BEDMINSTER, NJ: A group of former analysts from credit-rating service Moody's has brought its data-analysis skills to the area of reputation benchmarking.
Ratings Research (RRC), a corporate reputation research group, has developed a new model to benchmark and quantify corporate reputation. The group has been producing its research since April on a sector basis, and has thus far released reports on department stores and discount retailing, the pharmaceutical industry, and the electric power industry.
RRC was founded by several Moody's analysts, who are building up a list of clients that includes consumer-products giant Johnson & Johnson.
The firm's intricate methodology evaluates each company's reputation using a host of intangible qualities that are commonly associated with strong business performance. Criteria often measured include marketing effectiveness, innovation, and workforce diversity.
The survey is also tailored to each sector it is measuring. For instance, the group's survey of the electric power industry includes issues involving government regulation and safety that the survey on the retail industry does not.
RRC says that customizing the survey by industry is a critical component of its work because each sector faces unique reputation challenges.
"We are attempting to measure things that the financial community and corporate strategists constantly try to assess," said Jeff Resnick the firm's chief research officer. "But they are often forced to use a much less rigorous method to do so."
The group's survey universe contains two main audiences: senior executives within the industry, and financial analysts that specialize in the sector.
The group has developed a nine-tier letter-based rating system that closely mirrors the rating systems used by the major credit-ratings agencies.
The descriptions of the ratings are also similar. The "AAA" rating, which is the highest rating a company can earn, is designated for entities "that carry the highest quality and the smallest degree of reputation default risk." The survey's lowest ranking is "C," which is said to indicate a firm in "outright reputational default."
RRC's ratings earned a modest degree of vindication recently when Ames Department Stores filed for bankruptcy in August, nearly four months after the group's retailing survey placed a "C" rating on the discount store chain.
The research group said the survey can be used to help a company decide how to negotiate a crisis before it materializes.
"If a company is going through a period of controversy, our analysis has been used for finding out beforehand what the key drivers are for garnering support in a time of controversy," said Resnick. "Strategic communicators have to make certain the right characteristics are associated with their company so they can garner support in controversial times."
RRC's ELECTRIC POWER INDUSTRY SURVEY
Ratings Research's criteria for measuring corporate reputation is tailored to each industry. Below are the nine dimensions the group used to gauge company reputations within the electric power industry
- Marketing effectiveness, Organizational culture/ethics, Financial stability, Quality of workforce/processes, Innovation, Workforce diversity, Environmental focus, Global capabilities, Charitable support.