Shedding light on corporate reputation

High-profile scandals have irreversibly changed the corporate landscape. We all remember the crisis stories surrounding Enron, Worldcom, Shell and Siemens. We now live in a business world where stakeholder perception is valued nearly as much by a business as performance and profit. People have seen the giant-killing powers of failures in corporate reputation (CR), and the need to establish trust and confidence is widely recognised as being more important than ever. But today, stakeholders are also motivated by the way a company gives back to society. As people have grown increasingly cynical towards corporations, businesses are held ever more accountable for their behaviour and actions, and are expected to support social and environmental causes and give something back.

In short, in today’s world, CR is shown to directly impact on results, and should therefore be addressed with as much vigour as any other business risk. How it is addressed is a more complex issue – and those businesses that simply seek to avoid corporate scandal are not making their reputation work hard enough for them.

The key is proactive reputation management. It takes years for a corporation to repair a damaged reputation – so taking steps to proactively protect it is crucial.

In this context, many companies miss a systematic approach for managing reputation. The key is to work out whether your communications have been successful. There are three main ways in which to measure performance. First, outputs – what has been said about you, in articles and news stories? The indicators lie in content analysis (favourable, unfavourable, neutral, prominence and so on). Second, out-takes – what has been understood by your target audience? This can be measured through message recall by key stakeholders. Third, outcomes – what have these communications actually produced, in terms of sales, share value and so on?

Out-takes

Let us explore the second point above. Understanding message recall requires going out and speaking to key stakeholder or opinionformer groups. This is where the market researcher is critical. Most companies do not know how their stakeholders perceive their actions – what matters most and how it influences their reputation.

The “voice of the stakeholder” reveals much more about the current position of a company in the reputation discussion than most available ratings based on expert judgement. There is, therefore, a substantial need for primary research, giving fact-based information. However, the challenge is to design a research programme that supports reputation management and continuous improvement by effectively translating research results into meaningful actions. Below, I will outline some key points of best practice that can ensure an effective CR research programme.

Step one – identifying the stakeholders

As a starting point, we need to become aware of who our stakeholders are. The most basic definition of a stakeholder group is any whose input is vital to the organisation’s success. Most organisations will have multiple stakeholders with multiple resulting behaviours. Some examples of these are: customers, general public, investors and analysts, workforce, media, business communities, legislators, government and NGOs.

When considering who to include in your CR research programme, you must clearly define stakeholder groups. For example, when we refer to the media, do we need to distinguish between general media, business media and industry media? Are we interested in the opinion of the editor, producer or journalist? When referring to the Government, are we interested only in Members of Parliament or are there other civil departments of interest? Such questions will help determine who to target for interview.

Finally, when defining these groups, it is crucial to remember three key checks. First, will we be able to find these people? Second, will they be willing to participate in the research? Third, is our sample replicable for tracking purposes?

Step two – identifying the competing/peer organisations

To give context and further meaning to your CR measures, you need to compare your reputation to that of other organisations. The definition of these benchmark organisations could potentially be different for each stakeholder group. For example, among the Government, you may wish to compare yourself against companies which are known for their strong reputation and social responsibility (regardless of the industry). For customers, however, it may be more relevant to compare yourself against a company offering similar products or services.

Careful consideration should be given to the definition of these companies. Stakeholders must be familiar enough with both your organisation and that of your chosen peer – otherwise, responses will be meaningless.

Step three – measuring

You can only manage what you measure. Step three in creating a systematic approach to managing your CR is collecting stakeholder opinion. Typically, when researching CR, the target individuals for interview will be of relatively high profile (for example, MPs, CEOs, analysts and so on).

Not all respondents are created equal, and not all interviewers are created equal. It is crucial to match respondents to interviewers. The suitability of different data-collection methods should also be considered carefully, for example the appropriateness of a face-to-face interview, compared with an online questionnaire sent by email.

Where relationships already exist, for example via press or investor relations, it is important to pre-warn stakeholders of the upcoming research, while endorsing the importance of the exercise and the validity of the research.

Respondents’ time is precious, so the “CR interview” should be as concise and clear as possible. It needs to be logical and should not overtaxing. It should take company familiarity and awareness into account, and associate reputation questions with familiar business practices. It should not use buzz-words – issues can be defined in an explorative, qualitative phase if necessary.

To get the most out of your CR measurement, you should look to include an overall assessment of reputation and in-depth diagnostics. The overall assessment of reputation should be based on both emotional and rational questioning, and be combined into an index. Commonly, a one-number score or key performance indicator (KPI) of reputation is needed for quick, easy dissemination of top management information. It will help to evaluate the organisation’s status, allowing benchmarking over time, between units, across stakeholder groups and compared to key peers or competitors.

By assessing this one-number score across the different stakeholder groups, it is possible to produce a differentiated 360 degree view of reputation. This will quickly help to detect whether the level of reputation is homogeneous or whether there are individual groups with lower perceptions. This would suggest the communication strategy for this group must be looked into more closely. TNS has a reputation benchmarking database that can help in the recognition of “normal” differences between the stakeholders – and a system like this is key to the assessment stage.

In-depth diagnostics are required to understand current expectations and identify any issues and risks. The one-number score as described above is an important part of any corporate- reputation information system – but it isn’t enough. An organisation needs to understand what is influencing this reputation.

By asking detailed questions about various aspects of reputation (for example, quality of management, trading terms, ethical practices, social responsibility, level of innovation, working environment and market leadership), we can identify the driving forces behind the reputation and derive appropriate communication and action strategies going forward.

Step four – managing

And so we get to the crux of this article – the proactive management of CR. This is the most crucial and typically the most difficult, of all the stages in this process. Like most types of market research, CR data will be wasted if not used properly. By translating measurement into action and implementing change within an organisation, CR will improve and thus drive those crucial “outcomes”.

There are a few key ways of making this happen. Allocate responsibilities and resources, as a lack of accountability is a major problem in companies that do not execute well. Set targets – what does success look like? Where do you want to be? Conduct effective root-cause analysis and differentiate between action and communication dimensions. Is a certain issue real or just perceived as a problem? Integrate media resonance analysis and control of communication into the monitoring plan. Do your messages reach your audience? Implement actions / communications within an agreed timeframe.

Step five – monitoring

Managing CR should be a continuous process. Expectations can shift over time, driven by new social trends and the ever-changing business environments in which we work.

A pro-active organisation should be monitoring their CR constantly, to be aware of changing expectations, and to react appropriately. It ensures that measures identified by previous research are implemented, and are having the desired effect. And, most crucially, it helps you to determine the effect that an unexpected event or crisis has on how you are perceived.

While our philosophy is one of proactivity rather than reactivity, you can never plan ahead for negative events. Regular reputation-tracking is crucial to minimising – and responding to – the adverse impact of that one fateful occurrence.

By investing in understanding how you are perceived in the good times, and using this intelligence to build up good will, any corporation has the ability to face the tough times head on, safe in the knowledge that its stakeholders trust it to make the right decisions.

 

CV Gemma McIntosh
Head of stakeholder management, TNS UK Custom
2007 Head of stakeholder management, TNS UK Custom
2003 Managing consultant,TNS Financial & Professional Services