Ed CokeExecutive DirectorMillward Brown Corporate Practice

the spotlight never felt so intense

An organisation may speak of having values but, without demonstrable action, it lacks credibility. What a corporate brand stands for and how a company conducts business impact powerfully, not only on the minds of customers, but also stakeholders.

In today’s connected society all of us are becoming increasingly knowledgeable about company behaviour. Public scrutiny is fast moving and intense; there is risk of reputation damage to any part of a business, anywhere in the world. A bad news story that harms a company’s reputation can travel the globe in minutes.

Communication technology is also helping to unite people with shared interests. It gives pressure groups more influence than ever – whether they are ethical consumers, shareholder activists, or local environmental campaigners. And their concerns are many: from rainforest deforestation in the pursuit of palm oil, to decent wages for suppliers in developing countries; from responsibilities for obesity, food labelling and alcohol consumption, to executive pay, food miles and local sourcing and employment policies.

Whereas it was once more prevalent for extraction, pharmaceutical and tobacco multinationals to face forensic public examination for practices that impinged on the environment, social justice or health, now such issues are central to the reputation of any organisation, from whatever sector.

Transparency is all, and increasingly customers and commentators are expecting companies to show explicit commitment in navigating the moral maze. Not only in how they act but also how well they engage in constructive dialogue with governments, non-governmental organisations (NGOs), industry partners and pressure groups. The best companies will be those that welcome debate, present information openly and honestly, and take opportunities to inform and educate.

The result is a complex reputation landscape, crowded by wide-ranging demands that compete for attention. With the right insight a company can plan an effective reputation strategy, using empirical evidence that examines and measures how an industry and its companies are judged, and the actions that engender the greatest trust. Knowing what will lead stakeholders and opinion formers to advocacy, and understanding the issues they believe important both today and in the future, are key to mapping reputation priorities.

Millward Brown’s Reputation Asset Manager and Profiler – ReputationAMP – has been developed from the expert knowledge of our specialist corporate research practice and our collaborative partnerships with leading academics on reputation risk research. The result is a company-specific, diagnostic methodology, generating insight and recommending action that will improve reputational strength, tackle weaknesses and maximise opportunities.

In this report we share our current thinking on what makes reputations genuine and credible. We underpin these views with findings from our own study, examining in particular the current reputation of the fast moving consumer goods (FMCG) industry and some of the biggest companies leading this sector.

Our ambition at Millward Brown is to develop impactive, evidence-based results and ReputationAMP is no exception.

We believe it will prove a sound investment for any organisation aspiring to maximise its stake in the

reputation economy.

Creating, nurturing and upholding a corporate reputation is one of the most critical and fundamental tasks facing senior leaders today.

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doing the right things, for the right reasons, the right way

the quest for trust

TRUST

Strategy

Plans and objectivesfor the future

Doing theright things

For the rightreasons

In the rightway

Actions

What is done andhow it is done

Communication

What is said andhow it is said

Policymakers &regulators

Corporate peers &partners

Trade unions&

associations

Academics

Existing& potentialcustomers

C-suite

NGOs /IGOs

Investors& analysts

Employees

Special interest &

localcommunity

groups

Suppliers

Media

REPUTATION

The issues affecting reputation vary from industry to industry, just as the risks weigh more heavily on some companies than others. But what is common to all is a growing appetite for more detailed, diagnostic intelligence that can help organisations develop informed, effective strategies for building and protecting this seemingly intangible asset.

The ReputationAMP premise is there is no ‘one-size-fits-all’ solution to analysing how a company is perceived by others. The methodology must reflect the client’s stage of reputation. Is the organisation aiming to build, sustain or defend a reputation, or is it seeking to recover credibility following a damaging experience?

Reputation is fluid, and will shift and change over time. There are many influences: current and past behaviour; the varied agendas of different stakeholder groups; prevailing social, economic and political attitudes; whether a business is experiencing growth, maturity or change; and what area of the business is in question.

Consequently the ReputationAMP philosophy does not seek to measure one corporate reputation, but a plurality of reputations. Only by taking an holistic view of an organisation can reputation research present meaningful conclusions and offer opportunities for change.

What a company stands for, how it acts and how it communicates are all important to stakeholder opinion. They are the foundation stones needed for a company to acquire what is perhaps the most prized stakeholder motivator, trust.

Trust is essential to reputation. It is achieved when a company’s strategy, actions and communication are working in unison and the organisation is seen to do the right things, for the right reasons, in the right way.

ReputationAMP methodology explores how well a company is achieving these goals. It examines and measures stakeholder opinion, breaking down strategy, actions and communication into specific conducts within and across an organisation. These are analysed individually, with the potential to pinpoint the prevailing views on a continuum of indicators.

This detailed approach reveals precisely where a company has a strong or weak reputation. The results signal where strategy lacks focus or direction, where action is needed to develop new behaviour, or why current communication about conduct in a specific area is failing.

In this way ReputationAMP can help build a company’s all-round reputational strength.

The companies I trust are the ones where I know

about their responsible business strategies.

Deputy news editor, Millward Brown Reputation Study, June 2012

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forewarned is forearmed

AMPpowerful methodologyMillward Brown’s corporate practice has carried out its own research study to underline the power and versatility of ReputationAMP.

What ReputationAMP offers is insight, providing data and choices for action that allow companies to predict and plan how to move a reputation forward. Armed with this information, senior leaders can make informed decisions about future resources and priorities. A company can develop communication strategies that are confident and forward-thinking; ones that anticipate changing environments or emerging issues on stakeholder radars.

Scoring a top position in a rank of company reputations may feel good, but a one-number summary reveals neither the full story nor provides a guide to future action.

Using both qualitative and quantitative research, the team explored the views of opinion formers on the behaviours and reputations of one of the most competitive and dynamic industries, the FMCG sector.

This industry was selected for the ReputationAMP study for several reasons: its global presence; the new and growing pressures from informed consumers; and the fiercely competitive nature of the sector, central to the economic recovery of mature markets and growth in emerging ones.

The study focuses on three prime stakeholder groups: academia; the media; and NGOs and think tanks. The research authors recognise these groups do not comprise a full stakeholder profile, and any industry or company will have a broader, more diverse ‘stakeholder family’. However, as a practical illustration of the ReputationAMP methodology, the results from the three groups provide useful insight into what these opinion formers think of the FMCG industry and a selection of its world-leading companies.

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FMCG -a trusted industry, but less confidence at company level

TECHNOLOGY

43%

FMCG

42%

PHARMACEUTICALS

30%

TELECOMS

27%

ALCOHOLICBEVERAGES

27%

TRANSPORT

25%

ENERGY

14%

FINANCIALSERVICES

6%

“Overall, to what extent would you, from a professional perspective, say you trust the following industries?”

Fig.1

Uplift generated by regular contact with stakeholdersin perecentage points

FAMILIARITY

FAVOURABILITY

ADVOCACY

ORG.A

+56

+51

+16

ORG.B

+55

+30

+35

ORG.C

+58

+18

+14

ORG.D

+65

+49

+42

Fig.3

Average interaction by audience

NGOs MEDIA ACADEMICS

83%17%

84%16%

96%4%

InfrequentlyFrequently

Fig.4

Frequency of interaction with FMCG companiescategory average

FREQUENT CONTACT12%

INFREQUENT CONTACT88%

Fig.2

However, NGO and media opinion formers show noticeably lower levels of trust (Fig.1). As both groups hold a big sway over consumer perception and choice, it signals there is work to be done by the FMCG industry as a whole to generate greater trust among these audiences.

Our top-level findings show that, among the three FMCG stakeholder groups studied, opinion formers have little regular contact with individual companies. If so, there are significant opportunities to cultivate their understanding, engagement and advocacy. They have the potential to speak positively and endorse an organisation’s behaviour, forming a powerful communication bridge between a company and other stakeholders and consumers.

It is notable from the study that academics have the least interaction with all four organisations. This implies a potential gap in knowledge among this influential audience and an opportunity for dialogue.

When it comes to confidence in individual FMCG companies, there is a significantly weaker response. All three stakeholder groups show remarkably low confidence that the actions and behaviours of companies can help resolve industry issues.

An underlying reason seems to be a lack of engagement between FMCG companies and stakeholders. Of four world-leading corporations studied in detail, contact with most of the opinion formers questioned is infrequent. Significant opportunities therefore exist to grow the support of these audiences, in particular the academic community.

Yet the benefits of communicating regularly with opinion formers appear evident. Among the minority of stakeholders that experience regular contact with the same major FMCG companies, there are positive impacts on familiarity, favourability and advocacy.

The study shows that the opinion former audiences we surveyed regard the FMCG sector as one of the top two most trusted industries – a distinction most marked among academics.

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It’s individual companies I would trust, rather than whole industries, as you have good and

bad examples in all industries.

Senior policy advisor, Millward Brown Reputation Study, June 2012

it’s not just what you do,but how you do it andwhat you say...

Above 30% = significant relationship Above 40% = strong relationship

Is responsible towards society 70%

Is honest, trustworthy and ethical 69%

Deals fairly with their supply chain 65%

Is responsible towards the environment 59%Provides high-quality products & services 52%

Treats employees well 51%Builds and maintains positive stakeholder relationships 46%

Top seven drivers of advocacypercentages indicate strength of relationship between behaviour and advocacy

Fig.5

Here are the top actions and behaviours that, for the FMCG industry, are most likely to attract advocacy from the three stakeholder groups questioned. To build and grow their reputations, companies in this sector should focus on these ‘drivers of advocacy’. Communicating about these activities will also help cultivate goodwill and support among opinion formers.

…that builds advocacy and wins stakeholder support. Cultivating a regular, open dialogue with stakeholders fosters favourability and an inclination to recommend. It also provides a bank of goodwill among key audiences, increasing the likelihood that third party spokespeople will defend a company during difficult times. In short, positive advocacy is a valuable tool to building a more resilient business.

But developing a reputation that earns advocacy is not just about doing the right thing. Or even doing the right thing and communicating that activity. A company must hone in on issues that matter to its industry and stakeholder groups, prioritising communication so opinion formers hear most about the topics that spark their attention and interest. If company actions are authentic, the trust and respect of advocates will follow, and as they communicate with others, the positive messages will amplify.

ReputationAMP helps organisations identify the business practices and behaviours that correspond with their stakeholders’ interests and agendas, and are therefore most likely to gain advocacy.

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They could blow their own trumpet a lot more, usually with

size and success comes a lot of criticism. On issues at the forefront it would be nice to hear the good news broadcast more widely. That would

seriously enhance the positive reputation of the company.

Academic lecturer and researcher, Millward Brown Reputation Study, June 2012

Rather than separate reports, social and environmental

indicators should be integrated into annual reports and fully integrated with

business strategy.

NGO director, Millward Brown Reputation Study, June 2012

learn where best to invest effort

earn advocacy, manage vulnerabilities, build resilience

Performance on drivers of advocacycategory average

Demonstrates well No opinion Demonstrates poorly

Is responsible towards society 35%

41%

58%

45%

26%

66%

51%

Is honest, trustworthy and ethical

Deals fairly with their supply chain

Is responsible towards the environment

Provides high-quality products & services

Treats employees well

Builds and maintains positive stakeholder relationships

Fig.6Deals fairly with theirsupply chain (%)

13

5829 18

5527 29

56

1521

63

16

ORG.A ORG.B ORG.C ORG.D

Fig.7

The journey to advocacye

ORG.A

2% 25%

8% 22%

37% 38%

97%

Conversion rate of stakeholders from tier below

ORG.B

8% 53%

15% 31%

48% 48%

100%

ORG.C

4% 40%

10% 29%

34% 34%

100%

ORG.D

6% 39%

16% 47%

34% 34%

100%

Fig.8

Dep

th o

f rel

atio

nshi

p

AWARENESS

UNDERSTANDING

ENGAGEMENT

ADVOCACY

Unsurprisingly, opinion formers most likely to positively endorse a company’s behaviour are those with whom companies engage in regular and sustained dialogue.

All the companies examined as part of the study seem to be failing to gain the maximum advantage from positive advocacy. As already revealed, most FMCG stakeholders questioned say they have little contact with FMCG companies. Many appear insufficiently informed, so that when asked how well specific FMCG companies performed on each of the seven key advocacy drivers, there was a striking body of opinion expressing either a neutral or ‘no opinion’ response.

Targeted engagement, focusing on practices and behaviours confirmed by the research as advocacy drivers for the FMCG industry, can help companies reap greater reputational benefits.The study also shows how the ReputationAMP methodology is an aid to pinpointing reputation pressure points, exposing company vulnerabilities with the potential to publicly damage a company’s profile. This information gives clients the detailed guidance they need to plan how and in what way they respond.

For example, the stakeholder responses to ORG A and the advocacy driver statement ‘Deals fairly with the supply chain’ show that just 13 per cent believe the company demonstrates this well. Conversely, 29 per cent believe the company does not demonstrate fair supply chain dealings and 58 per cent are neutral or unable to comment.

This signals a need for further investigation. Perhaps supply chain practices present a real reputation risk, or supply chain actions are acceptable but the messages communicated about them are failing to have the desired impact. The source of poor messaging must be traced. Until it is, the company may find it advisable to withdraw from communicating further on this subject.

A reputation pyramid is not new or unique. However, as a means of highlighting strengths and weaknesses in how an industry or company cultivates stakeholder relationships, it is a valuable tool. It helps diagnose where to target resources and action for most effective results.

In the ReputationAMP study few respondents in any of the three stakeholder groups questioned indicated they had a strong, bonded relationship with FMCG companies.

The study results show that each company has work to do to convert their stakeholders to a higher position within the pyramid. With ReputationAMP modelling it is possible to identify where efforts will secure the best return.

For example, in fig.8, ORG A has the fewest stakeholders reaching the advocacy level, signalling a shortfall in how they cultivate understanding and engagement among opinion formers. Conversions to bonded advocacy appear particularly weak.

With ORG B however, we see the company has a comparatively high success rate moving stakeholders from engagement to advocacy. Therefore if greater effort is devoted to moving stakeholders from understanding to engagement, it should follow that their current practices will result in more than half these engaged opinion formers moving up to the ultimate level of advocacy.

ReputationAMP includes qualitative commentary from stakeholders about the style and content of engagement they welcome. This allows the team to work closely with the client, refining the approach and advocacy topics that will cultivate the strongest support.

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the future of reputationsustainability goes beyond the environment...

CUSTOMERS

SPECIALINTERESTGROUPS

INDUSTRY

GOVERNMENT &POLICY MAKERS

The right behaviours need to touch every part of a company’s operation and management. Planned carefully and with thought, these are an asset to building and protecting market share.Responses from opinion formers in the study show they are increasingly sensitive and sceptical about claims without substance, and can distinguish quickly between superficial ‘green-washing’ and those companies that are building reputations based on a broader, ethical agenda with real commitment.

From our discussions with stakeholders, the measures of a truly sustainable business now include:

include:

• sensitivities to exploiting new markets;

• responsible sourcing, including manufacturing and supply chain management;

• passingonefficienciestocustomers;

• equitable employment terms throughout the company and in all geographies;

• fair treatment across communities.

The ReputationAMP research study reveals a strong view among opinion formers that corporate citizenship for FMCG companies involves taking ownership of, and responsibility for, all aspects of the sustainability agenda that connect with their business.

The ReputationAMP study shows opinion formers respond best when they sense a company is genuine and consistent. They favour companies that are proactive in sharing good news, yet equally frank and open about missed targets, operational failures, and tough but pragmatic decision-making.

Consumers too are growing more ethically aware and exchanging information speedily through social networks. Like other stakeholder groups, their antennae for claims without substance grow more sensitive, aided by each new revolution in information and communication technology.

Indeed, the increasing popularity and use of social networks means that simply telling the story is no longer sufficient. Audiences want dialogue and the means to discuss, exchange ideas, and contribute comment. This presents an opportunity for an organisation, or an industry working together, to grasp the main social issues in which their businesses play a key part, and take ownership through education.

This is not to say the burden falls on companies alone. Sustainability agendas are broad, with many interconnecting players. There are interdependencies between companies, industry, governments, NGOs and customers. Each must recognise their mutual concerns, and the shared roles and responsibilities they have to make a new behaviour or policy effective. They must also acknowledge that each party works under different commercial and social pressures.

Stakeholder comment in the study indicates that collaborative effort is increasingly part of modern responsibility, and a crucial part of building a respected reputation in the 21st century.

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expertise that advancesreputation research

Millward Brown continues to push the boundaries of market research and brand consulting

Reputation Asset Manager and Profiler – ReputationAMP – builds on Millward Brown’s unrivalled aptitude for brand and communication research. Our corporate practice expands on this expertise, offering a tailor-made, evidence-based reputation methodology specifically designed to every client’s particular needs. It can adapt to any industry or sector, and to any company or organisation.

ReputationAMP does not simply lift up a looking glass and offer a reflection of a company’s present reputation. Probing for deeper insight, consultants apply critical thinking to unmask the real meaning behind the data. They examine what’s driving the opinions of stakeholders, the stimuli that produce positive advocacy, and the opportunities to shift neutral opinion or convert antipathy.

Working worldwide, Millward Brown’s corporate consultants do more than measure the current climate of opinion; they engage with the people whose views create and influence it. ReputationAMP solicits only the most influential stakeholders, each an expert in their own field. These are as likely to be drawn from corporate boardrooms as local communities, or from supply chain companies and employees, as investment houses and media commentators.

Whether honing in on selected stakeholder groups or carrying out a comprehensive investigation across all opinion formers, the methodology results in a detailed understanding of an organisation’s profile as seen by others. It provides perspective on what the prevailing reputation issues are today and in the future.

The results help companies understand, shape and sustain their reputation. And because an organisation needs reputation strategies to suit different stages of its development, the methodology can adapt to any point in the evolution of a business, from first growth through to maturity and change.

ReputationAMP goes beyond generating intelligence, it provides choices for action and answers to specific reputation challenges, including:

• diagnosinganddefiningreputationobjectives;

• benchmarking against competitors;

• monitoring for change, opportunity and vulnerability;

• assessing future reputation risks and priorities;

• planning reputation recovery strategies.

MillwardBrownisaleadingglobalresearchagencywith82officesinmorethan50countries. Renowned for rigorous methodology, the company draws on more than 35years’experienceandworkswith90percentofthetop100globalbrands.

For more information about ReputationAMP please contact:

Ed CokeExecutive Director, Millward Brown Corporate PracticeMillward Brown 24-28 Bloomsbury Way London WC1A 2PXt: +44 (0) 207126 5248 m: +44 (0) 7710 043151ed.coke@millwardbrown.com

www.millwardbrown.com/ReputationAMP

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The Millward Brown ReputationAMP study of the FMCG industry draws on the results of both qualitative and quantitative research conducted during May and June 2012.

The qualitative element comprised 10 one-hour in-depth interviews evaluating the reputational status of current FMCG organisations within the context of prevalent industry debates and issues.

A total of 105 quantitative telephone interviews were also conducted, focusing on world-leading FMCG organisations, measuring key metrics including awareness, confidence, proximity, familiarity, engagement and advocacy. Of the respondents: 35 were editors or senior correspondents at global or UK business publications, including daily newspapers, specialist press or websites; 35 were professors or department heads at academic institutes, with specific interest in business, the environment or sustainability; and 35 were directors or influential thought leaders within intergovernmental organisations (IGOs), NGOs, or think tanks.

For reasons of commercial sensitivity, organisation identities are not revealed. However, the four FMCG companies in this study are all in the top 200 of the Fortune Global 500 annual ranking of the world’s largest corporations.

About the FMCG study

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