INTRODUCTION

In recent years, numerous groups have taken it upon themselves to create ratings of companies. Many of these find their way into widely distributed media outlets. The publicity they garner, in turn, creates a halo around corporate brands and influences the subsequent evaluations of companies by consumers and specialists alike. In this way, corporate reputations can be viewed as social constructions created from the multiplicity of evaluations rendered by specialized evaluators, public observers and media amplifiers (Rindova and Fombrun, 1999).

Rankings and evaluations of companies are regularly reported by the media around the world. The large number of such rankings has created a significant challenge for managers of corporate communication in large organizations: How should they regard these rankings? Which ones are more influential and worth taking seriously, and which ones can be ignored? How should they be reported to senior managers within the company? And what should be done to reconcile the generally inconsistent ratings given to companies across these lists?

To examine this problem, Reputation Institute set out to identify the range of existing rating lists. Our first observation was that there are a large number of lists that feature companies. Many of these focus strictly on narrow financial criteria (such as size, accounting results or stock market performance). We eliminated these lists from consideration because they are not, strictly speaking, reputation rankings – even though they can have a significant effect on corporate reputations.

We narrowed our focus to identifying lists that provide relative rankings of companies on clearly identifiable criteria that have a subjective component to them, that is lists created from the perceptions of specific stakeholder groups, whether consumers, managers, CEOs, analysts or other such groups. We did not, therefore, consider lists based on indicators of assets, profitability, donations or other quantifiable indicators. We also restricted our focus to lists that have been replicated and publicly released at least twice.

From our initial research, we have identified a total of 183 lists to date that regularly provide rankings of companies in 38 countries around the world. Table 1 provides a geographical breakdown of these 183 lists.

Table 1 Country of Origin of Reputation Rankings
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Of the 183 reputation lists we identified:

  • — 61 of the lists provide a rating and/or ranking of a set of companies based on some overall measure of reputation

  • — 73 of the lists focus on assessments of the quality of the company's workplace

  • — 15 lists provide ratings of aspects of corporate citizenship

  • — 11 of the lists rate companies on some subjective assessments of their financial performance and future prospects.

Interestingly, only two lists focus strictly on providing ratings based on the perceived quality of the products and services of the rated companies. A possible explanation for this is the fact that there is such a large number of product awards given each year, such as those given by J.D. Power & Associates.

Table 2 summarizes the principal criterion used to rate companies in these internationally publicized reputation lists. Clearly, the proliferation of ratings of companies for their workplace quality is an indication of the popular interest in an ‘insider view’ of the corporate world. A perceptual rating of a company's workplace provides one way outside observers can pierce the ‘veil of secrecy’ that seemingly surrounds most companies and their operations.

Table 2 The Principal Criterion used by Reputation Lists
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WHAT MEANING SHOULD WE ATTACH TO REPUTATION LISTS?

Clearly, lists matter – they call attention to the activities of companies and so influence their appreciation by consumers of media coverage and may well influence the ratings of specialists themselves, as well as the behaviors of other stakeholders observing companies. They can turn ordinary companies into ‘celebrity firms’– and can also topple the famous into infamy (Rindova et al., 2006). To manage corporate reputation effectively, managers must therefore develop a thorough understanding of the relative importance of these different reputation ratings and lists. This requires a thorough familiarity with the quality of the list, the criteria being used to evaluate the companies, the audience likely to be influenced by the list and the visibility conferred upon the list by the media that is publicizing it. Magazines like Business Week and Fortune, newspapers like Financial Times and The Wall Street Journal give the ratings they rely on for greater visibility and legitimacy than more specialized outlets or smaller circulation newspapers internationally. In addition, it is important to understand which companies were considered for inclusion in the list. None of the lists are comprehensive, and various filters are applied by the rating agents that naturally influence who gets on the list, and so how well a company can perform. Some rankings are inclusive of all types of companies while others examine only the largest companies or those in a particular industry, region or country.

In order to understand the impact that a list is likely to have on a company's reputation, we recommend that managers examine the lists on which they are featured carefully. Six steps should be systematically taken by communication departments responsible for reputation tracking:

Step 1: Identify the Reputation LandscapeThe first step is to identify the specific lists on which the company is ranked, and those on which the company does not appear – but should. Reputation Institute maintains an in-house database of the rankings and ratings obtained by companies on more than 50 of the most prominent lists published over the past five years. Examination of a company's position on these lists provides a sense of the reputation landscape in which a company is operating.

Step 2: Assess Changes in the Company's Ratings & Rankings Over timeThe second step is to consider a company's performance on these rankings over time. Changes in perception provide an important barometer of how public sentiment may be shifting around the company.

Step 3: Compare Against Industry CompetitorsThe third step is to compare the company's standing on key lists with the relative position of major competitors. Reputation is a relative construct – and performance should always be benchmarked in order to understand whether changes are affecting an industry or sector as a whole, or whether it is an indicator of a shifting terrain that favors or disfavors the company. A regional comparison can often shed light on the competitive landscape as well.

Step 4: Ascertain Publication Reach and ReadershipCareful review, consideration, and comparison of the circulation and readership of the publications in which the different rankings are published can provide managers with a keener understanding of the relative ‘impact’ that the list is likely to have on public opinion, and therefore enable ‘weighting’ the observed results.

Step 5: Review & Contrast Ranking MethodologiesFinally, managers should carefully review the methodologies that were applied to generate these lists. It may be impossible for a company to get onto a list or to improve its rating on a list if the methodology precludes certain types of companies or if the selection criterion is inapplicable. Only by understanding how the ratings were created can managers conclude where they should focus their communication efforts to improve ranking performance and build reputation.

CONCLUSION: LIST OF LISTS

We conclude this brief note with an Appendix that identifies the principal lists we uncovered in our search, as well as the media partner or research firm responsible for creating the ranking. Please note that:

  • — The appendix summarizes published rankings of companies on an overall perceptual measure of corporate reputation or key dimension.

  • — The rankings provided on these lists reflect the judgments of the list creators and are not endorsed by the Reputation Institute.

  • — Rankings that are based solely on measurable financial performance data such as operating results or firm size are excluded.

  • — Also excluded are the many awards presented by magazines, trade associations and others to individual companies each year.

Finally, proprietary, non-public ratings such as the ratings of corporate governance provided by specialized ratings agencies like The Corporate Library or GovernanceMetrics International were excluded as well. Our rationale for not including them is that we were interested only in considering publicly available rankings that may have an impact on overall company reputation by virtue of their broad media distribution.

Although we set out to be exhaustive in our search for reputation lists, we expect that there will be additional lists that we may have missed or which are newly published. If you are aware of any such lists that do not appear here, we hope that you will notify the Reputation Institute (info@reputationinstitute.com) so that we may make future versions to this list of lists.