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Key Points to Remember

Strategy, reputation & brand management

Strategy, reputation & brand management


• Reputation Management is a management process, not a
Reputation & Brand Management: The marketing communications event;
Role of Corporate Communications in • Good reputations increase financial success;
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.


• The goal of a good reputation is not to have people know
Building & Retaining Value you or like you, but rather to build trust, which leads people
to behave toward you in desired ways;
Public Relations Leadership Forum • Trust comes from trustworthy behaviors;
Atlanta, Georgia • Good reputations build “resiliency”;
January 27, 2005 • Not all stakeholders are equal, but success will depend on
the organization’s ability to balance the needs and interests
of all stakeholders;
Elliot S. Schreiber, Ph.D. • Reputation is the only asset of a professional services firm-
Counselor & Visiting Professor
- reputation goes up and down on the elevator each day;
elliot@elliotschreiber.com
• Organizations attempt to differentiate themselves against
The information and slides in this presentation are copyrighted materials and competition; clients/customers decide whether there are
should not be copied, duplicated or used without the expressed written consent of
the author or without appropriate reference.
differences. • Copyright © 2005, The Institute for Public Relations

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Elliot S. Schreiber©
PO Box 118400, Gainesville, FL 32611-8400
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Approaches to Corporate Reputation & Brand


Management Brand & Reputation Defined
Strategy, reputation & brand management

Strategy, reputation & brand management

• For organizations, both Brand and Reputation


• Marketing/Communications Approach: focuses on can be defined similarly:
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.

identity and image and how company communicates to


internal and external stakeholders. A good reputation is
the perception by a given stakeholder that
believed to come from visibility, messages and social a product, service or organization
responsibility relevant to stakeholders. possesses certain attributes;

• Holistic Approach: focuses on a wide list of internal and • A good reputation occurs when the
external stakeholders and emphases the importance of organization’s attributes (its value proposition)
coordinated strategy to manage reputation. A good are both consistent with the needs and interests
reputation is believed to come from the ability of an
organization to match its value proposition and
of key stakeholders and better than the value
behaviors to the needs and interests of key stakeholders. propositions available from competitive
offerings.
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Elliot S. Schreiber©

Reputation Management
Sources of Organizational Value
Defined
Strategy, reputation & brand management

Strategy, reputation & brand management

• Is the process of identifying an organization’s Value


value proposition and its key stakeholders,
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.

prioritizing these stakeholders in terms both of


their value and risk, and then managing the Physical Plants &
organization in a way that matches the value Capital Equipment
proposition of the organization with that of key
stakeholders with consistency and continuity Financial Net Liquid
over time. Capital Assets
• The goal of reputation management is to have Intellectual Unique Unique
key internal and external stakeholders of the Capital Knowledge Skills
organization behave more positively toward the
company (e.g., buy products and services, refer Reputation Brand Stakeholder
talent, invest in the company, support the Capital Equity Relationships
company’s position, etc.)
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Elliot S. Schreiber ©


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Elliot Schreiber ©

1
The Value of Reputation Reputation Leads to Trust
Strategy, reputation & brand management

Strategy, reputation & brand management


• Employees • Media
– Attracts and keeps talent – Generates more positive
– Builds pride coverage A good reputation occurs
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.


– Makes jobs more • Government when the attributes of an
attractive and motivates
employees – Enhances support organization (its Value
• Clients – Minimizes chance of Proposition), are congruent
– Attracts new clients enhanced scrutiny
– Encourages repeat • Communities with the needs and interests
purchases – Builds support of key stakeholders
– Builds market share – Minimizes concerns
– Opens new market
opportunities Trust occurs when
• Investors stakeholders experience
– Lowers cost of capital
– Attracts new investments trustworthy behaviors
over time.
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Elliot S. Schreiber©

Reputation Can Boost Market Share


Reputation is Tied to Financial Success
Results All Institutions 2003
Strategy, reputation & brand management

Strategy, reputation & brand management

Reputation Rating Low 60.1 High 80.2


CIBC
1 Year Measures BMO
7.1
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.

NBF TD
SC
Cost of Goods Sold 60.8 49.0 RBC
CAN UBS
Growth in Employment 2.8% 6.9%
BWI Reputational Franchise

ML
Market to Book Value 0.81 1.1 6.9 SP
SFB GM
OR
Net Margin 4.3 8.0
Return on Assets 4.3% 8.4%
6.7
Beta 1.07 1.11 DUN

RJ
HAY
FE
5 Year Averages 6.5 WP
P
DES
CAN
‘02
Cash Flow to Sales 12.8 18.1
TRI
Price-Earnings Ratio 21.7 32.5 6.3 CAN
PAR
‘01
Return on Equity 16.8 38.4
FA
Equity as % of Total Assets 35.3 44.9 LC Year 2003 = $538 in Total
SALCANRES Secondary Commissions Paid on
Long-term Debt to Capital 29.9 24.8 OCT ‘00
Canadian Equity Trading by
Quick Ratio 0.82 1.01 SB GS Canadian Institutions
EPS Growth 7.3 16.5 5.9 DL

Sales Per Employee $2.46M $4.55M 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%


JEN Market Share of Secondary Commissions
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Source: Fombrun & Van Riel, 2004, p 78 •



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Source: Canaccord Capital, 2004


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Reputation Can Boost Market Share Measuring Corporate Reputation


-
Strategy, reputation & brand management

Strategy, reputation & brand management

Current Results All Institutions 2004


Fortune Magazine’s 8-Attributes of “Admired US
CIBC
Corporations”:
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.

7.4
BMO
1. Quality of management
BWI Reputation Franchise

TD
AC SC
‘03 ML
LOM

7.2
SB
OR
RJ
GMP NBF
RBC
2. Ability to attract and keep talented people
CL HAY
FE
‘03
SP UBS
3. Innovation
7.0 W
P 4. Quality of Products and/or Services
CAN
PI DL
TRI
DES
DUN
5. Wise Use of Corporate Assets
CSFB

SP
‘02
6. Soundness of Financials
6.8 FA
‘01 7. Social Responsibility
8. Value as a Long-Term Investment
6.6 JEN ‘00

LY
RES

6.4
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
Market Share of Secondary Commissions
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Source: Canaccord Capital, 2004

2
Intangible Assets Increasingly Drive Three Sources of Intangibles
Reputation
• Ernst & Young (2003) found that 82% of market 1. Discovery
Strategy, reputation & brand management

Strategy, reputation & brand management


• Patents
value of S&P 500 was comprised of perception of
• Trademarks
value of intangible assets, with 15% from tangible
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.


• R&D
assets; • Royalties
• In 1982, intangibles comprised only 35% of the • Innovations
market value; 2. Organization
• Intangible assets are “a claim to future benefits that • Technology
do not have a physical or financial component” • Brands
• Customers costs
(Lev 2001);
• Ability to leverage relationships and partnerships
• Intangible assets include: perceived quality of 3. Employees
management, ability to attract and keep talent, • Critical skills
specialized skills, quality of customers, • Culture
relationships, innovation, technology, etc. • Leadership



Copyright © 2005, The Institute for Public Relations
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www.instituteforpr.com Source: Baruch Lev, Intangibles, 2001



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Elliot S. Schreiber©
Elliot Schreiber 2004©

Drive Reputation through Consistency & Continuity


Primary Drivers of Reputation of Words & Actions
Strategy, reputation & brand management

Strategy, reputation & brand management

Social Conduct Contributions Employee Culture Product . . . .


Visible Actions
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.

. . . . .. .
.

. . . . St. ate.
l e
Business Conduct Company .
i.ra. b . . . .
Des
Communications
Reputation
. . . .
. . . .
Sales & Time
Distribution Service Support Price
Channels Reputation is built and trust is earned by
consistency & continuity of actions over time –



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Elliot S. Schreiber© finding the line of best fit •


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Conceptual Model of Reputation© Understanding the Model


Strategy, reputation & brand management

Strategy, reputation & brand management

For employees & external stakeholders : • Reputation occurs when the organization’s value
Time proposition matches the needs and interests of
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.

key stakeholders;
Reputation =
∑ Organization’s Attributes
Stakeholder Values
X Experience • The relationship between organizational value
proposition and stakeholder needs is modified by
experience, either by direct interaction, or
Where: through visibility (communications), or via 3rd-
Organization’s Attributes = Firm’s value proposition (attributes) to party information;
stakeholders
Stakeholder Values = The importance of the company’s attributes to • Reputation problems seem to not impact highly
stakeholders reputable companies as much as those with
Experience = How stakeholders perceive they have been treated reputations built over less time.
by the organization and whether its Promise is valid

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Elliot S. Schreiber 2004©

3
“Reputation Resiliency” Negative Messages Erode Reputation faster
than Positive Message Build Reputation
Strategy, reputation & brand management

Strategy, reputation & brand management


Start Negative Positive
Elements Difference Difference
• Reputation (good, neutral, poor) continues to Point Message Message
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.


build over time;
Son/daughter work for 60.5 48.9 -11.6 61.4 0.9
• Companies with good reputations over time
amass resiliency to manage short-term reputation Recommend 60.3 49.3 -11 60.7 0.4
issues better than those with neutral or poor
reputations; Loyal 48.8 43.4 -5.4 49.1 0.3
• The best way to minimize reputation risk is to
have sufficient resiliency before problems occur. Trust 59.4 47.3 -12.1 56.4 -3

Comfortable investing in 51.7 41.1 -10.6 51.3 -0.4

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• Copyright © 2005, The Institute for Public Relations Source: Schreiber & Ipsos-Reid 2004 • www.instituteforpr.com

Source: Ipsos-Public Affairs, 2004 •



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Elliot S. Schreiber©

Negative Message Shift Perceptions Organizational Values are the


Quickly Foundation of Reputation
Strategy, reputation & brand management

Strategy, reputation & brand management

Negative Messages Positive Messages

No Shift Move by 1 to 20 points or No Shift Move by 1 20

In
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.

Behaviors

rs
20 points more to 20 points points or

te
de
more

rn
ol

al
eh

Al
Work for 41 % 23 % 21 % 52 % 14 % 8%
ak

ig
Business Policies
St

nm
to

& Practices

en
Recommend 43 % 17 % 23 % 52 % 14 % 8%
ty

t
ili

&
b

Co
si
Vi

Loyal 57% 14 % 13 % 61 % 10 % 7%

nt
ro
Organization Values

ls
Trust 42 % 18 % 23 % 51 % 15 % 10 %

Invest
45 % 16 % 22 % 52 % 12 % 9%
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PO Box 118400, Gainesville, FL 32611-8400
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Source: Schreiber & Ipsos-Reid 2004

Key Reputation Questions for Reputation Management is Part


Management of Organizational Strategy
Strategy, reputation & brand management

Strategy, reputation & brand management

1. Besides shareholders, who are our key Management


stakeholders and what are the attributes that Preferences
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.

each currently ascribe to our organization?


Strategy

Environment

Organization
Reputation
2. What are the attributes we want key stakeholders
External

Capabilities
Management
to ascribe to our organization?

3. What are the plans to close the gap between #1 Resources


an #2?

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Elliot S. Schreiber © Source: adapted from Crossan, Fry & Killing, 2002© Elliot S. Schreiber©

4
Reputation Management Process Financial Results are Really a Proxy of
(RMP) © Doing Well by Employees & Customers
Steps:
Strategy, reputation & brand management

Strategy, reputation & brand management


1. Identification & mapping of stakeholders Employee Satisfaction r =.80 Customer Satisfaction
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.


2. Organizational alignment, internal training & cross-
functional executive team r=
.45
3. Analyze and map competitor attributes r =.55
Stock Price
4. Establish key reputation attributes & point of
differentiation (check consistency and continuity with
other corporate programs)
5. Develop Reputation Scorecard© Employee &&Customer
Employee CustomerSatisfaction
Satisfactionwere
werestrongly
strongly
6. Align objectives and activities of “stakeholder relations” correlatedand
correlated andtogether
togethercould
coulddrive
drivestock
stockprice,
price,
functions BUT,stock
BUT, stockprice
pricedid
didnot
notnecessarily
necessarily
7. Reputation Risk Analysis© driveemployee
drive employee&&customer
customersatisfaction
satisfaction
8. Communications Programs
9. Measure & Adjust Copyright © 2005, The Institute for Public Relations
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Organizations included: Ford, IBM, Xerox, 3M, Carlson, Nortel, H-P, etc.
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Elliot S. Schreiber© Source: Competitive Advantage through • www.instituteforpr.com

Elliot S. Schreiber©
Customer Satisfaction & Excellence (CATCSE)

Organizations Have a Variety of Stakeholder Identification


Stakeholders that Create Value
Strategy, reputation & brand management

Strategy, reputation & brand management

Ability to attract • The most important stakeholders for all


Investors & retain investors $ organizations are:
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.

– Employees
Ability to attract
– Customers/Clients
Employees & retain employees $ – Shareholders
• You need to then determine what stakeholders
Ability to attract are needed to support your activities with
Clients/Customers & retain clients $ employees, customers and shareholders—this
will differ from industry to industry
Ability to attract $ • Prioritize stakeholders into 1) those who drive
Other & retain stakeholders sales, 2) those who are needed to help support
Stakeholders sales, and 3) those whose actions, if not
addressed, could impede sales.
Source: Christopher Bart • Copyright © 2005, The Institute for Public Relations • Copyright © 2005, The Institute for Public Relations


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Elliot S. Schreiber© •

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Elliot S. Schreiber©

Reputation Risk Organizing Appropriately


Analysis© Brand Management Framework©
High Driver: Social Acceptance Driver: Personal or Family Security
Strategy, reputation & brand management

Strategy, reputation & brand management

Risks: Market, Credit, Operational, Business, Reputation


Brand Emphasis: Product Brand Emphasis: Masterbrand
Demand: Short to long-term Demand: Long-term
Fear, Uncertainty & Doubt

High
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.

Demand Created by: Advertising & Demand Created by: sales and Integrated
product-in-use by endorsers communications to create referrals
Value of Corporate Reputation: Value of Corporate Reputation:
Importance to Revenues

Service/ Retain High Maintenance/Retain LOW to MODERATE VERY HIGH


Examples: Air Jordan, Chanel No. 5 Examples: GE, IBM, Bank of America
Martha Stewart products
Driver: Personal need & desire Driver: Superior Performance
Brand Emphasis: Product Brand Emphasis: Ingredient Branding
Demand: Short-term, basic need Demand: Moderate to Long-term
Ignore /Eliminate Inform, dialogue, Demand Created by: Advertising Demand Created by: Integrated
monitor closely Value of Corporate Reputation: LOW communications to differentiate value of
Examples: Coke, Pepsi, ingredient to customer
M&Ms, Alka-Seltzer Importance of Corporate Reputation:HIGH
Examples: Intel’s Pentium Chip,
Low High Scotch Tape by 3M, pharmaceutical ingredients
Risk Associated with Stakeholder
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Low Complexity of Information in Decision High


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5
Integrating Communications with The Process Helps Companies Align
Organizational Strategy Objectives & Activities at All Levels

Shareholders Process also


Strategy, reputation & brand management

Strategy, reputation & brand management


Corporate Strategic Goal
Corporate Programs Board provides a
C Provides a
CEO framework for
Elliot S. Schreiber, Ph.D.

Elliot S. Schreiber, Ph.D.


o
Reputation
p Objectives Reputation Objectives Reputation Objectives framework for
governance
strategy
Mantra
Corporate

Go
gy

ve
te
Tactics
Group

rn
Tactics Tactics

ra

an
St

ce
Metrics Metrics Metrics Division

Reputation Scorecard
Ownership: SBU SBU SBU SBU
Prime …………………………………………………………………..
Support…………………………………………………………………
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Copyright © 2005, The Institute for Public Relations
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www.instituteforpr.com
Elliot S. Schreiber© Source: adapted from Balanced Scorecard Collaborative, 2003 Elliot S. Schreiber©

What Does All this Mean to the


Public Relations Profession?
Strategy, reputation & brand management

• Stop thinking of ourselves as being the ones who develop


messages and begin thinking of ourselves as prime drivers
of building trust and desired behaviors;
Elliot S. Schreiber, Ph.D.

• Recognize that trust comes from trustworthy behaviors, not


just good messages and drive organization appropriately;
• Be catalysts, integrators and strategic thinkers;
• See strategy as strategic thinking, not just planning–
reverse engineer programs and look for gaps;
• Be the “voice of stakeholders”, not just the voice of
management;
• Take a holistic perspective on reputation – don’t cede the
space to marketing and advertising;
• Think and act like business people rather than like
communicators.

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Elliot S. Schreiber©