in mind when making business decisions.
MSLGROUPs Reputation Impact Indicator study is an attempt to
dissect corporate reputation, to study the components of which it is
made up, and to then take a holistic view of each ones relative impact
onreputation at both a global and industry level. I hope you find the
report to be inspiring and thought-provoking reading.

Kindly,
Anders Kempe

Executive Summary
This report summarizes and comments on the
findings from MSLGROUPs Reputation Impact
Indicator, a global study of the general public,
that forms part of MSLGROUPs Corporate
Reputation framework. The primary aim of
this research was to find general reputation
trends on a macro and industry level and to lay
the foundations of a reputation framework for
additional future research and insight.

The findings provide insight


into what drives the general
publics views of some of
the worlds best-known
global corporate brands.

The field research was conducted during the last quarter of 2014, by
means of a survey on a statistically validated sample of the general
public in 10 countries, totaling 26,467 qualified respondents. The
surveywas complemented with analysis of social media content for
10 selected companies. The findings provide insight into what drives
the general publics views of some of the worlds best-known global
corporate brands.
MSLGROUP also carried out in-depth analysis of reputation drivers
within four industry clusters, in order to study the relative impact of each
for a given industry, and the differences between the four industries. The
selected industries cover the pharmaceutical, consumer electronics, fastmoving consumer goods (FMCG), and internet-based businesses sectors.
The key findings include:
Among the general public, the main dimensions driving corporate
reputation today are the perception of a companys products and
services, and that companys business behavior: Is the company
doing a good job delivering on its core business promise represented
by its products and services and is it seen to be doing so in an ethical,
transparent way.
At the industry level there are clear differences in the relative impact
of different reputation drivers within each dimension, e.g. corporate
behavior is significantly more important in the pharmaceutical industry
compared with the other three industry clusters studied, underscoring
the importance of fact-based input for reputation management.
There are significant regional differences in how companies are
perceived, throwing into stark contrast the new world and the old
world. Respondents in Brazil, China, India, and South Africa have a
more positive perception of companies than their counterparts in North
America, and particularly in Europe, where respondents can be said to
demonstrate greater skepticism towards companies in general.
Brands are global, corporate reputation is local. There are large
variances in the reputation of individual companies at a country
level. Even though a brand is recognized globally, the reputation
of the company is local.

EXECUTIVE SUMMARY

DEFINITIONS AND EXPLANATIONS


OF CONCEPTS IN THIS SECTION
Corporate reputation: The general
collective judgment of a corporation
based on assessments of the impact
of performances and actions attributed
to the corporation over time.
Net Promoter Score (NPS): The
inclination to recommend a company.
Brand awareness: The extent to which
a brand is recognized by potential
customers, and is correctly associated
with a particular product or service.
Mind Space: The ease with which a
respondent can answer questions about
the company. Measures the strength of
brand awareness.

A strong Mind Space can engender a robust corporate reputation.


There is a correlation between how easy it is for respondents to mentally
associate with a specific company or brand its relatability and
reputation. High brand awareness alone is not enough. The ideas,
images, feelings one associates with a given company need to be
easy and quick to draw upon, positive in sentiment, and linked to that
companys products and services. Companies that have this clearly
defined Mind Space will enjoy a more robust corporate reputation,
while companies that do not easily invoke such connotations, or invoke
neutral rather than positive connotations, will have a weaker reputation.
There are also differences for which factors have the largest impact on
reputation between respondents with positive, neutral and negative
connotations. For the former, the perception of products and services is
most important, but for the latter group aspects of corporate behavior
play a more significant role.
The research also confirms:
Reputation drivers linked to actual consumer experience are of
greater significance when it comes to evaluating Net Promoter Score
(NPS) than corporate reputation. This difference aside, there
is unsurprisingly a clear correlation between corporate reputation
and NPS, and for both of these measures the most important driver is
how well a company is perceived to deliver its products and services.
For some of the other drivers we see different patterns around which
factors contribute to NPS and which to corporate reputation, and in
general, consumer experience is brought more sharply into focus.
Age, media habits, and educational background matter.
Demographic factors play a significant role, and have a large impact
on the strength of a corporate reputation and how companies are
perceived.
Social media content reflects the relative importance of the
reputation dimensions. A large majority of discussions online are
about topics related to company products and services, and this is also
the area with most un-aided engagement. A majority of negative posts
online are related to corporate behavior, confirming the negative impact
of this dimension.
The report is structured in two parts, where the first part is a detailed
description of the Reputation Impact Indicator study, its methodology,
and its main findings. In the second part, three senior representatives
from MSLGROUP share their observations on the findings and their
implications for corporate reputation building.

PART ONE: THE STUDY

Part One:

The Study
and yet, we would argue, there
is clearly a need for a much deeper
understanding of the multifaceted
elements that contribute to
corporate reputation than currently
exists today.

Anders Kempe
President, EMEA, MSLGROUP

Part One: The Study

Given the sheer volume


of data that now washes
across our screens, it
would stand to reason
that a customers view of
a company or brand is
now necessarily arrived
at more quickly, and
therefore intuitively, than
in days past.

The Need for a


New Framework
Reputation sounds like a simple
thing. Individuals and companies
all want one that is good, there
are different paths you can follow
to secure such a thing, and many
of us instinctively think we know
which path to follow particularly
when were passing comment,
looking from the outside in. The
reality though is a lot more complex.
Reputation is fickle; a reputation
that is hard-won can be easily
lost. And importantly, reputation
is not a generic concept: the right
reputation for one company may
not be the right one for another.
The way in which we form an opinion
of a company or brand is at base a
function of what we experience when
we interact directly or indirectly
with that company or brand. Out of
our experience of a company and
the experiences others have is born
reputation.
In the pre-digital era, the number of
interactions between a company and
a customer were limited and each had
time to leave an impression. A brilliant
ad perhaps. Or maybe an enjoyable
visit to a store. Whatever the specifics,
a customers view of a company
or brand was likely to be a rational
one, formed after some deliberation,
deliberation that was possible because
people simply had more time. It was
against this backdrop that if such
experiences were managed effectively
by a business, a customers loyalty
could be assured.

There was also less competition


for experiential in the bricks and
mortar world of the pre-digital era,
as communications channels had
yet to invade every waking minute
of our lives. Impressions and
reputations could therefore set,
orestablish themselves.

By contrast, in todays digital era,


the number of exchanges between
a company and the customer has
exploded, with each interaction leaving
a progressively smaller impression.
Industry competitors from all corners
ofthe world now scramble to create
even small, brief connections with
the customer.
But do all these impressions and
connections carry equal weight in
terms of aiding an individual to form
an opinion about a company? Probably
not. With the ever-increasing volume
of communication and number of
information channels around us, it is
crucial that companies use fact-based
input to evaluate which elements have
the largest impact on their reputation.
These factors will of course vary across
industries and markets, and also
depend on the audience.
Given the sheer volume of data that
now washes across our screens, it
would stand to reason that a customers
view of a company or brand is now
necessarily arrived at more quickly,
and therefore intuitively, than in days
past. It has to be who has the time
to sit down and think anymore?
But is that the case? And what are
the implications for a companys
reputation? Most reputation modeling
orreporting assumes a rational,
deliberative model. None has tried to
quantify a more intuitive approach, let
alone figure out how first impressions
turn into long-held views. And this is
one issue at the heart of MSLGROUPs
Reputation Impact Indicator study:
How does the intuitive, gut-feeling view
an individual holds about a company
impact upon that companys reputation?
How can fleeting interactions between
companies and individuals be gelled
into more permanent impressions?
In an era of more frequent interaction
between businesses and their
customers, which drivers really matter
when it comes to building reputations?
And finally, what precisely should
companies emphasize in each
interaction with every potential
or existing customer, in order to bolster
their reputations?

PART ONE: THE STUDY

The MSLGROUP
Reputation Impact
Indicator

Robert Gelmanovski

With the Reputation Impact


Indicator we aim to layer
intuitive brand associations
and expectations over a more
traditional, deliberate reputation
measurement approach. We also
analyze the various types of content
a company produces, and link
them to reputation scores, to
better understand how to help
companies produce reputationenhancing content.

The MSLGROUP Reputation Impact


Indicator is one of the first studies to
examine the link between spontaneous,
intuitive associations with companies
and a more deliberate and rational
response to statements about
companies. The research also sheds
light on the drivers of corporate
reputation and the challenges of
managing corporate reputation from
a global perspective. This has been
achieved through a detailed exploration
of the drivers of reputation and the
relative significance of each driver
across industries and markets.
The resulting model, the Reputation
Impact Indicator, is based on a
Reputation Core consisting of
three questions:
Do you like company x?
Do you trust company x?
Do you respect company x?

ABOUT THE RESEARCH


The research behind the Reputation
Impact Indicator was designed by Robert
Gelmanovski, a researcher in reputation
management at the Royal Institute of
Technology in Stockholm (KTH) who
is affiliated with MSLGROUP in the
Nordics, and Dominic Payling, Director
and Head of Planning & Insight at
MSLGROUP in London, alongside a
reference group of senior consultants
from MSLGROUPs global network.
The research was then conducted by
Robert Gelmanovski.
A statistically validated sample of the
general public aged 1665 in 10 countries
was surveyed in the last quarter of 2014
in online panels provided by CINT, a
company with a presence in more than
60 countries. A total of 26,467 interviews
in 10 countries were conducted, at least
2,500 interviews per country. Countries
covered: United States, Canada, United
Kingdom, France, Germany, Sweden,
China, India, Brazil, and South Africa.

10
countries

The questionnaire consisted of 38


questions on reputation, plus background
questions on media consumption, age,
and educational background.

26,467
interviews

PART ONE: THE STUDY

ABOUT THE KNOWLEDGE BASE


Fombrun, Charles J., Naomi A. Gardberg
and Joy M. Sever (2000), The Reputation
Quotient: A Multiple Stakeholder Measure
of Corporate Reputation, The Journal of
Brand Management, 7 (4), pp. 241255.
Wartick, S. (2002), Measuring Corporate
Reputation, Business & Society, Vol. 41
No. 4, pp. 371392.
Helm, S. (2007), One Reputation or
Many? Comparing Stakeholders
Perceptions of Corporate Reputation,
Corporate Communications: An
International Journal, Vol. 12 No. 3,
pp. 238254.
Walker, K. (2010), A Systematic Review
of the Corporate Reputation Literature:
Definition, Measurement, and Theory,
Corporate Reputation Review, Vol. 12
No. 4, pp. 357-387.

Answers to the three questions


around the Reputation Core were then
combined and expressed as an index
from 0100, giving an indication of
a companys reputation. In order to
better understand what is driving the
Reputation Core Index we then looked
at four dimensions that contribute to the
building of reputation, each reflected
through a number of questions:
1. Strength of relationship
(how well a company
builds relationships with
external audiences)
2. Perception of
products and services
3. Perception of
corporate behavior

online for 10 of the companies, and


then links that content to the reputation
dimensions and the Reputation Core,
thus exploring which pieces of content
are building or eroding reputation.
In order to get a deeper understanding
of reputation content the researchers
examined what types of content the
general public within the 10 markets
published on the web during the
data collection period, for 10 of the
researched companies. By conducting
social media listening and classifying
the content into the models four
dimensions of reputation1, we are
able to link a type of content to a level
of reputation strength and further
understand the significance of
each driver.

4. Perception of
financial performance
ABOUT THE METHODOLOGY
The questionnaire was divided into
two parts: one covering spontaneous
associations and expectations, and a
second part with 25 reputation statements
with a 7-grade scale (1 = do not at all
agree, 7 = agree completely). Answers
were indexed to a scale 0100. An index
difference of 2 points was considered
statistically significant.
Respondents were asked to evaluate
41 global corporations, chosen
because of their worldwide operations
and international outlook, and only
respondents with a higher degree of
brand awareness of the companies
(somewhat familiar or very familiar)
were allowed to complete the survey.
In parallel with the quantitative
research, online content was analyzed
for 10 of the 41 companies, with this
content categorized into one of the four
reputation dimensions of the MSLGROUP
Reputation Impact Indicator model.
While we have chosen to focus on the
overall findings and implications of the
research for reputation management, not
on company-specific insights, data about
individual companies is sometimes used
to illustrate a general point.

These four dimensions were drawn


from international academic research
in the field of reputation and are
reflected in a number of questions,
with each question then correlated to
the Reputation Core thus identifying
reputational drivers.
In addition, the survey examines the
link between strength of reputation
and the degree of recommendation
(NPS).
The survey takes a global perspective
and covers 10 countries on five
continents: the United States, Canada,
United Kingdom, France, Germany,
Sweden, China, India, Brazil, and
South Africa.
Alongside the four dimensions of
reputation, the study also looks at
intuitive reputation awareness and
the impact on corporate reputation.
This intuitive aspect of reputation
is then linked to a more rational,
deliberate view of reputation. We define
the capacity to create spontaneous
associations with a company as Mind
Space, a metric that demonstrates
strength of brand awareness.
Underlying the results in each area
is reputation content, i.e. the
messages and conversations linked to
a company, the majority of which are
today delivered and digested via digital
channels. Our online listening metric
therefore looks at reputation content

.
1
This online analysis was carried out by our
agency in Bulgaria Publicis Consultants
MSLGROUP specialists in social media
monitoring, analytics, and research. The team has
worked for clients from the automotive, FMCG,
IT, and pharma industries, and offers its services
for a broad range of languages, including most
European and major Asian languages. Combining
hand-coding techniques in processing data from
automated analysis tools with robust knowledge
of the dynamics of human behavior online, and
related consumer trends, the analysts are able
to provide deep qualitative insights that help
inform strategy.

PART ONE: THE STUDY

MSLGROUPs Reputation
Impact Indicator model
Examining the relationship between the
Reputation Core, the underlying reputation drivers
and the content produced by and aboutcompanies.

Reputation
Content

Reputation
Drivers

Reputation
Core

PART ONE: THE STUDY

Definitions and explanations


of concepts in this section

Alongside the four


dimensions of reputation,
the study also looks
at intuitive reputation
awareness and the impact
on corporate reputation.
This intuitive aspect of
reputation is then linked to
a more rational, deliberate
view of reputation.

Reputation Core Index:


The measure of corporate reputation used in the study.
A combined score that answers the questions Do you like
company x?, Do you trust company x?, and Do you
respect company x?
Products and services:
The term used for a group of reputation drivers reflecting
the quality of the companys offering.
X offers high-quality products/services
X meets customer needs
X offers products/services that are
good value for money
X is an innovative company
X produces its products/services in
a sustainable way
Corporate behavior:
The term used for a group of reputation drivers reflecting
a companys actions and business behavior.
X acts ethically
X is open and transparent about the way
the company operates
X has a positive influence on society
X cares for the environment
X cares for its employees
Relationship:
The term used for a group of reputation drivers
reflecting the quality of the companys relationship
with its customers.
X involves the customer in the creation of
new products/services
X delivers on its promises
X is open to criticism and suggestions for improvement
X communicates in an honest and sincere way
X offers good customer service
Financial performance:
The term used for a group of reputation drivers
reflecting a companys financial performance.
X is a profitable company
X has a capable leadership
X has a clear vision for its future
X has good potential for future growth
X delivers better financial results than its competitors

10

PART ONE: THE STUDY

FINDING

Actions Speak Louder


Than Words

Our study shows that


perceptions around
products and services
create the strongest
reputation driver in all
countries surveyed.

Strong perceived delivery of products


and services and positive perceptions
of corporate behavior drive up the
Reputation Core Index among the
general public.
For companies that scored low on
the Reputation Core Index there is
a clear correlation to low scoring
on corporate behavior.
There are significant variations
between industries concerning
the relative impact of different
reputation drivers on the
ReputationCore Index.
What is the strongest driver of
corporate reputation among the
general public?
To answer this question and others,
we analyzed the degree to which
different attributes of the four
reputational dimensions (strength of
relationship, perception of products
and services, perception of corporate
behavior, and perception of financial
performance) drive reputation.
Perception of products and services
showed the strongest correlation to the
Reputation Core Index. This dimension
is made up of five different drivers,
which together reflects the quality of
the companys offering.

After products and services, corporate


behavior (the degree to which a
company is perceived to be doing
business in an ethical, transparent way)
correlated most strongly with a high
Reputation Core Index.
Our study shows that perceptions
around products and services create
the strongest reputation driver in all
countries surveyed. By contrast, how a
company is perceived to be performing
financially is the least important driver
for enhancing reputation among the
general public a statement true for
all markets surveyed.
Financial performance and the quality
of a companys management obviously
has a defining impact on many other
stakeholders, not least investors, but it
is not surprising that the general public
can be said to form opinions about a
companys reputation first and foremost
as consumers or citizens, rather than
as investors.
This finding can and should guide
the priorities of a management team.
If scoring on ethical behavior is at risk,
research shows that reputation can
suffer. When facing an issue, the way
the issue is handled and the perceived
level of transparency and sincerity can
often have as large an impact on the
reputation of the company as the issue
itself. On the other hand, quality of
products and services and making it
known that they are appreciated are
key contributors to a positive reputation
that should not be underestimated.

The impact of different dimensions 


on Reputation Core Index

Financial
Relationship
performance

Corporate behavior

Products and services

11

PART ONE: THE STUDY

On an industry level there are


significant variations in how
different reputation drivers
contribute to the Reputation Core.

This shows that people


have higher expectations
with regard to the corporate
behavior of pharmaceutical
companies than they do of
companies in the other three
industries under review.

The reputation drivers for companies


within the pharmaceutical industry
display some unique characteristics:
Although corporate behavior is
important for all industries, it has
a larger impact on reputation within the
pharmaceutical industry. Acts ethically
is the second most important driver for
corporate reputation in all industries,
but in the pharmaceutical industry
this driver is much closer in relative
importance to the first. This is followed
by other drivers that are closely linked
to corporate behavior, producing
products and services that are good
value for money, communicates in an
honest and sincere way, has a positive
impact on society, and is open and
transparent about the way the company
operates.
This shows that people have higher
expectations with regard the corporate
behavior of pharmaceutical companies
than they do of companies in the other
three industries under review. That is
to say, to act in a non-ethical way will
be more damaging to a pharmaceutical
company than to a company in one of
the other three industries covered in
the study.
Companies within the internet sector
also display an industry-specific
pattern. Providing products and
services that are perceived as value for
money does not have the same impact
on corporate reputation as it does in

12

the three other industries where value


is one of the core drivers, especially in
the pharmaceutical industry. Another
interesting difference is that producing
products in a sustainable way has
a much smaller impact on corporate
reputation for internet companies
than for companies in the other three
industries. It appears the internet
industry continues to be evaluated
by somewhat different criteria when
compared with more mature industries.
Overall, the financial performance of
a company is not a positive driver for
corporate reputation among the general
public, but there are some statistically
confirmed differences between the
industries. Additionally the impact of
this dimension appears to be affected
by pre-existing views respondents
may hold about a company. With the
exception of FMCG, a high profit margin
has a negative impact on the reputation
of all three other industries: profitable
seems to be seen as a dirty word. In
the FMCG and internet industries,
strong company leadership has a
positive impact on corporate reputation
but we do not see the same pattern
in the pharmaceutical and consumer
electronics industries. For consumer
electronics and internet businesses,
a perceived potential for future growth
has a positive impact, yet by contrast,
there is no statistically confirmed
relationship between this driver and
the reputation of companies in the
pharmaceutical and FMCG industries.

PART ONE: THE STUDY

The top 10 reputation drivers


in the pharmaceutical industry

1. Offers high-quality products/services

6. O
 pen and transparent about the way
the company operates

2. Acts ethically

7. Meets customer needs

4. C
 ommunicates in an honest and sincere way

9. Capable leadership

5. P
 ositive influence on society

10. Profitable company

8. P roduces its products in a sustainable way

Signifcant effect on Reputation Core

3. O
 ffers products/services that are good value
for money

10
1

The top 10 reputation drivers


for internet businesses

1. Offers high-quality products/services

6. O
 pen and transparent about the way
the company operates

3. P
 ositive influence on society

7. Offers good customer service

4. M
 eets customer needs

8. Offers products/services that are good


value for money
9. Innovative company
10. Capable leadership

Signifcant effect on Reputation Core

2. Acts ethically

5. Communicates in an honest and sincere way

13

10

PART ONE: THE STUDY

We can see that a positive


influence on society has a
significant impact on the
Reputation Core.

Companies commitment to social


issues seems to be largely judged
as a sum of their perceived overall
contribution to society. We can see that
a positive influence on society has a
significant impact on the Reputation
Core, and a change in this driver
will bring about the greatest change
for corporate reputation across all
industries with the exception of
pharmaceutical companies. Ethical
behavior is also a significant reputation
driver, especially in the pharmaceutical
industry, as we have seen. The two
more specific questions around caring
for the environment, and caring for
employees, were not found to be as
strong a driver of corporate reputation,
by contrast. One interpretation of this
is that the industries analyzed are
perceived to have a comparatively slight
negative impact on the environment,
versus others, and the significance of
this driver will most likely be greater for
other industries that are thought of as
more harmful to the environment.
When it comes to the relationship
dimension of reputation (reflecting the
quality of a companys relationship
with its customers), the driver that
stands out as having the biggest impact
is communicates in an honest and

Impact of the financial dimension


on the Reputation Core Index

sincere way. This further illustrates


the importance of ethical business
behavior. It is not enough to only act
ethically but companies also need
to be ethical and open in their
communication. Also interesting here
are differences across the four industry
clusters, when we look at expectations
around customer service and the impact
of this factor on corporate reputation.
For pharmaceutical companies and
those in the FMCG sector, the customer
service element does not have a
significant impact, while for consumer
electronics and internet businesses,
this factor has a confirmed positive
impact on corporate reputation.
From the analysis above we can see
that there is no one size fits all solution
where communication is concerned.
There are significant variations
between the relative importance of
a reputation driver when looking at
different industries, and it is crucial
for management and communications
professionals to have an understanding
of the specific dynamics in their
industry, and use this information
as input when making business and
communication decisions.

Profitable company
Capable leadership
Good potential for future growth

Signifcant effect on Reputation Core

Pharma

Consumer electronics

FMCG

14

Internet

PART ONE: THE STUDY

Impact of the corporate behavior


dimension on the Reputation
Core Index

Acts ethically
Open and transparent about
the way the company operates
Positive influence on society
Cares for the environment
Cares for its employees

Pharma

Consumer electronics

FMCG

Impact of the relationship


dimension on the Reputation
Core Index

Internet

Delivers on its promises


Communicates in an honest
and sincere way

Signifcant effect on Reputation Core

Offers good customer service

Pharma

Consumer electronics

FMCG

15

Internet

PART ONE: THE STUDY

(more than +50). Independent research 2


has shown a link between a high NPS
score and business success in terms of
sales.

FINDING

Use it, Like it, Recommend


it: The Drivers of
Recommendation (NPS)

Some have called it the ultimate


question: Would you recommend a
company to a friend or a colleague?
Our survey attempted to answer this
question by asking respondents to
tell us how likely they were to indeed
recommend the companies surveyed.

In this study we correlated high NPS


scores (where respondents indicated
either 910) with the Reputation
Core. In all countries, there was a
clear correlation between a strong
reputation and a high NPS score.
While this conclusion in itself wont
raise many eyebrows, we were able
to further analyze the factors behind
this correlation and uncover precisely
which reputational elements have the
strongest impact on NPS. What we
discovered is that the area of reputation
that is most strongly linked to a high
NPS score is the perception of products
and services. As was the case with
overall reputation, the dimension with
the least impact on NPS among the
general public is a companys financial
performance.

Respondents were asked to rate a


company from 0 (not at all likely) to 10
(very likely). By looking at the number
of 9 or 10 answers and subtracting
them from the 06 answers, the survey
produced an NPS. While an NPS can
be negative, most successful companies
have a number of dedicated promoters
or fans and therefore a high NPS score

2.
Marsden, P, Alain Samson and Neville Upton
(2005), Advocacy Drives Growth, Brand Strategy
(198), pp.4547.

Reputation drivers linked to actual


consumer experience are more
important for driving NPS than they
are for corporate reputation.
There are some differences between
industries, but those differences are
not as distinct as for the drivers
of reputation.

Reputation dimensions as
drivers of NPS

Financial
Relationship
performance

Corporate behavior

Products and services

16

PART ONE: THE STUDY

As for any differences between markets


with regard to what drives NPS, we
found none. In all markets, being
good at delivering your offering builds
recommendation levels the most.
At the industry level, we did see some
differences with regard to what drives
NPS, but those differences are not as
significant as for the reputation drivers.
One interesting variation is that a
companys financial performance is a
positive factor for NPS in the consumer
electronics, FMCG, and particularly
the internet industries. Only where the
pharmaceuticals industry is concerned
do we see a negative impact. One
further difference is that the relationship
dimension is more important, and will
become even more important, when
compared to ethical business behavior
as a driver of NPS within the consumer
electronics industry.

The area of reputation


that is most strongly linked
to a high NPS score is the
perception of products
and services.

While the importance of the different


dimensions where NPS is concerned
is much the same as it is for the
Reputation Core Index, the ranking
of the specific drivers is slightly
different. Offers high-quality products
and services still has the largest
impact, but produces its products in
a sustainable way has a bigger impact
on NPS than products being seen
as value for money and meeting
customer needs.

NPS Driver Strength by Industry

To have a positive impact on society


is more important for NPS than to
act ethically, which is similar to the
impact of this dimension on corporate
reputation. Caring for employees has
the third largest impact in the category
for NPS, but this piece is of low
significance when it comes to building
corporate reputation.
With regard to the relationship
dimension, the ranking is also different.
Delivering on promises is the most
impactful question for NPS, followed
by delivering good customer service
and communicating in an honest and
sincere way. This is also the inverse of
the ranking where impact on reputation
is concerned.
Not surprisingly, from the observations
above we can see that the drivers linked
to actual consumer experience are more
important for driving NPS than for
corporate reputation. This underlines
the need to carefully evaluate and
balance the message depending
on the purpose of, and audience
for communication.

Financial performance
Relationshiip
Corporate behavior
Products and services

Consumer electronics

Internet

FMCG

17

Pharma

PART ONE: THE STUDY

A more qualitative
approach to brand
awareness building
positive associations that
are easily accessible in the
minds of stakeholders is
therefore a key to a strong
reputation. And the more
closely this Mind Space
is linked to a companys
products and services,
thebetter.

with which an image of a company is


created in an individuals minds eye
is an advantage.

FINDING

Brand Awareness is not


Enough, Building a Strong
Mind Space and Positive
Connotations is Key
Not only the quality, but also
the ease with which people can
create mental associations with
an organization has a significant
impact on reputation.
Engendering neutral associations
is not enough to build a strong
corporate reputation.
The relative importance of different
reputation drivers is affected by
pre-existing attitudes towards
a company.
Only respondents claiming to know the
companies that were surveyed fairly
or very well, and could spontaneously
associate things with the company,
were allowed to answer the subsequent
questions on the drivers of reputation,
meaning all respondents effectively
were brand-aware of the participating
companies. Seventy-eight per cent of
respondents found it easy to come up
with spontaneous associations with
a company, and the Reputation Core
Index was 43% higher among that
group. In other words, occupying a
customers Mind Space the ease

Share of respondents who thought


it was easy versus difficult to
identify things they associate
withacompany in the survey

When respondents were asked to define


these connotations, 53% defined them
as positive, 38% as neutral, and 9%
thought of them as negative.
Unsurprisingly, associating negative
things with a company is linked
to a low reputation score. But what
was surprising was the significant
difference in impact upon reputation
found between neutral and positive
associations. Positive associations
resulted in an average Reputation
Core Index that was 60% higher
than that of neutral associations.
Clearly a more qualitative approach
tobrand awareness building positive
associations that are easily accessible
in the minds of stakeholders is
therefore a key to a strong reputation.
And the more closely this Mind Space
is linked to a companys products and
services, the better. These findings
were true for all markets, age groups,
and industries covered in the study.
So, in a world where businesses and
brands are constantly battling for
attention, simply grabbing peoples
attention is not enough. Organizations
need to generate positive Mind Space,
if they are to build a robust reputation.

Share of positive, neutral,


and negative associations
Difficult

Positive

Easy

Negative
Neutral

22%

09%

78%

38%

53%

18

PART ONE: THE STUDY

Dominant brands are not only recognized, they


also occupy Mind Space in relevant stakeholder
groups that is in line with the qualities with which
the brand wishes to be associated.
Creating a robust and relevant Mind Space goes
beyond creating brand awareness. A company not
only needs to grab attention and make stakeholders
aware of its existence, it needs to create an
impression that allows one to easily attribute
characteristics to the brand, thus increasing the
chances of making it the brand of choice. In this
respect, Mind Space can be said to be the quality
of awareness about a brand.

How do we define
Mind Space?

Brand

In todays world of speed and transparency,


Mind Space is created from a number of brand
conversation sources. What do we think of
when we hear a particular brand name? How
automatically were those connotations invoked?
Are the characteristics we ultimately associate
with a brand in line with the desired brand
positioning?
A robust Mind Space requires two parts.
The things one associates with a company need
to be easily drawn upon, thus making the process
intuitive: if a person has to spend time going
through a structured thought process in order to
work out what they think, then the Mind Space in
question is already weaker than if sentiments are
gut-felt. Secondly, the associations need to reflect
a positive, company-specific understanding of the
brand. If the associations are generic and equally
true for all companies in the industry, Mind
Space is also weakened.

Positive associations linked


to a stronger Reputation Core

Neutral associations lead to


a much weaker reputation

85
Positive
associations

Neutral
associations

0
Reputation Core

Company I like

Company I trust

19

Company I respect

PART ONE: THE STUDY

The importance of building positive


associations is also confirmed at the
industry level, with levels of corporate
reputation being significantly higher
among respondents who associated
positively with a company versus
those who demonstrated more neutral
associations. This was true across
all industries.
One interesting observation here is that
the positive impact of ethical business
behavior and drivers including acts
ethically, and produces its products
in a sustainable way is much stronger

Citizenship dimension drivers


linked to type of association

How the financial performance of a


company is perceived is also dependent
on whether the respondent judges the
things they associate with a company

Acts ethically

Positive influence on society

 pen and transparent about the way


O
the company operates

Cares for the environment

Consumer
electronics

Cares for its employees

FMCG

Negative associations

Neutral associations

Positive associations

Pharma

among respondents who judge their


own associations to be negative than
among respondents who associate
positive things with a company. For
this group of respondents, the questions
related to ethical business behavior
have a bigger impact on corporate
reputation than drivers related to
product and service quality, value for
money and meeting customer needs.

20

Internet

PART ONE: THE STUDY

to be positive, neutral, or negative. For


respondents with positive associations,
profitable company has a slightly
positive impact on corporate reputation,
whereas for respondents that judge
their associations as negative, the
profitability has a strongly negative
impact on reputation. An interesting
observation is the large impact of
capable leadership among respondents
with negative associations. One
explanation for this could be that
respondents with negative associations
put more trust in a companys

Financial performance drivers


linked to type of association

Good potential for future growth

Capable leadership

Delivers better financial results than


its competition

Consumer
electronics

FMCG

Negative associations

Neutral associations

Positive associations

From the below, we can see that


the attitude of the target group not
surprisingly has a large impact on
corporate reputation, and also that
the relative contribution of different
drivers varies significantly between
respondents with positive and negative
attitudes. Again, this highlights the
need to adapt communication to
the relevant audience, based on
a thorough understanding of
their attitudes and motivations.

Profitable company
Clear vison for its future

Pharma

leadership to change the perceived


negative aspects of their business.

21

Internet

PART ONE: THE STUDY

The importance of
perception of products
and services is supported
by our analysis of online
content from the 10 sample
companies.

FINDING

Social Media Discussions


Reflect the Relative
Impact of the Reputation
Dimension on Corporate
Reputation
The Reputation Impact Indicator
includes an analysis of the relationship
between corporate reputation and
discussions on social media.
The importance of perception of
products and services is supported by
our analysis of online content from the
10 sample companies. For companies
selling products directly to consumers,
the proportion of social media content
related to the products and services
varied between 5090%. Products and
services is also the reputation area
where we observed the most organic

Online content classified


into the three dimensions of
corporate reputation

posts, i.e. content and conversations


that are sustained without active
involvement from the companies
in question. A majority of the
conversations relating to the company
products and services were positive.
Also in line with the importance of the
reputation drivers, the other area where
we observed a number of organic
postswas topics relating to a companys
corporate behavior. These topics created
a high degree of engagement, with
conversations focused on ethical
conduct, transparency, and consumer
rights. In contrast with conversations
around core business, most of the
conversations around corporate behavior
were negative. Linking this to the main
area of research, we noticed, perhaps
unsurprisingly, that companies with a
poor corporate reputation, evidenced by
a low Reputation Core Index, appeared
so largely due to negative perceptions
of their position on corporate behavior.

Perception of products and services


Perception of corporate behavior/CSR
Perception of financial performance

1. McDonalds
2. BP
3. GoldmanSachs
4. Citibank
5. Shell
6. PayPal
7. Microsoft
8. Johnson & Johnson
9. Samsung
10. Google
10

20

30

40

50

60

70

80

Values in percentage points, from data derived through a qualitative and quantative analysis of a sample of content
for each company in each of the 10 countries.

22

90

100

PART ONE: THE STUDY

FINDING

Global Brands,
Local Reputation
A global corporate reputation might well
be the sum of local reputations in each
individual market, but how reputation
is constructed in those markets means
that each must be attended to with
insight and care. This is a significant
challenge not least given the growing
importance (and reach) of web-based
communication.
As far as local differences within the
survey findings are concerned, two
particular areas stand out:
1. Europeans are more skeptical
about companies than
respondents from the BRICS

The study found that


reputation varies
significantly between
countries and companies.

The average Reputation Core score


for companies was 66, across the 10
countries surveyed. However, the
study found that reputation varies
significantly between countries and
companies: the lowest Reputation
Core score was 28 and the highest
91. Examining different regions
we observed that Europeans rate
companies much lower than their
counterparts in North America do,
whoin turn lag behind respondents in
the BRICS countries surveyed Brazil,
India, China and South Africa. Indian
respondents produced the highest
average Reputation Core score of 79,
while Swedish respondents evidenced
the lowest average Reputation Core
score of 51. The study demonstrates
that in general, Indians hold
corporations in very high regard, with
the lowest Reputation Core score among
the companies surveyed being 72.
These differences observed between
the old world and the new world
underline the need for a finely-tuned
reputation strategy, one that avoids a
standardized global definition
of reputation.

23

2. There are considerable market


variations when it comes to a
companys reputation score
Globalization has become one of the
most dominant business trends in the
last three decades, and a significant
amount of corporate and marketing
communications work is carried out
with the purpose of building a robust,
global corporate brand. Indeed, the
brands we have studied in this research
are companies with an impressive
global presence.
The study demonstrates that despite
having high brand awareness in all
markets, a companys brand can
have a markedly different reputation
in individual countries. We found
numerous examples where both the
strength of the Reputation Core and
the associations people make with,
and discussions they have about
brands were very different.
For example, GlaxoSmithKline has a
Reputation Core Index score between
42 and 81, the highest being in India
and the lowest in Sweden. On the other
hand, AstraZeneca sees its Reputation
Core score vary between 52 in Canada
and 84 in Brazil. Taken together with
the previous finding regarding different
populations overall attitudes to and
views of corporations (less skeptical
in Asia, more so in Europe), this
highlights the challenges facing
marketing communications leaders
at global brands, and the clear
need for local knowledge of the
stakeholder environment.

PART ONE: THE STUDY

Showing the difference in


Reputation Core across countries

New world

Reputation Score

Stronger

Weaker

79

India

76

Brazil

75

China

74

South Africa

67

United States

64

Canada

61

United Kingdom

60

Germany

59

France

51

Sweden

Old world

24

PART ONE: THE STUDY

The Reputation Core score of


GlaxoSmithKline in different countries

90

81

76
69

67
57

56

56

54

52
42

India

Brazil

China

South Africa

Canada

United
States

United
Kingdom

Germany

France

Sweden

58

57

56

54

52

52

United
States

France

United
Kingdom

Sweden

Canada

The Reputation Core score of


AstraZeneca in different countries

90

84
78

77
68

Brazil

China

India

South Africa

Germany

Globalization has become


one of the most dominant
business trends in the last
three decades.

25

PART ONE: THE STUDY

36% of the respondents in


the study said that online
channels are their main
source of information about
companies.

FINDING

Demographics and
Media Habits Matter
The development of the Reputation
Core Index among different age groups
follows a different pattern in each of the
four industries. Where pharmaceutical
companies are concerned, reputation
is significantly weaker among both
younger and older age groups,
while higher among middle-aged
respondents. For consumer electronics,
reputation is at a similar level across
all the age groups. For FMCG and
internet related businesses, reputation
is highest among younger sections of
the population, and decreases with
age, with reputation being at its lowest
among older respondents.
As part of the study we also analyzed
a possible relationship between gender
and corporate reputation, but we
were not able to find any statistically
significant patterns that could
support the notion that the gender of
a respondent has an impact on the
Reputation Core Index.

There is however a link between


reputations score and the educational
level of the respondents, with the
highest reputation scores emerging
from respondents with college or
university degrees, and students.
This is true for all industries except
pharmaceuticals, where students
provided somewhat lower scores.
We also see a relationship between
online habits and the Reputation Core
Index. This is particularly true for the
pharmaceutical and internet industries
where reputation is much higher among
respondents that spend more time
online versus those with lower internet
usage levels. The same pattern is
true also for consumer electronics
and FMCG, but the difference is
less significant.
The research highlights the increasing
importance of digital channels as a
source of company information. In fact,
36% of the respondents in the study
said that online channels are their main
source of information about companies.
These numbers are increasing year on
year, making online content critical for
reputation management.

Industry Reputation
Core Index by age group

Pharma
Consumer electronics
FMCG
Internet

80

0
1617

1822

2326

2732

3335

3640

26

4145

4650

5155

5660

6165

65+

PART ONE: THE STUDY

Where do you mainly get your


information about companies?

13
10

11

12

36%
online

Breakdown:

The rest:

1. Company websites 16%

5. Other 1%

2. Twitter 1%

6. Newspaper ads 10%

3. Facebook 5%

7. Newspaper stories 10%

4. Other online source 14%

8. TV ads 13%
9. TV news 17%
10. Radio ads 2%
11. Radio news 3%
12. Magazine ads 1%
13. Friends or family 7%

27

PART ONE: THE STUDY

Reputation Core Index and


education level

Primary
Secondary
College, university
Still studying

80

40

0
Pharma

Consumer electronics

FMCG

Reputation Core Index and


online usage

Internet

Less than 1 hour


13 hours
36 hours
More than 6 hours

80

40

0
Pharma

Consumer electronics

FMCG

More time spent


online results in a
higher reputation score

28

Internet

PART ONE: THE STUDY

Part Two:

Observations
in situations where
reputation effects may be the key
determinants of business success
or failure, companies can and
should expect to be able to do
more than just reflect on previous
experience, or review data.
Experience certainly takes us
a long way. But it is time to move
on and to improve.

Maria Grimberg
Partner

29

Part Two: Observations

Reputation Moments
We believe that the information age that we live in today has changed
the way that audiences judge our reputation. Theirs is less and less
a thoughtful assessment of our carefully constructed narrative and
more and more an intuitive assessment based on the immediate
beats and moments that define those individuals most recent
interactions with us.

Dominic Payling
Director and Head of Planning
& Insight at MSLGROUP in London

The importance of building and nurturing a reputation, over time, remains


undiminished, indeed it has become more important than ever. But today
it is the way that an organization or company helps its audience to judge it
positively, moment by moment, that will increasingly determine its success.
As we head for an era of machine learning and programmatic reputation
with its ever shortening cycle of action, reaction, and interaction these
moments will occur more frequently and with ever greater rapidity. Wed
better be ready.
But how should we be in this new reputation dynamic? We know from the
evidence provided by behavioral scientists such as Nobel Laureate Daniel
Kahneman that simple assertion is not however enough. To have any
immediate and future value the promise an organization makes must be
underpinned by what it does to create the skin in the game and that is
what allows the organization to play on.
Historically the reputation acquisition process was slow and hard-won.
It took a major investment, in time, money, and effort to create reputation
equity, which made reputation equity a significant barrier to competition.
All very useful if you were an old, established brand, business, organization,
or industry.
Of course today, two network effects have disrupted the status quo:
1. Social Networking
Online the actions of an organization can be judged by many people and
those judgments then circulated among many others. Furthermore these
actions and judgments are preserved, in a sort of digital aspic, some of it
factual and accurate, some less so, some born of advocacy, some of malice,
but all accessible. In real-time. Today, the communication costs associated
with building a reputation have been reduced. And the ease with which
your reputation can be damaged has increased. Substantially.
2. The Sharing Economy
In the last year more strangers got into each others cars and beds than
ever in the history of trust. Disruptive technologies from businesses such
as ber and Airbnb demonstrate the way that reputation can be instant.
You have a bed, in a place I want to be, it looks clean and doesnt cost
too much lets book! Thousands if not millions of instant and valuable
off-the-shelf reputations appear to have been created overnight. Furthermore
businesses like Airbnb and ber actively incentivize our mutual reputation
engagement encouraging us to build or destroy each others reputations
at will.

30

PART TWO: OBSERVATIONS

In the sharing economy a widely distributed reputation can be acquired


at low cost and seemingly at speed. The barriers that protected old
established industries are falling and their destruction will accelerate.

Today, the communication


costs associated with
building a reputation have
been reduced. And the ease
with which your reputation
can be damaged has
increased. Substantially.

The dynamics, scale, and economics of reputation have shifted and


we believe that this has affected the way people think about corporate
reputation. We believe that this is in line with Daniel Kahnemans
theories about how actual influences on behavior compare with the
influences economists predict people should respond to when making
decisions. The economists view is straightforward and common sense.
Every person works out his or her preferences independently of each
other based on what is best for him or her. However, Kahneman and
his Co-laureate Amos Tversky showed that the working out that really
influences our behavior doesnt conform to logical, rational models
of behavior.
To describe the psychology underlying this and the influences behind
many of the decisions we make many times every single day of our lives,
Kahneman uses an elegant metaphor: fast versus slow thinking.
Slow thinking is the thinking we optimistically imagine we use all
the time to make decisions (just as economists imagine we do). It is
deliberate, conscious, calculating, mathematical, and rational. What is
more, it is hard work and it is slow. Although we can and do think like
this, we dont think like it very often. Such thinking is restricted in its
influence over our lives. Fast thinking is the far more influential mode.
It is automatic, only slightly conscious or completely unconscious
associative, and intuitive. It is effortless and it is speedy.
We should be mindful of fast thinking when we consider reputation too.
At MSLGROUP we believe this points to a new understanding of
reputation. With the removal of barriers to judgment created by the
networked world, where once it might have been enough to communicate
at scale, organizations must now behave correctly and be seen to be
behaving correctly at scale.
Build on top of this the active creation of instant reputations in
which participants are incentivized to judge each other and a new
type of economy emerges: one in which the reputation equilibrium
is truly dynamic and a sustainable business must seek to optimize
that reputation at all times. In the new world of reputation moments,
uncertainty has become much more pronounced and success lies in
constantly evolving, or optimizing your organizations popularity among
those people who have not yet decided to what extent they like you or
not. Competitive advantage lies increasingly at the margin.
We believe that reputations can now be formed more quickly if not
yet overnight and can now change more quickly. They are more
fragile than they once were and subject to faster, harder headwinds,
crosswinds, and tailwinds. We now live in an era of reputation moments
that we must seek to optimize always.

31

PART TWO: OBSERVATIONS

Reputation: A Matter
of Buy, Sell, or Hold?
Some might attract global profile, others might be noticed by many
fewer, but there are a significant number of examples each year
when we observe a clear link between corporate reputation and
stock market valuation. Almost all of these are where a company has
not delivered in a manner that has been expected by its customers,
suppliers, staff, or to society more generally. The transgressors
reputation has taken a hit and so has its share price. The impact
is often immediate and can be challenging to overcome.
Kevin Soady
Partner

But MSLGROUPs research shows that for most people, how a company is
doing financially is not something that concerns them when it comes to their
own views of a companys reputation. A company is either doing well (and
can therefore be expected to deliver on a series of reputational positives),
or it is not. Most people do not read the financial pages of the newspapers.
For them, the only time that business results appear to enter the public
consciousness is when a companys performance has been so spectacularly
bad or when the CEO is seen to have been so inappropriately remunerated
that it is front page rather than business page news.
This research has also determined that although a public perception of
good management (whatever that actually means) can support a positive
reputation, actually making money is something that might raise questions.
For a pharmaceutical company, for example, the research shows a negative
relationship between profit and reputation a small, but important indicator
that post the financial crisis, business as a whole has yet to clearly set out
an accepted argument for profit and corporate financial success.
So if the general public does not really care how a business is doing
financially, should the financial markets really care how the business is
doing reputationally?
The answer would appear to be an obvious yes. But in reality how many
companies are actually demonstrating the link between reputation and
performance in a way that is built into analyst models and investor decisionmaking? In our experience, there are not many who are (for example Allianz,
American Express, Philips) but when a company does take the time to
provide a detailed insight into this dimension it appears such an obvious
thing to do.

32

PART TWO: OBSERVATIONS

We have seen through this research that Net Promoter Score has a very
strong correlation with core reputation. There are many examples where
it has been demonstrated that a better NPS leads to better business
performance. Promoters spend more, tell others about their positive
experience, and are less likely to switch providers. This has been shown
consistently across disparate businesses and sectors from insurance and
credit cards, telecommunications and healthcare, technology and global
shipping services.
Many companies that are using NPS or equivalent metrics as a business
management tool are beginning to understand that the results are not just
of use in terms of sales and marketing, they can also offer the financial
markets an insight into the potential within a business if reputational
targets are achieved or improved upon. So, for them, a business that is
being managed on the basis of maximizing customer satisfaction (whether
those customers are the general public or other businesses), is a business
that will be taking market share, will be making more money, and should
be achieving a premium rating.

If the general public does not


really care how a business is
doing financially, should the
financial markets really care
how the business is doing
reputationally?

The next step to tying reputation to financial performance may well then
rest with the investors themselves or the sell-side analyst community.
Our recent survey of global investors, covering many of the same markets
as covered in this study, showed how important non-financial factors
are to investor decision-making, with corporate strategy and quality of
management the key issues for many. But it is hard to define exactly what
quality management is or represents. Corporate reputation is most definitely
one of the factors but how should this be defined? This Reputation Impact
Indicator study provides us with some insights and as more begin to learn
from the relatively few examples, it should become the norm rather than the
exception for the CEO, CFO, or Head of IR to be asked on an earnings call
So what happened to your key reputational KPIs in the quarter and what
are you doing to improve them? Because reputation can be the key to buy,
sell, or hold.

33

PART TWO: OBSERVATIONS

Guiding Corporate
Reputation Management
in the Next Decade:
A Little Less Conversation,
a Bit More Action Please?
Maria Grimberg
Partner

Management teams and leaders are giving the reputation aspect


of their decision-making considerably more weight than just a few
years ago. Their interest is primarily in understanding the potentially
positive or damaging effects of decisions and investments. It is
against this backdrop that MSLGROUPs Reputation Impact Indicator
study was conceived part of our effort to create a new framework
around corporate reputation as a fundamental corporate asset, built
for a decade where it is one of the top priorities and challenges for
many companies business success.
Today, the financial, commercial, or legal aspects related to any business
decision are heavily scrutinized. The models used to do so are well
established and well known. We believe that the reputational aspects of
those same business decisions also need to be treated in the same rigorous
way. Currently, those corporate communication managers and advisors
committed to elevating reputation in business decision-making processes
will seek to draw on experience from similar situations, gather historical
data from stakeholder research, and implement real-time monitoring and
measurement it is as much as current models enable them to do.
MSLGROUP sees the clear need to expand on and deliver better reputation
models and tools for such situations, to create a more robust and accurate
Corporate Reputation framework. Access to fast and deep data in any
situation is a huge advantage, but in order to really be able to give sound
advice in todays fast-moving world we need a more in-depth understanding
of how corporate reputation is constructed among various stakeholder
groups, and how it can be influenced both positively and negatively.
Put simply, in situations where reputation effects may be the key
determinants of business success or failure, companies can and should
expect to be able to do more than just reflect on previous experience, or
review data. Experience certainly takes us a long way. But it is time to move
on and to improve. MSLGROUPs research confirms what several previous
studies have shown: Reputation scores do have a direct impact on the
inclination to recommend a business, which in turn has a proven impact
on business performance. So it matters.
Reputation in a New Era
We do not live in a new world. But we do live in a new era where over the
last two decades several waves of technological innovation, globalization,
and value shifts have deeply influenced the way brands, companies, and
organizations operate. Unsurprisingly, they must now include reputation
insights in their corporate decision-making.
The new era is often discussed as seen through the lens of the consumer,
a consumer who is more important and carries more influence than ever
before. They are empowered by knowledge and by access to channels for

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PART TWO: OBSERVATIONS

voice or exit that are increasingly important. The walls between external
and internal are coming down and the concept of transparency must be
redefined in order to stay interesting, credible, and respected.
This makes many businesses nervous. The speed at which a consumers
opinion can spread is, frankly, daunting. It is easy to become more riskaverse than ever before and to start avoiding making decisions that might
upset consumers, even if they are sometimes the right ones to take. But
the truth is, innovation and progress require courage. And to survive and
thrive, companies need to be given the opportunity to weigh reputation
opportunities as well as risk.
Optimal versus Maximal Reputation
Here is where things get interesting.
We recognize that in a multi-stakeholder environment, businesses face
reputation risk in everything they do. In order to mitigate these risks, we need
a true and deep understanding of the possible effects on business results.
But the risk measure has become too simplistic. In our view, reputation has
too often been gauged by standards based on falsely objective criteria rather
than on the effect it really has on business. Companies from completely
different industries are ranked against one another, rather than against their
competitive set, and their own optimal reputation level is ignored.
Many existing frameworks take the starting point that a business
reputation is formed and developed steadily and progressively over time,
anevolutionary process if you like. The aim is to constantly improve,
and the higher the score, the better the chances for business success.

What really matters is


our ability to foresee how
a companys business
decisions affect the
Reputation Core and
to understand where it
will move away from its
equilibrium. From that base
a company can assess
the benefit and cost of any
reputation opportunity and
the associated risks.

But the truth is that every company is unique, and that reputation is largely
formed by the expectations people have of a company. If we understand the
building blocks we can also get closer to understanding what the optimal
level for any given company is. (Optimal reputation can only be understood
in a multi-stakeholder context. While the general public is important,
companies have conversations with many stakeholders.)
Our hypothesis is that there is an optimal level of reputation for every
company, which does not necessarily have to be the highest one possible.
Companies should strive for the optimal level of reputation and Mind
Space for the industry and business situation that they are in. A reputation
that is optimal will also be in a dynamic equilibrium. When pushed in one
direction, it will after some time, if companies do the right thing, bounce
back more or less to its original levels. The optimal level and makeup of
a reputation will change over time.
We also believe that there are thresholds within the dynamic equilibrium
which companies should not fall below, and thresholds that those companies
could seek to move beyond, in order to positively impact reputation going
forward. These thresholds are based on factors that have the strongest
correlation to reputation within a specific industry, but also related to society
as a whole.
So our conclusion is this: What really matters is our ability to foresee how a
companys business decisions affect the Reputation Core and to understand
where it will move away from its equilibrium. From that base a company
can assess the benefit and cost of any reputation opportunity and the
associated risks. Deeds versus words. We look forward to a time when more
of our clients perhaps say to us, A little less communication a bit more
understanding of the consequences of our actions, please. Of course, we
need to robustly test these hypotheses all be they well-founded. Stand by
for more from our follow-up research project next year.

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About the Editor:


Pr Uhlin is a consultant in the
CorporateCommunications practice
atMSLGROUP in Stockholm. He has
arich experience from communication
ina global environment, and has spent
15years in Asia working at MSLGROUP
offices in Beijing, Hong Kong, and
Shanghai. Pr has been a senior advisor
to several large multinationals in Asia
andhas considerable experience in
bothcrisis and reputation management.
He has a Bachelors degree in Business
Administration with a Major in
International Marketing, and a Masters
degree in Asian Studies, from the
University of Stockholm, Sweden.

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About
MSLGROUP
We are Publicis Groupes strategic
communications and engagement
group, advisors in all aspects
of communication strategy:
from consumer PR to financial
communications, from public affairs
to reputation management, and from
crisis communications to experiential
marketing and events. If you would
like to talk to us about how MSLGROUP
can support you with reputation
counsel, strategic planning, insightguided thinking, and big, compelling
ideas, please contact Maria Grimberg
at maria.grimberg@jklgroup.com.

MSLGROUP.COM
Trudi Harris
Chief Communications Officer
trudi.harris@mslgroup.com