Corporate Reputation Lessons Learned from EU5
As European nations grapple with multiple socio-economic and political developments—including changing trade relations, Brexit, growing nationalism, data privacy concerns, and debates over immigration policy, corporate reputations are increasingly at risk.
How have these challenging circumstances impacted multi-national companies' reputations in the EU5 (France, Germany, Italy, Spain, UK) and the trust that the General Informed Public has placed in them? What reputational strategies should companies operating in these countries leverage? Which businesses have the strongest reputations and why? The following highlights answers to these questions based on analyses of the top 100 most reputable global companies in the EU5.
8 Corporate Reputation Insights from the EU5
1. Reputation declines are not consistent across EU5 countries.
While the reputations of multi-national companies in the EU5 has on average dropped by 1.1-points, the first decline since the end of the Great Recession, we have seen significant between-country differences in reputation trends. Businesses in Italy, for example, have experienced the steepest decline in reputation and are driving the EU5 average down. Companies in Italy went from the second most reputable in 2017 to the least reputable in 2018. On the other hand, companies in the UK still maintain high reputation scores, despite an uncertain pre-Brexit environment.
2. Focusing on the right drivers of reputation is critical, but these differ between Southern and Northern Europe.
Company performance on Products/Services and Governance (ethics, transparency) are consistently the two most important drivers of reputation across all EU5 countries. However, Innovation and Financial Performance carry a higher weight in Southern Europe's Spain and Italy, while Citizenship (societal and environmental contributions) and Governance are relatively more important in the North—Germany, France, and the UK. Robert Bosch is an example of a company that has been able to achieve strong performance on drivers that matter most in both Northern and Southern Europe.
3. CSR needs to be top of mind.
One critical takeaway from our analyses is that declines in reputation have been driven by lower company performance on Corporate Social Responsibility (CSR). This includes measures of Governance, Citizenship, and the Workplace. A key issue around CSR is the lack of alignment between what actions and initiatives a company is taking and what they are (or are not) communicating. Creating CSR awareness through clear communication is best practice in successful reputation-building and management for EU5 businesses.
4. Corporate brand strength is linked to stronger reputation.
Corporate brand strength—the degree to which companies are unique, provide a consistent experience, and appear genuine in what they say and stand for—is a major predictor of reputation for the top 100 companies in the EU5. Country-specific differences in corporate reputation closely mirror differences in corporate brand strength. Interestingly, while multi-national companies in the UK and Germany struggle most with differentiating themselves from competitors, those in the three remaining countries need the most improvement around genuineness.
LEGO, the most reputable company in the EU5, has by far the highest level of corporate brand strength, driven by its close alignment between its products and purpose as a company.
5. Tell your story. Support your narrative.
Projecting the right corporate brand persona is critical to building reputation, especially in EU5 countries. Overall, we see that the biggest opportunities for EU5 businesses are around projecting genuineness, excitement, and charm. Differences in corporate brand personas exist from country-to-country. For example, being an exciting company is the top driver in the UK and Germany, while French companies need to focus most on being perceived as genuine.
6. Segment your communication.
Identifying what your levels of support are among different segments of the population is important for maximizing your reputation-building effectiveness. Significant differences in reputation perceptions among different stakeholder groups demand a more targeted and diversified communication strategy. Our findings suggest that, from a demographic perspective, reputation varies the most among companies operating in the UK and the least for those in France. For example, middle-aged men in the UK show the lowest level of trust in companies, as they perceive them as underperforming on Citizenship and Governance performance—two dimensions that are critical for this specific segment. Conversely, young females care more about Financial Performance and Products/Services. What's interesting in the UK is that despite having the highest polarization in reputation rankings, young females view companies most favorably, while middle-aged men are more skeptical.
7. Expectations of CEOs are changing.
In an environment of increasing political and socio-economic turmoil, CEOs are uniquely positioned to have their voices heard. They have the opportunity to embody what their company stands for, not only from a product and financial perspective but, more importantly, with respect to CSR contributions. While CEO familiarity is the biggest challenge overall, respondents who are familiar with a company’s CEO assign their business an average reputation score of excellent.
8. Consistency through region-specific reputation management is key.
Companies that have the strongest reputation scores across the EU5, such as LEGO, do a great job at aligning their business activities with the needs of a specific region/country and are thus able to consistently rank at the top no matter where they operate. By understanding regional dynamics, companies can most efficiently manage and improve their corporate reputation. This is a key takeaway for every business in the EU5 and can be a first major step towards an excellent reputation.