Woolworths wins the Reputation Institute Survey

The bloodbath in company reputations has largely continued this year, with the exception of retailer Woolworths, which emerged with an even stronger reputation in Reputation Institute’s National RepTrak® Pulse survey.

Last year’s top company, Vodacom, fared particularly poorly in 2014, dropping a massive 9.35 points to sixth position in the table, one position below its major competitor, MTN.

Woolworths’ reputation strengthened slightly from 73.98 to 74.31 points. It led the field on all reputation dimensions: leadership, citizenship, governance, workplace, innovation, products/services, and performance.

Reputation Institute’s Partner for Africa, Dr Dominik Heil says: “The 2014 survey shows that Woolworths is in a league of its own. Its success comes in an environment in which South African corporate companies are suffering a bloodbath in their reputations. Woolworths has managed to break out of this logic because it has a sound stakeholder management strategy. It demonstrates that engaging with stakeholders is not a loss exercise. If you create value for all your stakeholders – and not just for your shareholders – and manage that well, the benefit ‘pie’ for everyone will grow.”

The survey is conducted annually by the globally respected Reputation Institute. The National RepTrak® Pulse survey is now in its ninth year in South Africa, and measures the reputation of the largest listed South African companies based on revenue and who are engaged in commercial activities, have a reasonable amount of familiarity with the general public and are not wholly-owned subsidiaries of other companies.

As was the case with last year’s survey, mining companies were included and scored poorly in the reputation stakes.

Dr Heil added: “The result puts the bar really high for Woolworths. While it will strengthen its support by its stakeholders, it also creates a challenge as to how the retailer can continue to maintain its reputation on a sustainable basis.”

Woolworths was the only company to score above 70 points, giving it a strong and robust reputation.

Trevor Ndlazi, Reputation Institute’s Country Manager for South Africa says that the biggest driver of reputation in South Africa in 2014 is products and services at 15.2%, with citizenship only slightly behind at 15.0%.

“Product and services, citizenship, financial performance and innovation explain almost 60% of reputation, while workplace, governance and leadership made up just under 40% of what drives reputation this year,” he said.

He noted that to win the support and trust of consumers, companies must engage them in all seven dimensions and excel and communicate about each one.

“Building a company specific reputation platform across all dimensions is the key to success in the reputation economy. The key element in this year’s survey is the very large declines – from 6 points and more – in reputations of most of the companies bar two.

“This is a big concern going forward. Companies are losing credibility where they need it most – in the consumer sector. In this scenario, if government is to decide that regulation is needed, consumers will complacently accept it since they have lost trust in companies anyway.

“What is needed is either a new model of doing business, or for companies to take actions that regain the trust of consumers”, he said.

Ndlazi says that the drop in Vodacom’s reputation – from a strong/robust score of 74.17 in 2013 to an average/moderate rating of 64.83 in 2014 is massive and is largely attributable to its dispute with ICASA over mobile termination rates.

The remaining nineteen companies scored below 70 points, giving them “average/moderate” or “weak/vulnerable” reputations. Mining companies – Anglo American Platinum, Anglo American, AngloGold Ashanti, Goldfields, ArcelorMittal, BHP Billiton and Kumba Iron Ore made up seven of the bottom ten of the companies surveyed, a measure of the poor regard that consumers have for this sector of the economy.

The financial services sector also fared poorly. Even though Standard Bank jumped from seventh to second position on the table, its 2014 score of 68.77 points was only marginally better than the 2013 score of 68.5. First National Bank dropped a huge 9.08 points from last year. (FNB is a wholly-owned subsidiary of First Rand but is included in the survey as it is a major player in the financial services sector). Nedbank and ABSA dropped 4.18 and 4.39 points respectively.

The insurance industry also performed poorly. Old Mutual, for example, was 8.54 points down, and Sanlam 8.98 points down.

The survey is conducted annually in January and February among 1462 unique respondents, from whom 3860 rates were obtained. Respondents’ distribution was balanced to the country population on age and gender.

To be included in the survey, companies had to meet the following criteria:

• All companies were among Financial Mail’s 2013 Top Companies listed on the Johannesburg Stock Exchange (JSE) based on total revenues; and
• 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 low familiarity with the general public.

Company scores in the 2014 National RepTrak® Pulse were as follows: