Corporate Reputation in an AIG Era

I always enjoy reading the annual rankings from FORTUNE and FORBES.

But only one ranking evaluates corporate reputation -- FORTUNE's Most Admired Companies.

A successful reputation is predicated on good corporate policies and values that lead to good business practices and results. Reputations are built over an extended period of time by delivering on the brand promise.

But that's not enough to have a positive reputation. A reputation is not what a company thinks of itself. It's what others think of the company. Hence, it's equally important how the public (including employees, customers, shareholders, communities, government bodies, etc.) perceives the company.

The Most Admired Ranking -- found in the March 16 issue of FORTUNE -- comes at an interesting time in the corporate world. We've just experienced one of the biggest breaches of trust by business leaders in recent memory. You only need to look at the headlines in the past week regarding AIG to see just far public trust in business has eroded.

Edelman, Avanade's Americas PR firm, has conducted a survey for the past 10 years. Called the Trust Barometer, it tracks the trust levels of the public in a variety of institutions, including business.

Not surprising, trust in business is at an all-time low globally, but especially in the U.S. Interestingly, when segmented by industry, technology is the most trusted sector. That's good news for Avanade. The Most Admired list bears that out. 12 of the 50 companies on the list (nearly 25%) are technology companies.

It's great to see our parents in the top 50 -- Microsoft at #10 and Accenture at #49.

Like pornography, reputation isn't always easy to define -- you know it when you see it. But FORTUNE does a good job in providing some parameters for defining reputation (note all companies are publicly traded firms). And Edelman's research confirms that a strong reputation is an indispensable element to business success.

What research has indicated is that companies with strong reputations typically have stronger customer loyalty. They are typically more resilient to economic fluctuations (though not immuned) and typically come out stronger in good economic conditions. These companies also typically have lower staff turnover and perform well among other rankings, such as FORTUNE's Best Places to Work rankings (though Most Admired and Best Places have different criterion and as a result not necessarily the same companies on both lists).

From a communications standpoint, PR can't create reputations, and no amount of PR can recast the egregious acts of greed we have seen on Wall Street. But strategic PR that is rooted in companies with good policies and values that lead to good business practices and results will help shape positive perception and understanding of those companies, and in the process help foster trust in and respect (admiration) for those companies.