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Corporate Reputation Matters - A Lot

Investment in a company's reputation is often made begrudgingly. There is a sense that the impact of this intangible is too hard to measure or, if measurable, not of the same order of effect as more tangible transaction-driven indicators (sales growth, meeting earnings targets, comparative P/E ratio, etc.)

Many studies - including Hill & Knowlton's own reputation study called Corporate Reputation Watch - point to the contrary. But the boardroom juries assessing investment in reputation building programs (including thought leadership, issue engagement, social media programs, corporate branding and corporate responsibility efforts) seem perpetually hung.

Greg Lyle of Innovative Research Group in Canada has added another convincing research study to the body of evidence that reputation matters . . . and matters a lot to the general public and investors. (Greg and I recently sat on a series of Canadian Investor Relations Institute panels looking a corporate reputation and its impact on investors.) Greg's survey asked more than 5,000 Canadians to evaluate companies in 10 industry sectors with respect to general reputation and some specific attributes.

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(Click the image to access the full version of the table)

The two findings that interest me are that the general public does take account of overall reputation when it comes to deciding never to invest in a company, and that investors also take corporate reputation into account in a decision not to invest (although less so than the average person).

This confirms consumer studies suggesting the reputation effect plays out in the negative more than the positive. People may not be ready yet to pay a premium for the products or services of a  "responsible" company. But they will certainly punish a company with a deficient reputation quotient. My conclusion . . . reputation equity is worth accruing one way or another.

Reputation Recovery

Ethics and PR Decisions