What price reputation return on investment

Our research found almost universal frustration amongst FTSE250 communications leaders – and their bosses – about how best to measure corporate reputation and demonstrate ROI on communications programmes. Most struggle to identify the best way to show value to the business and agreed that buy-in from the top is essential to ensure that reputation measurement is a key part of risk management and supports business strategy.

MEASURING IMPACT

Most communications directors are keen to make corporate reputation less abstract and show how their activity can impact business objectives. However, this measurement still lags most other functions. It appears that new technology and the resulting increase in available data have made things harder; communications leaders can drown in a sea of statistical information whilst not nailing necessary measures for corporate behaviour.

Exacerbating the problem, there is no commonly agreed, industry-wide metric with which to gauge effectiveness. This is not surprising given that delivering an objective such as ‘shareholder value’ will differ from company to company depending on what the business and its stakeholders most value. Another difficulty is that reputation metrics sometimes need to be altered to reflect changing circumstances, such as an acquisition, affecting year-on-year comparisons. Lastly, the corporate communications function typically has relatively small budgets, which will be hard stretched to allocate to meaningful measurement. CEOs commented that their communications functions frequently focus too much on measuring outputs rather than outcomes or impact. There is also some frustration amongst senior communications leaders that some of their peers still use vanity metrics such as AVRs or ‘likes & followers’ on social media, which don’t show how engagement is delivering against core business objectives. This, they believe, devalues the function. In certain FTSE250 companies, CEOs need to shoulder some blame for the lack of credible corporate reputation management metrics.

Many CEOs have their own reading lists and private networks (e.g. their contacts at Davos, their neighbours, their favourite newspaper etc) and however objective they may think they are being, will rank these opinions ahead of what contradictory data may show.

THE ROLE OF KPIS¹²

Around three fifths (62%) of FTSE250 companies with inhouse group communications use key performance indicators (KPIs) to monitor the effectiveness of the function. These range from relatively loose, evolving objectives which are monitored occasionally, to highly structured, externally measured goals that are assessed regularly and consistently drive the activities of the department and the senior leadership team. Those that use them believe they add credibility to the function.

Our research revealed the following methodologies and metrics employed by FTSE250 organisations;

• Ascribing a monetary value (via an external company) to the various aspects of corporate reputation and then monitoring its rise and fall.
• Using internal data – monitoring key media messages, holding regular staff surveys.
• Correlating communications campaigns with share price.
• Analysis of company reputational performance versus the sector.
• Regular analysis of the external reputations of the CEO & leadership teams.
• Investor, analyst and media satisfaction surveys.
• Company-wide corporate reputation platforms which inform the long-term strategic decisions for the organisation.

Some firms are introducing ‘performance contract’ KPIs that underpin behaviour and value sets and directly link behavioural metrics with achievements. This, they say, ensures that KPIs recognise and reward behaviours that are consistent with the company’s values and vision.

Whatever company reputation metric is used, there is universal agreement that the results should be regularly presented to and monitored by the executive committee and board, to ensure that reputation measurement is a key part of risk identification and in line with the business strategy.

The 38% of FTSE250 companies with in-house resource who don’t use KPIs are generally unfazed by the lack of metrics and have no immediate plans to introduce them. In these businesses there is no downward pressure from their CEOs to perform to specific numbers or validate communications activities with data.

THE PRICE OF MEASUREMENT

The measurement of corporate reputation in FTSE250 firms ranges from simple media clipping services through to bespoke reputation monitoring & assessments delivered by specialist companies. Corporate communications functions are spending as little as £12,000 through to over £350,000 per year to measure reputation. This figure may not reflect all expenditure as sometimes the budget for reputation measurement can sit in other functions such as strategy or marketing.

FTSE250 EXPENDITURE ON REPUTATION MEASUREMENT

¹² More details available, hello@cayhillpartners.com