Ipsos Corporate Reputation

Global Vs Local

Local relevance is climbing the corporate agenda for global businesses and reputation management has a vital role to play in getting the global versus local balance right.

Globalisation and the growth of the digital economy make it increasingly important for businesses to understand cultural norms, customer expectations and regulatory views across every market.
Conversely, as the media, political pressure groups, and investors have become global, local incidents can now quickly escalate into global reputation crises.
Reputation Council members are clear that the balance between local market needs and global strategy requires experimentation and analysis, as well as evidence-based trust.

In 1983 Theodore Levitt published his classic treatise ‘The Globalisation of Markets’ in Harvard Business Review. His central contention was that advances in communications and technology were leading to a more homogenous world, indeed, a world where uniformity in consumer tastes would increase and global brands would flourish by delivering the same proposition and experience – regardless of location.

Reality seemed to support Levitt’s contention as companies such as McDonalds, Levi’s, Toyota and Panasonic exported standardised products (and marketing campaigns) around the world. The concept of the ‘global consumer’ was in the ascendancy and businesses aligned their organisational structures accordingly. Decision-making became centralised with the focus on global business units rather than individual countries.

Perhaps not surprisingly, the same principles permeated global reputation management: The idea that an organisation and what it stands for should be consistently expressed regardless of the location and cultural context. Ideas such as vision, purpose and core values were seen as essential truths that underpinned the corporate reason for being. They needed little in the way of adaptation to local needs or sensitivities and were at their best when unadulterated.

This doctrine held true for a number of years but became increasingly questioned with the emergence of fast-growing economies such as China and India, which spawned increasingly powerful local competitors. Consumers no longer needed to default to global brands as local companies were producing products and services that were catching up in quality and brand appeal. It became apparent that local relevance was climbing the corporate agenda for global businesses and that reputation management had a vital role to play in getting the global versus local balance right.

It’s in this context that we decided to ask our Reputation Council members from around the world to share their thinking with us in this area. Our findings fell under a number of clear themes: authenticity; measurement; autonomy; and digital and social media.

Authenticity

In an environment of increased scrutiny of global corporates in domestic markets, corporate communicators report the growing importance of translating global strategy into authentic localised outputs.

To do this effectively, corporate communicators must have a deep and evidence-based understanding of both the role of localism in driving reputation in the domestic market and local stakeholders’ expectations of the corporate entity, and then be empowered to turn broad global strategies into effective domestic communication plans, backed up by meaningful practical demonstrations of the entity’s commitment to the local market.

In addressing this challenge, many Council members referred to one of the bedrocks of good reputation management: authenticity. It emerged that if an organisation has done the groundwork in developing and embedding a strong corporate brand strategy internally, it will be well positioned to apply a specific market or stakeholder lens to this strategy to develop and tailor external communications that are authentic. That is, they’re true to the master strategy and relevant to specific markets or stakeholder groups, and will not put the business in a position where it is communicating in one market or with one stakeholder group in a way that compromises it with another.

"The stakeholders in each market whose views make up your reputation are shaped by their cultural, historical, political and market differences. There is a culture in every country that is different, no matter what global strategy you’re trying to deploy."
"Stakeholders don’t expect you to be a global brand, they expect you to be a local brand. When they interact with us, they interact in the local context."
"We have to operate with sufficient consistency so that we bring the same value set and value proposition wherever we operate around the world. We have to do this whilst also knowing that different audiences care about different things and therefore expect different things from you. We must appreciate this balance, else we risk not being authentic."
of Council members working in multinational companies analyse perceptions of their sector or business across different countries.
Measurement

As barriers to global business continue to diminish and the world becomes smaller, many businesses find themselves in new markets and new regions, managing different cultural norms, customer expectations and regulations. It’s normal in these situations to wonder why a company’s reputation varies by market, much as a reputation may vary by stakeholder audience. The majority of Council members we spoke with recognise this complex environment and understand that it’s nearly impossible to have a consistent, unified reputation across markets.

"It’s impossible. A general theme could come through, but it’s different at the local level. You can create a general belief about an organisation, but not a unified reputation across markets."

Within this context, most global communicators and marketers aim to develop a consistent global positioning strategy and framework that has the flexibility to be tailored to local markets, and also strive to demonstrate a long-term commitment to the local markets where they operate.

"It’s critical to understand reputation by market and have an umbrella narrative globally but understand that different markets, different cohorts and different subgroups are going to require pushes and pulls that are nuanced in the messaging. That will always be the case. Unless you have that diversified approach, you’re likely to fail at a global approach. The more global we get, the more local we get."

Additionally, this localisation of messaging and communications within the broader global context requires strong teams and partners on the ground.

"You need respect for regional and country communicators. They know the local market better than anyone else. Companies should be listening from the bottom up, not the top down."

Nearly all the Council members interviewed indicate that they evaluate their company’s reputation globally to provide the insight necessary to tailor their strategies and understand how to prioritise messaging and communications to local markets and various stakeholders. In many instances, this reputation measurement informs everything these companies do – programme prioritisation, partnerships, key messaging, stakeholder prioritisation, resource allocation, etc.

"It helps you to invest where it’s needed, but also get ahead of pushback. Research is a guiding tool for resource allocation and to measure the success of programmes."

Reputation measurement plays a critical role in the long-term strategy for local markets, and in the words of one of our Council members:

"You can’t improve what you don’t measure."
Autonomy

Our research suggests that tailoring corporate communication to local markets has become more important in recent years. Council respondents point out that it is vital to find a balance between local market needs and corporate-level strategy. The alignment builds on continuous exchange and relationships of trust.

The paradox is that the media, political pressure groups and investors have become global, but it is precisely this global perspective that has made local reputation problems more urgent. Today, a local reputation issue has the potential to grow into a global reputation crisis. On the flipside, communication tools on hand today have also made it easier to tailor global strategies to local particularities.

Mixing global and local communication strategies brings different points of view to the table. The way businesses talk to clients or organise a campaign and the images they use to build a corporate brand differ greatly between Saudi Arabia, China and Sweden. What matters depends on local cultural values, including religion. It is this broader context that needs to be considered when building communication strategies. Blending local and global communication can be a source of refreshing innovation.

Council members agree that the balance between global communication objectives and local needs has got to be right. Companies experimented with a spectrum ranging from totally autonomous local to totally centralised global communication strategies. There is no one-size-fits-all solution.

Whilst global narratives set the broad framework of a strategy, alignment with local needs is important. Both ought to be interlocked. Continuous exchange with local communication experts is necessary to achieve this. Local communicators should have a degree of autonomy, because they are the ones with robust knowledge of their local communication landscape. This autonomy presupposes trust in the vernacular expertise of communication teams on the ground.

"There are also questions of internal governance: What is the relationship between the holding company and its local market branches? How much autonomy do you grant local communicators? How far can this be, or should this be, controlled centrally?"
"On the corporate level, we must understand that it is very well possible for a local reputation issue to grow into an existential global reputation crisis. A system must be in place that allows communicators to allocate resources and to react with precision on the ground."
Digital and social media

For global businesses, digital and social media have dramatically increased public scrutiny of local operations. What may once have been considered local incidents can now quickly escalate into global reputation crises. At the same time, connecting with local consumers and stakeholders increasingly requires tailored engagement at a local level.

The challenge for global businesses is therefore a simple, if paradoxical, one: to build a reputation that is globally consistent and at the same time locally relevant.

"The growth in digital media in the last 20 years does mean that being able to segregate reputation by geography is not really tenable."

In last year’s Reputation Council report, we discussed how equity flows between corporate and product brands, offering both opportunities and threats to corporate communicators. The same principle applies to reputational equity flow between regions. And this flow has been accelerated by the growth of digital media, which has collapsed the barriers to information flowing between regions. In this environment, inconsistency of positioning or behaviour between regions becomes a threat to global businesses.

Reputation Council members stress the importance, therefore, of establishing a principle or framework that anchors corporate behaviour and messaging globally. This is the role of the corporate brand. As described in Ipsos’s white paper, ‘Brand Purpose: What’s the point of you?’, part of the purpose of brand positioning is to act as the “guardrails for communication.”

Final thoughts

It’s clear that the world has indeed changed since Theodore Levitt mused on the role of the global brand over 35 years ago. Global marketing and communications are no longer homogenous; we now live in a world where brands and reputations are seen through the prism of local market needs and expectations.

Council members clearly recognise this change and are working with CEOs and other members of the senior leadership team to implement communication and business strategies that achieve the right balance between globally consistent and locally relevant messaging.

However, given the rise of connected and savvy stakeholders, it is imperative that such strategies are built on the pillars of:

  • Authenticity – behaviour is aligned to communications
  • Autonomy – power is devolved wherever possible
  • Digital and social media – understanding their role in breaking down barriers
  • Measurement – objective assessment of progress

Methodology: 154 interviews conducted with Reputation Council members between 25th June and 12th November 2018.

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The AI Paradox: Businesses must not overlook their responsibility to reputation as investment in this technology grows

Digital technologies, from social media to Artificial Intelligence (AI), have undoubtedly altered peoples’ lives – some for the better, some for the worse. We’ve seen the rise of intelligent assistants like Siri and Alexa, grown reliant on communication platforms to keep in touch with friends and family, and have witnessed the positive impact of wearable technology in healthcare.

According to a 2017 PwC report[1], AI technology could deliver a 10% increase in the UK’s GDP by 2030, provided that different types of AI technologies are invested in. To nurture this potential, in early March the government outlined a plan to position the UK as the global leader of artificial intelligence[2]. The plan incorporates investing in R&D, helping people develop skills for the new age of AI, and supporting sectors in boosting their use of AI and data analytics technologies. The hope is to create resilience among the UK’s workforce as the use of AI becomes widespread across sectors and helps boost the economy.

The indication that AI is the future is evident among business leaders too. In a recent study by Ipsos, the authoritative Captains of Industry, three in five stated they have already invested in digital technologies such as machine learning and artificial intelligence. Another third plan to invest in the next five years, as businesses prepare for the utilisation of AI technologies, align with government priorities, and foster the potential for economic growth – especially in a post-pandemic world

However, while the benefits that could be reaped from digital technologies are limitless, it doesn’t come without its challenges. In an Ipsos poll published by the World Economic Forum, four in ten adults across the world said they are worried about the use of artificial intelligence, and nearly half of adults globally agree that the use of AI by companies should be regulated more strictly than it currently is[3]. In another poll, less than one in five adults in the UK believe their job will be automated in the next 10 years, and almost four in five feel confident they already have the skills to carry on with their current employment in the future – contrasting senior leaders’ perspective of digital technologies potential.

While government and businesses are working toward unlocking AI’s potential, efforts will need to be put in place to convince employees of AI’s positive societal impact, the need for upskilling, and the benefits it could bring to jobs in the UK. Uplifting the reputation of AI and automation will need to be at the forefront of the government’s transformational strategy – especially as trust in the sector[4] hit an all-time low in 2020, according to the Edelman Trust Barometer.

Companies such as Microsoft have already taken some steps toward convincing the public in their efforts toward responsible technology by publishing six ethical principles to guide the development and use of artificial intelligence[5], with focus on working closely with employees and teams across the company to enable this effort. The government is also taking steps on this by launching an independent Centre for Data Ethics and Innovation that will advise on the ethical use of data, ranging from evaluating its social and economic impacts through to its fair and responsible application across businesses.

These efforts are a step in the right direction. Digital technologies are notorious for their fast evolution, with policies and regulations coming too late to resolve issues that have already left a negative mark on society and employment. Governments, businesses, and industry experts will need to work coherently and transparently when implementing AI, and work toward foreseeing issues with its implementation before they happen.

Building trust with the public will be key, alongside convincing the UK workforce of the benefits for upskilling, with a focus on fully communicating how utilising digital technologies would affect society and employment, both positively and negatively. Turning the UK into a global AI leader will be a challenging endeavour, but as long as we remember that having the capability to create technology is not all it takes for its success, realising all of its social and economic benefits are very much within our grasp.

Article links

[1] https://www.pwc.co.uk/economic-services/assets/ai-uk-report-v2.pdf

[2] https://www.gov.uk/government/news/new-strategy-to-unleash-the-transformational-power-of-artificial-intelligence

[3] https://www.ipsos.com/en-us/wef-artificial-intelligence-press-release

[4] https://www.linkedin.com/news/story/were-losing-our-trust-in-tech-5042340/

[5] https://www.microsoft.com/en-us/ai/responsible-ai?activetab=pivot1:primaryr6

For more information please contact:

Nadya Valkova
Research Manager, Corporate Reputation

Nadya.Valkova@Ipsos.com

What drives judgement of an organisation’s reputation?

An important focus for Ipsos Corporate Reputation is to help our clients understand what drives their reputation, in other words, what are the issues stakeholders think about when they make judgments about companies and organisations. In this article we will show what are the key aspects organisations should be mindful of according to MPs and business journalists who we regularly interview.

What exactly drives reputation will vary from one organisation to another – there isn’t a single, off-the-shelf answer to this. Feeding into an organisation’s reputation will be elements of what it does (for example, product quality and innovation), what it stands for (such as business acumen, ethics, corporate social responsibility and ESG performance), expectations and perceptions of the sector it’s in, expectations of business and industry, and other wider context issues. Furthermore, an organisation’s delivery against its corporate promise needs to match or exceed the expectations it creates.

There will be many tangible benefits that an organisation gets from building reputation value. It will, for example, help ensure your point of view is heard in policy making and regulation, make stakeholders more receptive to communications, build resilience to draw upon during times of crisis, and strengthen your employer brand.

Factors shaping reputation will vary from company to company, as reputation isn’t formed in a vacuum. It is shaped by perceptions of the sector, by the ongoing socioeconomic climate and policy agenda, as well as the behaviour, performance and communications effectiveness of a company. However, MPs and journalists have told us which issues they tend to consider when they from opinions about companies and organisations, which we’ll discuss here.

The most common consideration for business journalists when judging an organisation tends to be its financial performance. Often, this is seen to be a hygiene factor which an organisation needs before it can start to credibly engage with other issues. As one national business journalist states;

“If you haven't got that [financial performance] you can't do anything else. If you're not a viable business nothing else really matters. You can be as nice as you like to everyone else but if you're going to go bust, there's no point.”

Other common considerations today among business journalists include quality of management, treatment of customers, treatment of employees, and how it engages with journalists.

Journalists tell us that there are three key benefits for an organisation from engaging well with them; it allows journalists to get an organisation’s message across in the pieces they write, it could position an organisation in a more favourable light, and it helps journalist to report more accurately and less one-sided. As a regional business journalist explains;

“You're never going to stop bad headlines if things go badly but engagement on a number of specific issues such as remuneration, climate change, you know if I have a full understanding of a company's policy and why it's doing something, I'm much less likely to shot from the hip. If I have a full understanding of that company's strategy and why something has happened, I'm probably going to have a more holistic, a fuller appreciation of what that is rather than just writing "This is a bloody disaster"”

Indeed, between 2015 and 2017 we saw that engagement with journalists rose in importance as an important factor (see illustration below), and it has maintained its importance ever since. It’s also interesting to note how treatment of employees has become an increasingly important factor for journalists; as Covid-19 lockdown restrictions start to ease and companies announce their plans for their employees (a return to office working or a continuation of remote, flexible or hybrid working), companies need to be mindful of how their demands of employees might be perceived and how this might impact on their reputations.

Meanwhile, the factors that MPs most commonly consider when judging organisations are treatment of employees, track record, financial performance, social responsibility and environmental responsibility.

When asked to rate each aspect in terms of importance, treatment of employees has over time continuously been rated as an important attribute by MPs, while social and environmental responsibility is becoming increasingly important:

However, which aspects are of most importance does to some extent depend on which side of the House an MP sits on.

For Conservative MPs, a company’s track record and financial performance are the key considerations – and financial performance is far more commonly mentioned by Conservative MPs than Labour MPs. As one Conservative Backbencher states;

“Longevity is important, successful track record in either financial terms or stuff they sell or market. The reality is you don't really know about their CSR. The brand reputation is hugely important.”

Meanwhile, the key aspect for Labour MPs is treatment of employees (a far greater consideration among Labour MPs than Conservatives), followed by social responsibility. As one Labour Shadow Minister sates, the way a company treats their employees can be seen to be a reflection of the wider ethos of a company;

“First and foremost, in terms of the management and the whole ethos, the way they treat their employees… how employees are treated is very important to me, are they on proper contracts, are they paid properly, do they have security of employment, do they have things like pensions.”

In line with the views of Labour MPs, our most recent wave of the Reputation Council showed that corporate communicators commonly view employees as a stakeholder group which is increasingly influential on company reputations (legislators, such as MPs, are also seen to be increasingly influential by corporate communicators). Employees are no longer an afterthought for corporate communicators and are increasingly treated “much more seriously as a sophisticated stakeholder audience” and a trusted and credible source of information about a company.

Once organisations understand how key stakeholders form their opinions of them and their competitors, and how they perform against these criteria, they can then put plans in place to target communications more effectively – as well as identifying how (and if) an organisation needs to ‘course correct’ to deliver against stakeholder expectations. In terms of planning a communications strategy, further insight on how best to engage with MPs can be found in our recent post: Creating relevant and engaging comms with MPs for effective corporate planning.

Ipsos MORI can help you better understand what drives opinions about your organisation among various stakeholder groups, and the steps you need to take to bolster the way you are perceived to perform on those key attributes. We provide tailored advice through bespoke research and/or through our syndicated stakeholder surveys among legislators, journalists, business leaders and investors.

Want to know more about our MPs and Business Journalists syndicated surveys (or our wider bespoke surveys)? Get in touch with Ipsos MORI….

For more information please contact:

Guto Hunkin
Associate Director, Corporate Reputation

Guto.Hunkin@Ipsos.com