By Wright Communications -
23 March 2017
Next time someone asks me about the value of PR and communications, I will tell them this: corporate reputation is worth trillions of dollars. The latest Reputation Dividend report found that reputation accounts for more than one-fifth of shareholder value across the S&P 500 index, which equates to US$4 trillion (NZ$5.6 trillion).
This means corporate reputation is worth more than the entire
GDP of Germany, the world's fourth-largest economy. As the report
only looked at one major stock index, the true global value of
reputation for businesses could be much larger. While the numbers
won't be as big in New Zealand, the lesson still applies: a good
corporate reputation creates value for shareholders.
In fact, the importance of corporate reputation may be increasing.
The report, in its ninth year, found the value of reputation had
increased from 18.2% across the index last year to 20.7% in 2016.
In the age of automation, artificial intelligence and apps for
everything, investors and consumers need to trust the humans behind
The importance of reputation also depends partly on what
industry you operate in. The Reputation Dividend report found
reputation was most prominent in telecommunications (34% of total
value) and had the least impact in utilities (13%). Apple was the
top-ranked company by value of reputation, followed by Walt Disney
For local context, New Zealand businesses should take a look at
the Colmar Brunton Corporate Reputation Index. This year's edition
saw Air New Zealand come out on top, followed by Toyota in second
place and Z Energy in third. Air New Zealand also topped the 2017
The Colmar Brunton Corporate Reputation Index is based on four
pillars - leadership and success, fairness, responsibility, and
trust. When it comes to the bottom line, the most important of
these is trust - at least in the New Zealand context where softer
measures seem to carry more weight than in overseas markets.
Trust measures not only whether a company can be trusted, but
whether it has a positive influence on society and is honest and
ethical in the way it conducts business. Kiwis are more likely
to do business with or buy from organisations they trust. This is
the impact of reputation on bottom line, in a nutshell.
Couple this with other leading research such as Colmar Brunton's
Better Futures Report and the message is clear: if companies have
corporate social responsibility at the heart of their
communications programmes, they will be focusing on the stuff that
actually matters to consumers.
Genuine two-way engagement is the key. We talk about earning a
good reputation by doing the right thing. It's a simplistic view
but it is an essential truth. Two-way communications builds trust
as does a willingness to address the issues - all part of doing the
We assist our clients to measure their material issues so they
can engage with their stakeholders on the issues that matter to
them and focus on sustained communications addressing these
To be clear, doing the right thing is no longer just about
fluffy community or conservation projects. If you are a bank,
focusing on ethical global lending or financial literacy of
borrowers is far more meaningful and likely to build trust and
reputation than fundraising for a popular cause (worthy as it may
be) unconnected to your business.
If Kiwi companies want to improve their reputation, they need to
understand the values of their consumers and incorporate that into
their business strategy and communications. Do the right thing,
engage in two-way communications with consumers and other
stakeholders and your reputation will grow and help to boost the
Reputation is something all businesses try to improve, but
simply hoping for the best is no longer enough. You have to take a
strategic approach, make reputation a KPI and invest in improving
it, both through your actions and your communications. It may not
turn your company into Apple, but it will put you top of mind when
your target consumers are making their choice.