Reputation & Trust -- Impact on the Bottom Line
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Transcript of Reputation & Trust -- Impact on the Bottom Line
TRUST & REPUTATION
Michael G. Cherenson, APRMichael G. Cherenson, APRExecutive Vice President, Executive Vice President, Success Communications GroupSuccess Communications Group2008 Chair-elect, PRSA Board of Directors2008 Chair-elect, PRSA Board of Directors
October 2008
What is reputation?
What’s reputation’s impact?
Who do they Trust?
How do you build trust & reputation?
What is reputation?
What’s reputation’s impact?
Who do they Trust?
How do you build trust & reputation?
REPUTATION: Ability to meet stakeholder expectations
Rational and emotional attachments
Net image with all stakeholders
Ability to meet stakeholder expectations
Rational and emotional attachments
Net image with all stakeholders
REPUTATION = EXPECTATION + CREDIBILITYREPUTATION = EXPECTATION + CREDIBILITY
Do What You Say You Will Do
Credibility is:
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
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
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
REPUTATION = “CAN I TRUST YOU?”
““To be persuasive, we must be To be persuasive, we must be believable; to be believable we must believable; to be believable we must be credible; to be credible, we must be credible; to be credible, we must
be truthful.”be truthful.”
-- Edward R. Murrow-- Edward R. Murrow
“Trust is like the air we breathe. When it’s present, nobody really
notices. But when it’s absent, everybody notices.”
-- Warren Buffett
“Trust is like the air we breathe. When it’s present, nobody really
notices. But when it’s absent, everybody notices.”
-- Warren Buffett
As much as 47% of American companies' net worth is tied up in intangible assets like
brand equity and reputation.
As much as 47% of American companies' net worth is tied up in intangible assets like
brand equity and reputation.
Greatest Business RisksSource: Economist Intelligence Unit, “Reputation Risk of Risks,” 2005
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60
Reputation RiskRegulatory RiskHuman Capital RisksIT Networks RiskMarket RiskCredit RisksCountry RisksFinancing RiskTerrorismForeign Exhange RiskNatural Hazard RiskPoltical RiskCrime
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Reputation RiskRegulatory RiskHuman Capital RisksIT Networks RiskMarket RiskCredit RisksCountry RisksFinancing RiskTerrorismForeign Exhange RiskNatural Hazard RiskPoltical RiskCrime
Senior Executives
STUDY: TRUSTAGREE 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.”
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.”
85% agreed,
66% strongly agreed
19 somewhat agreed
only 10 % disagreed
85% agreed,
66% strongly agreed
19 somewhat agreed
only 10 % disagreed
General Public
STUDY: SALARY
Which company would you rather work for, if all else were equal and your job would be the same in each?
Company ACompany A PPays you a salary that meets needs ays you a salary that meets needs Excellent Excellent reputation overallreputation overall
Company BCompany B Pays you a higher salaryPays you a higher salaryReputation overall is poor Reputation overall is poor
Which company would you rather work for, if all else were equal and your job would be the same in each?
Company ACompany A PPays you a salary that meets needs ays you a salary that meets needs Excellent Excellent reputation overallreputation overall
Company BCompany B Pays you a higher salaryPays you a higher salaryReputation overall is poor Reputation overall is poor
78% = Company A
17% = Company B
78% = Company A
17% = Company B
General Public
STUDY: PURCHASE
Which company would you rather purchase a product or service from, if the quality of the product or service was equal…
Company ACompany A Excellent reputation Excellent reputation Slightly higher prices Slightly higher prices
Company BCompany B Poor reputationPoor reputationSlightly lower pricesSlightly lower prices
Which company would you rather purchase a product or service from, if the quality of the product or service was equal…
Company ACompany A Excellent reputation Excellent reputation Slightly higher prices Slightly higher prices
Company BCompany B Poor reputationPoor reputationSlightly lower pricesSlightly lower prices
86% = Company A
10% = Company B
86% = Company A
10% = Company B
General Public
Is There a Link Between “Reputation” and Job Performance?
98% of HR professionals and 91% of employees say yes.
STUDY: JOB PERFORMANCE
STUDY: FINANCIALS
MBA STUDENTS
People Take Action On Companies They Do Not TrustHave you ever done this to a company you do not trust?
81
74
70
50
50
47
45
40
36
23
0 10 20 30 40 50 60 70 80 90
Refuse to buy their product or use their services
Criticize them to people you know
Refuse to invest in them
Investigated more about their activities
Refuse to work for them
Supported Legistlation controlling or limiting their activities
Ignored their attempts to communicate with you
Shared your opinion and experience on the Web
Written a letter or email complaining to the media, a politician, or an official 3rd party
Actively demonstrated or protested against them
2008 Trust in Institutions
Source:
2008 Trust in Institutions
NOT ALL ARE EQUAL…
Source:
Source:
Media Fragmentation
Media Fragmentation
NEW MEDIA MODEL
TRADITIONAL MEDIA MODEL
“Infodemic”A complex phenomenon caused by the interaction of mainstream media, specialist media and internet sites; and “informal” media, which is to say wireless phones, text messaging, pagers, faxes and e-mail, all transmitting some combination of fact, rumor, interpretation and propaganda.
~ David RothkopfChairman and CEO of The Rothkopf Group
A complex phenomenon caused by the interaction of mainstream media, specialist media and internet sites; and “informal” media, which is to say wireless phones, text messaging, pagers, faxes and e-mail, all transmitting some combination of fact, rumor, interpretation and propaganda.
~ David RothkopfChairman and CEO of The Rothkopf Group
Who is Credible?
TOP 2 BOX (%)
A person like yourself 51
Doctor or healthcare specialist 49
Non-profit organization or NGO representative 44
Academic 47
Financial/ Industry analyst 43
Regular employee of company 36
The CEO/leader of your company or employer* 31
Lawyer 16
Government official or regulator 22
CEO of a company 22
Public relations executive 12
Entertainer/ Athlete 11
Blogger 9
In general, when forming an opinion of a company, if you received information from (INSERT PERSON) about this company,
how credible would the information be? Would it be extremely credible, very credible, somewhat credible, or not credible at all?
Source:
Who is “A Person Like Me?”
Shares common interests with you 1
Holds similar political beliefs to you 2
Is from your local community 3
Is the same profession as you 4
Is the same religion as you 5
Is the same nationality as you 6
Is the same gender as you 7
Is the same race/ ethnicity as you 8
Ranking
All other things being equal, which THREE of the following characteristics are most likely to increase your trust in someone sharing information about the company? Are you MOST likely to trust the person if he/ she… [RANDOMISE LIST. ACCEPT THREE]
Source:
Trust is not distributed evenly
Not all spokespeople are equal
Some traditional Media still valuedSome traditional Media still valued
Peer-to-Peer highly influentialPeer-to-Peer highly influential
Person like you most trustPerson like you most trust
Trust is not distributed evenly
Not all spokespeople are equal
Some traditional Media still valuedSome traditional Media still valued
Peer-to-Peer highly influentialPeer-to-Peer highly influential
Person like you most trustPerson like you most trust
The Evolving Trust Landscape
Source:
A Simple Equation…Trust is shiftingPost 9/11 + Katrina + War = Fear & AnxietyEconomic instabilityInformation Overload“Tabloidization”Pressure for Short Terms ResultsSavvy ConsumersEmpowered EmployeesInternational instabilityInfodemicsMinority InfluenceReputations is More Valuable & Fragile Than Ever Before
Trust is shiftingPost 9/11 + Katrina + War = Fear & AnxietyEconomic instabilityInformation Overload“Tabloidization”Pressure for Short Terms ResultsSavvy ConsumersEmpowered EmployeesInternational instabilityInfodemicsMinority InfluenceReputations is More Valuable & Fragile Than Ever Before
How do you build a good reputation and restore Trust?
Source:
REPUTATION
Visible
Transparent
DistinctiveConsistent
Authentic
Source: Charles Fombrun
HOW TO BUILD CREDIBILITY?COMMUNICATE
Listening to Employees Builds TrustWhich are the THREE most important actions for a global company seeking to build trust
among its employees?
64
45
38
33
32
32
17
16
0 20 40 60 80 100
Listening to employees
Demonstrating its corporate social responsibility
Communicating the company's business strategy
Having CEO be accessible to employees
Encouraging dialogue across different parts of the business
Communicating the company's financial performance
Communicating openly about layoffs
Providing information about career advancement
How to Earn Trust58% Handle crisis better, more openly
56% Communicate openly and frequently with stakeholders
58% Stick to a code of business ethics no matter what
60% Personally and visibly show care and concern for customers
65% Assume personal responsibility and accountability
58% Handle crisis better, more openly
56% Communicate openly and frequently with stakeholders
58% Stick to a code of business ethics no matter what
60% Personally and visibly show care and concern for customers
65% Assume personal responsibility and accountability
Golin/Harris Survey
CREDIBILITY BANK
DEPOSITS• Open honest communication
• Good deeds
• DWYSYWD
• Managing expectations
WITHDRAWALS(automatic permanent overdraft)
• Lying, stonewalling
• Bad behavior
• Abuse others
• Not fulfilling your obligations
Multiple Sources
GOODWILL RESERVOIR - INVESTMENTS -- CAPITALThe ability to withstand crisis or invest reputation or political capital
TRUST BUSTING
TRUST BUSTING BEHAVIORS
Arrogance and Chest-Beating
Broken Promises and Commitments
Over promise, Under deliver
Deception and Disinformation
Denial, Stall, Delay
Duck Responsibility
Minimize Risk, Overrate Preparation
Abandon Core Values
Abuse the Trust of Others
TRUST BUSTING BEHAVIORS
Arrogance and Chest-Beating
Broken Promises and Commitments
Over promise, Under deliver
Deception and Disinformation
Denial, Stall, Delay
Duck Responsibility
Minimize Risk, Overrate Preparation
Abandon Core Values
Abuse the Trust of Others
SOURCE: GOLIN/HARRIS
TRUST BUILDINGTRUST BUILDING BEHAVIORSPromises Made, Promises KeptExceed ExpectationsHonesty, Clarity, ConsistencyMeasured Milestones, Viable AlternativesAccept and Assign AccountabilitySoberly, Systematically Assess ChallengesKnow Your DNARespect, Honor & Reward Those Who Put Their Trust in YouTreat Trust as a Long-Term Investment Paying Ongoing Dividends
TRUST BUILDING BEHAVIORSPromises Made, Promises KeptExceed ExpectationsHonesty, Clarity, ConsistencyMeasured Milestones, Viable AlternativesAccept and Assign AccountabilitySoberly, Systematically Assess ChallengesKnow Your DNARespect, Honor & Reward Those Who Put Their Trust in YouTreat Trust as a Long-Term Investment Paying Ongoing Dividends
SOURCE: GOLIN/HARRIS
TRUST – “I’M SORRY”Since 2002, encouraging doctors to apologize for mistakes.
Since 2002, encouraging doctors to apologize for mistakes.
Attorney Fees
$2 million
Malpractice Lawsuits
and notices of intent to
sue50.4%
TRUST – “I’M SORRY”
Veterans Administration HospitalLexington, KY
… a large percentage of patient dissatisfaction was generated by physician attitude and denial, rather than the negligence itself.
… close to half of malpractice cases could have been avoided through disclosure or apology…
… what a majority of patients really wanted was simply an honest explanation of what happened and, if appropriate, an apology.”
I’M SORRY?
Source:
BUILDING TRUST: STRATEGIES
• Know your corporate DNA• Leadership is key --
articulate your vision• CEO = “Chief Trust
Officer”• Think long-term• Know your reputation and
Audit relationships• Invest strategically in
your “Trust Bank” assets• Live your values and
ethics, put safeguards in place
• Prove it! Trust is earned through deeds and competence
• Know your corporate DNA• Leadership is key --
articulate your vision• CEO = “Chief Trust
Officer”• Think long-term• Know your reputation and
Audit relationships• Invest strategically in
your “Trust Bank” assets• Live your values and
ethics, put safeguards in place
• Prove it! Trust is earned through deeds and competence
• Put the human face back into the business (People listen with their stomachs)
• Accountability, sustainability and corporate responsibility – be a model citizen
• Communicate plainly, openly and straightforwardly
• Communication is a dialogue, not a monologue
• Not all communication is equal
• Put the human face back into the business (People listen with their stomachs)
• Accountability, sustainability and corporate responsibility – be a model citizen
• Communicate plainly, openly and straightforwardly
• Communication is a dialogue, not a monologue
• Not all communication is equal
Q&A
Michael G. Cherenson, APRExecutive Vice President, Success Communications Group
Chair-elect, PRSA Board of [email protected]
973-992-7800 x. 104www.successcomgroup.com