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CORPORATE REPUTATIONS ARE ON THE LINE During the last few years,…
CORPORATE REPUTATIONS ARE ON THE LINE
During the last few years, there has been a great deal of negative publicity about business firms because
of illegal and unethical behaviour by business executives and the economic woes that started in 2008.
But some corporations continue to perform well, and to do good things for their stakeholders. Each year,
the Reputation Institute publishes Global Pulse, which ranks the world’s 1000 largest companies
according to their reputation with their stakeholders. Each company’s score is determined by how well it
scores on key performance indicators like products/services, innovation, workplace, citizenship,
governance, and leadership.
A list of the most respected corporations in Canada is published by KPMG/Ipsos-Reid. Several hundred
leading Canadian CEOs are asked to assess Canadian corporations on eight performance categories such
as long-term investment value, innovation and product/service development, financial performance,
corporate social responsibility, corporate governance, human resource management, and customer
service.
Surveys about corporate reputations are also conducted in the United States. The Reputation Quotient
study is a joint effort of Harris Interactive Inc., a Rochester, New York-based research firm, and the
Reputation Institute of New York. Its surveys ask thousands of people to name two companies with the
best reputation and two companies with the worst reputation. Respondents evaluate the companies on
factors such as emotional appeal, financial performance, social responsibility, vision and leadership, and
workplace environment. In one recent survey, 88 percent of respondents rated the reputation of
American business as either “not good” or “terrible.”
During the last few years, the reputations of entire industries have declined. For example, the
reputations of the financial and automobile industries have declined sharply since the recession of 2008-
2009. Consumer impressions of the pharmaceutical and oil industries are also negative because of a
widely held belief that these industries are overcharging consumers for the products they sell. The
tobacco industry has also had problems because consumers think that information about the negative
effects of smoking and nicotine were withheld from the public.
When we consider negative information about business firms, we must remember that only a very small
proportion of them are actually engaging in illegal or unethical behaviour. A review of the global,
Canadian, and U.S. reputation listsand the criteria that are used to generate themprovides some
reassuring testimony on the vitality and values of many businesses. It also shows the manner in which
they conduct their operations and gives us some insights into how companies must perform to gain the
kind of stellar reputation necessary to get on the list.
These criteria all have one underlying theme: They reflect in one way or another the extent to which an
organization and its managers effectively meet or exceed the needs Chapter 2The Environment of
Business
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and expectations of their external constituents. For example, hiring and developing the brightest and
most motivated people from the labour market results in high levels of employee talent. Likewise,
respecting the needs of shareholders and other investors affects several criteria, including financial
soundness, use of corporate assets, and long-
term investment value. Says one expert, “We admire companies that cater to their constituents.”
Questions:
1. What is your opinion of the value of the rankings like these?
2. Do you think the criteria that are used are appropriate? Can you suggest others?
3. Is the ranking something that investors should rely on in buying stock?
4. If you were a top manager and wanted your firm to move up in the rankings, how
would you proceed?
