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24 May 2013 00:00
The Top Companies Reputation Index (TCRI) shows that companies plying their trade in finance, food, drink, clothes and mobile communication are all at the top. After all, these are the things that people engage with on a daily basis and there has to be an element of trust with the brands in those sectors.
While these industries all fare well in the reputation stakes, it is surprising to see the strong performance of parastatals.
They have been hampered by performance and governance-related constraints, but the index shows that parastatals are still considered to have fairly robust reputations.
The home, hardware and utility stores industry also had a good reputation score (just below 80), confirming their assessment as a favourably perceived industry. It is important that the general standard of business outlook in South Africa, nearly 20 years after democracy, is still positive. This is underpinned by the overall industry average points, contributing to a healthy South African corporate environment that bodes well for economic growth.
Mark Victor, partner for risk advisory at Deloitte says industries talk to a variety of stakeholders with the most critical being the public, investors, employees, customers, and suppliers.
"The question is less about what whether some industries are more important than others when it comes to corporate reputation and more about the organisations themselves and the impact they are making in the country. For example, look at banks. They are considered to be the guardians of the financial system. They need to be super-cautious in managing reputation because their failures are not seen to be product-based but something that can potentially impact the entire financial system," says Victor.
Traditionally, Victor believes, reputation was only important to stock exchange investors and financiers. This has changed, now that the public and customers have a more serious view of corporate reputation. It therefore comes to be about stakeholders across the value chain and what companies are doing to maintain those relationships.
Banks lead with the highest industry score (85.19). In fact, banks make up four of the top 12 companies in this year's rankings. This shows that customers trust banks, or at the very least, their security and ability to protect personal information.
This is in sharp contrast to consumers elsewhere in the world who rate financial institutions as the least trustworthy following the start of the global financial meltdown almost five years ago.
A study conducted last year by research firm StrategyOne found that consumers' confidence in banks' ability to do the right thing has plummeted by 46% in the US and 30% the UK since 2008. However, the study also showed that in countries like India and China, where consumers already have high levels of trust, belief in the integrity of financial institutions has increased by as much as 12% over the same period.
The strategies of local banks to focus on developing products that are more geared to the specific needs of clients have been paying dividends. The availability of mobile apps and telephone banking is also contributing to the perception that banks are trying to work with their customers instead of against them. The alcoholic beverages industry regularly comes under fire for its advertising campaigns and the abuse of its products.
Several companies have been counter-acting this criticism by actively promoting responsible drinking campaigns. More recently, Gauteng economic development MEC Nkosiphendule Kolisile wanted to implement a ban on alcohol sales in the province on Sundays. His decision to withdraw the proposal was welcomed by the industry and members of the public.
But despite the criticisms of the industry, it is still one of the most trusted in the country. As with banks, it is well regulated and organisations know that they are under public and government scrutiny at all times. Robyn Chalmers, head of media and communications at the South African Breweries (SAB) says the company recognises that it has an obligation to enhance the communities in which it operates and it does so because it is the right thing to do.
"For more than a century here in South Africa, we have known that our success as a business depends largely on our ability to deliver superior value to our fellow South Africans, particularly consumers, retailers, and society." A 2012 United Nations Children's Fund (Unicef) and Digital Citizenship Safety study found that South Africans are in the lead as one of the highest users of mobile technology and mobile social networking in Africa. According to the study, 72% of 15 to 24-year olds own a mobile phone. It is hardly surprising then that operators like Vodacom, MTN, and Cell C fared well in the Index.
But these high reputational rankings do not come without challenges. Billing issues, an ultra-competitive market, and an increasingly regulated industry mean that companies in the sector need to find more innovative ways to introduce solutions to the market. And similar to companies in the insurance industry, mobile providers need to balance consumer demand for simpler pricing models with products that provide clear differentiation to those of their competitors.
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