DOING ADMIRABLY: Being one of the UK’s most admired brands means more than just a public pat on the back. In corporate terms it is crucial to long term business growth. Kate Nicholas and Virginia Matthews report

As customers continue to take on the mantle of private shareholders and subsequently become more vocal, being able to communicate a consistent message to an interchangeable set of audiences, has emerged as a deciding factor in the success of Britain’s most admired companies.

As customers continue to take on the mantle of private shareholders

and subsequently become more vocal, being able to communicate a

consistent message to an interchangeable set of audiences, has emerged

as a deciding factor in the success of Britain’s most admired

companies.



’The foundations of loyalty and reputation are consistent behaviour and

the relentless communication of enduring values,’ said Mark Goyder,

director of the Centre for Tomorrow’s Company at the Management Today/PR

Week conference ’A Most Admired Company’ last month.



There is little doubt of the correlation between a company’s financial

performance and its ability to inspire admiration. From Management

Today’s league table of ’Britain’s Most Admired Companies’, 29 of the

top 30 companies listed have seen their share price increase by 100 per

cent in five years.



This compares to a general increase among FT 100 industrial companies of

just 52 per cent over the same period.



On all the other economic indices including profit per employee,

performance of share price, long term business viability etc - Britain’s

most admired companies such as Tesco, Burford, Next, Marks and Spencer,

Cadbury and Reuters are also streets ahead of the country’s businesses

as a whole.



But what many of these companies have in common, according to consultant

Geoff Smith, who has conducted an in-depth analysis of listed companies’

performances, is their quality of leadership and the ability to clearly

define goals.



Mark Goyder agrees that: ’Clarity of purpose, enduring values and a

clear personality are the keys to inspiring the admiration of your

peers.’ But it is the consistent communication of these messages to a

diverse audiences including shareholders, employees and customers that

is crucial to building reputation.



’Reputation is indivisible,’ says Goyder. ’Rather than putting

shareholders, employees and customers in separate boxes, many of the

most admired firms in Britain understand that these seemingly separate

groups of human beings are often one and the same.’



However, Goyder still believes that among a vast majority of companies

the gap between business rhetoric, and reality, is inexcusably wide, and

needs to be closed before any company can actively pursue the holy grail

of good reputation.



He gives the hypothetical example of the board that decides to go off to

Gleneagles for the weekend to ’discuss the finer points of the mission

statement’. These same people wonder why the staff who have been left

behind are less than enthusiastic when they return to work the following

Monday.



Familiarity breeds favourability



Simon Lewis, president of the IPR and director of corporate affairs for

Centrica the gas supply business created by the recent demerger of the

beleaguered British Gas, one of Britain’s least admired companies

according to the Management Today report, also pointed to the

relationship between a company’s customers and its target media, which

are in some cases one and the same.



’The views of journalists and others writing and commentating about our

business are undoubtedly influenced by their first-hand experience as

customers,’ says Lewis. ’At the same time there is no doubt that

negative press coverage of a company makes customers more sensitive to

poor customer service.’ According to Lewis, the company has now

recognised that improving its customer service needs to be a strategic

priority in its reputation recovery programme.



Lewis also points to the importance of understanding the relationship

between corporate reputation and brand reputation. ’It’s interesting to

note that it is the opinions of a relatively small number of people

which can shift perceptions about corporate reputations, whereas a brand

reputation is susceptible to the changing attitudes, of in our case,

many millions of customers.’



According to Lewis, market research has consistently shown that a

satisfied customer tells two people about their positive experience,

whereas a dissatisfied customers tells at least 20 people about their

negative experience - with resulting damage to brand and reputation.

’Brand reputations are won and lost at grass-roots level,’ says Lewis,

’not through the pages of the FT.’



Reputation rests upon the ability to build relationships and trust,

according to MORI chairman Robert Worcester.



He suggests that a company has to create awareness and make its

customers feel involved, by telling them exactly what you can do for

them, before persuading them to take action and purchase.



’There is no reason for anyone to listen to your message if they do not

know who you are and what you represent,’ says Worcester. According to

recent research 31 per cent of the public said they would not buy a

product from a company they had not heard of, while 60 per cent believe

that a company which has a good reputation would not sell poor quality

products.



’Familiarity breeds favourability, not contempt,’ explains

Worcester.



’Business success depends on building, and continuing to develop,

mutually beneficial relationships with critical audiences including

customers, employees, regulators and investors. Companies which achieve

customer and employee satisfaction and, subsequently, investor

satisfaction and loyalty, will achieve long term business success.’



Worcester stresses that different individuals have different values but

collectively the values tend to be shared between each audience. These

values should penetrate the corporate culture and underlie its

communications, because values and perceptions drive behaviour,

behaviour drives relationships and these relationships drive business

success.



Building reputations from the inside



The ability to build a reputation from inside through effective and

imaginative internal communications also emerged as one of the key

factors in the success of Britain’s most admired companies.



Virgin’s broad ranging diversification, for example, has been

underpinned by four corporate maxims - quality, value for money,

innovation and making business fun - as well as the idiosyncratic

leadership of Richard Branson.



Will Whitehorn, corporate affairs director for Virgin Management, claims

that his company’s reputation has developed not so much through

meticulous planning, but rather ’through the culture that streams almost

unconsciously throughout the company as a whole’.



An admired company can be likened to a stick of rock - slice it in half

and its good reputation is evident all the way through, the reputation

indivisible from the way the company does business.



The fact that Virgin and its entrepreneurial figurehead are admired has

been central to its business development. For example, despite

scepticism voiced at the conference by Sir Clive Thompson, group chief

executive of Rentokil Initial, about the company’s diversification in

the new area of financial services, Virgin has built on the core values

of the corporate reputation to become the third largest provider of PEPs

in Britain - proof that to be admired is not just ’nice’ but an

essential ingredient of success.



TESCO: GUARANTEEING CUSTOMER SATISFACTION



Retailer Tesco emerged as Britain’s most admired company in the recent

Management Today survey, as well as impressing many of the City’s

leading analysts with its performance. So how does it feel to be the

subject of such praise? Tesco marketing director Tim Mason freely

admitted at the conference that the path from ’music hall joke to ’Most

Admired’ has been some feat.



While effective communications of its customer services initiatives -

its baby-changing facilities, the transformation of its stores etc - has

always been of prime importance, during the late 1980s Tescos endangered

its reputation by losing sight of its customers.



According to Mason, at a time when the store was continuing to drive

itself upmarket the company somehow managed to ignore the fact that many

of its customers - the ones who had benefited most from Thatcher’s

Britain - were falling into the trough of negative equity and of mass

redundancy.



’Our customers, possibly more than those of our rivals, were hit very

hard by the last recession and we quickly realised that we had to get

back on track with them. We set about transforming the company, without

alienating our customers,’ he says. Being ’remorselessly

customer-focused’, says Mason, was the key to Tesco’s path from number

30 to number 1 in the Most Admired league table. This approach,

according to Mason meant giving customers ’more and charging them

less’, being constantly innovative with everything from nappy-change

facilities to Clubcard and ultimately, ’giving them the best shopping

trip possible’.



Mason says: ’We listened to what they had to say - in hotels, in

car-parks, in the stores themselves of course - and by targeting

everything towards their needs, we managed to sprinkle a little bit of

stardust on the entire Tesco operation.’



Along the way, the managing of Tesco’s own reputation was

transformed.



’Our corporate affairs team,’ says Mason, ’went from being positively

Neanderthal to being highly sophisticated in about five years.’



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