MEASURING REPUTATION

Valuing reputation

Value of reputationWhen 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

IRMAFirst 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 values

1. Perceived quality

3. Ethical profile 5. Relevance

Price/value relationship. Client attention.

Ethical commitment.Ethical products.

Knowledge.Communication.

2. Warranty 4. Social responsibility

Identification

Trust in the relationship. Perception of leadership.

Ecological sensitivity.Support to social causes.

Recognition of the identity.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 lineBusinesses 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 alertsKloutFollowerWonk

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 TwitterProvides 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 ReputationAccording 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 ReputationVillafañe & Asociados evaluate the reputation of

companies by way of:

Reputation auditsReputation monitors

Audits vs. monitorsThe 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 AuditMethodology

Public Elite & social leaders

Clients

Interviews to those responsible for business units.

In depth interviews with elite and social leaders.

Qualitative research

Focus groups with middle management and employees.

• Competitors

• Entrepreneu-rial

• Political• Professional• Third sector

Quantitative research

Desk research

Reputation MonitorsMonitors 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 1,000Fortune 500Fortune 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 MonitorsCorporate 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.

What do you think?

Reputation and TrustA 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%

HomeworkFor 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&viewMode=0

D. Conflict Barometer

http://www.hiik.de/en/konfliktbarometer/index.html

Sources Fombrun, Charles J. : Reputation, Realizing Value from the Corporate

Image, Harvard Business School Press, 1996 - http://books.google.com.pe/books?hl=en&lr=&id=m_4Cbz5f5uUC&oi=fnd&pg=PP13&dq=value+of+measuring+reputation&ots=jZ-i_oVzK0&sig=Q51oNgh3a61pZKJ8Dsx5QNyPajY&redir_esc=y#v=onepage&q=value%20of%20measuring%20reputation&f=false

Edelman Trust Barometer 2012: http://trust.edelman.com/

Villafañe, Justo: La Buena Reputación, claves del valor intangible de las empresas; Ediciones Pirámide 2008; pgs. 46 – 56, 77 – 135.

The Reputation Institute: http://www.reputationinstitute.com/

© Ines Scudellari 2012