Hermès Tops “Most Reputable” List

The only luxury goods brand in the Consensiv 50, Hermès earns its reputation with a tight focus on management and operational controls.

13Nov_Consensiv_MethodologyGreat Expectations
Another quality of a corporate reputation is the importance of setting and then meeting stakeholder expectations. Canadian National Railway (CN), for example, has been on the league table every month since the ranking’s inception. In 2010, a poll conducted by leading U.S. agricultural shippers put CN in last place on almost every quality contributing to customer satisfaction (on-time performance, service and costs). However, a year later, the same poll ranked the company third, noting its vast improvements.

Every stakeholder group has expectations and, according to the Consensiv metrics, CN continues to meet them, moving up 17 spots in November to the 26th place. This increase in reputational value is a measure of customer satisfaction as well as a metric of reputational durability, since the rise came despite allegations of financial improprieties in early October concerning CN’s commuter infrastructure projects in Toronto.

Similarly, while Yum Brands left the league table this month (it was 36th in October), the news for its reputation could have been far worse. Yum has been experiencing a crisis stemming from a chicken supply-chain scare in China late last year. Yum publicly disclosed the problem soon after the news broke and admitted that it had underestimated the severity and duration of it. That was key to preserving its reputation. While it suffered spikes courtesy of its equity investors (and the occasional negative news story), the Consensiv measures of Yum’s reputation have stayed fairly strong, evidencing that it has been successfully communicating progress to the stakeholder groups involved in its supply chain (including regulators and financial partners).

Even though Yum recently reported earnings short of expectations and lowered annual sales expectations for China, the company is planning to run a public-information campaign to tout its ability to meet expectations of product safety. The campaign is backed by a newly awakened corporate appreciation of reputation risk. In the company’s 2013 10-K Item 1A, published after the first hits from the poultry supply situation, it disclosed reputational value risks associated with business processes, intangible assets, sustainable labor practices, ethics and regulatory compliance, and cyber security.

In the next two months, the real question for every public company will be to define and then deliver in 2014 with certainty and consistency. Successfully doing so will yield the highest and most durable reputational values.

Jonathan Salem Baskin is managing director of Consensiv, a reputation controls firm. He is the author of six books, has written a regular column on CMO leadership for Advertising Age since 2008, and is a Senior Fellow Emeritus of the Smithsonian’s National Museum of American History. 

Nir Kossovsky is chief executive of Steel City Re, a leader in corporate reputational value measurement and enterprise risk transfer. He is executive secretary of Intangible Asset Finance Society and a trustee of Excela Health Systems, a community-based health care provider. His latest book is Reputation, Stock Price and You: Why the Market Rewards Some Companies and Punishes Others (Apress 2012).

One thought on “Hermès Tops “Most Reputable” List

  1. This is the fourth lever of shareholder value creation (and preservation). Understanding and managing stakeholder expectations is critical. I am intrigued by the methodology and intend to learn more from Consensiv.

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