Top Executives Say Value of Corporate Reputation on The Rise

CEOs Rate Communications a '7' on 10-Pt. Scale

Until recent years, the PR industry has sorely lacked market research to help professionals analyze their efforts. Every aspect of PR, from benchmarking and best practices to integrating communications into the business hierarchy, is dependent on hard data. Now three new studies provide insight into the hot-button issues of corporate reputation, global corporate issues and M&As. Analysis of the three provides a wealth of information to guide corporate PR strategic planning.

In this issue we examine a survey of CEOs by Hill and Knowlton/Yankelovich Partners on reputation, Ketchum's survey of top corporate executives titled "What Keeps the CEO Up at Night?" (on Page 7) and an examination of the long-term success of M&As by Watson Wyatt Worldwide.

In addition, this week's case study examines how communications can inspire a new corporate culture when a company decides to re-launch in a new direction.

If you're convinced that "corporate reputation" means a lot to altruists and very little to senior execs with their eyes glued to the bottom line, think again. CEOs said they place high value on the power of corporate reputation, and understand the benefits a good image has on more measurable success metrics such as low employee turnover, higher stock prices and greater credibility amid a crisis, according to a new survey.

That's according to the 500+ Chief Executive magazine readers in response to a Hill and Knowlton/Yankelovich Partners questionnaire on "The Value of Corporate Reputation." The responses from the October/November survey were coupled with feedback from a roundtable discussion held with CEOs in the summer. (Most of the responses came from CEOs, chairmen, presidents or vice chairmen.)

But despite the high stake they place on corporate reputation, the study also shows that CEOs believe there is room for improvement in the role communications plays in protecting corporate image. On a 10-point scale, the top officers ranked corporation communications effectiveness an average of 7 (a mean score).

Although the study doesn't pinpoint which facets of communications the respondents see as lacking, other study findings point to some answers.

For instance, the senior execs said that their corporate reputation is a brand linchpin, but only 19 percent said they have formal systems to measure corporate reputation - a responsibility often relegated to corporate communications.

If your company is one of the other 81 percent, an ideal way to prove your PR worth is to conduct reputation research among key publics and to revisit the benchmark of your reputation on a regular basis.

Keep in mind, however, that tracking corporate reputation must be "big picture," taking into account a wide range of factors, from your Web site and annual report to your employee communications and pro-bono efforts.

What's Corporate Reputation?

In the H&K survey, CEOs generally agreed that three key elements make up the crux of corporate reputation:

• high quality of products and services (72 percent);
• a company people trust (72 percent); and
• high-caliber management (43 percent).

Nearly all of the 650 business leaders from major U.S. companies ranked corporate reputation "very important," and 63 percent said they consider it more important than they did five years ago.

The tangible benefits of corporate reputation surface in countless ways, including the success of philanthropy and community relations, two growing applications of PR. Among the techniques being tapped by companies to bolster and maintain their corporate reputations:

• AT&T gives its employees one paid day off each year to pursue volunteer work of their choosing; the program began in 1996 and is now a cornerstone of its community-relations face;
• FedEx sponsors an annual PGA tournament to benefit St. Judes Research Center in Atlanta. The company also partners with Heart-to-Heart for domestic and overseas missions to get relief supplies to disaster victims and to provide medicine and goods to needy people;
• After Ernst & Young saw that it was losing more than 20 percent of its female employees and spending millions in hiring and training to fill those positions, it hired the research group Catalyst that surveys the role of women in the corporate workplace and recommended ways for E&Y to keep women on board; and
• The Learning Company, Inc., which will merge with Mattel if a May 7 stockholders vote supports it, sponsors a series of national events about Internet safety (with Boston-based The Computer Museum), as well as other awareness-building events. (AT&T, 908/221-6200; Ernst & Young, 212/773-3000; FedEx, 901/395-3460; H&K, 212/885-0605; TLC, 617/494-5674)

Reputation ROI

What are the top benefits of a superior corporate reputation?

"We view our reputation as a critically important asset - just as much as our profits. Our marketing budget pales in comparison to major companies such as Coca-Cola and McDonald's, but for some reason, we're consistently ranked as one of the best-known companies. Programs such as our sponsorships allow us to nurture our brand."

Greg Rossiter, managing director, public relations, FedEx

Some Other Key Findings

• Only 2 percent of top execs believe the importance of company reputation has decreased over the past five years;
• 95 percent agree that their company name is a "brand" that helps them achieve their goals in the marketplace;
• Virtually all CEOs (96 percent) agree that their own visibility is a key factor in building their company's reputation; and
• Two-thirds of CEOs in companies with $500 million or more in revenue cite an increase in the importance of global corporate communications.