Managing Corporate Reputation
as a Strategic Asset
Rupert Younger
Director, Oxford University
Centre for Corporate Reputation
15 September, 2009

Reputation
Reputation: 132 million results
on Google in 0.15 seconds
Reputation Management: 24
million results on Google
PRCA: members employ
5000 people in the UK and
generate £400m p.a. in client
fees
35% increase in FT’s usage of
the word reputation in
corporate coverage since
2007
The word “reputation” is often loosely used
and incorrectly applied, but it has impact and
authority

Surveys
• Ipsos MORI Reputation Centre research
• Harris Associates Annual “National Corporate
Reputation Survey”
• Annual Delahaye Index “Best US Corporate
Reputations”
• Fortune “Global Most Admired Companies” Annual
Survey
• Roland Berger “Best of European Business Awards”
• Hill & Knowlton “Corporate Reputation” Surveys
• Forbes “The World’s Most Respected Companies”
Annual Index

Media Usage
• “Wal-Mart: A ‘Reputation Crisis’”
• “How Coke is Tackling Reputation Risk”
• “Why it is better to lose money than your
reputation?”
• “What price now the Met’s honour and
reputation?”
• “How Boss's Deeds Buff A Firm's
Reputation”

Corporate Lexicography
• Annual Reports
• CSR Reports
• Executive Titles
• Governance Committees

Annual Risk Survey 2007
1. Damage to reputation
2. Business interruption
3. Third party liability
4. Distribution or supply chain failure
5. Market environment
6. Regulatory changes
7. Failure to attract or retain staff
8. Market risk (financial)
9. Physical damage
10. Merger/acquisition/restructuring

Annual Risk Survey 2009
1. Economic slowdown
2. Regulatory/legislative changes
3. Business interruption
4. Increasing competition
5. Commodity price risk
6. Damage to reputation
7. Cash flow/liquidity risk
8. Distribution or supply chain failure
9. Third-party liability
10. Failure to attract or retain top talent

Reputation is Much Discussed
“One can survive everything, nowadays, except death, and live down everything except a
good reputation”.
Oscar Wilde
“I sent the club a wire stating, Please accept my resignation. I don’t want to belong to any
club that will accept me as a member”.
Groucho Marx
“Reputation is an idle and most false imposition; oft got without merit and lost without
deserving”.
Iago in Othello
“Character is like a tree and reputation like a shadow. The shadow is what we think of it;
the tree is the real thing.”
Abraham Lincoln

Given All This
Reputation
is clearly an
Important Concept
that needs
Definition

In an Academic Context
Reputation can be evaluated through three dimensions/variables:
• What you directly observe (behaviour)
• What you impute from what you observe (opinion)
• What you are told about what others have observed or imputed (gossip)
Reputation is a social evaluation, a fundamental instrument of
corporate order, based upon distributed, spontaneous social
variables.

But in a Corporate Sense
“A company's reputation for being able to
deliver growth, attract top talent, and avoid
ethical mishaps can account for much of
the 30%-to-70% gap between the book
value of most companies and their market
capitalizations.”
July 9 2007

Brand is …….
Buyable - financial or emotional product
Reassuring - consistency and quality
Association - with attributes and values
Name - for this reassurance & association
Distinctive - competitive proposition & appeal
……a consumer proposition created &
managed by its owner for revenue

Reputation is …….
Relational construct – with someone for something
Exception attributed – distinction, notoriety, point of difference
Perception comparison – experience & belief
Uncontrollable sometimes – it is not always the truth
Track record – performance and behaviour count more than words
Emotional appeal – perception of character, indicator of trust
……a perception held by others about your
anticipated future behaviour

Values – Important, But Beware
“Peace is Our Profession”

Values – Important, But Beware
“Peace is Our Profession”
United States Strategic Air Command (B52 Nuclear Bombers)

Values – Important, But Beware
“Peace is Our Profession”
United States Strategic Air Command (B52 Nuclear Bombers)
“Our Dream: A World Free of Poverty”

Values – Important, But Beware
“Peace is Our Profession”
United States Strategic Air Command (B52 Nuclear Bombers)
“Our Dream: A World Free of Poverty”
The World Bank

And Enron!

Terminology
term control definition
Brand Owner A consumer proposition
Reputation Stakeholders A perception of character
Image Audience An impression in time
Goodwill Accountants Estimated intangible value

Reputation Viewpoints
Management Focus Specifics Motivation
CEO/ Chairman The City performance v peers
share price
Financial Director Business Review principal risk Compliance
asset value description
Chief Legal Officer D&O liability duty to protect
liability for damage
Risk Director Governance control – procedures Control
inclusion within register
Human Resources Reporting structure control – people
ownership attribution
Company Secretary Regulator codes business community Community
reporting standards
CSR Director SRI fund managers stakeholder activism
sustainability agenda
Investor Relations Investor confidence analysts briefings Choice
shareholdings profile
Communications External opinion public relations
media interest

So, Reputation is….
• A relationship construct: a corporation will
have:
– a reputation for something, or
– a reputation with another entity
• Reputation creation and maintenance is
therefore behavioural through interaction
with third party stakeholders

2 Spanish Companies in Global Pulse
Top 20 GLOBAL PULSE SCORE
ONE-YEAR
COMPANY COUNTRY INDUSTRY RANK PULSE CHANGE
Ferrero Italy Consumer Products 1 85.17 1.64
Ikea Sweden General Retail 2 83.98 -0.16
Johnson & Johnson United States Consumer Products 3 83.58 0.10
Petrobras Brazil Energy 4 82.37 2.40
Sadia Brazil Food Manufacturing 5 82.06 New
Nintendo Japan Computer 6 81.63 New
Christian Dior France Consumer Products 7 81.37 New
Kraft Foods United States Food Manufacturing 8 81.09 -1.70
Mercadona Spain Food Retail 9 80.99 2.09
Singapore Airlines Singapore Airlines & Aerospace 10 80.97 New
Tata India Conglomerate 11 80.89 -1.95
UPS United States Transport & Logistics 12 80.84 -0.21
General Mills United States Food Manufacturing 13 80.80 -0.54
El Corte Inglés Spain General Retail 14 80.80 0.80
Matsushita Electric Japan Electrical & Electronics 15 80.31 1.43
Industrial
FedEx United States Transport & Logistics 16 80.30 4.01
Grupo Bimbo Mexico Food Manufacturing 17 80.22 -1.53
Honda Motor Japan Automotive 18 79.86 2.07
Whirlpool United States Consumer Products 19 79.86 5.45
Votorantim Brazil Conglomerate 20 79.59 3.49

Merco Analysis 2009
2008 2009 Company Points
1 1 10.00
2 2 9.06
3 3 8.93
5 4 8.85
4 5 8.28
6 6 8.22
8 7 8.20
7 8 7.43
9 9 7.42
13 10 5.32

Reputation & Stakeholders
For Stakeholders, Read Relationships

Reputation & Relationships
SHAREHOLDERS
GOVERNMENT CUSTOMERS
COMPANY = MEDIA
SUPPLIERS EMPLOYEES
BANKERS
Weightings will differ: B2B, National v International, Public v Private, Multi-Supplier v
Single Supplier, Regulated v Non-Regulated, Unionised v Non-Unionised

Reputation & Sales
“On average 20% of a company’s
sales can be explained by
reputation”
(source: Millward Brown “corporate reputation study” amongst more than 20,000
consumers across the USA and UK rating 213 consumer facing corporations
(106 in the USA and 107 in the UK) during December 2006/January 2007

Reputation & Sales Source: Reputation Institute 2009
I would RECOMMEND 'Company' to others
Most Reputable Companies (Top 20)
2.5% 28.7% 66.8% 2.0%
Least Reputable Companies (Bottom 20)
38.6% 42.0% 15.1% 4.4%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Negative (1‐2) Neutral (3‐5) Positive (6‐7) Not sure

Reputation & Sales Source: Reputation Institute 2009
For Top 20 reputation in the world For Bottom 20 reputation in the world
7 out of 10 people will 2 out of 10 people will
recommend the company recommend the company and
4 out of 10 refuse to
support them

Reputation & Talent
60
50
40
30 %
20
10
0
Reputation Environment Pay Location
Source: Oxford graduate
exit interviews

How employees feel about the head of the
Leadership company and its senior managers
How staff feel about stress, pressure and
Wellbeing the balance between their work and home
duties
Feelings about the company people work
Belonging for as opposed to the people they work with
How much Companies are thought by their
Giving Back staff to put back into society in general and
the local community in particular
To what extent staff feel they are stretched
Personal Growth and challenged by their job

Reputation & Suppliers
• 30, 60, 90 days payment; but also
consider:
– Growth in credit rating agencies
– Labelling & provenance
– Sir Philip Green & Ponchos!

Reputation & Rating
• Reputation lies at the heart of listed
markets: eg BP 2006
– p/e is an expectation of future performance
– importance of track record – guide to future
– perceptions of management
The South Sea Bubble 1720 – The First Market Crash

Reputation & Community
• Reputation is your licence to operate

Reputation & Regulation
• Good reputations deliver regulatory
dividends, and vice-versa

And The Media?
CORPORATE MOUTHPIECE, CRITIC OR POLICEMAN?

Reputation & The Media
• Media activity does not equate to reputation
management
• We now live in a global village with differing agendas
• Global cultures need to align global values with local
customs
• Corporations often do not control their own information
flow
• The media reaches all stakeholders and has huge
influence
• Media and communications activity falls into 2 distinct
areas:
– Short term tactical activity (damage limitation)
– Longer term positioning (building relationships)
• Stakeholder engagement should form the backbone of
any strong communications agenda

Reputation Management Structures
• Over 80% of FT-SE 100 companies have
reputation activity reporting into marketing or
communications. Similar for EuroFirst 300?
• Communications directors understand strategic
nature of the beast
– self interest as it underpins delivery of fact rather than
spin
– interconnectedness means that it is impossible to do
it any other way
• This is THE big 21st Century corporate theme
• Governance (Standard Chartered), Reporting
(Diageo), Operationalisation (ENI)

Reputation Management
From a communications discipline..
+ =
Communications Officer

Reputation Management
…to a strategic discipline
+

Strategic Reputation Management
• Enhances Sales
• Ability to attract Talent
• Conditions relationships with Suppliers
• Dictates your Investment Rating
• Shapes relationships with Stakeholders
• Underpins interaction with Community
• Determines attitudes of Regulators and
Politicians

Reputation & Leadership
• Clear vision: 'what we stand for and are prepared to be held responsible
for';
• Clear values, supported by a code of conduct, setting out expected
standards of behaviour;
• Clear policies stating performance expectations and 'risk tolerance' in key
areas;
• Clear understanding of stakeholders' expectations, information
requirements and perceptions of the organisation;
• Open, trusting, supportive culture;
• Robust and dynamic risk management system which provides early
warning of developing issues;
• Organisational learning leading to corrective action where necessary;
• Reward and recognition systems which support organisational goals and
values;
• Extension of vision and values to major partners and suppliers;
• Open and honest communications tailored to meet the needs of specific
stakeholders.
Source: IBE

Oxford’s Core Research
• Organisational structures, governance, and reputation
(Prof Tim Morris)
• Financial agents, the role of the regulator, market
liquidity, and the role of technology in reputation (Prof
Alan Morrison)
• Corporate brands, cultures, CSR and reputation (Dr
Kunal Basu)
• Supply chain and reputation (Dr Steve New)
• Organisational behaviour, stakeholder interaction and
measurement of reputation (Dr David Barron)
• Historical contexts of how firms build and sustain long-
term reputations (Dr Chris McKenna)

Foro de Reputacion Corporativa
• An enlightened and influential group
• Issue driven by internationalisation of the major
Spanish corporations
• Focus on intellectual capital + practical action
– Regular reputation reports
– Academic engagement
– Foro
• CSR focus to date
• Opportunity to be in the vanguard of modern
reputation thinking

THANK YOU!
15 September 2009