Research released today by the Judge Institute of Management, Cambridges Business School, suggests that environmental and social credibility will have a significant impact on the future reputation of Multinational corporations.
Within three scenarios of the future business climate (fortress world, market world & transformed world) the CEOs of the Global Fortune 500 were asked to rate the significance of seven elements of reputation to the preservation of a positive corporate reputation.
34% of the CEOs from the Global Fortune 500 completed the survey – if combined the revenues of their respective companies’ amount to almost US$5 Trillion. Taken holistically this small group of people controls the direction of massive capital flows, their daily decisions affecting the current and future lives of billions worldwide.
The table shows the seven elements of reputation listed in order of their perceived future impact on the preservation of a positive corporate reputation. The scores are averaged across differing scenarios and they represent CEOs opinion regardless of the business climate. By averaging the scores we have, in effect, put a damper on outliers, extracting the underlying trends.
1: [LV] LEADERSHIP & VISION
2: [Q] QUALITY
3: [KS] KNOWLEDGE & SKILLS
4: [SC] SOCIAL CREDIBILITY
5: [FC]FINANCIAL CREDIBILITY
6: [EC] ENVIRONMENTAL CREDIBILITY
7: [EM] EMOTIONAL CONNECTIONS
In his foreword to the report Sir Mark Moody-Stuart, the chairman of Anglo American plc, suggests that It is not surprising that Leadership and Vision, Quality and Knowledge and Skills consistently rank in the top three. With the possible exception of Quality these are all elements which are difficult to measure.
Despite recent financial scandals (Enron, WorldCom etc.) CEOs predict that in the near future social credibility will be as important as financial credibility, and environmental credibility will only be marginally less important.
On average, and in virtually all of the data variations, Emotional Connections was considered to be the least important element to the preservation of a positive corporate reputation. However its average score suggests that it is still of medium significance.
The remaining six elements form a core group, whose upkeep is predicted to be invaluable to the future preservation of a positive corporate reputation.
The position of the seven elements displays considerable regional variation, for example: European companies consistently assign the future importance of Environmental, Financial and Social Credibility a higher level of significance to the preservation of a positive corporate reputation than their North American counterparts.