The corporate reputation ranking systems

There are a wide range of measurement systems out there - which should you opt into?

David Harris, FTSE Group
David Harris, FTSE Group

Strategies for measuring corporate reputation can be defined as either external or internal. Internal research is customised research commissioned by the company, as Barclays is embarking on. Both quantitative (large-scale polls of relevant audiences) or qualitative (focus groups convened to gain a more subtle understanding of issues) are often necessary to build up a comprehensive picture.

External measures refers to the independent rankings produced by organisations like Business in the Community (BITC) and the FTSE Group. Some (i.e BITC's CR Index) require opting-in via payment and the filling-in of forms; others (FTSE4Good) are assembled with publicly-available information and thus contain a wider range of companies albeit with a lower level of detail.

There is also a third category of organisations that issue requests for information but don't necessarily charge for the rankings, for example the Carbon Disclosure Project, which elicits information about carbon emissions.

Definitions also vary from those heavily concerned with benchmarking classic CSR (corporate social responsibility) measures, especially those that refer to a company's sustainability agenda, to the rankings that embrace a wider scope of elements that make up reputation.

FTSE Group manager of responsible investment David Harris emphasises that the criteria applied to its FTSE4Good index evolves each year. The group, with its independent auditing committee, is currently working on introducing a way of quantifying how companies treat their customers, an important facet of corporate reputation that the FTSE4Good Index currently omits. (See essays by Open Road's Graham McMillan, Hill & Knowlton's Richard Millar and Corporate Culture's John Drummond for more on the importance of addressing reputation with customers).

This may also be lacking in the BITC's system. It elevated seven companies this year into its new ‘Platinum Plus' ranking, its highest accolade, reserved for companies that had demonstrated superior thinking and action on the issue of sustainability. This included EDF Energy, fined £2m in July by industry regulator Ofgem for not recording customer complaints correctly and failing to connect some customers speedily enough, but described by BITC as ‘visionary' for its environmental strategy.

Some companies grumble at the time-consuming nature of the 100 page form; others aren't convinced of its analysis process.

Energy firm EON opted not to take part in the BITC CR Index this year, says PR and media relations manager Jonathan Smith. ‘As a group we take part in the Dow Jones Sustainability Index which is a more robust and credible CR Index.'

Vodafone also opts into the Dow Jones Sustainability Index, along with two other global CR rankings - Oekom Corporate Responsibility Report and Ethisphere's World's Most Ethical Companies report.

Vodafone's group external relations manager Caroline Dewing feels that one of the biggest benefits of taking part in rankings can be that they build momentum internally. ‘In a huge multinational company part of the challenge of improving corporate reputation is making sure that employees in all corners of the organisation understand the direction we're moving in.'

Linking the measurement systems in internally also offers the potential to take the ultimate step of giving managers financial incentives to act in a way which will improve corporate image. BITC figures show that 50 per cent of its member companies do this

Centrica's Corporate Responsibility team is measured on a set of key performance indicators including employee safety, loyalty and retention, reduction in the energy used by the company and numbers of customers on ‘social' energy tariffs. Centrica is also one of a handful of companies that document figures on its Net Promoter Score (a formula that measures the amount of customers who recommend a brand).

That there are still such a variety of measures of corporate reputation reflects the diversity in the nature of businesses. But observers expect that the next few years will result in a gradual consensus on key comparable indicators, making the job of comparison simpler.

 

 

 

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