Measuring Reputation

I am often asked how best to measure reputation, since there often confusion which measure is best. Many companies rely on Fortune magazine’s “Most Admired American Companies” list that is published each spring. Others commission their own studies, using a number of different companies that offer research.

First, one needs to understand that reputation depends on who is asked; that is, it exists in the minds of stakeholders and not all stakeholders think alike. Employees may be concerned about the quality of their work-life, compensation and prospects for future growth; customers may be concerned about the quality and price of products and services; while analysts may be focused on the ability of the management team to meet its objectives, past financial results and future prospects for return on investment. So the answer about how to best measure reputation is this: use a measure of reputation that designed to best assess your reputation with the stakeholder in question.

There are a variety of “off-the-shelf” reputation studies that many companies use. Fortune magazine’s rankings are excellent, but they are designed to assess reputation with investors, analysts and executives of competitor companies. The attributes that Fortune uses to measure reputation are heavily skewed toward the needs and interests of these stakeholders. Forbes also has a ranking, but its measure is purely focused on return on assets. In Canada, Report on Business has a yearly study, using attributes similar to those used by Fortune, but with a few "tweaks" for Canadian interests. Similarly, in Germany, Manager Magazin publishes a study of reputation with attributes of interest to that country.

A number of human resources consulting firms have their own measures that assess employee satisfaction and engagement. These are related to reputation, but they usually do not ask employees and potential employees how they feel about the reputation of their company. This would be an important question since research has found that employees, particularly the best employees, are more motivated when they feel that their company has a good reputation, and high quality talent is more likely to be attracted to a company with a good reputation.

There are other measures of reputation by other groups that are not sanctioned by companies. Many of these assessments come from activist groups or non-governmental organizations (NGOs). While the company may not agree with the attributes used or the results, the studies are valid to the extent that they accurately reflect the perceptions of these groups.

For many companies, reputation studies are done by a variety of functional and business groups, such as marketing, sales, HR, corporate communications, government relations, and others. Here are some suggestions for companies to enhance their perspective on their reputations:

1. Adopt a common model of reputation that everyone can agree on. From this model, questionnaires can be developed to assess the perspectives of all stakeholders, and in a way that provides common rather than disparate data.
2. Seek a research instrument that provides linear data. Opinion research gives one a direction, but it does not provide information on the intensity of feelings and perceptions. Only linear data can give this. This allows a good researcher to find the drivers of reputation, how these drivers are linked and what moves behaviors, which is the ultimate goal of reputation management (to buy, invest, join the company, support the company, etc).
3. Only conduct research if it is actionable. Companies have lots of information, much of which they have no idea how to use. Reputation research should not be done simply to see if people like or dislike the company, but rather to set in place, monitor or adapt of program on influence.