Corporate reputation no longer just about financial performance

At a time where consumers and stakeholders are holding companies accountable like never before, the factors that define corporate reputation are changing.

According to a new Weber Shandwick report, business leaders in 2020 will need to scan the reputational landscape on a 360-degree basis.

Take for instance, the fact that companies are being pressured to step outside their traditional parametres and lend their voices to political and social issues. They’re not only expected to deliver on financial performance, but to also make a positive contribution to society. This all ties into other studies that have pointed towards the critical need for companies to adopt and execute a clearly defined purpose.

Reputation is omnidriven

A company’s portfolio of reputation drivers is no longer dependent on solely a few select factors. Based on the study, factors such as ethics and values, diversity and inclusion, customer and employee privacy, training and support for employees, environmental responsibility, philanthropy or charity support, and marketing and communications fare just below traditional factors such as quality of products and services or financial performance.

Even leadership participation at events and social media presence may affect reputation. Half of global executives in the study say the participation of leaders at forums, conferences or industry events and the company leaders’ presence on the company website and social media contribute a lot to reputation.

The effect of communications

More than half (58%) of respondents say that how a company responds to and addresses a crisis affects their reputation, and equally important is a company’s ability to communicate and deliver its mission and values.

Additionally, eight in 10 global executives (79%) say it is important for the CEO to communicate the organisation’s values in order to be highly regarded. This is especially important in government, public sectors, social services, professional services, and retail.

An interesting find is that global executives largely agreed (76%) that most of their company crises are self-inflicted and preventable. And when it comes to stakeholders, nearly nine in 10 global executives (87%) say customer perceptions are important to their company’s reputation, closely followed by those of investors (86% of global executives at publicly held companies) and employees (83%).

Lower down on the influence scale are people on social media (68%) and non-profits, advocacy groups or non-governmental organisations (66%).

The 76 percenters

According to the report, three benefits were listed as the most important to a company with a strong reputation: customer or client loyalty, competitive advantage, and better relationships with suppliers and partners. Other factors include attraction of high-quality talent, employee retention, higher stock price, and new market opportunities. 

Overall, one-third of global executives (33%) report that more than three-quarters of their market value—76% or more—is attributed to their company’s reputation. These '76 percenters' have shown to differentiate other global executives in what they deem to make up corporate reputation. Their outlook on reputation were found to be more omnidriven.

The 76 percenters are made up of key stakeholders, such as employees and investors, and are hyperaware of the company’s reputation. Those who also work at publicly held companies are more likely than the average executive at a publicly held company to say the topic of reputation has come up during the company’s earnings calls (74% vs. 57%).

Geographically, Indonesia, India, and China were especially found to prioritise corporate reputation when evaluating their company value.

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