ANALYSIS: Customers hold the key to reputation

The 2002 Hill & Knowlton Corporate Reputation Watch survey is complete, and it contains some key lessons for corporate PROs tasked with preserving the reputation of their bosses.

The reputation of boardroom barons has slumped in the wake of the WorldCom and Enron scandals. Newspaper headlines and news bulletins have been dominated by the corporate scandals for months. And the resulting public scepticism about company ethics has seen corporate reputation issues take on a much higher profile.

The 2002 edition of Hill & Knowlton's Corporate Reputation Watch survey reveals that chief executives now believe that the most important ingredient in the make-up of their public reputation is the customer.

Asked why reputation is increasingly important, the 800 CEOs interviewed for the study in Europe and North America were convinced of the link between reputation and sales: 'Chief executives have firmly got their customers in mind. If there's a change this year, the economic climate has meant they are focusing even more on customers and sales,' says Andy Laurence, director of H&K's European corporate communications practice.

A majority of CEOs say that the most important outcome of a better reputation is an increase in sales.This was felt most strongly in Europe, with 65 per cent of Belgian, 56 per cent of Italian and 50 per cent of British CEOs citing this outcome.

The survey highlights how important the reputation of the top tier of management is to that of the corporation as a whole. In the US, 80 per cent said the reputation of the boss was 'a major influence' on that of the company. Even in Europe they still constituted a majority: 56 per cent in the UK, 63 per cent in Germany and 50 per cent as a European average.

Sixty-two per cent of UK companies now assess reputation at the highest level as do 69 per cent of Belgian firms. Only 38 per cent of US companies admitted to monitoring corporate reputation in the boardroom while 42 per cent of Dutch firms confessed to not measuring it at all.

The ability of the CEO to communicate was identified as a crucial factor in building and protecting companies' reputations. In the UK, 78 per cent rank the ability to communicate as the top influence on reputation, and even that was at the lower end of the scale: in the Netherlands it was 90 per cent, in Germany 87 and in Belgium 82.

Country experiences vary on whether the CEO's pay cheque is now tied to his or her ability to influence reputation. Forty-four per cent of Italian companies include corporate reputation as a measure of performance, although the figure is just one per cent in Germany. In the UK and US, the figure is barely a quarter of those CEOs surveyed.

According to the survey, CEOs believe negative coverage remains the greatest threat to reputation, although in the wake of Enron and WorldCom, unethical behaviour has risen up the danger list, particularly in the US. Two in five US bosses now view ethical lapses as a threat, although the figure falls to just 24 per cent in the UK.

This is nuanced by comms heads interviewed by PRWeek. Tate & Lyle director of corporate relations Chris Fox says such findings can give the impression negative coverage is not something companies have any control over: 'Negative media coverage happens for a reason and our job is to understand that and deal with it before it happens. It does have an impact on reputation, but that's the symptom not the cause.'

There are also bodies for whom conventional measures of reputation are irrelevant. Manchester United director of comms Patrick Harverson says that while the club takes its reputation seriously, it can't be assessed in the same way as for others: 'We are on display like no other company,' he says. 'We live our lives daily on the back and front pages of the newspapers.'

Sainsbury's PR boss Jan Shawe suggests the survey offers a restricted view of what influences reputation. Shareholders and suppliers also need to have faith in a company: 'If investors lose faith in the finance director giving accurate information about the company, the biggest nasty that can happen is your shareholders sell,' she points out. 'Shareholders need to be reassured that the company is being managed competently by a good board.'

H&K suggests that because bosses tend to get most closely involved with print media, customers and staff, they tend to rate these sources of information as the most important. The internet, broadcast media and non-governmental organisations remain lower on the priority list in the survey.

The suggestion that companies do not take notice of what happens on broadcast media also gets short shrift from Shawe. And she rejects the notion that US chief executives have a higher profile than UK and European counterparts, although she says some US bosses may have a major media presence because their companies are larger than European operators.

'There are some big names in the US like Jack Welch, but there have been some big names in Britain and in Europe too' she says. 'I think there's been a trend over the last 20 to 30 years where chief executives have got to stand up and get out there.'

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