Reputation Gets Respect

July 07, 2014

Reputation Gets Respect

Barron’s came out on June 28th with its World’s Most Respected Companies list.  They ask institutional analysts to rank the world’s 100 largest companies, as measured by total stock market capitalization. The cut off for the list was a cool market value of $78.2 billion. So these are what you would call mega-companies. Barron’s aptly writes that this annual ranking “…usually resembles a game of Chutes and Ladders, as some corporate reputations improve while others slide.” So true. As I have noted many times before, our world’s corporate royalty are no longer invincible and years ago, no one would have believed that they would have parted with their crowns. But we have learned that they fall like the rest of us.

The companies in the survey are judged on Respect which means different things to different people. Since investors are given space to write in why they give some companies higher respect ratings than others, we can gleam how reputations are being shaped these days. To me, this is where reputation gets interesting and reflects back what’s important in building and restoring reputation today.

In the chart below that came from the article itself, management quality tops the list as what constitutes respect today, followed very closely by ethics. Again, this is proof positive that leadership — be it visible or just symbolic — drive reputation and respect. Additionally, reading between the lines (what Barron’s provided in its text), some investors also base their ratings on the bottom line and stock price performance. Some others vote according to whether management is a good steward of shareholder capital and can think strategically. Other hints include handling difficulties effectively and dealing with complexity. Respect even gets a bit squishy. As Barron’s writes, “Other determinants of respect for corporations involve harder-to-define concepts, such as value to society and treatment of ‘stakeholders,’ including not only shareholders but also customers, employees, suppliers, and even the environment. Stakeholder stance has gained currency since the financial crisis.” The past few years have shown us that HOW others are treated by a corporation translates into worth and should not be ignored. 

Barron's World's Most Respected Companies, 2014

Barron’s World’s Most Respected Companies, 2014

Here are some other trends worth noting from this year’s survey results: 

  • The pharma industry rebounded from its doldrums one year ago. Several of the pharma companies have moved up the respect ladder.
  • Russian and Chinese companies continue to score low on investor respect, possibly because of the perceived lack of transparency which Barron’s says “scared many money managers away from these stocks.”
  • While a bit more than one half of the world’s largest publicly traded companies are headquartered overseas, U.S. corporations account for 19 of the top 20 scorers. This alone says a lot about the quality of U.S. corporations in building solid reputations that have lasting power.

Reputations continue to rise and fall and the intangibles are increasingly worth their weight in gold. 

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Leslie Gaines-Ross
Leslie Gaines-Ross

As Weber Shandwick’s Chief Reputation Strategist, I focus on the ever changing world of reputation. For the past 25 years, I have relentlessly observed, researched and commented on the rise and fall of corporate and CEO reputations.

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