Corporate Reputation and the Bottom Line

September 28, 2008 Updated: October 1, 2015

A sign is displayed outside of the Google headquarters in Mountain View, California. (Justin Sullivan/Getty Images)
A sign is displayed outside of the Google headquarters in Mountain View, California. (Justin Sullivan/Getty Images)
WASHINGTON—Internet heavyweight Google Inc. earned the distinction of being the most respected company in America. Google, a newcomer in a “Global Pulse U.S. 2008 Study,” came away with a rating of 85.23, tops on the list.

The annual study, conducted by the Reputation Institute, a New York City-based global research and consulting firm, included around 60,000 consumers in 27 countries who provided opinions regarding the world’s 1,000 leading companies.

“Google edged out the largest consumer product companies in the U.S., indicating that consumers have a high level of trust, respect, and good feelings for the company,” said Kasper Nielsen, managing partner at the Reputation Institute in a press release.

Toyota Motor Corp. of Japan was judged to be the most respected globally, taking the distinction from last year’s champion Lego Group.

In the U.S. survey, Johnson & Johnson Co. placed second, followed closely by Intel, General Mills, and Kraft Foods.

Google also achieved the top spot in the “2007 Reputation Quotient Survey” recently published by Harris Interactive Inc., a global research company.

“Google received a top-ranking for social responsibility primarily due to their workplace environment, demonstrating that corporate responsibility, in the minds of consumers, starts with your own employees first,” said Robert Fronk, vice president at Harris Interactive.

Not one corporation achieved a 100 percent rating on the reputation scale, which evaluates a company's behavior in the areas of “products/services, innovation, workplace, citizenship, governance, leadership and performance.”

Winners and Losers

Companies’ reputations are on a downward slide worldwide, according to the Harris Interactive survey. Close to three-fourths of Americans surveyed call corporate America’s behavior appalling and harmful to society.

Trust, the cornerstone of customer loyalty, has sunken in light of layoffs, poor treatment of employees, off-shoring of production, corporate greed, revelation of corporate misconduct, excessive executive compensation, and, most of all, lowering of product quality.

“Companies that pay attention to enhancing their reputation see bottom line results,” said Fronk. “The companies with good reputation have stayed near the top of the list and those with bad reputations have gotten worse.”

Costco Wholesale Corporation was judged the most respected company among the largest U.S. retail companies with a score of 74.33 percent. 

Microsoft toppled from no. 1 in 2006 to no. 10 in the 2007 Reputation Quotient Survey.

Halliburton Energy Services, a global corporation, was on the bottom of the Harris Interactive list of the 60 “Most Visible Companies,” in America with a score of 49.06.

Wal-Mart is losing the customer loyalty game with a 53.01 score, 4.74 percent down from 2007, according to the Reputation Institute survey. Wal-Mart did not even make the top 200 list. The Harris Interactive survey-takers gave Wal-Mart a 64.95 score, placing it 44th on its list, and said that this company’s customers have grown increasingly negative over the past three years.

Wal-Mart dropped 76 points from the 57th place in 2007 to number 136 in 2008 on the Reputation survey scale, according to WalmartWatch, a Web-based Wal-Mart watchdog.

“Despite Wal-Mart’s recent efforts to make improvements, it may take time for U.S. consumers to perceive the company in a more positive light,” said Nielsen in a press release.

First on the list of Wal-Mart negatives are its labor practices. WalmartWatch charges that Wal-Mart is anti-union, refuses to pay its workers a decent salary, has a second-rate health plan, and sells products from sweatshops and slave labor camps in China and other Third World countries. As of July, 80 lawsuits against Wal-Mart have been heard by different U.S. Courts.

“Wal-Mart is in dire need of an army to manage its reputation all the time,” said Brian White in a recent article on the Blogging Stocks, a Web-based blog of the Weblogs Inc. network. “A few well-placed PR stunts won’t cut it.”

Good Reputation Leads to Greater Profits

“Many people aren’t purely mercenary in their business dealings. They care about fairness,” suggest University of Pennsylvania professors in an article entitled “In the Game of Business, Playing Fair Can Actually Lead to Greater Profits.”

A reputation for being fair-minded saves resources, cost, and reduces lengthy negotiations and excessive legal documentation.

People retaliate against companies with poor reputation by buying from competitors and sharing their negative experiences with those they come in contact with.

According to a Knowledge @ Wharton (KW) article, behavior seen in TV programs such as “The Apprentice,” where “wannabe moguls try to impress Donald Trump by preening, cajoling and conniving,” does not foster a good reputation for a company. The reputation suffers and consumers will remember when making purchasing decisions.

The KW article ended by stating, “Disregarding fairness can be detrimental to the company[‘s reputation] in the long run, as fairness is the lubricant for the sales machinery.”