TRUST & REPUTATION

Michael G. Cherenson, APRMichael G. Cherenson, APRExecutive Vice President, Executive Vice President, Success Communications GroupSuccess Communications Group2008 Chair-elect, PRSA Board of Directors2008 Chair-elect, PRSA Board of Directors

October 2008

What is reputation?

What’s reputation’s impact?

Who do they Trust?

How do you build trust & reputation?

What is reputation?

What’s reputation’s impact?

Who do they Trust?

How do you build trust & reputation?

REPUTATION: Ability to meet stakeholder expectations

Rational and emotional attachments

Net image with all stakeholders

Ability to meet stakeholder expectations

Rational and emotional attachments

Net image with all stakeholders

REPUTATION = EXPECTATION + CREDIBILITYREPUTATION = EXPECTATION + CREDIBILITY

Do What You Say You Will Do

Credibility is:

BRAND REPUTATION

Brand is personality

Brand is what a company wants you to think and feel when you hear its name

Brand is communication

Brand is something you build

Brand is a promise

Brand is personality

Brand is what a company wants you to think and feel when you hear its name

Brand is communication

Brand is something you build

Brand is a promise

Reputation is character

Reputation is what you really do think and feel when you hear the company’s name

Reputation is behavior

Reputation is something you earn

Reputation is keeping the promise

Reputation is character

Reputation is what you really do think and feel when you hear the company’s name

Reputation is behavior

Reputation is something you earn

Reputation is keeping the promise

Source: Paul Holmes, The Holmes Report

REPUTATION = “CAN I TRUST YOU?”

““To be persuasive, we must be To be persuasive, we must be believable; to be believable we must believable; to be believable we must be credible; to be credible, we must be credible; to be credible, we must

be truthful.”be truthful.”

-- Edward R. Murrow-- Edward R. Murrow

“Trust is like the air we breathe. When it’s present, nobody really

notices. But when it’s absent, everybody notices.”

-- Warren Buffett

“Trust is like the air we breathe. When it’s present, nobody really

notices. But when it’s absent, everybody notices.”

-- Warren Buffett

As much as 47% of American companies' net worth is tied up in intangible assets like

brand equity and reputation.

As much as 47% of American companies' net worth is tied up in intangible assets like

brand equity and reputation.

Greatest Business RisksSource: Economist Intelligence Unit, “Reputation Risk of Risks,” 2005

0

10

20

30

40

50

60

Reputation RiskRegulatory RiskHuman Capital RisksIT Networks RiskMarket RiskCredit RisksCountry RisksFinancing RiskTerrorismForeign Exhange RiskNatural Hazard RiskPoltical RiskCrime

0

10

20

30

40

50

60

Reputation RiskRegulatory RiskHuman Capital RisksIT Networks RiskMarket RiskCredit RisksCountry RisksFinancing RiskTerrorismForeign Exhange RiskNatural Hazard RiskPoltical RiskCrime

Senior Executives

STUDY: TRUSTAGREE OR DISAGREE:

Trust is the most important consideration I make, even more than political viewpoint, when I consider who to vote for, and more important than price and quality when I consider who I do business with, or who I invest with.”

AGREE OR DISAGREE:

Trust is the most important consideration I make, even more than political viewpoint, when I consider who to vote for, and more important than price and quality when I consider who I do business with, or who I invest with.”

85% agreed,

66% strongly agreed

19 somewhat agreed

only 10 % disagreed

85% agreed,

66% strongly agreed

19 somewhat agreed

only 10 % disagreed

General Public

STUDY: SALARY

Which company would you rather work for, if all else were equal and your job would be the same in each?

Company ACompany A PPays you a salary that meets needs ays you a salary that meets needs Excellent Excellent reputation overallreputation overall

Company BCompany B Pays you a higher salaryPays you a higher salaryReputation overall is poor Reputation overall is poor

Which company would you rather work for, if all else were equal and your job would be the same in each?

Company ACompany A PPays you a salary that meets needs ays you a salary that meets needs Excellent Excellent reputation overallreputation overall

Company BCompany B Pays you a higher salaryPays you a higher salaryReputation overall is poor Reputation overall is poor

78% = Company A

17% = Company B

78% = Company A

17% = Company B

General Public

STUDY: PURCHASE

Which company would you rather purchase a product or service from, if the quality of the product or service was equal…

Company ACompany A Excellent reputation Excellent reputation Slightly higher prices Slightly higher prices

Company BCompany B Poor reputationPoor reputationSlightly lower pricesSlightly lower prices

Which company would you rather purchase a product or service from, if the quality of the product or service was equal…

Company ACompany A Excellent reputation Excellent reputation Slightly higher prices Slightly higher prices

Company BCompany B Poor reputationPoor reputationSlightly lower pricesSlightly lower prices

86% = Company A

10% = Company B

86% = Company A

10% = Company B

General Public

Is There a Link Between “Reputation” and Job Performance?

98% of HR professionals and 91% of employees say yes.

STUDY: JOB PERFORMANCE

STUDY: FINANCIALS

MBA STUDENTS

People Take Action On Companies They Do Not TrustHave you ever done this to a company you do not trust?

81

74

70

50

50

47

45

40

36

23

0 10 20 30 40 50 60 70 80 90

Refuse to buy their product or use their services

Criticize them to people you know

Refuse to invest in them

Investigated more about their activities

Refuse to work for them

Supported Legistlation controlling or limiting their activities

Ignored their attempts to communicate with you

Shared your opinion and experience on the Web

Written a letter or email complaining to the media, a politician, or an official 3rd party

Actively demonstrated or protested against them

2008 Trust in Institutions

Source:

2008 Trust in Institutions

NOT ALL ARE EQUAL…

Source:

Source:

Media Fragmentation

Media Fragmentation

NEW MEDIA MODEL

TRADITIONAL MEDIA MODEL

“Infodemic”A complex phenomenon caused by the interaction of mainstream media, specialist media and internet sites; and “informal” media, which is to say wireless phones, text messaging, pagers, faxes and e-mail, all transmitting some combination of fact, rumor, interpretation and propaganda.

~ David RothkopfChairman and CEO of The Rothkopf Group

A complex phenomenon caused by the interaction of mainstream media, specialist media and internet sites; and “informal” media, which is to say wireless phones, text messaging, pagers, faxes and e-mail, all transmitting some combination of fact, rumor, interpretation and propaganda.

~ David RothkopfChairman and CEO of The Rothkopf Group

Who is Credible?

TOP 2 BOX (%)

A person like yourself 51

Doctor or healthcare specialist 49

Non-profit organization or NGO representative 44

Academic 47

Financial/ Industry analyst 43

Regular employee of company 36

The CEO/leader of your company or employer* 31

Lawyer 16

Government official or regulator 22

CEO of a company 22

Public relations executive 12

Entertainer/ Athlete 11

Blogger 9

In general, when forming an opinion of a company, if you received information from (INSERT PERSON) about this company,

how credible would the information be? Would it be extremely credible, very credible, somewhat credible, or not credible at all?

Source:

Who is “A Person Like Me?”

Shares common interests with you 1

Holds similar political beliefs to you 2

Is from your local community 3

Is the same profession as you 4

Is the same religion as you 5

Is the same nationality as you 6

Is the same gender as you 7

Is the same race/ ethnicity as you 8

Ranking

All other things being equal, which THREE of the following characteristics are most likely to increase your trust in someone sharing information about the company? Are you MOST likely to trust the person if he/ she… [RANDOMISE LIST. ACCEPT THREE]

Source:

Trust is not distributed evenly

Not all spokespeople are equal

Some traditional Media still valuedSome traditional Media still valued

Peer-to-Peer highly influentialPeer-to-Peer highly influential

Person like you most trustPerson like you most trust

Trust is not distributed evenly

Not all spokespeople are equal

Some traditional Media still valuedSome traditional Media still valued

Peer-to-Peer highly influentialPeer-to-Peer highly influential

Person like you most trustPerson like you most trust

The Evolving Trust Landscape

Source:

A Simple Equation…Trust is shiftingPost 9/11 + Katrina + War = Fear & AnxietyEconomic instabilityInformation Overload“Tabloidization”Pressure for Short Terms ResultsSavvy ConsumersEmpowered EmployeesInternational instabilityInfodemicsMinority InfluenceReputations is More Valuable & Fragile Than Ever Before

Trust is shiftingPost 9/11 + Katrina + War = Fear & AnxietyEconomic instabilityInformation Overload“Tabloidization”Pressure for Short Terms ResultsSavvy ConsumersEmpowered EmployeesInternational instabilityInfodemicsMinority InfluenceReputations is More Valuable & Fragile Than Ever Before

How do you build a good reputation and restore Trust?

Source:

REPUTATION

Visible

Transparent

DistinctiveConsistent

Authentic

Source: Charles Fombrun

HOW TO BUILD CREDIBILITY?COMMUNICATE

Listening to Employees Builds TrustWhich are the THREE most important actions for a global company seeking to build trust

among its employees?

64

45

38

33

32

32

17

16

0 20 40 60 80 100

Listening to employees

Demonstrating its corporate social responsibility

Communicating the company's business strategy

Having CEO be accessible to employees

Encouraging dialogue across different parts of the business

Communicating the company's financial performance

Communicating openly about layoffs

Providing information about career advancement

How to Earn Trust58% Handle crisis better, more openly

56% Communicate openly and frequently with stakeholders

58% Stick to a code of business ethics no matter what

60% Personally and visibly show care and concern for customers

65% Assume personal responsibility and accountability

58% Handle crisis better, more openly

56% Communicate openly and frequently with stakeholders

58% Stick to a code of business ethics no matter what

60% Personally and visibly show care and concern for customers

65% Assume personal responsibility and accountability

Golin/Harris Survey

CREDIBILITY BANK

DEPOSITS• Open honest communication

• Good deeds

• DWYSYWD

• Managing expectations

WITHDRAWALS(automatic permanent overdraft)

• Lying, stonewalling

• Bad behavior

• Abuse others

• Not fulfilling your obligations

Multiple Sources

GOODWILL RESERVOIR - INVESTMENTS -- CAPITALThe ability to withstand crisis or invest reputation or political capital

TRUST BUSTING

TRUST BUSTING BEHAVIORS

Arrogance and Chest-Beating

Broken Promises and Commitments

Over promise, Under deliver

Deception and Disinformation

Denial, Stall, Delay

Duck Responsibility

Minimize Risk, Overrate Preparation

Abandon Core Values

Abuse the Trust of Others

TRUST BUSTING BEHAVIORS

Arrogance and Chest-Beating

Broken Promises and Commitments

Over promise, Under deliver

Deception and Disinformation

Denial, Stall, Delay

Duck Responsibility

Minimize Risk, Overrate Preparation

Abandon Core Values

Abuse the Trust of Others

SOURCE: GOLIN/HARRIS

TRUST BUILDINGTRUST BUILDING BEHAVIORSPromises Made, Promises KeptExceed ExpectationsHonesty, Clarity, ConsistencyMeasured Milestones, Viable AlternativesAccept and Assign AccountabilitySoberly, Systematically Assess ChallengesKnow Your DNARespect, Honor & Reward Those Who Put Their Trust in YouTreat Trust as a Long-Term Investment Paying Ongoing Dividends

TRUST BUILDING BEHAVIORSPromises Made, Promises KeptExceed ExpectationsHonesty, Clarity, ConsistencyMeasured Milestones, Viable AlternativesAccept and Assign AccountabilitySoberly, Systematically Assess ChallengesKnow Your DNARespect, Honor & Reward Those Who Put Their Trust in YouTreat Trust as a Long-Term Investment Paying Ongoing Dividends

SOURCE: GOLIN/HARRIS

TRUST – “I’M SORRY”Since 2002, encouraging doctors to apologize for mistakes.

Since 2002, encouraging doctors to apologize for mistakes.

Attorney Fees

$2 million

Malpractice Lawsuits

and notices of intent to

sue50.4%

TRUST – “I’M SORRY”

Veterans Administration HospitalLexington, KY

… a large percentage of patient dissatisfaction was generated by physician attitude and denial, rather than the negligence itself.

… close to half of malpractice cases could have been avoided through disclosure or apology…

… what a majority of patients really wanted was simply an honest explanation of what happened and, if appropriate, an apology.”

I’M SORRY?

Source:

BUILDING TRUST: STRATEGIES

• Know your corporate DNA• Leadership is key --

articulate your vision• CEO = “Chief Trust

Officer”• Think long-term• Know your reputation and

Audit relationships• Invest strategically in

your “Trust Bank” assets• Live your values and

ethics, put safeguards in place

• Prove it! Trust is earned through deeds and competence

• Know your corporate DNA• Leadership is key --

articulate your vision• CEO = “Chief Trust

Officer”• Think long-term• Know your reputation and

Audit relationships• Invest strategically in

your “Trust Bank” assets• Live your values and

ethics, put safeguards in place

• Prove it! Trust is earned through deeds and competence

• Put the human face back into the business (People listen with their stomachs)

• Accountability, sustainability and corporate responsibility – be a model citizen

• Communicate plainly, openly and straightforwardly

• Communication is a dialogue, not a monologue

• Not all communication is equal

• Put the human face back into the business (People listen with their stomachs)

• Accountability, sustainability and corporate responsibility – be a model citizen

• Communicate plainly, openly and straightforwardly

• Communication is a dialogue, not a monologue

• Not all communication is equal

Q&A

Michael G. Cherenson, APRExecutive Vice President, Success Communications Group

Chair-elect, PRSA Board of DirectorsMcherenson@successcomgroup.com

973-992-7800 x. 104www.successcomgroup.com