ANALYSIS: Corporate Reputation - Are we close to ’holy grail’ of reputation? Reputation measurement tools are now a dime a dozen, but which one will the PR industry rally behind? With rival firms all pushing their own systems, can a consen

The news that Fortune magazine and research firm Roper Starch have teamed up to create a new corporate reputation tool, while no doubt significant, turned few heads last week. In fact, with everyone jumping on the reputation bandwagon these days, reputation management products are becoming as ubiquitous as hot-dog vendors in Manhattan. But as with frankfurters, not all are created equal - and some are certainly better than others.

The news that Fortune magazine and research firm Roper Starch have teamed up to create a new corporate reputation tool, while no doubt significant, turned few heads last week. In fact, with everyone jumping on the reputation bandwagon these days, reputation management products are becoming as ubiquitous as hot-dog vendors in Manhattan. But as with frankfurters, not all are created equal - and some are certainly better than others.

The news that Fortune magazine and research firm Roper Starch have

teamed up to create a new corporate reputation tool, while no doubt

significant, turned few heads last week. In fact, with everyone jumping

on the reputation bandwagon these days, reputation management products

are becoming as ubiquitous as hot-dog vendors in Manhattan. But as with

frankfurters, not all are created equal - and some are certainly better

than others.



The Fortune index won’t be released until next spring, making it a

relative latecomer to the game. And with most PR firms already heavily

marketing their own reputation measurement tools, one has to wonder how

successful such a product will be, despite the obvious cache the Fortune

brand carries.



But its very existence means that the magazine has finally admitted -

tacitly at least - that its ’Most Admired’ list is not ’the definitive

report card on corporate reputations,’ as its web site brags.



Whoever comes up with the ultimate reputation measuring stick stands to

reap a tidy profit. The Council of Public Relations Firms released two

studies earlier this year that made a strong case for increased

investment in reputation management, and no doubt left many a CEO

scratching his head and wondering, ’So how do I put a finger on

this?’



One study showed the impact of corporate reputation on stock price, and

the second hammered home the direct relationship between PR spending and

corporate reputation. In the latter survey, the Council found that

companies in the top 200 of Fortune’s ’Most Admired’ list spend more

than twice as much money on PR than companies with weaker

reputations.



Council prexy Jack Bergen equated the findings to ’a nuclear bomb,’ one

whose reverberations are still being felt in corporate PR

departments.



While Fortune certainly won’t admit it, another possible impetus for

last week’s announcement was NYU professor Charles Fombrun, who released

his ’Reputation Quotient’ earlier this fall. Conducted online by Harris

Interactive, the RQ first queried 3,000 people, who were asked to

nominate companies they thought had the best and worst reputations. A

group of 10,830 people then rated the companies on 20 attributes such as

company vision and leadership, workplace environment and emotional

appeal.



Johnson & Johnson emerged as the winner, followed by the usual suspects

- Coca-Cola, Intel, Dell, Wal-Mart and Disney. But the choice of J&J as

number one, despite last year’s disappointing financial results and

lagging stock price, underscored the major difference between Fombrun’s

approach and Fortune’s methodology, which polls executives, directors

and analysts. Indeed, Johnson & Johnson didn’t even finish number one in

its own category in the latest Fortune rankings - it was bested by Merck

and Pfizer.



An even starker contrast is provided by a glance at the companies ranked

number five in ’Most Admired’ and RQ. While Fortune tips its hat to

Warren Buffet’s Berkshire Hathaway, the consumer-focused RQ placed

environmentally conscious Ben & Jerry’s in the five slot. The RQ survey

respondents clearly cared little about financial performance, basing

their votes mainly on past experiences, the opinions of friends and

family, and in the case of Ben & Jerry’s, with their stomach. So which

approach is better?



The PR community was quick to embrace RQ as a step in the right

direction, but no one would go so far as to endorse it as an industry

standard. ’Corporate reputation is difficult to evaluate without asking

consumers. Anything that broadens (the Fortune list) and provides a

bigger picture will help,’ says Kirk Stewart, VP of communications at

Nike (number 23 in the RQ).



’I think any tool in this area is critically important at this point,’

adds Sears PR chief Ron Culp. ’Everyone has realized that we need

something, but no one has seized the moment. RQ is the closest to it

we’ve seen so far. It’s all about the consumer. If you connect with

them, not much else matters.’





Is RQ too consumer-centric?



But the problem with RQ is that it’s too connected with consumers’

tastes.



A major beef that many critics have with RQ is that, in attempting to

address the shortcomings of the Fortune list, it goes too far in the

other direction. The RQ ignores companies that mainly serve other

businesses - not a single financial services company made the list - and

leaves out key constituencies such as C-level executives, financial

analysts, government officials and the media. ’Right now it’s

consumer-centric,’ says Burson-Marsteller’s resident reputation guru

Leslie Gaines- Ross, who adds that Fombrun is taking steps to widen the

net.



Not surprisingly, given the current infatuation with computers and the

Internet, a bevy of hi-tech companies made RQ’s top 20. The public’s

ambivalence about software giant Microsoft (number three in Fortune) was

reflected in its number 15 RQ ranking, behind Hewlett-Packard, Intel,

Xerox, Gateway, Dell and Lucent. But given RQ’s emphasis on consumers,

it was strange to see that Apple Computer was nowhere to be found.



The RQ also gives short shrift to companies with famous brands but

undefined corporate images. The best example is Procter & Gamble, but

Johnson & Johnson’s pharmaceutical industry rivals Merck (number nine in

Fortune) and Pfizer fall into this category as well. And how did Home

Depot (number nine in RQ) end up ahead of General Electric (number 11)?

Probably because CEOs and analysts admire Jack Welch for building a

great company, while the public admires Home Depot for helping build

their homes.



Another obstacle to the universal acceptance of RQ is the fact that it

depends on one research firm, Lou Harris & Associates. It’s likely that

major research firms such as Wirthlin and Yankelovich will contest the

coronation of a proprietary system as an industry standard. ’Clearly

there’s going to be a battle over this,’ Gaines-Ross says. ’It’s become

a cottage industry,’ Nike’s Stewart observes.





Step in right direction



But while flawed, RQ is certainly a step in the right direction. ’Is

this the one? We’ll have to wait and see,’ Gaines-Ross says. ’It all

depends on what the client wants. That’s what it gets down to.’ Culp

concurs: ’Right now nobody can agree, but (the competing firms) will put

their egos aside because our chairmen will demand something.’



Perhaps. But the PR industry doesn’t have a great track record when it

comes to putting egos aside. The Council has a dilemma on its hands: it

wants to get behind a universal reputation measurement system, but it

also supports the idea of multiple research vendors. In the end, it

seems that creating new reputation tools is the easy part.



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