03fombrun.qrk 7/3/03 3:56 pm page 43 3 who’s tops— and who ... · this was the case for...

Who’s Tops—and Who’sNot?

You can’t build your reputation on what you’re going to do.

—HENRY FORD

If you were asked to name two or three companies that youmost respect, trust, and admire, which companies would youput on your short list? Would you name a huge company likeGeneral Electric? Or a small company like Bang & Olufsen? Acomputer company like IBM, or the Internet auctioneer eBay?Would the companies be American or Japanese, German orDutch, French, Danish, or Italian? The maker of your televisionset (Sony), the coffee retailer who sells you your café latte (Star-bucks?), or the company whose name probably first pops upwhen you turn on your laptop (probably Microsoft)?

Questions like these are interesting to think about becausethey speak to the visibility that some companies achieve overothers and to the trust and respect we have for the many thingsthey do. They therefore speak to a company’s reputation with

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consumers. Companies rightly care about being recognized (aswell as what they are recognized for) because a good reputationattracts support from customers, investors, and potential employees.

The World’s Most Visible Companies

In the fall of 2000, with the help of various market researchcompanies, we gathered nominations from consumers in 12countries: Australia, Belgium, Denmark, France, Germany,Greece, Italy, the Netherlands, Spain, Sweden, the United States,and the United Kingdom. They represent three major regionsof the world: the United States, Europe, and Australia.1

In each country, we asked participants to name two com-panies that stood out as having the best and worst reputations.We then compiled the open-ended nominations from represen-tative consumers to identify the most visible companies in eachcountry.

Who’s Most Visible in the United States?

Figure 3–1 identifies the 30 companies at the upper end of thedistribution of nominations. Also shown on the chart are the 10companies U.S. consumers were most aware of, for both goodand bad reputation, in summer 2001.

The results are instructive. For one, companies become vis-ible for different reasons. Among the most visible companieswere some that attracted enormous negative public attentionthroughout 2000 and 2001. This was the case for Bridge-stone/Firestone and Ford, because of the accidental deathscaused when Firestone tires exploded on Ford Explorers. It wasalso true of Philip Morris due to its protracted court battle overthe company’s past efforts to disguise from the public the neg-ative health effects of tobacco. ExxonMobil continued to displaya negative halo—reflecting the persistent association consumersmake between the company and the decade-old Valdez spill of

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Chapter 3 • Who’s Tops—and Who’s Not? 45

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Figure 3–1 The most visible companies in the United States (summer 2001).

U.S. Companies Nominated U.S. Companies Nominatedfor Best Reputation (2001) for Worst Reputation (2001)

1. Microsoft 1. Bridgestone/Firestone 2. General Electric 2. Exxon Mobil3. Wal-Mart 3. Ford4. IBM 4. Microsoft5. General Motors 5. Philip Morris6. Ford 6. AT&T7. AT&T 7. General Motors8. Dell 8. RJ Reynolds9. Sears 9. AOL/Time Warner

10. Gateway 10. DaimlerChrysler

1989. Clearly, ExxonMobil has not benefited from any positivecarryover from Exxon’s merger with Mobil, a company that haslong enjoyed more positive regard from the public. None of thesecompanies attracted positive nominations.

Two companies earned nothing kudos: Wal-Mart and GeneralElectric (GE). The fact that Wal-Mart took the number threespot on positive counts is remarkable, given recurrent media


and activist criticism about the company’s damaging effects onsmall local stores that are driven out of business when a Wal-Mart store opens in a community. Clearly the public thinks veryfavorably of what Wal-Mart has achieved from providing high-quality products at affordable prices, efficiently and effectively.GE also makes the grade for mostly positive nominations, oftenas not for its continuing ability to generate high returns and forthe acclaimed style of GE’s former CEO, the legendary JackWelch.2

Finally, two companies received mixed nominations: Mi-crosoft and General Motors (GM). Microsoft’s nominations mir-ror the polarized public debate over its actions. On one hand,some respondents react negatively to the company because ofits highly publicized tussle with the U.S. Department of Justiceover allegations of monopolistic practices. On the other hand,many respondents clearly think highly of Microsoft, its prod-ucts, and leaders. The ambivalent pattern combined to elevateMicrosoft to the status of 2nd most visible company in the Unit-ed States after Bridgestone/Firestone. In contrast, GM earnedits mixed pattern of nominations from very different percep-tions of its divisions: Most of GM’s positive nominations reflectpublic enthusiasm about its Saturn division. Consumers gener-ally perceived other parts of GM in negative terms.

Who’s Most Visible in Europe?

We asked the same two questions of nearly 10,000 people in 10European countries in the fall of 2000. Initially, we expected thatsome of the same global multinationals would probably receivethe bulk of the nominations. In fact, we were wrong. Across coun-tries, quite different companies were nominated—and patrioticfervor had much to do with the replies. For Germans, auto-makerDaimlerChrysler (the makers of Mercedes) reigned supreme. TheFrench frequently thought of Renault, Italians applauded Fiat,Spaniards named telecom giant Telefonica, and Greeks praisedtheir mobile phone company Panafon. Clearly, then, no demon-stration of European integration emerged from these data: In-stead, the results demonstrated that consumers in most Europeancountries tend to praise their homegrown brands over those of

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other countries. Of the non-European companies nominated,Coca-Cola, McDonald’s, and Sony were the most frequently men-tioned corporate brands.

In each European country, however, consumers were alsoquick to recognize their own companies’ faults: The Frenchhaven’t forgiven Total-Fina-Elf for the oil spill that devastatedpart of its Atlantic coastline in spring 2000 following the sink-ing of the tanker The Erika; the Danes chastise the former gov-ernment telephone monopoly TeleDanmark (now known asTDC) for its ongoing difficulties in servicing consumers, as wellas Cheminova for its involvement in producing insecticides andpesticides that harmed consumers and forced people to relo-cate from affected areas in the 1980s and 1990s. Finally, theDutch have yet to forget the fireball collapse of World Online, theDutch Yahoo! wannabe that imploded dramatically in 1999 fromits inflated promises to investors and from brash overexposure.

To identify a pan-European set of the most visible compa-nies, we compiled the results across all 10 European countriesin which we carried out the study. Figure 3–2 summarizes theresults. The most visible company based on total nominationsreceived across all 10 countries was the French food retailerCarrefour. The company owns leading supermarket chains inEurope and earns most of its nominations for its visible retailoutlets in France and Spain. Philips runs a close second andowes its nominations to the Netherlands, Belgium, and France.Both Carrefour and Philips, as well Ford (whose nominationscome mostly from nominations to its Volvo-branded cars) andDaimlerChrysler, owe their top spots to the high number of pos-itive nominations they received. In contrast, the most highlynamed U.S. companies in Europe were McDonald’s and Coca-Cola, both of which also received a large number of negativevotes. The pattern is different than the one we observed in theUnited States, where negative publicity often fuels the highestlevels of corporate visibility.

Across Europe, people think most highly of companies thathave powerful consumer brands: Car companies are heavily rep-resented, as are food producers, retailers, and electronics—thecompanies that consumers are most likely to interface with in theirdaily lives. Named for best reputation status are each country’s top



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Figure 3–2 The most visible companies across ten countries in Europe (fall 2000).

European Companies Nominated European Companies Nominatedfor Best Reputation (2000) for Worst Reputation (2000)

1. Carrefour 1. McDonald’s2. Philips 2. Total Fina Elf3. DaimlerChrysler 3. Shell4. Ford (Volvo) 4. Deutsche Bank5. Volkswagen 5. Microsoft6. PSA Peugeot-Citroen 6. Aldi7. Renault 7. Fiat8. Coca-Cola 8. PSA Peugeot-Citroen9. Siemens 9. Nike

10. Sony 10. Deutsche Telekom

suppliers of retail goods, including companies like Siemens, Sony,BMW, and GM (for its Opel brand), whose reputations are whollynational. Named for worst reputation were companies that crossgeographies, reaching well beyond Europe, with negative auras sur-rounding American icons McDonald’s, Microsoft, Nike, and (to alesser extent) Wal-Mart. Also negatively viewed were France’s Total-Fina and Germany’s Deutsche-Telekom. On both sides of the At-lantic, consumers clearly have a profound distaste for companies


whose actions they perceive to pose enduring threats to health,safety, and the environment.

Finally, the most visible companies in Europe have quite dif-ferent national origins, and most of them earn their standing ona nationalistic basis—nominations from more than three coun-tries are very rare indeed. It suggests that few companies aretruly well-positioned in the hearts and minds of consumersacross Europe. In other words, the reputational marketplace inEurope is still wide open, and there’s no company yet that canclaim legitimate reputational standing as pan-European.

As in the United States, some European companies receivedmixed nominations as both good and bad companies. In the Unit-ed States tobacco was the chief villain and Philip Morris its posterchild. In Europe, by comparison, Philip Morris earned no nega-tives and even received above average nominations for ‘best rep-utation’. In the United States, Wal-Mart was unanimously praised,whereas in Europe it earned a significant number of nominationsfor worst reputation. The duality of the reputations of these com-panies is a recurring pattern that holds true in Europe for Mi-crosoft, Shell, PSA-Peugeot-Citroen, and GM as well. Thesesplintered images, we suspect, probably do affect the operatingperformance of these companies: Polarized consumers are un-likely to deliver the kind of unfailing support that managers needin order to generate sales. It suggests a latent tension that execu-tive teams in these companies should address if they are to improvetheir market results with consumers.

Who’s Most Visible in Australia?

In fall 2000, 1,019 Australian consumers were asked to nominatebest and worst companies in Australia. Figure 3–3 shows the re-sults. The most visible company in Australia was Telstra, the coun-try’s semi-private telecommunications monopoly. CommonwealthBank (the country’s oldest commercial bank) and the well-known re-tailer Coles-Myer took second and third place respectively. LikePhilip Morris and Microsoft in the U.S., Telstra’s reputation was heav-ily splintered—being nominated as tops on both positive and nega-tive counts. In contrast, Commonwealth Bank owed its visibility



mostly to negative nominations, whereas Coles-Myer enjoyed thestrongest positive halo of all.

Cross-country comparisons of the most visible companiessuggest some generalizations:

� Companies are often nominated more positively when theymarket very popular consumer products and services, whenthey own key products that carry the corporate brand name

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Figure 3–3 The most visible companies in Australia (fall 2000).

Australia Companies Nominated Australian Companies Nominatedfor Best Reputation (2000) for Worst Reputation (2000)

1. Telstra 1. Telstra2. Coles Myer Group 2. Commonwealth Bank3. Qantas 3. McDonald’s4. BHP 4. Westpac Bank5. Woolworth 5. BHP6. AMP 6. National Australia Bank7. NRMA 7. AMP8. Commonwealth Bank 8. Optus9. Microsoft 9. ANZ Bank

10. David Jones 10. Coles Myer Group


(Coca-Cola), or when they rely on a very recognizable logo(Mercedes), all of which are heavily advertised.

� Most companies that top the negative nomination chartsoften do so because their names have become indeliblytied to products that cause harm—they damage health(Philip Morris, RJ Reynolds), kill people (Ford and Bridge-stone/Firestone), have damaged the environment (Total-Fina, ExxonMobil, Shell), or are thought to take advantageof consumers (Microsoft, Telstra).

� Public impressions are driven partly by the visibility ofthe industries in which these companies operate. They’realso influenced by the visibility of the companies them-selves—many have huge advertising and communicationsbudgets, and so develop high public profiles. Some arecatapulted into visibility because of scandal or crisis.

Most clearly, however, visibility is only a precursor to rep-utation. The question before us is therefore this: If we focus onany single company, what specific criteria do people think aboutwhen they evaluate the company? And how do companies re-ally compare when we go beyond the “beauty pageants” thatcharacterize the nominations-process, and actually ask peopleto rate companies on a standardized list of criteria?

Various instruments have been proposed to address thisissue.3 Fortune magazine publishes one of the best-known meas-ures of corporate reputation, one that is derived from answersto eight questions about the company’s products, leadership,and results. Over the years, many have criticized Fortune’s in-strument and data collection methodology.4 To overcome someof these problems, we created the Reputation Institute in 1999to undertake careful research and develop a standard indicatorthat could be used worldwide with different types of stakehold-ers. The Reputation Quotientsm (RQ) instrument is whatemerged from joint work with our research partner Harris In-teractive. In the next section, we describe the RQ and how wehave used it since 1999 to develop detailed ratings and analysesof some of the most visible companies in the world.



The Reputation Quotient

Pick a well-known company—one you hold in high regard. Fixit in your mind. Now try to explain why you named that com-pany. If you’re like most people we’ve asked this question of in-dividually and in focus groups in 6 countries, your explanationswill fall into one of the following six categories:

� Emotional Appeal: You simply like, admire, or trust thecompany.

� Products and Services: You think the company sells prod-ucts or services that are high quality, innovative, reliable,or a good value for the money.

� Financial Performance: You’ve been happy with the com-pany’s profitability, believe it has strong future prospects,and isn’t too risky to invest in.

� Vision and Leadership: You feel the company has a clearvision for the future and strong leadership.

� Workplace Environment: You believe the company is well-managed, has topnotch employees, and would be great towork for.

� Social Responsibility: You think the company is a goodcitizen—it supports good causes, doesn’t damage the en-vironment, and does right by local communities.

Through our collaboration with Harris Interactive, we sys-tematically tested these dimensions and attributes on thousandsof people, online, by phone, and in personal interviews. Basedon these tests, we created a standardized instrument from whichwe calculate an overall reputation score—the Reputation Quo-tient, or RQ.5 Simply put, the RQ is the sum of the answers peo-ple give when they are asked to rate a company on 20 questions.Figure 3–4 diagrams the structure of the RQ. The questionnairesurvey based on these items is designed to be filled out by allkinds of respondents, be they managers, investors, employees,or consumers—people who have a minimal level of familiaritywith the companies they are asked to rate.

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The Reputations of the Most Visible Companies in the U.S.

Knowing the companies that were most visible in each country,we set out to measure in detail the reputations of those compa-nies. In 2001, over 20,000 American consumers were asked toanswer the 20 standard RQ questions in order to obtain detailedratings of the 60 most visible U.S. companies.

Figure 3–5 shows the 2001 results. As it had in each of twoprior years’ ratings, Johnson & Johnson again topped the U.S.ratings of 2001. And Microsoft, Coca-Cola, Intel, 3M, and Sonywere also among the public’s top 10 companies—they had thehighest RQ scores among the most visible companies.


7- pt scale7 = Describes very well1 = Does not describe well

Reputation

7-

SocialResponsibility

Vision &Leadership

FinancialPerformance

EmotionalAppeal

Products &Services

WorkplaceEnvironment

Supports Good CausesEnvironmental ResponsibilityCommunity Responsibility

Feel Good AboutAdmire and RespectTrust

Market OpportunitiesExcellent LeadershipClear Vision for the Future

Record of ProfitabilityLow Risk InvestmentGrowth ProspectsOutperforms Competitors

Good Place to WorkGood EmployeesRewards Employees Fairly

High QualityInnovativeValue for MoneyStands Behind

Figure 3–4 The reputation quotient: Six dimensions and 20 attributes.


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Figure 3–5 Who’s tops in the United States (2001)?

The Reputations of the Most Visible Companies in Europe

In fall 2001, we also invited representative samples of consumersin the Netherlands, Italy, and Denmark to rate the reputationsof the most visible companies in each country.

The Netherlands’s Top-Rated Companies The 30 most visible compa-nies in the Netherlands were rated by a representative sampleof over 5,000 consumers. The giant food retailer Ahold toppedthe Dutch ratings, with Sony, Unilever, Heineken, and Microsoftrunning close behind. In consumer electronics, it came as some-thing of a surprise that Sony outdid Philips in the Netherlands.It suggested the need for closer examination of the reputationstrategy Sony has pursued in international markets, and possi-ble areas of improvement for Philips in its own home market.Figure 3–6 summarizes the Dutch results.

Italy’s Top-Rated Companies Around the same time, we asked closeto 3,000 Italian consumers to rate the 20 most visible compa-nies in Italy using the RQ. Figure 3–7 shows that Italy’s most



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Figure 3–6 Who’s tops in the Netherlands (2001)?

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visible companies are grouped in three tiers. The top tier is ledby prestige car maker Ferrari, food producer Barilla, the choco-late confectioner Ferrero, and includes food giants Parmalat andGalbani, retailer Benetton, and tire-maker Pirelli. Clearly, Ital-ian consumers applaud the flagship performance of Italy’s top-branded Ferrari cars, most visible for its successes in FormulaOne racing.

The second tier is led by Coop Italia and includes the regu-lated telecommunications, media, and publishing groups, as wellas Eni, the Italian utility company—the highest performingstate-operated company. The third tier is anchored by Italy’sproblem-ridden automaker Fiat and includes the state-ownedand operated postal services and railways.

Denmark’s Top-Rated Companies Some 2,700 Danish consumerswere asked to rate the reputations of Denmark’s 15 most visiblecompanies using the RQ. The results shown in Figure 3–8 indi-cate that in 2001 toy and entertainment provider Lego was thetop-rated company in Denmark, followed by high-end consumer

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Figure 3–9 Who’s tops in Australia (2001)?

electronics developer Bang & Olufsen—world famous for itssleek designs of stereo and video equipment—and the trans-port-based conglomerate A. P. Moller, the parent company ofthe Maersk family of businesses involved in commercial shippingand air transport. The second tier was led by Microsoft and NovoNordisk, the well-known maker of insulin products. The thirdtier consisted of a mix of consumer product companies, an-chored at the low end by Cheminova, the chemical companyinvolved in the production of insecticides and pesticides.

The Reputations of the Most Visible Companies in Australia

Finally, in fall 2001, our colleagues at AMR Interactive invitedover 4,000 consumers to rate the 20 most visible companies inAustralia. In contrast to Europe, where national companies earnthe top ratings, Figure 3–9 shows strong mindshare by Americancompanies: Microsoft topped the rankings, along with three otherU.S.-based multinationals: McDonald’s, Coca-Cola, and IBM. The



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only Australian companies that were rated in the top tier wereretailers Dick Smith Foods, Holden, Woolworth, and Cole-Myers.In contrast, Australia’s three major banks fared relatively poorly(NAB, CBA, and Westpac), performing less well than BHP, Aus-tralia’s major mining company. The only standout among bankswas tiny Bendigo Bank, notable for its widely-publicized com-munity-based banking strategy. Disappointing results were alsoobtained by Australia’s telecom operators Optus and Telstra.

Learning from the World’s Top-Rated Companies

Rankings are always titillating, creating as they do an Oscar-likeatmosphere of red-carpet winners and side-show losers. The re-search question that inspired us to launch the RQ project, how-ever, is not who wins and loses—but why. What drives reputationamong the world’s top-rated companies? From our observations,it’s probably safe to say that they do things differently. But what?

The RQ project demonstrates that consumers are quite goodat sensing what companies are up to. In both the United Statesand Australia, Microsoft earned praise from consumers for car-rying out a smooth leadership transition from Gates to Balmerand for emerging relatively unscathed from the government’santitrust efforts. Similarly, in all countries Coca-Cola was givencredit for conveying invigorated leadership under CEO DouglasDaft and for unveiling an effective global advertising campaign.On the other hand, the public was not fooled by either Daim-lerChrysler’s rocky intercontinental marriage or by Lucent’sflawed business model. Nor did American consumers fail toblame both Ford and Bridgestone/Firestone for the tire debaclethat led to the loss of so many human lives.

To examine the underlying drivers of reputation, we con-ducted detailed statistical analysis of the RQ measures taken in2001. In cross-national comparisons, very comparable resultswere actually obtained. Figure 3–10 summarizes the statisticalpattern that was uncovered from analysis of the U.S. data.

The model in Figure 3–10 can be read to say that:


� Most consumers ascribe high reputations to companiesthey like, trust, and admire—the components of a com-pany’s ‘emotional appeal’.

� Perceptions of a company’s products and services are thekey factor driving emotional appeal and hence overall rep-utation. The communications initiatives of companiesseeking to improve their reputations should thereforeheavily emphasize product quality, innovation, and value.

� Perceptions of a company’s workplace environment andsocial responsibility are significant predictors of how wellconsumers rate a company. Knowingly or not, consumerspsychologically support companies that they perceive asbehaving fairly and responsibly towards employees andcommunities.

� Interestingly, differences in perceived financial perform-ance and leadership had little effect on consumer ratingsof corporate reputation. In forming impressions of com-panies, these core business factors are clearly discountedby the public.

At the risk of over-quantification, the model also suggeststhat to increase its reputation by 5 percent, a company wouldhave to improve its emotional appeal to consumers by 7 percent,


Increase 10% Increase 24% Increase 26% Increase 55%

Products and Services

SocialResponsibility

WorkplaceEnvironment

Vision andLeadership

FinancialPerformance

EmotionalAppeal

Increase 7%

Reputation

Increase 5%

.72 .29 .27

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ns.09

Figure 3–10 What drives corporate reputation?


which in turn would require improved perceptions either of thecompany’s products and services by 10 percent, workplace en-vironment by 24 percent, or social responsibility by 26 percent.Favorable perceptions of the company’s financial performancewould have to be improved by 55 percent to generate a compa-rable change in reputation. Take General Electric, with an RQ of78 in 2001. To improve its RQ by 5% or 3.9 would catapult Gen-eral Electric to the highest tier of U.S. companies at 81.0 (closeto Johnson & Johnson and Microsoft). Such a change would re-quire significant improvement in how consumers rate the com-pany’s emotional appeal. To get consumers to improve theirratings, GE would have to invest in costly initiatives, and wouldget the highest leverage from generating improved perceptions ofits products and services. However, that may also be the most dif-ficult set of attributes to change—most people already have highopinions of the value they get from buying GE products. In con-trast, the results suggest that it’s possible the company could getthe greatest return from investments that position GE as a moresocially-responsible company—something consumers don’t yetassociate with the company, and that therefore present a greateropportunity for improvement.

You’ll recall that at the end of Chapter 2 we concluded fromvarious studies that a 10 percent change in reputation was worthat least a 1 percent change in market value. Given GE’s $300 bil-lion market capitalization, the 5% improvement needed to carryGE to the top of the consumer ratings would be worth approx-imately $500 million in value creation. In a real sense —thenumber represents the maximum budget a company like GEshould be willing to allocate specifically to improve consumerperceptions of the company by 5 percent, whether through ad-vertising, public relations, or philanthropic initiatives.

Conclusion

Overall, we’ve shown that consumers are as sophisticated as in-vestors, but interpret the corporate world in terms of multiplesignals that companies broadcast about their non-financial ini-tiatives. Reputation-building with consumers is therefore about

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making sure a company communicates clearly, not just about itsquarterly financial results—the purview of analysts and in-vestors—but about how it treats its employees and about howit contributes to society. It signals that reputations act as mir-rors to the public about a company’s managerial excellence.

In the next chapter, we examine the relative contributionthat corporate reputation has made to the financial perform-ance of the most visible companies. To explore excellence moredeeply and provide reputational benchmarks to others, the restof the book then focuses on the top-rated companies. In suc-cessive chapters, we show that top companies actually managetheir reputations systematically by building strong reputationplatforms—a strategic positioning they achieve in the market-place through a combination of sustained leadership, internaland external communication, citizenship, and workplace ini-tiatives—the drivers of the RQ.

Methodological Appendix to Chapter 3

We created the Reputation Institute in 1999 to study corporatereputations. The annual consumer polls that we’ve sponsoredsince then have been conducted with our market research part-ner Harris Interactive and other affiliated companies. Harris re-lies on a 7 million person panel of voluntary participants toidentify and poll representative samples of consumers in the Unit-ed States. The opinions of those sampled are weighted to be rep-resentative of what the general public thinks in each country. InEurope, we relied on telephone sampling to carry out the studies.

Projects unfolded in two stages in each country: a nomina-tions phase and a rating phase. In the nominations phase, webegan by asking two basic questions:

� Of all the companies that you’re familiar with or that youmight have heard about, which TWO—in your opinion—stand out as having the BEST reputation overall?



� Of all the companies that you’re familiar with or that youmight have heard about, which TWO—in your opinion—stand out as having the WORST reputation overall?

Polls of the general public were conducted in 12 countriesand three regions of the world between fall 2000 and spring2001. Over 20,000 people participated in these initial polls.From their nominations, we extracted a list of the companiesthat were “most visible” to the public in each country—for bet-ter or worse. These companies are the ones whose reputationswere measured in detail in the second phase of research—therating phase.

Detailed studies sponsored by Harris Interactive and theReputation Institute using the RQ have been featured annuallyin the Wall Street Journal since 1999. Here we discuss the re-sults of parallel studies completed in 2001 in the United States,Australia, Denmark, Italy, and the Netherlands. The projects in-volved close collaboration with the market research firms ofHarris Interactive, Blauw Research, and AMR Interactive, aswell as close working relationships with the Corporate Com-munications Center at Erasmus University, with SDA-Bocconiin Italy, and with Copenhagen Business School and Interplay inDenmark.

As interesting as they are, nominations are not accurate de-pictions of the reputations of companies. To fully examine cor-porate reputations requires more detailed measurement—hencethe launch in 2000 of a worldwide project to measure corporatereputations accurately—we call it the rating phase. To carry outthe rating phase, we needed a reliable instrument to measurethe reputations of the nominated companies. The instrumentwe used to rate those companies was the Reputation Quotient(the RQ), a measure developed by Charles Fombrun and HarrisInteractive that was designed to overcome weaknesses in exist-ing instruments and that we have proposed as a useful bench-mark for reputation measurement.

More than 30,000 people participated in the rating phaseacross the five countries. We relied on these RQ interviews to ob-tain accurate ratings of the most visible companies in each coun-try. The ratings enabled us to calculate reputation scores for

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these companies and set the stage for us to explore the under-lying reasons why they are thought to be tops by the public.

Sampling Process in the United States: A total of 10,038U.S. respondents were polled in seven separate polls con-ducted between April and August 2001: Of these, 5,975 weredone online and 4,063 by telephone. An identical nomina-tion phase was conducted during summer 2000 with 5,661respondents, of which 4,651 were interviewed online and1,010 by telephone. The online respondents were random-ly selected from a large online panel that Harris Interactivecreated to carry out online research. At the time, the Har-ris online panel included over 7 million voluntary partici-pants. To ensure that the study was not biased to onlinerespondents, a separate set of telephone interviews was con-ducted with a representative sample of the general public.The nominations for best and worst corporate reputationwere tallied and summed, and the 60 most visible corporatereputations in the United States were identified.

A total of 21,630 consumers then rated the reputations of the60 most visible companies using the RQ instrument. All in-terviewing was conducted online in October 2001, and allcompanies were rated by respondents who indicated thatthey were at least somewhat familiar with that company.Respondents were asked to rate up to two randomly chosencompanies with which they were familiar. Respondents whowere familiar with more than two companies were random-ly assigned to rate two companies. After the first rating wascompleted, they were given the option to rate their secondcompany, and interviews lasted an average of 22 minutes.

Sampling Process in Europe: Sampling was done on a coun-try-by-country basis. Various research firms were used toobtain phone nominations from representative samples of750 to 1,000 people in each country in fall 2000. Commer-cial brands, purely financial holdings, and subsidiaries wereexcluded. The nominations enabled creating lists of the 20to 30 companies with the most visible corporate reputa-tions in each country. RQ interviews in each country were



conducted by telephone, between February and April 2002,and companies were rated by respondents who had indi-cated that they were “very familiar” with, “somewhat fa-miliar” with, or “had heard the name of” that company.

Sampling Process in Australia: A similar process was used tosample the general public in Australia for both the nominationsphase and the rating phase. The Australian sample was nationalin scope, and stratified to represent the population of the Statesand Territories, and then split between urban and rural popu-lations. Data collection was conducted by AMR Interactive,based in Sydney, Australia.

The comparable sampling and rating methodologies used inthe United States, Europe, and Australia enable us to comparethe relative RQ scores given to companies across the regions.

Endnotes

1. For interested readers, we have appended a note at the endof this chapter that describes in greater detail the methodol-ogy that guided our research.

2. Even Mr. Welch fell victim to public outrage in 2002 follow-ing revelations of retirement perks awarded by General Elec-tric judged as unseemly by many critics and uncovered duringhis high profile divorce proceedings.

3. A number of major media publish corporate ratings on a reg-ular basis. Fortune’s annual survey of America’s Most Ad-mired Companies (AMAC) is probably the best known ofthese and has spawned a small industry of followers in pub-lications such as the Financial Times, Asian Business, andthe Far Eastern Economic Review. Social ratings agencieslike the former Council on Economic Priorities and invest-ment funds like Kinder, Lydenberg, & Domini (KLD) also ratecompanies on their social performance.

4. Academics conducting research on corporate reputations haverelied heavily on practitioner ratings in their modeling efforts,particularly the Fortune AMAC and KLD ratings. Although every-one routinely acknowledges many limitations to the data, most

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also acknowledge that it has been difficult to develop a valid,standardized database of corporate reputational ratings (see Cor-porate Reputation Review, Vol.1, 1997). Unfortunately, the re-sult has been a patchwork quilt of analyses whose inconsistentfindings are invariably blamed on methodological shortcomingsattributable to measurement issues. Hence our effort with Har-ris Interactive to systematize the measurement process.

5. C. J. Fombrun, N. A, Gardberg, & J. M. Sever, “The ReputationQuotient: A Multi-Stakeholder Measure of Corporate Reputa-tion.” Journal of Brand Management, 2000: 241–255.



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