To be globally competitive, Chinese companies must adopt internationally recognized benchmarks for corporate performance. Doing so will improve their reputation for quality and design, encourage global acceptance, increase market share and boost sales and profits. If they refuse to embrace these types of changes, they risk facing doubts about their financial and operational soundness.
History teaches us that companies can only compete on price for a limited period of time. China is already finding that companies in Vietnam, Sri Lanka, Morocco and Peru can deliver the same results for even lower costs. Price competition does not lead to sustainable profitability. Only performance on a broader set of metrics will deliver longer term results. Market share and financial support both depend on trust and strategy execution in globally recognized terms. A company's desire to enter new markets or initiate an IPO in New York, Hong Kong or London may depend on meeting these standards.
Ever since Adam Smith wrote "I have never known much good done by those who affected to trade for the public good" in the 18th century, the role of business in society has been widely debated. Four decades ago, Nobel Prize-winning economist Milton Freidman forcefully argued that "the social responsibility of business is to increase its profits," an argument reiterated in business school classrooms from Auckland to Abu Dhabi to Atlanta every day.
Here's the hitch: The vast majority of senior executives don't buy Friedman's views on corporate social responsibility. A global survey found that just 16% of executives in 116 countries held to the view that business should "focus solely on providing the highest possible returns to investors while obeying all laws and regulations." The other 84% agreed with the statement that business should "generate high returns to investors but balance that with contributing to the broader public good."
In the 20th century, PR and marketing were separate but unequal career paths, and CMO was the highest-ranking and most-respected title to which one in those jobs could aspire. The standard career paths in these areas were relatively linear: As a lead communicator, you went to j-school, did a turn in journalism or an agency and then apprenticed under a "gray hair" boss until he retired. This is compared with the typical path of a chief marketing officer, who got his or her M.B.A. in marketing, hired agencies that made him or her look good, learned how to manage big budgets and award-winning creative and then got in the running for the corner office.
For reputation managers and corporate communicators—who often work in tandem or, in some organizations, are even one in the same—in the post-financial crisis universe, the combined elements of distrust for authority and demand for transparency have converged online, especially in the realm of social media.
Indeed, social media's emergence and subsequent proliferation spawned a new generation of so-called experts, all claiming to provide answers to the single question that dominates the modern business environment: How can organizations bend social media to their will and, in turn, enhance and protect their reputations?
"My Administration is the only thing between you and the pitchforks."
U.S. President Barack Obama felt compelled to speak these words to the leading U.S. bank CEOs at a White House gathering to which they had been summoned on April 9, 2009. Driven by public anger at the financial crisis, the President employed a metaphor invoking images of 'peasants with pitchforks' rising up to demand better treatment. That Iranian students, indigenous Peruvians and Somali pirates feel similarly inspired to take violent actions affecting global businesses reinforces the point.
Doctors take the ancient Hippocratic oath to "do no harm" when they enter the medical profession. Most patients still trust doctors to help them when they are sick, and give them the benefit of the doubt when under their care. Contrast this with the way CEOs and corporate boards have been treated during the current economic slowdown. Stakeholders are quicker to judge and slower to forgive than ever, and the benefit of the doubt is becoming harder for companies to achieve. Greater calls for transparency from all circles have moved the governance attribute to center stage, and made "doing what's right" the new reputational imperative for these times.
In the second half of the twentieth century, chief executives were on top of the world. Masters of their corporate universe, on top of far-flung organizational structures with command and control lines of communication, armed with powerful brands that deployed products and services to mass consumer audiences on timetables largely of their choosing. It was good to be king...while it lasted.
In the United States, three of four young people entering the workforce want to work for a company that "cares about how it impacts and contributes to society." The Center for Corporate Citizenship has characterized employees as the "missing link" in corporate citizenship. Our new book, Beyond Good Company, describes how citizenship is moving from the margins to the mainstream of businesses. In light of pressing social and environment issues, leading firms are innovating in their products, processes, and, now, in their people management. Select firms are engaging employees under the mantle of citizenship?and in progressively deeper and more meaningful ways. Here's why and what two of them are up to.
The U.S. is in a profound reputation crisis. The prestige of the world's most powerful democracy, its leaders, its financial sector, and its largest companies are at an all time low. To address this reputation crisis calls for a comprehensive recovery plan. Although local economic investments, tax cuts, and a financial bailout of many companies, industries, cities, and states will be necessary components of such a plan, they will be far from sufficient. They must be matched by a dramatic change in the national conversation, and complemented by a set of targeted initiatives designed to capitalize on the wave of optimism and hope that have carried Mr. Obama into the White House. Only in this way can we rebuild the mistrust that consumers here and abroad now have of the U.S., its leaders, and its institutions.
A corporate brand is one of the most important strategic assets in the corporate portfolio. Companies that manage their corporate brands effectively gain advantages of market entry, penetration and differentiation over their competitors in ways that help them integrate their wide ranging activities. But no brand does this perfectly forever due to constant changes in the environments their companies face, ever-shifting patterns of competition, and fluctuations in stakeholder support.
An overview on measurement and the 2008 Global Pulse findings Corporate reputations are valuable intangible assets. They are valuable because they influence the decisions of consumers about which products and services they will buy, the decisions of creditors and investors about which companies they will lend money to (and at what price), and the decisions of job-seekers about which companies they want to work for. They are assets because they influence the profitability of companies and are unique and inimitable. Unfortunately, they are also intangible—and so are difficult to measure.
Handling negative criticism is the job of a growing number of communication executives who specialize in managing crises. Of primary concern to them is a desire to minimize damage to the company's stock of reputation capital—the value of the company's intangible assets, a number that constitutes about 65% of an average company's market value, and that accounts for over 90% of the market value of many celebrated companies like The Coca-Cola Company and Google.
China is among the fastest growing markets in the world and a key player in the emerging global order. China's recent entry into the WTO and the changes made by the Chinese government to meet WTO requirements, when coupled with the country's rapidly growing economy and abundant low-cost labor supply, have therefore made doing business in China an especially attractive option to many of the world's largest companies. But just as globalization is making China an economic superpower, the country is also facing serious reputation issues. Recent media coverage has cast China in a harsh light, and to continue its rapid growth China will have to address these issues.
In 2006, Reputation Institute introduced a standardized measure of reputation and released the results of its first global survey of corporate reputations—the Global RepTrak® Pulse. The RepTrak Pulse is calculated by averaging perceptions of trust, esteem, admiration, and good feeling obtained from a representative sample of 100 local respondents who are familiar with the company. Reputation Institute repeated its annual measurement of the corporate reputations of the world's largest companies in 2007, and more than 60,000 respondents in 29 countries were interviewed to evaluate more than 1,000 companies. This paper gives an overview and analysis of the results. The study lists three major points that help explain the data: (1) macro-cultural and macroeconomic contexts, (2) media coverage of companies, and (3) company-specific events and initiatives.
Corporate reputations can be viewed as social constructions created from the multiplicity of evaluations rendered by specialized evaluators, public observers, and media amplifiers (Rindova & Fombrun, 1999). Thus rankings lists, created from the perception of specific stakeholder groups, are an invaluable resource in analyzing a company's reputation. However, there are several significant challenges that these lists face. Which lists are more accurate? Which lists are more influential? What should be done to reconcile generally inconsistent ratings across different lists? To examine these problems, Reputation Institute has identified key attributes of existing lists and compiled a comprehensive, accurate, and reputation-focused list of lists. This paper provides a review of the RI List of Lists and provides an analysis of how these lists can be best utilized.
Corporate governance is a system of structural, procedural, and cultural safeguards designed to ensure than a company is run in the long-term interests of its shareholders. Many aspects of a company's structure, behavior, ethical standards, legal, and community environments in which it operates impact the governance structure of a company. Why should companies care about it? According to recent studies, 46% of institutional asset owners take environmental, social, and corporate governance analysis into consideration when making investment decisions. Without a sound central structure, many companies risk neglecting important areas of their business and destroying their reputation capital. Thus while in recent years national regulations have forced companies to improve corporate governance, companies must still focus on the way their governance structures and policies are perceived by investors. This paper discusses the overall global climate of corporate governance and presents what aspects a company must focus on to create a good corporate governance structure.
Since 2001, the U.S. has faced a wave of corporate scandals, resulting in the liquidation of corporate assets, the demise of once-powerful corporate brands, and extensive litigation. Over the next three years, public trust in business continually declined. As a result, companies began to practice the infusion of values-based ethical principles into corporate cultures, the appointment of "Chief Ethics Officers," and the adoption of stricter ethical guidelines and codes of conduct. The advantage of a values-based approach to ethics is that the guidelines or principles set forth can be more readily applied and codes and values shared with suppliers, partners, and other stakeholders. The era has seen the transformation of the "swashbuckling CEO of the 1990s" to the institutional CEO who serves as a steward of both company and industry, with an understanding of the importance of building stakeholder trust and confidence. This paper gives an overview of corporate ethics after 2001, discusses the way in which companies are and should be striving to improve ethical behavior, and explores the global implications of corporate ethics.
While CSR initiatives occur frequently on a voluntary basis, national governments, activists groups, and NGOs are helping the process along by pressing for formal CSR regulation. With the increase of public scrutiny, companies are exerting energy into meeting certain standards set by various pre-determined social and ethical criteria. Official labels, standards, and certificates, are common rewards used by governments and activist groups to monitor CSR. These guidelines stimulate companies to evolve more sophisticated selection, implementation, and reporting of their CSR related activities. This paper provides an overview of the institutional framework that is developing to improve CSR around the world.
In recent years, there has been an increase in the number of groups that supply CSR ratings to investors and consumers. The visibility of these CSR ratings is due to growing trends such as social investment funds and national and international social regulations. While a good rating on a CSR index brings awards, applause, sales, and reputation it does not guarantee acceptance by stakeholders. A poor CSR rating can, however, shake the economic foundations of a company's operations. It undermines trust in the company and its ability to deliver on its promises to employees, customers, and investors. Ratings agencies therefore have an enormous responsibility to develop ratings that are valid and reliable. This paper discusses the ever-important CSR indices methodologies and closely examines the effect of CSR ratings on companies.
This paper adresses the the relationship between a company's Financial Performance and its Social Performance. It builds off Friedman's paper arguing that a company should focus solely on the bottom line, and presents arguments for the "stakeholder perspective" concluding that companies that improve perceptions of their Social Performance at any time during the business cycle through social initiatives will see their Financial Performance improve over time.