Inside Story Opens the Vaults on Corporate Reputation - May 2013

Commercial in confidence 1

INSIDE STORY Research and Knowledge Management | Level 5, 2 Barrack Street, Sydney NSW 2000Tel: 02 9299 9979 | Fax: 02 9299 7991 | Email: [email protected] | Web: www.insidestory.com.au | ACN: 00 364 0953 | ABN: 46 795 383

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INSIDE STORY opens the vaults on corporate reputation


Introducing INSIDE STORY

25 year

s old!

CELEBRATING A BIG BIRTHDAY MEASURED CORPORATE REPUTATIONS SINCE 1999

REPUTATION CLIENTS SPAN MANY COMPANIES AND INDUSTRIES


Unions

Employees

Students &

graduates

Associations

Academics

Members

Politicians

Advisors

Opposition

Bureaucrats

Regulators

News journalist

s

Business journalist

s

Wires

Television

Print

Internet

Bloggers

Twitterers

Fans

NGOs

Community groups

Consumer advocates

SMEs

Large business

esEnterprise

s

Regional communitie

sAustralian

sInternational

visitors

Who influences your reputation?


Journalists – every 6 months since 1999

News journali

sts

Business

journalists

Wires

Television

Print

Internet


How we measure reputation

Negative equity Positive equityNeutral:

neither weaknor strong

-5 -4 -3 -2 -1 0 +1 +2 +3 +4 +5

© Copyright INSIDE STORY 2013 INSIDE REPUTATION INDEX


How the environment has changed

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

In the beginning – companies perceived positively. Regularly saw reputation ratings up at 4.5/5

2000/2001 – Dot com bubble

burst2001 – HIH – Australia’s

largest ever corporate collapse

All reputations re-evaluated – drop. The best

sit at around 3/5

2008-2010 – GFC – Australian

business largely unscathed in a global sense.

However a degree of

nervousness.

The ‘new normal’ - businesses getting to

grips with high Australian dollar, ‘two

speed economy’, uncertain political environment, new

carbon tax, increase in superannuation –

increased uncertainty

Relative stabilityIncrease in interest in CSR activities, innovation


Case study: QBE

Frank O’Halloran

14 years at the helm of QBE

Reputation for being a great leader

Made hard nosed decisions which paid off

Ability to attract top executives

Did not like talking to the media – unless it suited him


Feb ‘09 Feb ‘100.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

QBE’s evolving reputation

Feb ‘04 Feb ‘05 Feb ‘06 Feb ‘07 Feb ‘08

1.5

Global financial crisis – period of

uncertainty

Feb ‘11 Feb ‘12 Feb ‘13

Recovering from losses in

September 11 attacks in USA

plus unsuccessful life

insurance expansion

1.3

1.9

2.3 2.

1

QBE goes shopping – buys

up cheaper competitors

3.1

3.8

QBE hit by multiple disasters – Japan & Christchurch

earthquakes, floods in Thailand, tornadoes in USA. Negative

impact on profitability – 45% drop in share price

2.0

Frank steps down as CEO, John Neal

appointed

1.9

2.1


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Feb ‘11 Feb ‘12 Feb ‘13

$-

$5.00

$10.00

$15.00

$20.00

$25.00

QBE’s share price

2.0

1.9

2.1

Feb ‘04 Feb ‘05 Feb ‘06 Feb ‘07 Feb ‘08 Feb ‘09 Feb ‘10

1.51.

3

1.9

2.3 2.

1

3.1

3.8


Impact on trust and confidence

Feb ‘04 Feb ‘05 Feb ‘06 Feb ‘07 Feb ‘09 Feb ‘10 Feb ‘11 Feb ‘12 Feb ‘13Feb ‘08

0.6

1.5

0.3

1.7 1.

5

2.6

1.4

1.4

0.4

1.3

Trust Confidence

1.3

1.9

2.3 2.

1

1.5

3.1

3.8

Overall reputati

on

2.0 1.

9

2.1

Global financial crisis – period of

uncertainty

1.8

1.9

1.8

2.3 2.

0

2.7

4.0

1.4

1.4

2.3

QBE, which was regarded as the best managed insurer in this sector and one of the better ones

on the globe, wasn't actually quite as well managed as we thought it was.” Senior business journalist, May 2013


What is a ‘good’ reputation then?

-5 -4 -3 -2 -1 0 +1 +2 +3 +4 +5

© Copyright INSIDE STORY 2013 INSIDE REPUTATION INDEX

1.3

3.8

1.8 2.8

The ‘golden zone’


Corporate reputation – what negatively impacts it?

Failing to meet forecastsEspecially without warning

Failing to grow Especially when your competitors are

Making unexpected major changesAnd failing to communicate reasons why

CrisisService outage, plant closures, major layoffs, strikes, off-shoring

DisharmonyBetween the board and management, institutional shareholders and management, company and government, social and shareholder expectations

Scandal Customer complaints, CEO or board indiscretions

‘Unethical’ practices Price gouging, significant price increases without explanation


The journalist’s mental model – how they respond to your messages

Values Experiences Perceptions

Integrity, esteemRational economist

vs. humanist

Past and present, direct and indirect,

professional and personal

Things they hear, read and observe

Knowledge and feelings

‘You’ (the organisation)Actions, people, culture, competitiveness, corporate responsibility,

strategies, relationships

Message

How you project externally eg via messages, advertising, products and your relationships with the media.

How well your message is communicated and cuts throughJournalists will overlay your message with their previous experiences, perceptions and values.

This is combined with what they learn from others eg financial analysts, other sources

SupportPositive stories

RejectNegative stories

Wait & see

Neutral stories

Ignore

Overall evaluation


Corporate affairs

A hygiene factor – ignore it at your peril

Timely access to the right people

Framing the strategy clearly and confidently

Understanding and communicating:What were the event triggers?What are the critical issues that led to this? What is happening in the background (industry, economically, etc)?

After an event, media focus is on strategy (what you are doing now?) as opposed to the business model (how you make money)


When do journalists’ musings matter?

When your company has a big consumer footprint

When politicians or other major opinion leaders might take notice

When your company has many direct shareholders and customers who listen to these journalists

When your company is perceived as an iconic brand name (Qantas, Telstra, CBA, NRMA) – everybody thinks they should have a say in how these companies are managed!

When your CEO cares about how public comment reflects on his or her reputation


What makes a good relationship with the media?

Build a relationship – get to know who writes about you

Help journalists to understand your wider industry as well as your organisation

Don’t mass spam your press releases – target your audience

Don’t try to manage the press! Hate exclusives – if have a release, be open

It’s all about the story – welcome coming with comments on issues, ideas for stories, positions on events

Give advance notice of CEO and senior management availability for interviews – especially if based interstate

Return calls and emails promptly – even just to say you’re unable to respond or you’re working on it


INSIDE STORY Research and Knowledge Management | Level 5, 2 Barrack Street, Sydney NSW 2000Tel: 02 9299 9979 | Fax: 02 9299 7991 | Email: [email protected] | Web: www.insidestory.com.au | ACN: 00 364 0953 | ABN: 46 795 383

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GO DEEPER, MOVE FORWARD

Investor Relations

Inside Story Opens the Vaults on Corporate Reputation - May 2013