Measure What Matters.

New tools can help you measure your organization's reputation

He that filches my good name robs me of that which not enriches him, and makes me poor indeed.

Shakespeare, from "Othello."

Reputation matters.

That was true when you were a kid and a classmate talked about you behind your back. And it's true today, when the company you represent is unflatteringly portrayed in the news, on Wall Street or in the employee cafeteria.

Fortune magazine understood the value of a good reputation when it launched its annual survey on America's Most Admired Companies 17 years ago. Today, the Fortune edition ranking those firms is one of the magazine's best-read issues. And the list remains the country's best-known measure of corporate image.

In recent years, more and more PR pros, CEOs and CFOs have come to realize not only that reputations matter, but also that they can be managed. Indeed, many public relations firms have gone so far as to substitute the words "reputation management" for "public relations" to describe their work.

But whether you call it "PR" or "RM," the struggle has been the same - how to prove the effects of your work. Now, however, public relations professionals have access to a new generation of research tools that can help measure the reputation they're purporting to manage and prove whether their work actually improved it.

What's motivating this rush to reputation management and measurement is a plethora of evidence that a good reputation can dramatically affect an organization's results.

Psychologically, a company with a solid reputation earns the benefit of the doubt in times of crisis. Tylenol shook off product tampering. UPS survived a labor walkout. Nike sails on despite foreign labor concerns. There's also a bottom-line impact. In four of the last five years, an investor who owned stock in Fortune's Most Admired Companies would have earned returns that handily beat the Standard & Poor's 500. In fact, a 1997 Ernst & Young study, "Measures That Matter," found that as much as 40 percent of the average company's market value is based on non-financial assets, including its reputation.

Good public relations professionals know, then, that a lot is at stake in their job of protecting and enhancing corporate reputation. But before you can manage a company's reputation, you have to measure it - warts and all.

Traditionally, defining and measuring something as amorphous as reputation has been more intuitive than scientific.

Do employees feel good about the company? If turnover is reasonable, you might assume they do.

Do customers value your corporation? Counting complaints gives you a clue, but can't predict if customers will bolt when a competitor offers them a new deal.

Will investors stick with your company through a bad earnings cycle? Maybe your strong past performance will hold them. But maybe not.

Of course, it doesn't help that even experts in the field can't agree on how to define what a corporate reputation is, or use the same terms to discuss it. Some talk about corporate image, for example, while others refer to brand equity or consumer loyalty. With that kind of basic confusion, it's easy to understand why many companies never get around to the important job of reputation measurement.

New reputation tools

Intuition will always play a role in understanding your organization's image. But you don't have to fly by instinct alone. More scientific measures are now appearing as a growing number of research firms and consultants, who see reputation management as a smart business opportunity, are offering more affordable and accurate reputation measurement tools.

These studies and surveys can help managers more clearly understand their company's current reputation. That information then can be used to decide where to allocate staff and financial resources to maintain or improve that reputation.

Jack Bergen, president of the Council of Public Relations firms, a trade association for the U.S. public relations industry, sees opportunities and threats in the heightened interest in corporate reputation management.

"There is a general acceptance now that reputation matters. That's why Fortune's Most Admired list remains something that business executives look at," he said. "And it's good that the whole subject is gaining greater attention, with the management consultants and accountants starting to look at it. The threat is that they may start moving in and taking away the authority of corporate communication professionals.

"But all in all, I'd rather have the opportunity with the threat."

Using the new tools

A public relations executive who'd like to measure his company's reputation has many choices of products and providers. Among the firms offering reputation management services today are researchers such as Walker Information, Opinion Research Corporation International, Yankelovich Partners and Lou Harris & Associates; management consultants such as Ernst & Young and PriceWaterhouse Coopers; and major public relations firms such as Hill & Knowlton, Burson-Marsteller and Edelman Public Relations.

But no matter which tools you use, some general criteria apply as you move into a reputation management study or survey. Among them:

Get buy-in from the top. A company's top management needs to understand the importance of reputation management and measurement, and sometimes that's a hard sell. "I don't think a non-communication business executive knows what has to be done to manage reputations, and they probably think it's much more simple to do and can be accomplished with a quick fix rather than continual work," Bergen said. But a growing body of research is showing that a good reputation - including the reputation of the chief executive officer himself - is as important to corporate success as the latest information management systems, he said.

For example, a 1998 Burson-Marsteller study, "Maximizing Corporate Reputations," found that a CEO's reputation accounts for 40 percent of how a company is viewed by stakeholders and outsiders. A majority of the 2,500 business and financial executives questioned in the survey said a CEO's reputation would influence them to buy stock in the company, believe the company if it was under pressure in the media and recommend the company as a good business partner.

Today's savvy CEOs definitely are getting the message about the value of a strong corporate image, said James D. Daniels, corporate vice president and director of marketing for Opinion Research Corp. ORC calls its measurement of corporate reputation an "Equity Score."

"Some of our CEO clients have their Equity Score and their company's stock price posted on their walls," he said. "They know that both contribute measurably to the bottom line."

Measure all constituencies. A good gauge of a company's reputation considers the views of all its different stakeholders. "We say reputation is the reflection of an organization over time, as seen through the eyes of all of its stakeholders, expressed through their thoughts, words and actions," says Kim Graham Lee, group vice president of Walker Information.

In other words, a good measurement of corporate reputation includes more than investors' views. The perceptions of employees, customers, vendors and business partners are essential. A good reputation measurement tool also will look at all the messages your company is sending, intended and otherwise, through all of the interactions it has, and how those messages are being received.

It's especially important that employees' beliefs and attitudes be quantified, Lee said. "Those who know you the best can be the leading indicators of the views of other stakeholders. A company's reputation starts within the organization."

It's not brand equity. Don't confuse reputation with brand equity, which is typically tied to how one audience - the consumer - views a company's products or services. Or with corporate identity, which really represents how the company defines itself. Reputation is all stakeholders' views of the entire organization. It's a strategic assessment that can help a company manage and shape its future, not just an after-the-fact measurement of advertising reach or column inches.

It doesn't have to blow the budget. The biggest of the big corporations might think nothing of spending U.S. $100,000 or more on a research study. But that budget's off the charts for many corporate communication departments - or nonprofit organizations. Fortunately, some of the new reputation measurement tools are available for significantly less, and they provide plenty of good information to get started.

Measure over time. "You ought to look at reputation as financial people look at quarterly results," Bergen argued. At the same time, he acknowledges, no communication department has the budget to do fresh research every three months. But once a benchmark study has been done, Bergen said, it's possible that some of the department's other regular duties - like monitoring media relations results - can contribute to regular updating of an understanding of its reputation.

Apply what you learn. Understanding how stakeholders view a corporation allows a public relations department to use limited resources more effectively and increase its effectiveness as a strategic business tool. If a company's been the subject of negative news coverage, reputation measurement can show key clients that employees and investors remain committed to the firm. If, on the other hand, a measurement shows that citizens in the company's hometown see it as aloof, and that's hurting employee recruitment and retention, more resources could be channeled into community affairs activities.

The bottom line, said Bergen, is that companies can't afford not to know their reputation with employees, investors, customers and other constituencies. Corporate communication professionals are the key to - and the keepers of- one of the most valuable assets in the business world today.

Pamela Klein is a freelance writer based in Indianapolis, Ind.