TRUST & REPUTATION Michael G. Cherenson, APR Executive Vice President, Success Communications Group 2008 Chair-elect, PRSA Board of Directors October 2008

What is reputation? What’s reputation’s impact? Who do they Trust? How do you build trust & reputation?

What is reputation?

What’s reputation’s impact?

Who do they Trust?

How do you build trust & reputation?

REPUTATION: Ability to meet stakeholder expectations Rational and emotional attachments Net image with all stakeholders REPUTATION = EXPECTATION + CREDIBILITY

Ability to meet stakeholder expectations

Rational and emotional attachments

Net image with all stakeholders

DWYSYWD D o W hat Y ou S ay Y ou W ill D o Credibility is:

BRAND REPUTATION Brand is personality Brand is what a company wants you to think and feel when you hear its name Brand is communication Brand is something you build Brand is a promise Reputation is character Reputation is what you really do think and feel when you hear the company’s name Reputation is behavior Reputation is something you earn Reputation is keeping the promise Source: Paul Holmes, The Holmes Report

Brand is personality

Brand is what a company wants you to think and feel when you hear its name

Brand is communication

Brand is something you build

Brand is a promise

Reputation is character

Reputation is what you really do think and feel when you hear the company’s name

Reputation is behavior

Reputation is something you earn

Reputation is keeping the promise

REPUTATION = “CAN I TRUST YOU?”

“ To be persuasive, we must be believable; to be believable we must be credible; to be credible, we must be truthful.” -- Edward R. Murrow

“ Trust is like the air we breathe. When it’s present, nobody really notices. But when it’s absent, everybody notices.” -- Warren Buffett

“ Trust is like the air we breathe. When it’s present, nobody really notices. But when it’s absent, everybody notices.”

-- Warren Buffett

As much as 47% of American companies' net worth is tied up in intangible assets like brand equity and reputation.

As much as 47% of American companies' net worth is tied up in intangible assets like brand equity and reputation.

Greatest Business Risks Source: Economist Intelligence Unit, “Reputation Risk of Risks,” 2005 Senior Executives

STUDY: TRUST AGREE OR DISAGREE: Trust is the most important consideration I make, even more than political viewpoint , when I consider who to vote for, and more important than price and quality when I consider who I do business with, or who I invest with.” 85% agreed, 66% strongly agreed 19 somewhat agreed only 10 % disagreed General Public

AGREE OR DISAGREE:

Trust is the most important consideration I make, even more than political viewpoint , when I consider who to vote for, and more important than price and quality when I consider who I do business with, or who I invest with.”

85% agreed,

66% strongly agreed

19 somewhat agreed

only 10 % disagreed

STUDY: SALARY Which company would you rather work for, if all else were equal and your job would be the same in each? Company A P ays you a salary that meets needs Excellent reputation overall Company B Pays you a higher salary Reputation overall is poor 78% = Company A 17% = Company B General Public

Which company would you rather work for, if all else were equal and your job would be the same in each?

Company A P ays you a salary that meets needs Excellent reputation overall

Company B Pays you a higher salary

Reputation overall is poor

78% = Company A

17% = Company B

STUDY: PURCHASE Which company would you rather purchase a product or service from, if the quality of the product or service was equal… Company A Excellent reputation Slightly higher prices Company B Poor reputation Slightly lower prices 86% = Company A 10% = Company B General Public

Which company would you rather purchase a product or service from, if the quality of the product or service was equal…

Company A Excellent reputation

Slightly higher prices

Company B Poor reputation

Slightly lower prices

86% = Company A

10% = Company B

STUDY: JOB PERFORMANCE Is There a Link Between “Reputation” and Job Performance? 98% of HR professionals and 91% of employees say yes.

STUDY: FINANCIALS MBA STUDENTS

People Take Action On Companies They Do Not Trust Have you ever done this to a company you do not trust?

2008 Trust in Institutions Source:

2008 Trust in Institutions

NOT ALL ARE EQUAL… Source:

Source:

Media Fragmentation

Media Fragmentation

NEW MEDIA MODEL TRADITIONAL MEDIA MODEL

“ Infodemic” A complex phenomenon caused by the interaction of mainstream media, specialist media and internet sites ; and “informal” media , which is to say wireless phones, text messaging, pagers, faxes and e-mail, all transmitting some combination of fact, rumor, interpretation and propaganda . ~ David Rothkopf Chairman and CEO of The Rothkopf Group

A complex phenomenon caused by the interaction of mainstream media, specialist media and internet sites ; and “informal” media , which is to say wireless phones, text messaging, pagers, faxes and e-mail, all transmitting some combination of fact, rumor, interpretation and propaganda .

~ David Rothkopf

Chairman and CEO of The Rothkopf Group

Who is Credible? In general, when forming an opinion of a company, if you received information from (INSERT PERSON) about this company, how credible would the information be? Would it be extremely credible, very credible, somewhat credible, or not credible at all? 36 Regular employee of company 12 Public relations executive 9 Blogger 11 Entertainer/ Athlete 22 CEO of a company 51 A person like yourself 49 Doctor or healthcare specialist 44 Non-profit organization or NGO representative 47 Academic 43 Financial/ Industry analyst 31 The CEO/leader of your company or employer* 16 Lawyer 22 Government official or regulator (%) TOP 2 BOX Source:

Who is “A Person Like Me?” Ranking All other things being equal, which THREE of the following characteristics are most likely to increase your trust in someone sharing information about the company? Are you MOST likely to trust the person if he/ she… [RANDOMISE LIST. ACCEPT THREE] 5 Is the same religion as you 3 Is from your local community 2 Holds similar political beliefs to you 1 Shares common interests with you 4 Is the same profession as you 6 Is the same nationality as you 7 Is the same gender as you 8 Is the same race/ ethnicity as you Source:

Trust is not distributed evenly Not all spokespeople are equal Some traditional Media still valued Peer-to-Peer highly influential Person like you most trust The Evolving Trust Landscape Source:

Trust is not distributed evenly

Not all spokespeople are equal

Some traditional Media still valued

Peer-to-Peer highly influential

Person like you most trust

A Simple Equation… Trust is shifting Post 9/11 + Katrina + War = Fear & Anxiety Economic instability Information Overload “ Tabloidization” Pressure for Short Terms Results Savvy Consumers Empowered Employees International instability Infodemics Minority Influence Reputations is More Valuable & Fragile Than Ever Before

Trust is shifting

Post 9/11 + Katrina + War = Fear & Anxiety

Economic instability

Information Overload

“ Tabloidization”

Pressure for Short Terms Results

Savvy Consumers

Empowered Employees

International instability

Infodemics

Minority Influence

Reputations is More Valuable

& Fragile Than Ever Before

How do you build a good reputation and restore Trust?

Source:

REPUTATION Visible Transparent Distinctive Consistent Authentic Source: Charles Fombrun

HOW TO BUILD CREDIBILITY? COMMUNICATE

Listening to Employees Builds Trust Which are the THREE most important actions for a global company seeking to build trust among its employees?

How to Earn Trust 58% Handle crisis better, more openly 56% Communicate openly and frequently with stakeholders 58% Stick to a code of business ethics no matter what 60% Personally and visibly show care and concern for customers 65% Assume personal responsibility and accountability Golin/Harris Survey

58% Handle crisis better, more openly

56% Communicate openly and frequently with stakeholders

58% Stick to a code of business ethics no matter what

60% Personally and visibly show care and concern for customers

65% Assume personal responsibility and accountability

CREDIBILITY BANK DEPOSITS Open honest communication Good deeds DWYSYWD Managing expectations WITHDRAWALS ( automatic permanent overdraft) Lying, stonewalling Bad behavior Abuse others Not fulfilling your obligations Multiple Sources GOODWILL RESERVOIR - INVESTMENTS -- CAPITAL The ability to withstand crisis or invest reputation or political capital

DEPOSITS

Open honest communication

Good deeds

DWYSYWD

Managing expectations

WITHDRAWALS

( automatic permanent overdraft)

Lying, stonewalling

Bad behavior

Abuse others

Not fulfilling your obligations

TRUST BUSTING TRUST BUSTING BEHAVIORS Arrogance and Chest-Beating Broken Promises and Commitments Over promise, Under deliver Deception and Disinformation Denial, Stall, Delay Duck Responsibility Minimize Risk, Overrate Preparation Abandon Core Values Abuse the Trust of Others SOURCE: GOLIN/HARRIS

TRUST BUSTING BEHAVIORS

Arrogance and Chest-Beating

Broken Promises and Commitments

Over promise, Under deliver

Deception and Disinformation

Denial, Stall, Delay

Duck Responsibility

Minimize Risk, Overrate Preparation

Abandon Core Values

Abuse the Trust of Others

TRUST BUILDING TRUST BUILDING BEHAVIORS Promises Made, Promises Kept Exceed Expectations Honesty, Clarity, Consistency Measured Milestones, Viable Alternatives Accept and Assign Accountability Soberly, Systematically Assess Challenges Know Your DNA Respect, Honor & Reward Those Who Put Their Trust in You Treat Trust as a Long-Term Investment Paying Ongoing Dividends SOURCE: GOLIN/HARRIS

TRUST BUILDING BEHAVIORS

Promises Made, Promises Kept

Exceed Expectations

Honesty, Clarity, Consistency

Measured Milestones, Viable Alternatives

Accept and Assign Accountability

Soberly, Systematically Assess Challenges

Know Your DNA

Respect, Honor & Reward Those Who Put Their Trust in You

Treat Trust as a Long-Term Investment Paying Ongoing Dividends

TRUST – “I’M SORRY” Since 2002, encouraging doctors to apologize for mistakes. Attorney Fees $2 million Malpractice Lawsuits and notices of intent to sue 50.4%

Since 2002, encouraging doctors to apologize for mistakes.

TRUST – “I’M SORRY” Veterans Administration Hospital Lexington, KY … a large percentage of patient dissatisfaction was generated by physician attitude and denial, rather than the negligence itself. … close to half of malpractice cases could have been avoided through disclosure or apology… … what a majority of patients really wanted was simply an honest explanation of what happened and, if appropriate, an apology.”

I’M SORRY?

Source:

BUILDING TRUST: STRATEGIES Know your corporate DNA Leadership is key -- articulate your vision CEO = “Chief Trust Officer” Think long-term Know your reputation and Audit relationships Invest strategically in your “Trust Bank” assets Live your values and ethics, put safeguards in place Prove it! Trust is earned through deeds and competence Put the human face back into the business (People listen with their stomachs) Accountability, sustainability and corporate responsibility – be a model citizen Communicate plainly, openly and straightforwardly Communication is a dialogue, not a monologue Not all communication is equal

Know your corporate DNA

Leadership is key -- articulate your vision

CEO = “Chief Trust Officer”

Think long-term

Know your reputation and Audit relationships

Invest strategically in your “Trust Bank” assets

Live your values and ethics, put safeguards in place

Prove it! Trust is earned through deeds and competence

Put the human face back into the business (People listen with their stomachs)

Accountability, sustainability and corporate responsibility – be a model citizen

Communicate plainly, openly and straightforwardly

Communication is a dialogue, not a monologue

Not all communication is equal

Q&A

Michael G. Cherenson, APR Executive Vice President, Success Communications Group Chair-elect, PRSA Board of Directors [email_address] 973-992-7800 x. 104 www.successcomgroup.com