Dennis Wilcox: 5 Q&A on Corporate Reputation

Well, I couldn’t manage to organize my trip to Subotica last month and meet THE public relations guru, Dennis L. Wilcox, in person, but I did contact him through facebook and asked him for a short interview on corporate reputation.

Reputation, its management and measurement, is the focus of my interest these days, as a part of the research I do for my master thesis.

So here are his answers on my questions.

1. How do you define corporate reputation?
Corporate reputation is the collective perceptions of an organization's various stakeholders. It represents the collective perceptions and opinions of individuals who have some relationship with the organization as customers, suppliers, employees, members of a community where the organization has a store or plant, government regulators, investors, financial analysts, journalists who cover the organization, etc.

2. What is the difference between corporate reputation and corporate image?
A corporate reputation is formed by stakeholders involved or affected in some way by the organization. Corporate image, on the other hand, is more internalized. Image is what the organization believes it is and wants to project. A bank, for example, may wish to project the "image" that its staff is friendly and helpful, or that the bank is successful and well managed. Public relations and advertising campaigns are often focused on projecting an "image" of an organization or that its product brands represent quality and good value.

Customers, for example, may feel that the "image" being projected is wrong or misleading. They find that the bank staff is not particularly helpful or friendly -- or that the product is of poor quality. Thus, the bank might have the "reputation" of being unfriendly although the bank continues to project the image that it is friendly through its advertising.

3. What makes a good corporate reputation?
A good corporate reputation is based on the organization's core values and actions. A corporation that treats its employees well, makes excellent products, actively participates in the community, supports worthwhile projects, and actively works to ensure that its environmental impact is minimal, usually has a good reputation. Reputation is based on actions, not slogans and lofty speeches. There is a good quote from Abraham Lincoln, which puts things in perspective: "Character is like a tree and reputation like a shadow. The shadow is what we think of it; the tree is the real thing."

4. Measuring corporate reputations accurately is crucial if they are to be managed. What is the best way to measure corporate reputations?
Measuring corporate reputation involves a mix of methods. The basic concept is to continually "listen" to the corporation's key publics. This may be in the form of focus groups among employees or customers, monitoring customer service queries and complaints, doing a content analysis of comments and discussion about the corporation and its products on the Internet and social network sites, and even in-depth interviews with community leaders and industry "influencers." It's important to establish a matrix of various publics to assess reputation within each public. The corporation may have an excellent reputation among the financial community (investors and analysts) but not a good reputation in the communities in which it operates. Or a particular product may have a poor reputation for quality, whereas other products have a much better reputation. By assessing "reputation" in various sectors, the corporation can then take action to correct problems and enhance its reputation as a responsive organization. There are also international indexes -- reputation surveys of corporations by various publications and nonprofit groups. In the U.S, for example, Fortune Magazine does an annual ranking of the 100 most admired companies. Apple, Google, Coca-Cola often come out as the "most admired" companies based on a number of factors.

5. How do mainstream media influence reputation?
Mainstream media have much to do with forming perceptions of a company because people who don't know much about the corporation rely on media reports to form their opinions. If the corporation is in the news because of a plant disaster, or being forced to do a product recall, people usually perceive that the corporation is not very good -- thus lowering the reputation of the company. The extensive media coverage of corporate CEOs making large salaries (in some cases, $l00 million) while, at the same time, laying off thousands of workers and asking for government bail-outs caused a severe erosion of reputation for such companies as AIG, Citigroup, and the Bank of America. On the other hand, Walmart -- the world's largest retailer -- has improved its reputation in recent years by a series of actions and initiatives that have put it in the forefront of the "green" movement and sustainability. Favorable media coverage of these initiatives have done much to improve its reputation among the general public.

Thank you, professor! :)

Does CSR pay off?

Very often the business managers ask the question how much is it worth to spend on CSR strategy and does it really pay off?

Recently Forbes has published an article on this topic, defending the opinion that CSR practice does not bring the company positive impact, a conclusion taken from David Vogel research, based on companies from Fortune 500 list. But there are many other experts with similar analysis who have come to different conclusions.

For instance, the Goldman Sachs Report from 2007 shows that among six sectors covered (energy, mining, steel, food, beverages, and media), companies that are considered leaders in implementing environmental, social and governance (ESG) policies to create sustained competitive advantage have outperformed the general stock market by 25 percent since August 2005. Additionally, 72% of these companies have outperformed their peers over the same period.

Even according to the Domini 400 Social Index, companies with positive ESG performance have compared stronger than the S&P over the last 18 years.

One more recent research, made by Panel Intelligence in November 2008, once again confirms that CSR actually pays. According to this study, 80% of sustainability leaders surveyed say they intend to maintain or increase spending in areas related to sustainability next year. In fact, they reported that sustainability and clean technology spending, as a percentage of corporate revenues, is expected to increase 73 percent through 2010.

Another recent study reveals that, as a result of “ecoflation”, packaged goods companies may expect a reduction in earnings of 19 to 47 percent in the next decade if they do not implement adequate sustainability measures.

The study Trends in Communication Management and Public Relations made by European Communication Monitor in November 2008 shows that 73% of the PR professionals in Europe think that CSR will be even more important in the following three years, and four of ten believe that CSR is a strategic issue that the communication management must deal with.

In addition, this study gives some more useful hints on CSR. For instance, 75% of the European PR pros are involved in CSR, and the main motivation for that (at almost all types of companies and all European regions) is the reputation management (70%). The most practiced CSR activity is the corporate profile (values and strategy, 60.8%). However, in some regions of Europe, the selection of CSR strategy differs: while in East and South Europe the social actions are the main aspect, the corporate ethics plays the main role on the West and North of Europe. Communicating environmental activities is less valued in East Europe.

So, does CSR really pay off? This question is so often probably because the results from CSR practice cannot be seen quickly. Lots of managers that decide on corporate budget splits cannot see the CSR effects and that is why they more easily decide to invest in strategies that can provide results for shorter period.

On the other hand, CSR cannot be directly linked to improved financial performance of the company, so probably it is necessary to make a broader business case for CSR. However, it is more than obvious that CSR indirectly helps in increasing of the company value, through: increasing the engagement among employees, bolster corporate reputation, leading to product innovation and differentiation, helping manage risk, decreasing environmental impact and contribute to solving social problems, and so on.

But at the end of the day, Vogel is right when saying that CSR is not going to save a company that has made poor business decisions.

PR in 2009 ... and beyond

The New Year usually inspires columnists and bloggers to make a review of the year that is gone, summarizing the events and results, and to give some general predictions for the year to come. I haven’t even tried to avoid that cliché - the theme just popped up: What should a PR professional be in 2009 and what skills must he/she posses? In other words, in which direction will the PR profession develop in the new year that started few days ago?

The list of recommendations given bellow is generally aimed at the PR industry in my country, Macedonia. For very little people here, these recommendations mean presence, they already practice them. For most of PR practitioners - they represent a far future, far beyond 2009. And a good part of my colleagues - if they bother to read this at all - will take these recommendations as totally unnecessary, and will continue - as usual - to limit their professional everyday life with their only PR activity - having coffee with journalist-friends.

Thus, let these recommendations be a kind of New Year’s Resolution for every PR pro who wants to keep up with the new trends in the industry and to work in direction of advancement of the public relations as a profession.

So, if you haven’t mastered these skills yet, it is time to at least understand that:

1. PR will be even more open and wider profession than it was before, and it will demand even more skills, various skills.

2. As a PR pro you must know your client so well, that you will know the question the client plans to ask you even before he does.

3. A PR pro must be a storyteller, must know to tell stories that move people.

4. The PR pro will be a content creator, not only a communicator who delivers messages.

5. The PR pro must be even more curious, thoughtful, innovative, insightful, creative …to have even more passion to his/her profession… and above all to be even more daring and bold.

6. A PR pro will must be capable of leading a conversation with the audiences, to dialogue instead of pure message delivering. He/she should ask questions, and to give answers to ones. Moreover, he/she should be prepared to listen to the answers to the questions asked.

7. A PR pro must follow all the fast changes happening in his/her environment and to react quickly on each of those changes… The PR pro must be prepared to quickly adjust or change even his/her own belief, attitude, prejudice…

8. For a successful PR strategy, focusing on traditional media is definitely not enough anymore. The PR professional must think in direction of integrated campaign that will include even tools such as making movies and videos, (micro)blogging, social networks, building of applications for mobiles and computers, video games… in other words, to use all tools available, so the “alternative” communication tolls will become “conventional” media.

9. The measurement of the real PR effects will replace the pure counting of media placements. A PR pro must be ready to seek for and to propose new creative ways to evaluate PR actions, evaluation that will reflect the real picture and the impact in the society.

10. And last but not least, the PR pro should not succumb to the pressures of the ongoing world crisis. The PR pro must understand and believe that the intellectual and the creative “assets” he/she owns cannot be taken away by no recession! And creativity in PR is needed as never before.

In addition, here is one great video produced by Ogilvy PR Worldwide for PR Week. The video is a compilation of statements of top PR experts worldwide, and the title is PR of the Future.