The Results of the 2012 RepTrak Study What the Reputation Economy means for South Africa 2012 South Africa s Most Reputable Companies: Part of the World s Largest Study on Corporate Reputation 1
Introduction to Reputation Institute Who We Are? Reputation Institute is the world's leading reputation management consultancy, enabling leaders to make more confident business decisions that build and protect reputational capital and drive competitive advantage. Our Global Presence Independently owned and founded in 1997, we operate in 30 countries. We provide best-in-class reputation consulting to empower more confident decisionmaking, enabling our clients to achieve their corporate objectives. By working with us, you can leverage your corporate reputation to gain competitive advantage, minimize your reputation risk and protect reputation capital, influence stakeholders to desired action, create and integrate a reputation management and measurement system. Our Publications Our South African Members 2
How is Reputation Different to Brand? Brand The promise a company makes to its stakeholders Owned by the company Reputation The degree to which the company fulfills its promises Owned by stakeholders A brand is a promise when you live up to that promise you build Reputation 3
What is Reputation? It is an Emotional Connection.& is the degree to which STAKEHOLDERS Admire Trust Respect Feel Good YOUR COMPANY! 4
How is Reputation Created & Why is Reputation Important? Direct/Personal Experiences Products /Service Investments Employment Company s Actions Communications/Branding Initiatives/Behaviours 3rd Party Influencers Media (Traditional, Social) Experts/Leaders Personal & Social Networks...Influences Stakeholder Perceptions (Reputation)...Influences Stakeholder Behaviour (Recommend, Invest, Support, Use/Buy, Benefit of Doubt)...Influences Business Results. 5
Why are Reputations Important? A Stronger Reputation Eases Recovery from a Crisis King III states that reputation is a company s most significant asset. Reputation is Linked to Market Value Therefore the management thereof as well as effective stakeholder engagement is recognised as essential to good corporate governance. 6
It has put Reputation on Everyone s Mind
What is the Reputation Economy? People: Are highly connected into networks Choice: Many companies to potentially cooperate with A Brave New World Where: Media: Affect how markets interpret events Support: Depends on having favorable perceptions Performance: Comes from generating support Value: Is created from exploiting intangible assets
The Declining Influence of Traditional Institutions is paralleled by the Rise of Social Media
Social Networks Mobilize Action and Affect Interpretations
And a Company s Performance Depends on Having Support 0.33 Price/Earnings Network Support 0.32 0.24 Market/Book Enterprise Value/EBITDA -0.18 Market Risk Source: Reputation Institute, 2011; quantitative analysis based on 2011 RepTrak Pulse, 2010 Financial Data, Large Cap U.S. Companies, N=274
In Summary ALL companies operate in an ecosystem of influence It is a REPUTATION ECONOMY and reputation is how attractive you are to your stakeholders and is an emotional connection...that ensures Your customers are loyal Your customers recommend you Your partners support you Policy makers and regulators give you the benefit of the doubt The media looks for your point of view Your employees are engaged and deliver on your strategy 12
Reputation Institute s RepTrak Reputation Institute uses the standardised RepTrak framework to measure reputation. Reputation is an Emotional Connection, Driven by Seven Dimensions 13
Reputation Institute s RepTrak Decomposed Seven reputation Dimensions drive the overall Reputation which influences Supportive Behaviour Dimensions Reputation Supportive Behaviours Products & Services Innovation Recommend Workplace Governance Benefit of Doubt Citizenship Leadership Performance Say Positive 14
2012 South African RepTrak Pulse Results You can t move what you can t measure 15
Annual Reputation Study of South African Companies Details of the South Africa RepTrak Pulse 2012 The reputation of the 20 largest listed South African companies based on revenue and familiarity to the general public. We surveyed the economically active segments of the general public LSM 6 and above in four major Provinces (Gauteng, KwaZulu-Natal, Western Cape, Eastern Cape) who were familiar with the companies The South African study is a component of Global Reputation Study across 41 countries and 24 industry categories. 3010 ratings were collected from 1304 unique respondents (members of the general public) for the purposes of this study. Data Collection: January and February 2012 Reputation Pulse and Dimension scores range between 0 and 100. The table below provides score range categories or tiers. Excellent/Top Tier above 80 Strong/Robust 70 79 Average/Moderate 60 69 Weak/Vulnerable 40 59 Poor/Lowest Tier below 40 Airlines & Aerospace Automotive Beverage Chemicals Computer Conglomerate Construction & Engineering Consumer Products Electrical & Electronics Energy Financial Bank Financial Diversified Services Financial Insurance Food Manufacturing Industrial Products Information & Media Pharmaceuticals Raw Materials Retail Food Retail General Services Telecommunications Transport & Logistics Utilities 16
Top 20 JSE Listed Companies Measured in 2012 Company Selection Criteria: Engaged in commercial activities and had a reasonable amount of familiarity with the general public. Were not whollyowned subsidiaries of another company. Anglo American Absa BHP Billiton Clicks Liberty MTN Nedbank Old Mutual Pick n Pay SABMiller Sanlam Santam Sasol Shoprite Spar Standard Bank Telkom Tiger Brands Vodacom Woolworths Source: Financial Mail: 24 June 2011 Top Companies 2011 (pg.29-30) 17
Respondent Familiarity of the Top 20 Listed Companies Familiarity [Sorted by Very familiar] Not at all familiar Have only heard the name Somewhat familiar Very familiar Not sure Shoprite 0.0% 10.0% 89% 0.0% Pick n Pay 0.3% 10.0% 89% 0.0% Spar 0.0% 10.1% 89% 0.0% Woolw orths 0.1% 11.5% 87% 0.0% Standard Bank 0.1% 11.7% 87% 0.0% Absa 0.1% 11.1% 87% 0.0% Vodacom 0.1% 13.7% 85% 0.0% Telkom 0.2% 16.4% 83% 0.1% Clicks 0.4% 17.6% 81% 0.0% MTN 0.2% 16.9% 81% 0.0% Nedbank 0.2% 19.2% 78% 0.0% Sasol 0.5% 25.0% 72% 0.0% Old Mutual 0.4% 26.5% 68% 0.1% Sanlam 1.8% 31.1% 61% 0.1% SABMiller 5.6% 24.4% 60% 0.2% Tiger Brands 6.8% 28.5% 51% 0.8% Santam 11.7% 32.9% 42% 0.2% Anglo American 14.0% 28.8% 35% 0.6% Liberty Holdings 12.5% 32.8% 35% 0.2% BHP Billiton 32.0% 26.9% 16% 1.6% 1 304 18
How are perceptions about companies formed? Over half the respondents had heard about the company through mainstream media such as TV news or newspapers. Just under half of the respondents had heard about the company through the company s own marketing initiatives. 45% of the respondents had experienced the company directly for themselves through purchasing the products/services of the company. From mainstream media (eg TV News, print publication) 3 rd party influencer From Company (eg Advertising, Press Release, Website, Company Representative) Company 52% 49% 48% 51% I have purchased/used Company's products/services Direct Experience From 3rd party (eg friend, family, aquaintance, topic expert) 3 rd party influencer 45% 40% 55% 60% From social media (eg forum/bulletin board, social network, tagging site, blog, microblog) 3 rd party influencer From online media 3 rd party influencer 12% 21% 88% 79% I commented about Company using social media 10% 90% Direct Experience 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % YES RESPONDENTS % NO RESPONDENTS 3912 19
Communication Channels and Emotional Connection Our research shows that respondents who had heard about a company from social media tended to have a higher emotional connection (measured by the Pulse Score) to that company. This suggests that social media is becoming a more influential 3 rd party influencer to the general public. Respondents who have had a direct experience or a high level of engagement with a company through purchasing the company s products/services, or feeling strongly enough about a company to comment on the company on social media, tended to have a higher emotional connection to the company than those who had a low level of engagement with the company. From social media (eg forum/bulletin board, social network, tagging site, blog, microblog) 58.56 66.41 3 rd party influencer I have purchased/used Company's products/services 56.56 65.78 Direct Experience I commented about Company using social media From Company (eg Advertising, Press Release, Website, Company Representative) From 3rd party (eg friend, family, aquaintance, topic expert) From mainstream media (eg TV News, print publication) From online media 59.81 63.13 59.26 62.45 59.58 61.60 59.76 61.06 60.09 60.00 Direct Experience Company 3rd party influencer 3rd party influencer 3rd party influencer Pulse score of NO respondents 50 55 60 65 70 Pulse score of YES respondents 3912 20
2012 Top 20 South Africa RepTrak Pulse Scores Woolworths has the best reputation of the top 20 listed companies in South Africa followed by MTN, Absa, Standard Bank and Vodacom. These four companies scores are below 70 points which is considered an average/moderate reputation. RepTrak Pulse Scores - 2012 [Sorted by Score] 3010 Woolw orths 78.59 MTN 69.57 ABSA 69.12 Standard Bank 67.79 Vodacom 67.53 Clicks 67.12 Old Mutual 65.08 Nedbank 65.07 Spar 64.84 Pick n Pay 64.31 Sasol 61.97 Shoprite 61.93 Tiger Brands 58.04 Sanlam 57.24 SABMiller 56.66 Anglo American 53.85 Telkom 51.55 Santam 48.98 Liberty Holdings 48.49 BHP Billiton 40.22 Excellent/Top Tier above 80 Strong/Robust 70 79 Average/Moderate 60 69 Weak/Vulnerable 40 59 Poor/Lowest Tier below 40 All Global Pulse scores that differ by more than +/-2.9 are significantly different at the 95% confidence level. Pulse scores are based on questions measuring Trust, Admiration & Respect, Good Feeling and Overall Esteem (captured in the Pulse score on a 0-100 scale). 21
Changes in Corporate Reputations Over Time (2011 2012) Decreased corporate reputation scores across all industries are indicative of the general public and important stakeholders to these companies becoming more scrutinizing. Diversified financial services (Santam, Liberty Holdings and Old Mutual) have suffered the biggest industry drop in reputation scores. 100 RepTrak Pulse Scores Over Time 2011 vs 2012 90 80 70 60 50 62.8 51.55 66.9 57.24 58.0 48.49 63.0 53.85 69.1 70.8 61.97 65.08 73.0 73.9 67.53 71.9 69.57 69.12 67.7 65.07 70.1 67.79 58.3 56.66 40 30 20 10 0-11.2-9.7-9.6-9.1-7.1-7.1-5.7-5.7-5.4-5.4-4.3-4.3-2.7-2.7-2.6-2.6-2.3-2.3-1.6-1.6-1.5 2011-2012 2011-2012 2011-2012 2011-2012 2011-2012 2011-2012 2011-2012 2011-2012 2011-2012 2011-2012 2011-2012 2011-2012 Telkom Sanlam Liberty Holdings Anglo American Sasol Old Mutual Vodacom MTN ABSA Nedbank Standard Bank SABMiller Companies showing significant decline in reputation scores from 2011 to 2012 2011: n=3617 2012: n=2205 All scores that differ by more than +/-2.9 are significantly different at the 95% confidence level. 22
2012 Reputation Dimension Drivers for South Africa Seven dimensions of corporate reputation shape perceptions of a company. Products & Services, Innovation, Workplace, Governance, Citizenship, Financial Performance and Leadership. These dimensions drive the emotional bond, which in turn influences behaviour toward companies. 12.6% 16.7% South Africa 13.7% 14.3% 18.5% 17.2% 15.4% 13.1% 13.5% 13.2% 13.2% 12.6% 13.1% 12.9% Products & Services and Innovation are the two main drivers of reputation for the South African public in 2012. The other five Dimensions have an importance that is separated by only 1.1%. This indicates that financial Performance, Citizenship, Workplace, Governance and Leadership can be considered to have significant influence for South African companies in 2012. All seven dimension drivers have significant influence on a company s overall reputation score, and must be addressed when actively managing corporate reputation. Dimension weights The illustration shows the importance of each reputation Dimension for the general public in South Africa in 2012. The sum of each weights is 100, so each figure shows the relative weight of the dimension. The dimension weights show the importance of the single dimension in creating overall reputation (RepTrak Pulse). 2011 Adj R 2 = 0.552 (n=4822) 2012 Adj R 2 = 0.759 (n=3912) Score Key: Large font = 2012 Drivers Small font = 2011 Drivers 23
Change in South Africa Reputation Drivers Over Time Products and Services and Innovation is driving perceptions in South Africa In 2012 Products and Services remains top driver in South Africa whilst Innovation has replaced Leadership as the second most important driver. New products and services that excite consumers drives sales, profits and share price. Not having an innovation strategy puts the company s reputation, and its future, at risk. Dimension Driver Over Time South Africa 26 22 18 14 10 6 2008 2009 2010 2011 2012 Products & Services 16.5% 21.4% 17.6% 17.2% 18.5% Innovation 13.3% 16.3% 13.3% 13.1% 15.4% Workplace 13.0% 13.6% 12.7% 12.6% 13.2% Governance 14.5% 13.1% 14.3% 12.9% 13.1% Citizenship 15.5% 9.6% 15.2% 13.2% 13.5% Leadership 13.0% 13.7% 13.5% 16.7% 12.6% Performance 14.2% 12.3% 13.4% 14.3% 13.7% Adj. R² 0.701 0.585 0.658 0.552 0.759 1 924 500 5 373 4 822 3 912 24
South Africa Dimension Distribution 2012 The majority of the general public respondents provided positive ratings for all of the seven Dimensions except for Governance. Neutral respondents are seen as fence-sitters, and they now make up 37-47% of the ratings for each dimension. In order to grow reputation capital, companies are advised to meet or manage stakeholders expectations. Closing the expectations gap will provide companies with a greater amount of positive support. South Africa Top 20 Dimensions Negative (1-2) Neutral (3-5) Positive (6-7) Not sure Products 2.4% 37.3% 60.1% 0.2% Performance 3.1% 36.8% 58.9% 1.1% Leadership 3.2% 39.9% 55.9% 1.0% Innovation 3.1% 41% 55% 0.1% Citizenship 3.2% 41.32% 54.25% 1.3% Workplace 3.0% 42.2% 50.9% 3.8% Governance 3.3% 46.8% 49.6% 0.4% n=3912 Product/Services: 'Company' offers high quality products and services -- it offers excellent products and reliable services Innovation: 'Company' is an innovative company -- it makes or sells innovative products or innovates in the way it does business Workplace: 'Company' is an appealing place to work -- it treats its employees well Governance: 'Company' is a responsibly-run company -- it behaves ethically and is open & transparent in its business dealings Citizenship: 'Company' is a good corporate citizen -- it supports good causes & protects the environment Leadership: 'Company' is a company with strong leadership -- it has visible leaders & is managed effectively Performance: 'Company' is a high-performance company -- it delivers good financial results 25
Top Performers in South Africa: Products & Services, Innovation and financial Performance Woolworths and MTN take the top two positions for all three of these reputation dimension drivers for 2012 Woolworths achieved a strong and robust score for Products and Services, Innovation and financial Performance. Products & Services Woolw orths MTN Pick n Pay ABSA Clicks Standard Bank Vodacom Nedbank Old Mutual Sasol Shoprite Spar Tiger Brands SABMiller Sanlam Telkom Anglo American Liberty Holdings Santam BHP Billiton 79.84 69.61 68.31 68.08 67.87 67.40 67.39 66.41 65.28 64.49 63.68 63.51 60.94 60.20 59.63 55.68 54.62 52.24 47.78 42.89 n=3010 Woolw orths Innovation MTN Vodacom Clicks Standard Bank ABSA Pick n Pay Nedbank Spar Old Mutual Shoprite Sasol Tiger Brands SABMiller Sanlam Telkom Anglo American Santam Liberty Holdings BHP Billiton 76.50 66.82 65.35 65.16 65.09 63.88 63.39 62.86 61.63 60.53 60.34 59.98 57.00 55.78 55.42 52.87 52.42 48.20 46.34 40.26 All scores that differ by more than +/-5.9 are significantly different at the 95% confidence level. n=3010 Perform ance Woolw orths 75.10 MTN 71.22 ABSA 71.05 Standard Bank 68.79 Old Mutual 68.19 Spar 65.87 Nedbank 65.78 Sasol 65.33 Vodacom 64.86 Pick n Pay 64.55 Shoprite 62.94 Tiger Brands 61.05 SABMiller 60.70 Clicks 60.58 Sanlam 58.61 Anglo American 55.11 Telkom 53.75 Liberty Holdings 50.18 Santam 49.91 BHP Billiton 39.89 n=3010 26
Top Performers in South Africa: Citizenship and Workplace Woolworths takes the top place for Citizenship and Workplace in 2012. MTN takes second place for Citizenship and Vodacom takes second place for Workplace. Woolworths and MTN s scores for Citizenship are strong/robust, indicating that these two companies are highly regarded for their role in society. The top 9 scores for Workplace are only Average, indicating that South African companies are not perceived to be offering attractive work conditions. Citizenship Woolw orths MTN ABSA Standard Bank Nedbank Old Mutual Vodacom Sasol Pick n Pay Spar Clicks Shoprite Sanlam Telkom Anglo American Tiger Brands SABMiller Santam Liberty Holdings BHP Billiton 74.92 70.27 67.14 66.57 66.10 65.75 64.56 64.51 62.87 61.41 60.20 60.11 59.36 55.94 54.39 53.91 51.77 50.21 44.97 39.47 n=3010 Workplace Woolw orths Vodacom MTN Standard Bank ABSA Nedbank Old Mutual Clicks Sasol Pick n Pay Spar Tiger Brands Sanlam Shoprite Telkom Anglo American SABMiller Liberty Holdings Santam BHP Billiton 69.63 67.36 65.04 62.48 62.25 61.21 61.10 60.90 60.23 59.00 58.38 55.82 55.75 54.74 53.79 53.46 52.46 49.14 48.22 42.23 n=3010 All scores that differ by more than +/-5.9 are significantly different at the 95% confidence level. 27
Top Performers in South Africa: Governance and Leadership Woolworths takes the top place for Governance and Leadership in 2012. ABSA and MTN take second and third places respectively for Governance and Leadership. The top scores for Governance are only Average, despite the fact that South Africa is generally regarded as having one of the most advanced codes of corporate governance. Woolworths score for Leadership is Strong/Robust suggesting that CEO Ian Moir is well-respected and has had a positive influence on the company. Governance Woolw orths ABSA MTN Standard Bank Vodacom Nedbank Old Mutual Sasol Spar Shoprite Pick n Pay Clicks Sanlam Tiger Brands Telkom SABMiller Anglo American 68.62 66.41 65.98 63.90 63.37 62.77 62.72 61.49 60.94 59.14 58.56 58.54 58.48 56.47 52.63 51.68 50.90 Leadership Woolw orths ABSA MTN Vodacom Standard Bank Nedbank Spar Sasol Pick n Pay Old Mutual Shoprite Clicks Sanlam Tiger Brands SABMiller Anglo American Telkom 74.53 69.18 68.53 67.74 66.76 65.17 65.04 63.41 61.70 61.50 61.05 60.69 59.62 58.38 57.53 57.20 49.84 Santam Liberty Holdings BHP Billiton 45.79 42.21 37.74 Santam Liberty Holdings BHP Billiton 49.25 47.97 38.83 n=3010 n=3010 All scores that differ by more than +/-5.9 are significantly different at the 95% confidence level. 28
Supportive Behaviour I would recommend company to others. Over 80% of respondents would recommend Woolworths to others. The majority of respondents would recommend 16 of the 20 listed companies. High neutral percentages indicate opportunity for improvement, where companies can meet or manage the general public s expectations, build a stronger emotional connection and persuade the fence-sitters to be more supportive. Recommend to Others Woolw orths 0.0% Standard Bank 0.7% ABSA 2.3% MTN 2.0% Nedbank 0.6% Pick n Pay 3.0% Sasol 2.3% Spar 2.0% Tiger Brands 5.3% Clicks 1.0% Shoprite 0.0% Vodacom 0.0% Old Mutual 0.0% Anglo American 5.4% SABMiller 3.8% Sanlam 3.7% Santam 8.2% Telkom 4.9% Liberty Holdings 8.1% BHP Billiton 12.3% n=3010 Negative (1-2) Neutral (3-5) Positive (6-7) Not sure 19.2% 29.6% 31.1% 33.4% 35.9% 36.6% 37.6% 38.4% 36.3% 41.8% 44.1% 44.3% 45.9% 43.3% 45.2% 46.3% 44.6% 80.8% 69.7% 66.5% 64.6% 63.5% 60.3% 60.0% 59.6% 58.4% 57.2% 55.9% 55.7% 54.1% 51.3% 51.1% 50.0% 47.1% 55.1% 55.6% 59.5% 40.0% 36.3% 27.1% Q: I w ould recommend Company to others 29
Supportive Behaviour I would say something positive about company. 78.6% of respondents would say something positive about Woolworths. South Africa s banking industry also elicits high percentages of supportive behaviour from respondents, indicating that companies in this industry are reasonably well-respected. The majority of companies measured in 2012 have respondents willing to offer these companies verbal support. Companies will need to determine the level of support required from the general public in order to achieve their strategy. Creating initiatives that are aimed at meeting expectations has been found to build a robust reputation and improve overall support. Say Something Positive Woolw orths 0.0% Standard Bank 0.4% ABSA 1.4% Nedbank 1.0% Pick n Pay 2.0% MTN 2.0% Vodacom 0.0% Tiger Brands 4.3% Old Mutual 0.0% Spar 1.1% Shoprite 0.0% Clicks 3.0% Sasol 1.7% SABMiller 4.7% Anglo American 4.3% Sanlam 2.7% Santam 11.0% Telkom 5.0% Liberty Holdings 6.1% BHP Billiton 12.3% Negative (1-2) Neutral (3-5) Positive (6-7) Not sure 21.4% 27.4% 28.8% 33.0% 33.8% 34.1% 38.2% 34.2% 39.0% 38.6% 40.0% 37.7% 39.5% 38.8% 42.5% 44.2% 78.6% 72.2% 69.6% 66.0% 64.2% 64.0% 61.8% 61.5% 61.0% 60.3% 60.0% 59.3% 58.8% 56.5% 53.2% 52.8% 44.4% 44.6% 51.0% 59.6% 54.4% 43.9% 34.3% 33.3% Q: I say something positive about Company n=3010 30
Supportive Behaviour I would give company the benefit of the doubt in times of crisis. Just over half the companies measured would be given the benefit of doubt if they were in a crisis. This indicates that the general public are skeptical of how companies conduct themselves. Companies will need to ensure that their risk policies and procedures are well established throughout their organisations. Furthermore companies are advised to have crafted comprehensive crisis plans to ensure they are able to communicate clearly to the general public when a risk materialises. Benefit of Doubt Negative (1-2) Neutral (3-5) Positive (6-7) Not sure Woolw orths 1.8% 23.4% 74.8% ABSA 3.1% 30.8% 66.1% Standard Bank 3.9% 33.5% 62.2% Sasol 4.1% 36.8% 59.1% MTN 3.9% 37.1% 59.0% Nedbank 5.1% 36.3% 58.2% Spar 6.2% 37.3% 56.6% Shoprite 2.0% 46.4% 51.6% SABMiller 6.8% 41.7% 51.5% Vodacom 6.1% 42.8% 51.1% Old Mutual 3.2% 46.0% 50.8% Tiger Brands 6.3% 45.4% 48.3% Santam 9.4% 42.8% 47.8% Anglo American 5.4% 47.3% 47.3% Pick n Pay 7.3% 45.5% 47.2% Clicks 3.1% 49.8% 47.1% Sanlam 5.5% 47.1% 47.1% Liberty Holdings 5.3% 56.3% 38.4% Telkom 7.7% 54.1% 38.2% BHP Billiton 9.2% 58.9% 31.0% Q: I w ould give the benefit of the doubt to Company if the company w as facing a crisis n=3010 31
Supportive Behaviour: Top 3 Reputed Companies vs Bottom 3 Reputed Companies Companies with better reputations illicit higher levels of support amongst the general public. Companies with the majority of their support being neutral, are at risk. These companies are not meeting the expectations of the general public due to their lower reputation scores, and as a result, the general public are less likely to offer their support to these companies. Supportive Behaviour Distributions: Top 3 and Bottom 3 Companies Recommend to Others: Top 3 Recommend to Others: Bottom 3 Say Something Positive: Top 3 Say Something Positive: Bottom 3 Benefit of Doubt: Top 3 Benefit of Doubt: Bottom 3 Negative (1-2) Neutral (3-5) Positive (6-7) Not sure 1.0% 26.6% 72.3% 0.0% 8.4% 56.7% 34.5% 0.4% Q: I w ould recommend Company to others 0.6% 25.9% 73.5% 0.1% 7.8% 55.0% 37.2% 0.0% Q: I say something positive about Company 2.9% 29.3% 67.7% 0.1% 7.4% 56.4% 35.9% 0.3% Q: I w ould give Company the benefit of the doubt in times of crisis n=1002 32
Positive Supportive Behaviour Over time 90% 80% 70% Recommend All Companies Average Banking 90% 80% 70% Say something positive All Companies Average Banking 60% Diversified Financial Services 60% Diversified Financial Services 50% Telecommunication 50% Telecommunication 40% General Retail 40% General Retail 30% 2010 2011 2012 30% 2010 2011 2012 90% 80% 70% 60% 50% 40% 30% Give benefit of the doubt 2010 2011 2012 All Companies Average Banking Diversified Financial Services Telecommunication General Retail Reputation and Support move together: Because of the general decline in reputation across industries, a correlating decline is seen in supportive behaviour. The table below illustrates that Banks in South Africa lost on average 4 points on reputation from 2011 to 2012, resulting in a loss of only 4% supportive behaviour. The Telecommunications industry shows a higher level of sensitivity to reputation score, losing 19% supportive behaviour off a 7 point decline in reputation score. Average change in Pulse and Supportive Behaviour Scores from 2011 to 2012 Pulse Supportive Behaviour Financial - Bank -4.26-4% Financial - Diversified -10.31-15% Telecommunication -7.00-19% 33
South Africa and the Reputation Economy There is ever increasing connectivity People have increasing choice about which companies they are prepared to support or deny support Globally and in South Africa corporations are losing credibility The loss of credibility in corporations in South Africa is particularly important as this sector has provided stability in a national context in flux There are sufficient outliers in corporate reputation that demonstrate that companies can succeed and what it takes to succeed in this environment Board Chairs, CEOs and other corporate leaders are not skilled in leading in this environment It is critical for strategists to understand in what way reputation is relevant for the company s ability to continue operating and achieve its strategic objectives Leadership in this environment requires a vision that goes beyond the company itself and this vision needs to be demonstrated in each aspect of the company 34
South Africa Respondent Profile & Methodology South Africa Respondent Profile: 1,304 unique respondents were obtained in South Africa in January and February 2012. Each respondent was allowed to rate a maximum of five companies with which they were familiar. A total of 3010 ratings were obtained for the purposes of this study. Ratings for Pulse scores are statistically significant at a 95% confidence level with a margin of error +/- 2.9. In other words, companies within countries have significantly different results when their RepTrak Pulse is greater than 2.9 points apart. Ratings for Dimension scores are statistically significant at a 95% confidence level with a margin of error +/- 5.9. Respondents distribution was balanced to the country population on age and gender. To be included in Reputation Institute s South Africa s 20 Most Reputable Companies list, all companies had to meet the following criteria: All companies were among Financial Mail s 2011 Top 20 Companies listed on the Johannesburg Stock Exchange (JSE) based on total revenues All companies were at least somewhat familiar to the economically active segment of the general public. The list excluded some large South African holding companies due to of low familiarity with the general public. Respondents per age group 250 200 150 100 50 0 18-24 25-34 35-44 45-64 Male 171 174 128 156 Female 167 175 140 193 General Education Level 29% 1% 70% Low Education Middle Education High Education 20% 31% Region 16% 33% Gauteng Western Cape KwaZulu- Natal Eastern Cape 35
All Scores are Standardized Global RepTrak Pulse Scores - Standardized and Comparable Market research shows that people are inclined to rate companies more or less favorably in different countries, or when they are asked questions directly or online. When asked in a personal interview, for example, it's known that people tend to give a company higher ratings than when they are asked by phone, or when they are asked to answer questions about the company online. This is a wellestablished source of 'systematic bias'. Another source of systematic bias comes from national culture --in some countries, people are universally more positive in their responses than in other countries. In statistical terms, it means that the entire distribution of scores in a 'positive' country is artificially 'shifted' because of this propensity for people in that country to give higher ratings to all companies, good or bad. The distribution of scores in that country may also be more 'spread out' than in another because people have more information and are able to make more subtle differences between companies. To overcome these sources of systematic bias, Reputation Institute's policy is to adjust reputation scores by standardizing them against the aggregate distribution of all scores obtained from the RI's annual Global RepTrak Pulse study. Standardization has the effect of lowering scores in countries where consumers tend to over-rate companies, and has the effect of raising scores for companies in countries in which consumers tend to rate companies more negatively. Two adjustments are made for every Global RepTrak Pulse Score Reputation Institute uses its cumulative database of reputation scores measured internationally to carry out two adjustments: 1) Country Adjustment: All scores derived from surveys are standardized by subtracting the country mean and dividing by the standard deviation of all known scores previously obtained in that country. In statistical terms, this adjustment 'normalizes' the distribution of scores in the country to a mean of 0 and a standard deviation of 1, producing a 'z-score' for the company. 2) Global Adjustment: A global mean and standard deviation are calculated from all of the country-adjusted ratings. A Global RepTrak Pulse score is scaled back by multiplying each company's z-score by the global standard deviation and adding back the global mean. The resulting number is the Global RepTrak Pulse or Dimension score that is reported. As additional global research comes in, Reputation Institute regularly updates the country and global distributions that are used to create our standardized RepTrak scores. All RepTrak results are therefore comparable across industries, countries, and over time. 36
Contact Reputation Institute South Africa Contact us to learn how you can unlock the power of your reputation. Reputation Institute South Africa 128 Tenth Street Parkmore, Sandton Phone: + 27 11 666 4794 www.reputationinstitute.com 37