Value of reputation When you decide to buy a smart phone, go see a film, choose a restaurant, how do you make the decision? What do you do if you want to travel to a city you haven’t visited before? How do you find the information you need?
You probably chose what was recommended to you. You chose based on reputation. Word-of-mouth referrals are the sine-qua-nons of success. Good reputation increases credibility and determines most of our choices. Corporations rely on reputation when choosing a service, provider, worker.
There are methods for economic valuation, to measure notoriety, to measure the value of relations, etc.
Measuring what? Brand Finance They define themselves as the “world’s leading brand valuation consultancy”. Have conducted thousands of brand valuations. Clients are international brand owners, tax authorities, lawyers, government bodies and investment banks. brandfinance.com
Interbrand Group http://www.interbrand.com/en/Default.aspx Valuing the global green brands as an asset to reputation.
Brand Z The 2012 Top 50 most valuable Latin American brands http://www.millwardbrown.com/BrandZ/default.aspx
IRMA First brand reputation monitor: the Brand Reputation Index (Índice de Reputación de Marca – IRMA). Created by the Spanish Monitor of Corporate Reputation (Monitor Español de Reputación Corporativa - Merco). 2003 – first results of financial companies that work in Spain were published.
IRMA’s Evaluation Variables for the Financial SectorFunctional Values Social values Emotional values1. Perceived quality 3. Ethical profile 5. RelevancePrice/value relationship. Ethical commitment. Knowledge.Client attention. Ethical products. Communication.2. Warranty 4. Social responsibility IdentificationTrust in the relationship. Ecological sensitivity. Recognition of thePerception of Support to social identity.leadership. causes. Positive sentiments.
IRMA’s methodology: a survey with a structured questionnaire. Number of surveyees: 1,500 Universe: informed clients from the financial sector Previous qualitative research to determine the variables. Field work: CATI system – Computer assisted telephone interviews
Reputation on line Businesses are Googled. People are Googled. Schools and universities are Googled.
Everyone and everything is exposed on the Internet: News articles Blog posts Reviews Forum comments Online campaigns
There are monitoring tools to monitor online reputation: Google alerts Klout FollowerWonk
Google alert are emails sent to you when Google finds new results -- such as web pages, newspaper articles, or blogs -- that match your search term.
Google Alerts can monitor anything on the Web: Find out what is being said about a company or product. Monitor a developing news story. Keep up to date on a competitor or industry.
Klout measures influence online. Their mission: to empower every person by unlocking their influence. Democratizing influence via social media.
he Klout Score, a number between 1 and 100, is a representation of your overall social media influence. The Score examines more than 400 variables on multiple social networks beyond your number of followers and friends. It looks at who is engaging with your content and who they are sharing it with.
FollowerWonk: the social analytics tool for Twitter Provides analytics on Twitter accounts, including follower segmentation, social graph tracking and comparison of Twitter accounts. Target User: From small organizations up to large brands with 5 million followers/follows.
The Value of Reputation According to Villafañe, though the reputation capital does not yet appear in the companies’ balances, it will soon be included. The value of reputation is measured by research and empirical proof on the value of reputation, and how it increases the value of the company.
Reputation capital: The value that the corporate reputation of a company has for its stakeholders.
How do you build-up the reputation capital of a company? Through corporate sensitivity of the value of reputation: establishing clear objectives regarding reputation, and eliminating reputation risks. Corporate reputation must penetrate the organization’s culture.
Managing reputation: by way of the transversalization of its management, and by introducing reputation in the management of the company, implementing a global strategy. Adopting a committed corporate behavior : setting standards of conduct with the main stakeholders.
Evaluating Reputation Villafañe & Asociados evaluate the reputation of companies by way of: Reputation audits Reputation monitors
Audits vs. monitors The reputation audit is a tailor-made research that evaluates all the variables that affect the reputation of a company. The reputation monitor uses a small number of general variables to analyze the reputation of a company.
Reputation Audit MethodologyPublic Elite & social Clients leadersInterviews to In depth Qualitativethose interviews with researchresponsible for elite and socialbusiness units. leaders.Focus groups • Competitors Quantitativewith middle • Entrepreneu- researchmanagement rialand employees. • Political • Professional • Third sectorDesk research
Reputation Monitors Monitors that use surveys to obtain their data (Fortune, Review 200, Management Today, etc.) measure corporate image more than reputation (Villafañe). Double evaluation most recommended (compare different sources, evaluate complementary variables, interview directives, etc.).
Business magazine Fortune ranks the American companies based solely on revenues. Fortune 1,000 Fortune 500 Fortune 100 Also Fortune Global 500 – annual ranking of global corporations based on revenues.
The top 10 Fortune 2012 list: Royal Dutch Shell (The Netherlands) Exxon Mobil (USA) Walmart (USA) BP (UK) Sinopec (China) China National Petroleum Corporation (China) State Grid Corporation of China (China) Chevron (USA) Conoco Phillips (USA) Toyota (Japan)
Best companies to work for Companies are also rated by their employees. This gives them prestige and good reputation.
Fortune ranks the 100 best companies to work for. They rank by pay, best benefits, size, turnover, number of women employed, minorities, etc. For more than 25 years Great Place to Work has studied the inner workings of workplaces around the world, from small startups to some of the best-known multinationals.
Types of Monitors Corporate Communication: Global Most Admired Companies (Fortune) Review 200 (Far Eastern Economic Review) Britain’s Most Admired Companies (Management Today) Reputation Quotient (The Wall Street Journal) World’s Most Respecte Companies (Financial Times) Merco (Cinco Días)
Responsible Investment: Dow Jones Sustainability Index (Dow Jones) FTSE4Good (Financial Times) Domini 400 Social Index (Standard & Poor’s)
Specialized Monitors: Financial Ranking: Standard & Poor’s 100 (Standard & Poor’s) Dow Jones Stoxx (Dow Jones) There are also labor monitors, sustainability and reporting criteria certification monitors (ISO 14001, EMAS, Accountability 1000, etc.), sustainability principles prescribed by international organization monitors, etc.
Who should evaluate corporate reputation? The citizens, according to Charles J. Fombrun Professor Emeritus of Management at the Stern School of Business, New York University, and Executive Director of the Reputation Institute. Most specialists say it should be the well-informed public.
Reputation and Trust A company’s good reputation strengthens the trust the public has in that company. A well-trusted company strengthens its reputation. The 2012 Edelman Trust Barometer examines trust in four key institutions -- government, business, media, and NGOs -- as well as communications channels and sources.
The Trust Barometer shows that people are much more likely to buy from and recommend a company they trust. A good reputation also lowers transactional costs and the cost of borrowing – it’s easier to do business and raise capital if you are a trusted brand. The 2012 Edelman Trust Barometer measures attitudes about the state of trust in business, government, NGOs, and media across 25 countries.
Edelman Trust Barometer http://trust.edelman.com/ The 2012 Annual Global Study The 2012 Edelman Trust Barometer survey was produced by research firm StrategyOne and consisted of 20-minute online interviews conducted from October 10 – November 30, 2011. The online survey sampled 25,000 general population respondents with an oversample of 5,600 informed publics in two age groups (25-34 and 35-64) across 25 countries.
All informed publics met the following criteria: college- educated; household income in the top quartile for their age in their country; read or watch business/news media at least several times a week; follow public policy issues in the news at least several times a week.
Media was the only institution to see an increase in trust over the past year.
The 2012 Edelman Trust Barometer shows an overall decline in trust globally, with steep declines in the levels of trust in government and business. Government is now the least trusted institution–trailing business, media, and NGOs. Business experienced fewer and generally less severe declines in trust, but has its own hurdles to clear – notably that CEO credibility declined 38 percent, its biggest drop in Barometer history. For the fifth year in a row, NGOs are the most trusted institution
Perceived drivers of irresponsible behavior: Poor management – 29% Unethical business practice – 28% Shortcuts that lead to poor quality – 21%
Homework For next class, research other existing barometers and present to class: Who they are, what they do, how do they do it, target audience, etc. A. Press Freedom Barometer http://en.rsf.org/press-freedom-barometer-journalists- killed.html?annee=2012?dolist=ok/press-freedom- barometer-journalists-killed.html B. Transparency International http://www.transparency.org/research/gcb/overview
C. Consumer Barometer http://www.consumerbarometer.com/#?app=home&vie wMode=0 D. Conflict Barometer http://www.hiik.de/en/konfliktbarometer/index.html