Principles as Important as Products? Corporate Governance is a Growing Reputation Factor

Corporate governance is having a greater impact on business reputation than ever before, a new survey finds, reinforcing the notion that CEOs should be just as concerned about rising populism as politicians.

After speaking to more than 35,000 UK citizens, the Reputation Institute discovered that a companies’ products and services were still regarded as the top contributor to its reputation, comprising 19.7%, up 1.4 percentage points from a year earlier.

But corporate governance came in at a close second, rising 1.5 percentage points to 17.2%, followed by corporate citizenship, which rose 1.3% to 15.8%. Those increases came at the expense of innovation, leadership and corporate performance, which all went backward.

“The populist sentiment of 2016 that led to the Brexit vote and the election of President Trump has also impacted corporate reputation,” the Institute’s managing director, James Bickford said. “People want to feel they are being treated with authenticity, transparency and fairness by the corporates they are spending their money with.”

The results come after separate polls in the U.S. found that trust in the institutions of government and business has diminished rapidly amid fears from large portions of the population that they have been left behind by globalization. The divisive nature of global politics also has put many CEOs’ views in the spotlight, bringing the risk of reputational damage, should they anger a large portion of their customer base.

According to a survey of 23,633 American adults conducted in November and December by Harris Poll, a startling 50% thought CEOs had a “bad reputation”. What’s more, only a quarter thought they had a “good” reputation, while the rest sat on the fence.

Even so, this latest British survey indicated that companies weren’t communicating their corporate governance achievements very clearly, with 67% and 71% of respondents, respectively, either “unsure” or “neutral” on what UK companies were doing in this regard.

Some companies appear to be doing a better job than others. Amazon scored highly in Harris Poll’s reputation rankings, followed by Wegmans, Publix Super Markets, Johnson & Johnson and Apple.

British companies selected by the public as the most reputable in the Reputation Institute’s poll included Dyson, Aston Martin, Lego, Michelin and Sony. Interestingly, Samsung managed to keep its reputation largely intact, despite having to recall its fire-prone Galaxy Note 7 smartphone.

The British public is now 6% more likely to recommend a Samsung product than they were a year ago, highlighting the value of a good crisis-management strategy. “Having invested heavily in building their reputation prior to the crisis, taking early responsibility and a financial hit to compensate affected customers, the company has weathered the storm brilliantly in the UK,” Bickford said.