Corporate reputation crises - New study highlights most could be avoided

27 FEB 2020 Corporate reputation crises - New study highlights most could be avoided

JOHANNESBURG - FEBRUARY 24, 2020 – A new study conducted among 2 227 executives worldwide highlights that, despite leadership focus on corporate reputation, most reputational crises could have been avoided.

In fact, of the 39% of global executives reporting their company had recently experienced a crisis that affected company reputation, 76% said that the crisis could have been prevented all together.

By contrast, 69% of South African executives whose company experienced a recent reputational crisis reported that the crisis could have been prevented. 51% of South African executives said their company experienced a crisis in the past three years that affected company reputation.

The study – The State of Corporate Reputation in 2020: Everything Matters Now – was conducted by Weber Shandwick in partnership with KRC Research. It surveyed 22 markets in North America, Latin America, Asia Pacific and nine EMEA countries, including South Africa.

Weber Shandwick is a leading global public relations firm with offices in major media, business and government capitals around the world. Commenting on the relevance of the survey as global business markets head into a new and undoubtedly pivotal decade, Weber Shandwick Chief Executive Officer for Africa, Jill Hamilton, said reputational opportunities and threats lie in wait everywhere.

“The year 2020 marks not just the start of a new decade, but a year in which business leaders all over the globe will need to change how they think and act, using a new approach to a wide range of emerging reputational issues; it is not business as normal,’’ she said.

“Building and protecting reputation must be a daily solve for all companies, large and small – particularly given the unforgiving nature and behaviour of many of today’s consumers who shun companies when they lose trust in them or disagree with them about social issues.

“Companies are now expected to not only deliver on financial performance, but make a positive contribution to society, stepping outside their traditional parameters and lending their voices to political and social issues, even when these issues do not strongly relate to their core business.

“Importantly, Millennials will be the next generation of leadership, and their views on company values, societal issues and investment decisions will change how corporate reputations are shaped and communicated,” Hamilton said.

It is in the context of these unprecedented changing times that Weber Shandwick took stock of the reputation of business. The State of Corporate Reputation in 2020: Everything Matters Now examined what drives reputation, why it is important to be highly regarded and the benefits that come with having a strong reputation.

Key findings included:

  • Reputation is ‘omnidriven’ – it’s impacted from all sides. A company’s reputation is similarly influenced by a variety of factors, with no one driver having a greater impact than the rest. When asked to rate nearly two dozen different reputation drivers on how much each contributes to their own company’s reputation, global executives assigned similar scores to each. This lack of distinction suggests that companies can no longer solely focus on just a few key drivers of reputation but on many multiple drivers.

    That said, South African executives were the only EMEA executives to rank value for price of products/services as the #1 reputation driver.

  • Corporate reputation success is dependent upon a large stakeholder set. Customers, investors and employees are identified by global executives as the most important stakeholders when it comes to a company’s reputation. However, all stakeholder groups presented in the survey were rated highly, by at least two-thirds:

    • Customers – 87%
    • Investors – 86%
    • Employees – 83%
    • Suppliers and partners – 80%
    • People in the community – 75%
    • Government officials and regulators – 74%
    • The media – 73%
    • People on social media – 68%
    • Non-profits, advocacy groups or non-governmental organisations – 66%

  • In South Africa, the important categories were:
  • Customers –92%
  • Suppliers and partners – 87%
  • Employees – 86%
  • People in the local community – 82%
  • Government officials and regulators – 78%
  • People on social media – 73%
  • The media – 70%
  • Non-profits, advocacy groups or non-governmental organisations – 66%

  • Reputation is on the board’s agenda. The research demonstrated that executives firmly believe that reputation matters to board members. 91% of executives said their company’s reputation is important to their board of directors.

    In South Africa, only 67% of board executives agree with that statement, with 27% saying it is somewhat important, and 2% saying it is not important (4% of companies did not have a board of directors).

  • Reputation is measured. 71% of global executives said that their company leadership monitors/measures company’s reputation with the most common measures being employee satisfaction/engagement, sales/financial performance, and surveys among various stakeholder groups:

    • Employee satisfaction or engagement – 47%
    • Sales and/or financial performance – 45%
    • Surveys among important stakeholder groups – 40%
    • Awards and rankings – 37%
    • Online customer ratings and reviews – 36%
    • New customer or client acquisitions – 36%
    • Media coverage – 34%
    • Online employee ratings and reviews – 34%
    • Personal judgment of CEO or leadership team – 30%
    • Social media or other internet metrics – 29%
    • Number of website visitors – 27%
    • Government or state support – 25%

  • 80% of South African executives said that their company leadership monitors/measures company’s reputation. When asked how that reputation gets measured, South African executives identified 5.5 metrics, on average, that their leadership uses, the most common being sales or financial performance, new customer or client acquisitions, and awards and rankings.

  • Reputation is well tended to by leadership. 70% of global executives report that their senior management spends just the right amount of time focusing on their company’s reputation. 79% of global executives say it’s important for the CEO to communicate the organisation’s values in order to be highly regarded. Additionally, 58% rate a company’s ability to communicate and deliver upon its mission, vision and value highly as a marketing and communications driver of reputation. Values are also expected to be conveyed by CEOs addressing societal issues (56%).

    The South African figures were the same. To learn more about The State of Corporate Reputation in 2020: Everything Matters Now, contact jhamilton@webershandwick.com.

Note to editors about the Composition of the South Africa Sample:

Age:

  • Millennial (1981-1998): 33%
  • Gen X (1965-1980): 47%
  • Boomer+ (1944-1964): 20%

Gender:

  • Male: 62%
  • Female: 38%

Title:

  • CEO, President, Owner: 3%
  • Executive Officer, Managing Partner, Executive or Senior Vice President: 5%
  • Regional Head, Director or Division Head, Business Unit Head: 17%
  • Vice President, Department Head: 2%
  • Director, Manager, Function or Project Head: 73%

Revenue:

  • $250 million-$499 million: 70%
  • $500 million-$999 million: 28%
  • $1 billion-$4.9 billion: 2%
  • $5 billion-$9.9 billion: 0%
  • $10 billion+: 0%

Geographic reach:

  • Multinational: 25%
  • Domestic: 75%

About the Research

The State of Corporate Reputation in 2020: Everything Matters Now was commissioned by Weber Shandwick and conducted by KRC Research in July and August 2019. An online survey was administered to 2,227 executives across 22 markets worldwide. Respondents are in mid to high-level positions at companies with at least $500 million in revenue in developed countries and $250 million emerging markets. These executives represent a variety of industries.

About Weber Shandwick

Weber Shandwick is a leading global communications network that delivers next-generation solutions to brands, businesses and organisations in major markets around the world. Led by world-class strategic and creative thinkers and activators, we have won some of the most prestigious awards in the industry. Weber Shandwick was named to Ad Age’s Best Places to Work in 2019 and was the only PR firm designated an Ad Age A-List Agency Standout in 2017 and 2018. Weber Shandwick was also honoured as PRWeek’s Global Agency of the Year in 2015, 2016, 2017 and 2018, and The Holmes Report’s Global Agency of the Year in 2015, 2017 and 2019. The firm earned 25 Lions at the 2019 Cannes Lions International Festival of Creativity. Data-led, with earned ideas at the core, the agency deploys leading and emerging technologies to inform strategy, develop critical insights and heighten impact across sectors and specialty areas, including brand and B2B marketing, healthcare marketing, change management, employee engagement, corporate reputation, crisis management, data and analytics, technology, public affairs, social impact and financial communications. Weber Shandwick is part of the Interpublic Group (NYSE: IPG). For more information, visit http://www.webershandwick.com

About KRC Research

KRC Research is a global full-service nonpartisan opinion research and strategy firm. A unit of the Interpublic Group of Companies (NYSE: IPG), KRC Research offers the quality and custom service of a small firm with the reach of a global organisation. For over 30 years, KRC Research has worked on behalf of corporations, governments, not-for-profits and the communications firms that represent them. Staffed with multidisciplinary research professionals, KRC combines sophisticated research tools with real-world communications experience. For more information, visit www.krcresearch.com