Sifiso Falala
Now in its fifth year, the annual Top Companies Reputation Index (TCRI) compiled by Plus 94 Research and partly funded by the Mail & Guardian reflects challenging economic conditions in South Africa negatively impacting corporate reputation.
“We have seen overall scoring across sectors going down during the past three years. South African consumers are not as buoyant about the country and conditions as they were four or five years ago,” says Sifiso Falala, chief executive of Plus 94 Research.
He believes that the country is only now starting to feel the brunt of the global recession that began in 2008: “From challenges around inflation and high levels of unemployment, South Africa is faced with a number of socio-political developments that are impacting corporate reputation. Couple this with protest action linked to [lack of] service delivery and general discontent around the standard of living, [and] you have an environment which needs business to become more visible in helping overcome these challenges.”
For Falala, one of the biggest concerns when it comes to managing corporate reputation in the country is that companies are not driving innovation.
“Innovation is a critical component of reputation. In general, local companies replicate or reproduce trends from elsewhere and not doing anything uniquely African.
“While we are not saying they should be involved on a political level, they need to find innovative ways of addressing specific South African issues pertaining to unemployment, the disadvantaged, the disabled, and youth to name but a few. We need to embrace a South African way of solving problems which will, by implication, see an improvement in reputation.”
The power of social media
Tamra Capstick-Dale, managing director of Corporate Image, says corporate reputation is more important today than ever before.
“Consumers are more savvy than they were 10 years ago. They are more engaged with companies because of who they are, instead of what they produce. Decisions to purchase are often made on what a company stands for.”
Lara Magnus, director of Orange Ink, echoes this sentiment: “Corporates are becoming far more obsessed with reputation. In the world of being online around the clock, people can comment and say bad things about companies. It is creating a scary environment for businesses. We are seeing this result in two ways of approaching reputation. On the one hand, you have companies who embrace it and have fun with it. Sure, there might be hits and misses but they take the bad with the good. And then you have those companies who are more concerned about what employees and their stakeholders think.
“They adopt an ‘old school’ approach with their reputation, with responses become much more marketing-focused instead of conversational,” she says.
Depending on who you ask, social networking might be the best or worst tool for management reputation.
“Social media is underplayed by certain companies who underestimate the power of it. There are others who take it too seriously. If people are really enraged about something they will not just click like or share a post. It all depends on how companies react to it,” says Capstick-Dale.
She feels that companies should not fall into the trap of getting social media users to dictate their organisational strategy.
“You need to make decisions based on the business, consumers, and the supply chain. Anything other than that and you are only doing what is popular and not good for business. Social media outrage moves on very quickly, and it has a very limited impact on the bottom line.”
Jaco Pienaar, chief knowledge officer at market research and analysis firm Professional Evaluation and Research, feels that social media is placing focus on how top brands handle crises.
“In the past year we have seen several companies facing numerous scandals including retrenchments, strikes, and the like. How they manage these dictate how strong their brand remains. From our research we have seen that the companies who come out on top are generally the ones able to manage their reputation very efficiently and be ahead of the consumer.
Often, it simply boils down to not lying to your customer,” says Pienaar.
Capstick-Dale says that once a company starts lying, it loses trust: “It leads to stakeholders asking what else has the company lied about. Certainly, a brand can recover from this, but it will take time.”
Magnus says that part of this problem is that companies are quick to make promises in the midst of a crisis, but need to follow-through on them once the crisis has been resolved.
“It is easy to revert to business as usual following a crisis. But to effectively come back from this means the organisation has to deliver on the promises made,” says Magnus.
Despite their focus on maintaining and improving reputation in the short term, companies need to look at the future of the country and the role they see themselves fulfilling.
Building on Falala’s view that companies need to impact more than their bottom line, Capstick-Dale feels that in 10 years’ time people will look back at the behaviour of corporate South Africa and its inability or unwillingness to make its voice heard in the social discourse.
“Companies are [right now] relatively silent in the face of aggression from the government. This is a mistake and their reputation will suffer accordingly.”
Key findings
• Coca-Cola retains the top position, albeit with its lowest ever score of 83.22, compared to 85.68 in 2014 and an all-time high of 89.36 in 2011.
• Pick ‘n Pay drops from second to sixth position, while Vodacom retains third place which it has held for the last three years.
• MTN drops out of the Top 10 for the first time since 2011, to occupy the 17th position.
• Multichoice moves into its highest ever ranking in fourth place, entering the Top 10 for the first time.
•Volkswagen improved to its highest ever rank in 5th place. The Top 5 companies include two vehicle sector organisations – Volkswagen and Toyota.
Research methodology
The companies in the annual Top Companies Reputation Index (TCRI) are the 50 largest advertising spenders in South Africa for the past year. Because of the size of their advertising, they have high public visibility and engagement.
Overall, 167 companies were rated in the 2015 index by a sample of 2 590 respondents across the major cities in all nine provinces. Every respondent rated an average of six companies with the sample conducted in the respondent’s home language.
It was also demographically weighted to be representative of provinces, age groups, race, and gender.
Prior to performing the rating, respondents were asked to indicate familiarity with the different businesses in the study and only rated companies that they were familiar with. As a result, not all companies were rated by the same number of respondents.
However, a larger number of respondents rating a company did not necessarily reflect better results, nor did a smaller number of respondents imply a poorer showing.
Companies were rated across nine pillars of reputation with the score being an aggregation of all the 31 attributes recalculated to a constant sum of 100. The pillars include corporate communication, products and services, financial performance, governance, and recognition.