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
’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
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
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
’Familiarity breeds favourability, not contempt,’ explains
’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
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
’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
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
’Our corporate affairs team,’ says Mason, ’went from being positively
Neanderthal to being highly sophisticated in about five years.’