Events ranging from the divisive outcomes of the Brexit vote and the U.S. presidential election to the emergence of fake news and #MeToo have hammered home that point, and now large companies are learning that lesson as well.
“The reputation bubble has burst,” says Stephen Hahn-Griffiths, chief research officer of the Reputation Institute, a reputation measurement and management services firm. Since 2006, RI has published the Global RepTrak 100, an annual study of corporate reputation. This year’s ranking revealed an average 1.4-point decline in the reputation of RT100 companies, the first significant regression since the end of the Great Recession.
“We have a crisis of trust,” says Hahn-Griffiths. “Over the past year-and-a-half, we’ve reached a strategic inflection point . . . . People are questioning, ‘Can I really trust corporations?’ And for two-thirds, the jury is out.”
To determine the RT100, RI surveyed more than 230,000 individuals in 15 countries from January to February 2018. Companies considered typically have revenue in excess of $50 billion, a presence in all surveyed countries and brand familiarity with at least 40% of the general population.
This downward reputation trend is troubling, but a tarnished image is just the start. “The real impact of the bubble is making it harder than ever before for companies to garner the trust of stakeholders,” says Hahn-Griffiths. Just 38.5% of those surveyed say they trust companies to do the right thing, a sentiment evident in their behavior. Among RI’s findings is an 8.1-point plunge in willingness to invest—a possible sign of market volatility to come—as well as declines in intent to purchase (-7.9 points) and interest in employment (-6.1 points).
RI did, however, uncover one bright spot: 51% of people are keeping an open mind. “The world is saying, ‘Convince me,’” says Hahn-Griffiths. “Companies that do well in representing their corporate narrative to make the world a better place to live are the ones who make it to the top of the ranking.”
Companies like Samsung, which managed to improve its standing, jumping 44 spots to No. 26 with a score of 73.3. Following the numerous Galaxy Note 7 fires that dotted 2017, not to mention Samsung heir Lee Jae-yong’s corruption scandal, the South Korean conglomerate had seemingly sullied its reputation beyond repair. Rather than brushing controversy aside, Samsung tackled its crises head-on, issuing public apologies. It then rewrote its narrative, encouraging the world to “Do What You Can’t” during the Pyeongchang 2018 Olympic Winter Games. In a moving advertisement featuring a woman learning to walk with a prosthetic leg (and a little help from Samsung Gear VR), the once embattled company earned the confidence it had lost and more. “Samsung is the fastest riser of all the companies we’ve measured,” says Hahn-Griffiths. “All of the things Samsung is doing really well Apple is doing really poorly.”
Ethical behavior, fairness, product value and transparency are among the most important factors in determining a company’s reputation. So it’s no wonder that Apple plummeted 38 spots to No. 58 on the 2018 RT100—a fall explained by incidents as an encryption conflict with the FBI, tax evasion, disappointing iPhone X sales and long-rumored battery-tampering—plummeted 38 spots to No. 58 on the 2018 RT100. The tech giant did score one win, in the profitability arena, but that’s not likely to help its reputation status. “Being viewed as highly profitable has a negative perception in terms of corporate social responsibility,” says Hahn-Griffiths. “Apple has really been punished in the court of public opinion.”
The challenge for companies like Apple is showing the world they are purpose-driven, a hurdle Samsung cleared by drawing a connection between its products and the human experience. But that’s not the only way. For some companies, it’s the convictions of senior leadership that makes all the difference. “The voice of the CEO needs to be heard,” says Hahn-Griffiths. “Being willing to take a position can increase the reputation of the company.”
One example of this can be seen in the leadership of Satya Nadella, whose steadfast stance on social issues like immigration has been part of the reason Microsoft vaulted into the RT100’s top 10. Born in India, the CEO has been an advocate for the Deferred Action for Childhood Arrivals program, especially since the Trump Administration announced its intent to roll it back. “As CEO, I see each day the direct contributions that talented employees from around the world bring to our company,” wrote Nadella in an August LinkedIn post. “We care deeply about the DREAMers who work at Microsoft and fully support them.”
Other highlights of the RT100 include LEGO—No. 2 for the second time, thanks to transparency and sustainable initiatives like moves to produce plant-based pieces—and Rolex, the reigning No. 1 most reputable company for three straight years. “It’s a company that has put all its effort on redefining winning,” says Hahn-Griffiths of the luxury watch brand’s campaigns with tennis star Roger Federer. Even still, Rolex’s year-over-year score declined to 79.3, just shy of 80, RI’s benchmark of excellence. Its slip is a reminder of changing times.
Yes, the reputation bubble has burst. But Hahn-Griffiths insists this is actually an opportunity, especially for companies in financial services, transportation and other sectors not typically known for corporate social responsibility. “Companies that can outplay the competition, be smart about the right reputation backstory, effectively manage risk,” he says, “will have the best success navigating the choppy waters ahead. It’s not the end of the reputation game—it’s merely the beginning.”
Vicky Valet, Forbes Staf