Banks' Reputations Are Plummeting, Tooby
As the financial crisis exploded last fall, big U.S. banks weren't just devastating shareholders. They were laying waste to years of image-building as well.
According to an annual survey from Harris Interactive, corporate reputations took a nosedive. Among the 60 firms whose reputations were rated by more than 20,000 Americans in phone and online interviews last fall, the worst performers included Washington Mutual, Citigroup (C), Merrill Lynch (BAC), Wachovia (WFC), JPMorgan Chase (JPM), and Bank of America (BAC). Bringing up the rear was troubled insurer AIG (AIG), whose reputation score of 43.78 on a scale of 1 to 100 neared Enronesque levels, showing how poorly regarded the once-proud company has become.
Perhaps more surprising is that banks received even lower reputation scores from respondents who were also customers. That's unusual, says Harris Senior Vice-President Robert Fronk, because customers usually give higher ratings to companies they patronize.
The poor showing from the banks—as well as from such automakers as General Motors (GM) and Chrysler, which finished among the bottom five—contributed to an overall negative perception of Big Business. Nearly 9 out of 10 Americans say U.S. corporations have a bad reputation in general, the survey found. In previous years, that figure was around 7 of 10.
Not every company suffered. With an overall reputation score of 82.39, out of a possible 100, Johnson & Johnson (JNJ) reclaimed the top spot from Google (GOOG), which finished second, at 81.89. (Any score over 75 is considered good, while those above 80 are considered excellent.) Other big gainers included Sony (SNE), which moved up 13 slots to third; Wal-Mart (WMT), AT&T (T), and Unilever (UN), the Anglo-Dutch outfit that owns such brands as Dove, Lipton, and Ben & Jerry's.
Unilever was one of several consumer-product firms to score particularly well in the survey, now in its 10th year. Strong ratings for No. 4 Coca-Cola (KO), No. 5 Kraft (KFT), No. 8 General Mills (GIS), No. 12 Procter & Gamble (PG), and No. 16 PepsiCo (PEP) underscored how consumers turn to trusted names when times get tough. "We call them comfort-and-value companies," says Fronk. Their performances also highlight how food companies have thus far weathered the recession relatively well as consumers dial back on discretionary purchases such as restaurant meals.
The survey asked respondents to identify the most visible companies, whose reputations were then rated according to 20 attributes, each measured on a seven-point scale. The attributes fall into six dimensions: emotional appeal; products and services; social responsibility; vision and leadership; workplace environment; and financial performance.
trust in business plummeted
The public furor over the financial sector's collapse shed light on a puzzling aspect of the survey. Familiar names such as FedEx (FDX), UPS (UPS), and Intel (INTC), among the top performers in every prior year, vanished from the list. Apparently the closely watched trials and tribulations of financial institutions left the shipping giants and the chipmaker without sufficient visibility when the survey was conducted last fall. (Of the eight companies new to the list in 2008, seven were financial firms. The other was Amazon.com (AMZN).)
Given the public's general antipathy toward corporations, "not being on the list isn't the worst thing in the world," Fronk says. The negative perception of American businesses has been documented by other recent surveys. For example, the latest edition of the Edelman Trust Barometer, created by the public relations agency, found that the percentage of Americans who "trust business to do what is right" fell from 58% in 2008 to 38% this year. CEO credibility also hit record lows in several countries surveyed.
Another surprise was the relatively low score of Apple (AAPL), which ranked 14th, just above Unilever and well below rival Sony. Fronk says that despite the ubiquity of Apple's iPod and iTunes software, its charismatic leader Steve Jobs, and its knack for innovation, Apple fell short in other measures of corporate reputation. In particular respondents said Jobs has failed to instill a "leadership culture" at Apple and its "secretive" workplace culture won a low score for transparency.
"There's a difference between a brand and a reputation," says Fronk, implying that while Apple's brand is top-notch, its reputation could use some improvement.