1. REPUTATION AND ITS IMPACT ON THE BOTTOM LINE
Michael G. Cherenson, APR
Vice President
The Cherenson Group
Livingston, NJ, USA
September, 2005

2. Goals and Objectives Provide an American perspective on reputation
Define reputation.
Consider reputation’s impact on the bottom line.
Identify who is responsible for “reputation.”
Discuss ways to build a good reputation.

3. What is Reputation?

4. REPUTATION: A Dictionary Definition
The general estimation in which a person is held by the public.
The state or situation of being held in high esteem.

5. REPUTATION: Corporate Reputation
A cognitive representation of a company's ability to meet the expectations of its stakeholders.
Rational and emotional attachments.
The net image a company develops with all of its stakeholders.

6. Brand
reputation
MARKETING
Advertising
Public Relations

7. According to Hill & Knowlton’s Annual Global Survey of Senior Executive Opinions on Corporate Reputation and Management:
66% of executives believe that “brand and marketing message” is either essential or important to the company’s reputation.
Customers are increasingly placing the same emphasis on “brand recognition” and “corporate reputation” when evaluating a purchase decision.

8. Reputation
BRAND
Brand = Height (Awareness) x Width (Functional Appeal)
Reputation = Depth (Expectation and credibility)

9. BRAND REPUTATION Brand is personality
Brand is what a company wants you to think and feel when you hear its name
Brand is communication
Brand is something you build
Brand is a promise
Reputation is character
Reputation is what you really do think and feel when you hear the company’s name
Reputation is behavior
Reputation is something you earn
Reputation is keeping the promise
Source: Paul Holmes, The Holmes Report

10. Do What You Say You Will Do
DWYSYWD
Do What You Say You Will Do

12. Is Reputation Important?

13. UNITED STATES FEDERAL RESERVE
As much as 47% of American companies' net worth is tied up in intangible assets like brand equity and reputation.
ERNST & YOUNG
35% of a company’s value is attributed to various non-financial intangibles.

15. CHERENSON STUDY: REPUTATION V. SALARY
Consumers were surveyed by professionally trained data collectors using a CATI (Computer Assisted Telephone Interviewing) System. Respondent selection was randomized. A total of 2,400 adults (18+) were interviewed (800/poll). Each survey has a margin of error of +/- 3.5% at the 95% confidence interval. That is to say, 95% of the time, results will be within +/- 3.5% of the "true values" where "true values" refer to the results obtained if it were possible to interview every adult in the state.

16. QUESTION
Which company would you rather work for, if all else were equal and your job would be the same in each…
1) Company A would pay you a salary that meets your needs. They have an excellent reputation overall.
2) Company B would pay you a higher salary, but their reputation overall is poor.

17. SOURCE:

18. REPUTATION & JOB PERFORMANCE
Is There a Link Between “Reputation” and Job Performance?
98% of HR professionals and 91% of employees say yes.

19. CHERENSON STUDY: REPUTATION V. PRICE

20. QUESTION
Which company would you rather purchase a product or service from, if the quality of the product or service was equal…
1) Company A, = excellent reputation + slightly higher prices than average.
2) Company B = poor reputation + slightly lower prices than average.

21. SOURCE:

22. REPUTATION & STOCK PRICE
Highly Credible Companies have a 12% higher price/earnings ration than those with lower profiles (YANKELOVICH/FORTUNE)

23. POWER OF TRUST: REPUTATION = “CAN I TRUST YOU?”

24. “Trust is like the air we breathe
“Trust is like the air we breathe. When it’s present, nobody really notices. But when it’s absent, everybody notices.”
-- Warren Buffett
Reputation & Trust

25. CHERENSON STUDY: TRUST
AGREE OR DISAGREE:
Trust is the most important consideration I make, even more than political viewpoint, when I consider who to vote for, and more important than price and quality when I consider who I do business with, or who I invest with.”
SOURCE:

26. We Agree
85% agreed, with 66% saying they strongly agreed and 19 percent saying they somewhat agreed; only 10 % said they disagreed with the statement.
SOURCE:

27. Trust is Key, But People Don’t Trust!
NGO’s are the most trusted around the world. (Edelman)
80% only believe info if it comes from multiples sources. (Edelman)
75% of Americans have limited confidence in large business (ABC News)
73% say most large US Corporations are NOT Trustworthy. (Roper)
83% believe investment bankers have conflicts-of-interest (US Trust)

28. Trust is Key, But People Don’t Trust!
79% question reliability of financial statements (US Trust)
67% do not trust corporate managements (US Trust)
65% do not trust auditors (US Trust)
62% of consumer say that CEOs are not doing enough to build or restore confidence in American business (Golin/Harris)

29. + A Simple Equation… Reputations is More Valuable
Lack of Trust
Information Overload
“Tabloidization”
Pressure on CEOs
Savvy Consumers
Empowered Employees
International instability
Minority Influence
Reputations is More Valuable
& Fragile Than Ever Before +

30. How do you build A good reputation?

31. REPUTATION MANAGEMENT
Identify organization’s value proposition; prioritize key stakeholders in terms of value and risk, and then…
Manage the organization to match the value proposition with that of key stakeholders with consistency and continuity over time. (Schreiber)

32. PUBLIC RELATIONS AND REPUTATION MANAGEMENT
PRSA Definition:
"Public relations helps an organization and its publics adapt mutually to each other."
Grunigs’ Two-Way Symmetrical Model of Public Relations:
Applying research and dialogue to bring about changes in ideas, attitudes and behaviors of both the organization and its publics – i.e., building/maintaining reciprocal relationships.

33. HOW TO BUILD CREDIBILITY? COMMUNICATE.

34. Public Relations At first, it was:
“Here’s the message, go deliver it.”
Then it became:
“What should the message be?”
Today, more and more, it’s:
“What should we do?
— Harold Burson
New York Times
August 9, 1929

35. Who is Responsible for “Reputation”
90% of CEOs said communications is “very important” or “important” for managing reputation (Burson-Marsteller)
55% of marketing managers say the PR department is responsible for “Reputation” (PR Week)

36. Who is Responsible for “Reputation”
46% of corporate communalization professionals say the PR department is responsible for Reputation (PR Week)
65% of CEOs worldwide believe it is their personal responsibility to manage their companies reputation. (ORC INTERNATIONAL)

37. REPUTATION – FROM THE TOP DOWN
"It's clear that CEOs believe communications and reputation are a shared responsibility. The CEO may be the primary individual, but there needs to be some resonance deeper inside the organization."
-- Chris Komisarjevsky, president & CEO, Worldwide, Emeritus, Burson-Marsteller worldwide
“… public relations occupies an enhanced position of importance for today's CEOs. They are using PR not only to deflect corporate problems but to drive business." .
-- Julia Hood, editor-in-chief PRWeek Magazine

38. How PR Can Evolve Into Chief Reputation Officer
Issues management.– be the antenna, identify and manage issues that threaten the organization
Think like a business person – identify links between PR and the organization’s agenda
Results – develop clearly defined objectives and measure results. Show a link between PR and business outcome.

39. How PR Can Evolve Into Chief Reputation Officer
Network internally – be a resource to the entire organization
Think organization-wide -- practice PR as if the entire organization is depending on it
Ask tough questions and don’t be afraid to say NO – be an advocate for the employee, the shareholder and the public.

40. The 18 Immutable Laws of Corporate Reputation (Alsop)
ESTABLISHING A GOOD REPUTATION
Maximize your most powerful asset – Your Reputation
Know your reputation
Understand that you have many publics
Live your values and ethics
Be a model citizen
Convey a compelling corporate vision
Create emotional appeal
Cherenson:
Think Long-Term & Anticipate
Communicate continually
MAXIMIZE – REPUTATION IS AN ASSET -- Fed Ex
UNDERSTAND THAT YOU HAVE MANY PUBLICS – ARTHUR PAGE – “You operate at the permission of the public)
LIVE YOUR VALUES AND ETHICS -- J&J, TYLENOL (CREDO – “Our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services.
INTERESTING STORY ABOUT VALUES -- The hospitals in the University of Michigan Health System have been encouraging doctors since 2002 to apologize for mistakes. The system's annual attorney fees have since dropped from $3 million to $1 million, and malpractice lawsuits and notices of intent to sue have fallen from 262 filed in 2001 to about 130 per year
BE A MODEL CITIZEN – (PAUL REVERE)

41. The 18 Immutable Laws of Corporate Reputation (Alsop)
KEEPING A GOOD REPUTATION
Recognize your shortcomings
Stay vigilant
Make your employees your reputation champions
Control the Internet before it controls you
Speak with one voice
Beware of “reputation rub-off”
Cherenson:
It’s about connecting with people
Rich Communication Channels – with lots of interaction -- are key.
Leadership is essential
CONTROL THE INTERNET Shares of Apple Computer dropped almost 5 percent on June 3 on speculation that the company might be experiencing a slowdown in sales of iPods. The New York Times sourced a report on the independent Web site, AppleInsider.com, as one of the reasons for the decline.

42. The 18 Immutable Laws of Corporate Reputation (Alsop)
REPAIRING A DAMAGED REPUTATION
Manage crisis with finesse
Fix it right the first time
Never underestimate the public’s cynicism
Being defensive is offensive
If all else fails, change your name
It takes 4 years for a company to rebuild a blemished reputation.
-- BURSON MARSTELLER/ROPER

43. -- Jim Collins, author of
"On average... it takes seven years to get to the point where a company shifts from good to great.“
-- Jim Collins, author of
Good to Great: Why Some Companies Make the Leap... and Others Don' t

44. Q&A

45. Michael G. Cherenson, APR Vice President The Cherenson Group 3 Regent Street Livingston, NJ 07039, USA