Backdated stock options. Fudged earnings. Sky-high executive paychecks. The corporate world has been inundated by scandals for the last five years. After the delirious debut of the dot-com era in the late 1990s, reality arrived--and made itself at home. Business leaders now rank down near journalists and politicians on the list of trusted professions.
But companies are starting to catch on. "Reputation" has become a watchword in the corporate world, and safeguarding a company's image is now a top priority for many CEOs. That's one reason why the Reputation Institute, a New York consulting firm, decided to rate the reputations of the biggest companies in the world. The results may surprise you; only one American company, for example, made it into the top ten worldwide.
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The world's most reputable companies
The Reputation Institute has been ranking corporate reputations in conjunction with Harris Interactive since 1999. They only surveyed Americans, however, and only ranked the 60 companies that were most frequently named by respondents. This year, the two organisations parted ways.
For the latest poll, the Reputation Institute surveyed 30,000 people around the world and ranked 600 of the largest companies worldwide. Companies were only judged on their home turf; Americans only opined about American companies, for example, and Indians only discussed firms headquartered in India.
To determine which countries and which companies to rank, the Reputation Institute started with a list of the 300 largest companies worldwide. The companies on that list were headquartered in 25 different countries. Then, the researchers looked at the largest companies in each of those countries, so that citizens from each nation in the survey could rank at least ten firms.
The Reputation Institute then adjusted its findings to account for regional differences. French respondents, for example, tended to rate companies less favorably than Brazilians. The researchers adjusted the scores so that the average rating in each country was 64, the same as the global mean. The distribution around the mean was also standardized.
And the winner is Barilla Holding, the Italian pasta maker, with annual revenue over $5 billion and a reputation score of 87.79 out of a possible 100. Barilla wasn't the only Italian stallion to make the top ten. Ferrero, which makes chocolate products like Nutella and Kinder chocolate eggs, was close behind, ranking eighth overall.
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If there's one thing these results confirmed, it's that people like food. The $34 billion Kraft Foods was the only American firm to make it into the top ten, with a score of 81.82. Clearly, Americans have fond memories of elbow macaroni smothered in cheese-flavored sauce.
Consumer product companies also fared well. Denmark's Lego and Sweden's Ikea also made the top ten, along with South Korea's Samsung. In the United Kingdom, Wal-Mart Stores rival Tesco was number one. "People are just more aware of those companies," says Leslie Gaines Ross, a reputation expert with public relations firm Weber Shandwick.
Good deeds, of course, also boost corporate reputations. Charles Fombrun, executive director of the Reputation Institute, says companies that give to social causes did well in the survey. The Lego founding family, he says, takes care of a small Danish town. Tata Group, a conglomerate which is the most respected company in India, is also generous, Fombrun says.
The bottom line: Corporations need to build a strong relationship with consumers, even if they don't sell macaroni or candy bars. That's easier to do in a smaller country with fewer large firms, which is one reason why so few American firms made the top ten. Because there are more large companies in the US, Americans have less of a connection to the companies that influence their lives, says Fombrun.
The list contains a few surprises. The US Postal Service, for example, made the top 30 in the United States, with a score of 67.25. It came in just behind Caterpillar, Mars, and PricewaterhouseCoopers. AT&T, by contrast, despite its strong brand recognition, had a rating of 53.63, enough to put it in America's bottom ten.
The bottom end of the list included a few corporations whose names have become synonymous with bad behavior. Tyco's reputation hasn't recovered from its corporate scandals; its reputation score is 52.61. Exxon Mobil may be popular with investors, but consumers care more about gas prices than stock prices and gave it the third-worst ranking in the United States. Cigarette maker Altria fared poorly as well.
The company with the worst reputation worldwide was Halliburton, with a score of 21.86. The defense contractor was one of only three companies, including Sweden's Skandia and Japan's Mitsubishi Motors, to achieve a dubious feat: a reputation score below 30.
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