Corporate governance, which often makes headlines for the wrong reasons, is having a bigger impact on company reputation than ever before according to new research published today by consultancy the Reputation Institute.
A company's products and services are still the main drivers behind its reputation, but is no longer enough to win over the general public in itself. Having a broader positive influence on society has become the third biggest influence in consumer decision making. In uncertain times, people want to feel they are being treated with “authenticity, transparency and fairness” by those they spend money with according to the Reputation Institute's Ed Coke.
The Institute's so-called "RepTrak" system measures a firm's ability to deliver on the public's expectations in seven key areas: products and services, innovation, workplace, governance, citizenship, leadership and performance.
So who is cutting the mustard? Dyson is rated as the most reputable company in the 2017 poll, followed by Aston Martin and Lego.
Samsung managed to maintain its good reputation in the UK despite its exploding Galaxy Note 7. This is attributed to the South Korean giant's handling of the crisis. Volkswagen and Lloyds Banking Group showed improvements in the ratings as they took steps to recover from controversy.
Meanwhile, Virgin Trains appears to be have been scapegoated for the woes afflicting the UK's wider rail network, scoring fewer points than last year among consumers.
Prime Minister Theresa May has spotted that corporate governance is in need of rehabilitation with the public and is consulting on how to improve it, notably with proposals on executive pay and workers on boards. If that is not a wake up call for UK plc, then hear this: consumers are 77 per cent more likely to buy products from companies with excellent reputations versus those with poor ones.
How can corporations help themselves? In a word, communication. Companies are often failing to get across what they do in terms of governance or citizenship, with 67 per cent of the survey's respondents “unsure” on what they are up to.
With a government white paper due within weeks, it is time for companies to put their best foot forward and shout about what they do in these areas or face greater intervention.