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Reputation & Trust -- Impact on the Bottom Line

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Michael Cherenson
Michael Cherenson

Reputation is a company's character and what stakeholders really think and feel based on its behaviors, not just its branding. Trust is the most important factor for many stakeholders when choosing companies and is built through consistent actions that meet expectations over time. While some traditional media are still trusted, personal recommendations from similar individuals are highly influential. Companies must communicate openly, accept responsibility, and adhere to strong ethics to develop credibility and earn stakeholders' long-term trust.

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TRUST & REPUTATION Michael G. Cherenson, APR Executive Vice President, Success Communications Group 2008 Chair-elect, PRSA Board of Directors October 2008
What is reputation? What’s reputation’s impact? Who do they Trust? How do you build trust & reputation?
REPUTATION: Ability to meet stakeholder expectations Rational and emotional attachments Net image with all stakeholders REPUTATION = EXPECTATION + CREDIBILITY
DWYSYWD D o W hat Y ou S ay Y ou W ill D o Credibility is:
BRAND REPUTATION Brand is personality Brand is what a company wants you to think and feel when you hear its name Brand is communication Brand is something you build Brand is a promise Reputation is character Reputation is what you really do think and feel when you hear the company’s name Reputation is behavior Reputation is something you earn Reputation is keeping the promise Source: Paul Holmes, The Holmes Report
 
REPUTATION = “CAN I TRUST YOU?”
“ To be persuasive, we must be believable; to be believable we must be credible; to be credible, we must be truthful.” -- Edward R. Murrow
“ Trust is like the air we breathe. When it’s present, nobody really notices. But when it’s absent, everybody notices.” -- Warren Buffett
 
As much as 47% of American companies' net worth is tied up in intangible assets like brand equity and reputation.
Greatest Business Risks Source: Economist Intelligence Unit, “Reputation Risk of Risks,” 2005 Senior Executives
STUDY: TRUST AGREE OR DISAGREE: Trust is the most important consideration I make, even more than political viewpoint , when I consider who to vote for, and more important than price and quality when I consider who I do business with, or who I invest with.” 85% agreed, 66% strongly agreed 19 somewhat agreed only 10 % disagreed General Public
STUDY: SALARY Which company would you rather work for, if all else were equal and your job would be the same in each? Company A P ays you a salary that meets needs Excellent reputation overall Company B Pays you a higher salary Reputation overall is poor 78% = Company A 17% = Company B General Public
STUDY: PURCHASE Which company would you rather purchase a product or service from, if the quality of the product or service was equal… Company A Excellent reputation Slightly higher prices Company B Poor reputation Slightly lower prices 86% = Company A 10% = Company B General Public
STUDY: JOB PERFORMANCE Is There a Link Between “Reputation” and Job Performance? 98% of HR professionals and 91% of employees say yes.
STUDY: FINANCIALS MBA STUDENTS
People Take Action On Companies They Do Not Trust Have you ever done this to a company you do not trust?
 
2008 Trust in Institutions Source:
2008 Trust in Institutions
NOT ALL ARE EQUAL… Source:
Source:
Media Fragmentation
Media Fragmentation
NEW MEDIA MODEL TRADITIONAL MEDIA MODEL
“ Infodemic” A complex phenomenon caused by the interaction of mainstream media, specialist media and internet sites ; and “informal” media , which is to say wireless phones, text messaging, pagers, faxes and e-mail, all transmitting some combination of fact, rumor, interpretation and propaganda . ~ David Rothkopf Chairman and CEO of The Rothkopf Group
Who is Credible? In general, when forming an opinion of a company, if you received information from (INSERT PERSON) about this company, how credible would the information be? Would it be extremely credible, very credible, somewhat credible, or not credible at all? 36 Regular employee of company 12 Public relations executive 9 Blogger 11 Entertainer/ Athlete 22 CEO of a company 51 A person like yourself 49 Doctor or healthcare specialist 44 Non-profit organization or NGO representative 47 Academic 43 Financial/ Industry analyst 31 The CEO/leader of your company or employer* 16 Lawyer 22 Government official or regulator (%) TOP 2 BOX Source:
Who is “A Person Like Me?” Ranking All other things being equal, which THREE of the following characteristics are most likely to increase your trust in someone sharing information about the company? Are you MOST likely to trust the person if he/ she… [RANDOMISE LIST. ACCEPT THREE] 5 Is the same religion as you 3 Is from your local community 2 Holds similar political beliefs to you 1 Shares common interests with you 4 Is the same profession as you 6 Is the same nationality as you 7 Is the same gender as you 8 Is the same race/ ethnicity as you Source:
Trust is not distributed evenly Not all spokespeople are equal Some traditional Media still valued Peer-to-Peer highly influential Person like you most trust The Evolving Trust Landscape Source:
A Simple Equation… Trust is shifting Post 9/11 + Katrina + War = Fear & Anxiety Economic instability Information Overload “ Tabloidization” Pressure for Short Terms Results Savvy Consumers Empowered Employees International instability Infodemics Minority Influence Reputations is More Valuable & Fragile Than Ever Before
How do you build a good reputation and restore Trust?
Source:
REPUTATION Visible Transparent Distinctive Consistent Authentic Source: Charles Fombrun
HOW TO BUILD CREDIBILITY? COMMUNICATE
Listening to Employees Builds Trust Which are the THREE most important actions for a global company seeking to build trust among its employees?
 
How to Earn Trust 58% Handle crisis better, more openly 56% Communicate openly and frequently with stakeholders 58% Stick to a code of business ethics no matter what 60% Personally and visibly show care and concern for customers 65% Assume personal responsibility and accountability Golin/Harris Survey
CREDIBILITY BANK DEPOSITS Open honest communication Good deeds DWYSYWD Managing expectations WITHDRAWALS ( automatic permanent overdraft) Lying, stonewalling Bad behavior Abuse others Not fulfilling your obligations Multiple Sources GOODWILL RESERVOIR - INVESTMENTS -- CAPITAL The ability to withstand crisis or invest reputation or political capital
TRUST BUSTING TRUST BUSTING BEHAVIORS Arrogance and Chest-Beating Broken Promises and Commitments Over promise, Under deliver Deception and Disinformation Denial, Stall, Delay Duck Responsibility Minimize Risk, Overrate Preparation Abandon Core Values Abuse the Trust of Others SOURCE: GOLIN/HARRIS
TRUST BUILDING TRUST BUILDING BEHAVIORS Promises Made, Promises Kept Exceed Expectations Honesty, Clarity, Consistency Measured Milestones, Viable Alternatives Accept and Assign Accountability Soberly, Systematically Assess Challenges Know Your DNA Respect, Honor & Reward Those Who Put Their Trust in You Treat Trust as a Long-Term Investment Paying Ongoing Dividends SOURCE: GOLIN/HARRIS
TRUST – “I’M SORRY” Since 2002, encouraging doctors to apologize for mistakes. Attorney Fees $2 million Malpractice Lawsuits and notices of intent to sue 50.4%
TRUST – “I’M SORRY” Veterans Administration Hospital Lexington, KY … a large percentage of patient dissatisfaction was generated by physician attitude and denial, rather than the negligence itself. … close to half of malpractice cases could have been avoided through disclosure or apology… … what a majority of patients really wanted was simply an honest explanation of what happened and, if appropriate, an apology.”
I’M SORRY?
Source:
BUILDING TRUST: STRATEGIES Know your corporate DNA Leadership is key -- articulate your vision CEO = “Chief Trust Officer” Think long-term Know your reputation and Audit relationships Invest strategically in your “Trust Bank” assets Live your values and ethics, put safeguards in place Prove it! Trust is earned through deeds and competence Put the human face back into the business (People listen with their stomachs) Accountability, sustainability and corporate responsibility – be a model citizen Communicate plainly, openly and straightforwardly Communication is a dialogue, not a monologue Not all communication is equal
Q&A
Michael G. Cherenson, APR Executive Vice President, Success Communications Group Chair-elect, PRSA Board of Directors [email_address] 973-992-7800 x. 104 www.successcomgroup.com

More Related Content

Reputation & Trust -- Impact on the Bottom Line

  • 1. TRUST & REPUTATION Michael G. Cherenson, APR Executive Vice President, Success Communications Group 2008 Chair-elect, PRSA Board of Directors October 2008
  • 2. What is reputation? What’s reputation’s impact? Who do they Trust? How do you build trust & reputation?
  • 3. REPUTATION: Ability to meet stakeholder expectations Rational and emotional attachments Net image with all stakeholders REPUTATION = EXPECTATION + CREDIBILITY
  • 4. DWYSYWD D o W hat Y ou S ay Y ou W ill D o Credibility is:
  • 5. BRAND REPUTATION Brand is personality Brand is what a company wants you to think and feel when you hear its name Brand is communication Brand is something you build Brand is a promise Reputation is character Reputation is what you really do think and feel when you hear the company’s name Reputation is behavior Reputation is something you earn Reputation is keeping the promise Source: Paul Holmes, The Holmes Report
  • 6.  
  • 7. REPUTATION = “CAN I TRUST YOU?”
  • 8. “ To be persuasive, we must be believable; to be believable we must be credible; to be credible, we must be truthful.” -- Edward R. Murrow
  • 9. “ Trust is like the air we breathe. When it’s present, nobody really notices. But when it’s absent, everybody notices.” -- Warren Buffett
  • 10.  
  • 11. As much as 47% of American companies' net worth is tied up in intangible assets like brand equity and reputation.
  • 12. Greatest Business Risks Source: Economist Intelligence Unit, “Reputation Risk of Risks,” 2005 Senior Executives
  • 13. STUDY: TRUST AGREE OR DISAGREE: Trust is the most important consideration I make, even more than political viewpoint , when I consider who to vote for, and more important than price and quality when I consider who I do business with, or who I invest with.” 85% agreed, 66% strongly agreed 19 somewhat agreed only 10 % disagreed General Public
  • 14. STUDY: SALARY Which company would you rather work for, if all else were equal and your job would be the same in each? Company A P ays you a salary that meets needs Excellent reputation overall Company B Pays you a higher salary Reputation overall is poor 78% = Company A 17% = Company B General Public
  • 15. STUDY: PURCHASE Which company would you rather purchase a product or service from, if the quality of the product or service was equal… Company A Excellent reputation Slightly higher prices Company B Poor reputation Slightly lower prices 86% = Company A 10% = Company B General Public
  • 16. STUDY: JOB PERFORMANCE Is There a Link Between “Reputation” and Job Performance? 98% of HR professionals and 91% of employees say yes.
  • 18. People Take Action On Companies They Do Not Trust Have you ever done this to a company you do not trust?
  • 19.  
  • 20. 2008 Trust in Institutions Source:
  • 21. 2008 Trust in Institutions
  • 22. NOT ALL ARE EQUAL… Source:
  • 26. NEW MEDIA MODEL TRADITIONAL MEDIA MODEL
  • 27. “ Infodemic” A complex phenomenon caused by the interaction of mainstream media, specialist media and internet sites ; and “informal” media , which is to say wireless phones, text messaging, pagers, faxes and e-mail, all transmitting some combination of fact, rumor, interpretation and propaganda . ~ David Rothkopf Chairman and CEO of The Rothkopf Group
  • 28. Who is Credible? In general, when forming an opinion of a company, if you received information from (INSERT PERSON) about this company, how credible would the information be? Would it be extremely credible, very credible, somewhat credible, or not credible at all? 36 Regular employee of company 12 Public relations executive 9 Blogger 11 Entertainer/ Athlete 22 CEO of a company 51 A person like yourself 49 Doctor or healthcare specialist 44 Non-profit organization or NGO representative 47 Academic 43 Financial/ Industry analyst 31 The CEO/leader of your company or employer* 16 Lawyer 22 Government official or regulator (%) TOP 2 BOX Source:
  • 29. Who is “A Person Like Me?” Ranking All other things being equal, which THREE of the following characteristics are most likely to increase your trust in someone sharing information about the company? Are you MOST likely to trust the person if he/ she… [RANDOMISE LIST. ACCEPT THREE] 5 Is the same religion as you 3 Is from your local community 2 Holds similar political beliefs to you 1 Shares common interests with you 4 Is the same profession as you 6 Is the same nationality as you 7 Is the same gender as you 8 Is the same race/ ethnicity as you Source:
  • 30. Trust is not distributed evenly Not all spokespeople are equal Some traditional Media still valued Peer-to-Peer highly influential Person like you most trust The Evolving Trust Landscape Source:
  • 31. A Simple Equation… Trust is shifting Post 9/11 + Katrina + War = Fear & Anxiety Economic instability Information Overload “ Tabloidization” Pressure for Short Terms Results Savvy Consumers Empowered Employees International instability Infodemics Minority Influence Reputations is More Valuable & Fragile Than Ever Before
  • 32. How do you build a good reputation and restore Trust?
  • 34. REPUTATION Visible Transparent Distinctive Consistent Authentic Source: Charles Fombrun
  • 35. HOW TO BUILD CREDIBILITY? COMMUNICATE
  • 36. Listening to Employees Builds Trust Which are the THREE most important actions for a global company seeking to build trust among its employees?
  • 37.  
  • 38. How to Earn Trust 58% Handle crisis better, more openly 56% Communicate openly and frequently with stakeholders 58% Stick to a code of business ethics no matter what 60% Personally and visibly show care and concern for customers 65% Assume personal responsibility and accountability Golin/Harris Survey
  • 39. CREDIBILITY BANK DEPOSITS Open honest communication Good deeds DWYSYWD Managing expectations WITHDRAWALS ( automatic permanent overdraft) Lying, stonewalling Bad behavior Abuse others Not fulfilling your obligations Multiple Sources GOODWILL RESERVOIR - INVESTMENTS -- CAPITAL The ability to withstand crisis or invest reputation or political capital
  • 40. TRUST BUSTING TRUST BUSTING BEHAVIORS Arrogance and Chest-Beating Broken Promises and Commitments Over promise, Under deliver Deception and Disinformation Denial, Stall, Delay Duck Responsibility Minimize Risk, Overrate Preparation Abandon Core Values Abuse the Trust of Others SOURCE: GOLIN/HARRIS
  • 41. TRUST BUILDING TRUST BUILDING BEHAVIORS Promises Made, Promises Kept Exceed Expectations Honesty, Clarity, Consistency Measured Milestones, Viable Alternatives Accept and Assign Accountability Soberly, Systematically Assess Challenges Know Your DNA Respect, Honor & Reward Those Who Put Their Trust in You Treat Trust as a Long-Term Investment Paying Ongoing Dividends SOURCE: GOLIN/HARRIS
  • 42. TRUST – “I’M SORRY” Since 2002, encouraging doctors to apologize for mistakes. Attorney Fees $2 million Malpractice Lawsuits and notices of intent to sue 50.4%
  • 43. TRUST – “I’M SORRY” Veterans Administration Hospital Lexington, KY … a large percentage of patient dissatisfaction was generated by physician attitude and denial, rather than the negligence itself. … close to half of malpractice cases could have been avoided through disclosure or apology… … what a majority of patients really wanted was simply an honest explanation of what happened and, if appropriate, an apology.”
  • 46. BUILDING TRUST: STRATEGIES Know your corporate DNA Leadership is key -- articulate your vision CEO = “Chief Trust Officer” Think long-term Know your reputation and Audit relationships Invest strategically in your “Trust Bank” assets Live your values and ethics, put safeguards in place Prove it! Trust is earned through deeds and competence Put the human face back into the business (People listen with their stomachs) Accountability, sustainability and corporate responsibility – be a model citizen Communicate plainly, openly and straightforwardly Communication is a dialogue, not a monologue Not all communication is equal
  • 47. Q&A
  • 48. Michael G. Cherenson, APR Executive Vice President, Success Communications Group Chair-elect, PRSA Board of Directors [email_address] 973-992-7800 x. 104 www.successcomgroup.com