Measuring and managing corporate reputation

  • Business
  • Saturday, 15 Aug 2009

WHEN I think of Johnson & Johnson, I think of smiling babies and then I get all warm and fuzzy inside.

Mention Ikea and I think of happy families in cosy homes, laughing over a home-cooked meal at the dinner table.

Ferrero Rocher, Kinder and Nutella, all from Italian confectioner Ferrero, remind me that its time to relax and give myself a treat; to sink into a lush sofa as the creaminess of cocoa and sugar tango on my palate.

Evidently I’m not the only one who feels trust, admiration and well being towards these three brands.

Over 70,000 online respondents felt the same and voted Ferrero as the Most Reputable Company in the World in 2009, with Ikea and Johnson & Johnson coming in second and third respectively.

These results were based on the annual Global Reputation Pulse survey conducted by the Reputation Institute to measure stakeholders perception of over 1000 of the worlds leading companies.

But given the intangible nature of perception and reputation, how is it measured? And how important is it, really, compared to the bottom line?

As intangible as reputation may be, it also proves to be immensely invaluable once results are out. Research has shown that people are more likely to buy and support companies they trust, work for organisations they hold in high regard and recommend brands they genuinely like.

Consumers are becoming more discerning, quick to side the corporation that not only produces high quality products but also acts ethically. Todays consumers are more sensitive towards environment and community welfare, and expect the same level of consciousness from big corporations.

A company’s reputation will ultimately influence the bottom line, whether it does so explicitly or not.

You may say its a chicken-and-egg situation: is the reputation attracting more supporters or is it the supporters who rally for the company, thereby strengthening its reputation?

Either way, there’s no loss anywhere. In Ferreros case, it’s a turnover in excess of 7 billion euros, with Ikeas turnover at over 100 million euros in 2008.

In measuring reputation, the lay person may simply ask, on a scale of 1 to 10, with 10 being the highest, how would you rate your feelings of goodwill towards Company ABC?

The Reputation Institute measures reputation a little more seriously than that, tracking 23 key performance indicators in the areas of products and services, innovation, work place, governance, citizenship, leadership and governance using a variety of tools including RepTrak, RepTrak Risk and the Global Pulse Report.

The results answer a deceptively simple question that has most CEOs stopping short: What do stakeholders think of my company?

Reputation measurement tools provide companies with answers to build a fortress of strategies around.

Strategies that increase trust and confidence among stakeholders, who go on to make decisions (usually of the purchasing kind) based on those feel-good attributes.

If Malaysian companies want to step up their game, its time they give serious thought to managing their reputation instead of letting their reputation manage them when trouble arises.

Without the support of a strong reputation, a company is only making itself vulnerable to competitive attacks. The advent of the Internet as our second skin these days only drives this point further, as the blogosphere gains more credibility and everyone has got something to say about everything.

Ferrero sets a high benchmark for the big guns to follow as the only company to be ranked in the top five of all seven categories of Reputation Institutes survey.

Closer to home, there is still work to be done but things look promising. Maxis Communication Bhd was rated as Malaysia’s most admired company, as published in the Wall Street Journal Asia in 2006.

Since then, Nestle Malaysia has been given the same honour in 2008.

·Dr Zulhamri Abdullah (Ph.D, Cardiff, UK) is a research director of RI Associate for the Reputation Institute and a consulting partner of RUSS Consulting Sdn Bhd. Zulhamri is an award-winning researcher and is also a senior lecturer at Universiti Putra Malaysia.

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