How do the experts define corporate reputation? And how is a company’s standing affected by disruptions in its industry, or by a crisis in a competitor?
In highly commoditised industries like manufacturing and airlines, reputation management can be especially challenging, and so we invited Andreas Bartels of Lufthansa and Dr. Anneke Neuhaus of Siemens to share their insights from the reputation coalface.
The following is an edited transcription of a panel discussion recorded at the European Communication Summit 2018.
What role does trust really play in corporate reputation?
Andreas Bartels: As an airline employee, my answer to this question is easy: trust is absolutely essential not only for our company but also for the entire industry. If somebody has no trust in an airline, he or she would never book a flight.
I have four theses about trust and reputation, which I’d like to share with you. First, trust is driven by three key factors: brand, product and the CEO. Which factors play an important role depends on whether you are in good or bad times. In good times, your product and your brand counts more; in bad times the CEO comes more into play.
My second thesis is that reputation is like a savings account. In good times you pay in, in bad times it pays out and you benefit from it. Trust is different, in that it is driven by crisis situations. A crisis decides how you build or lose your trust. In a crisis, trust can be lost or damaged very quickly. However, if you get things right in a crisis, you can quickly build your trust.
My third thesisis that only corporate communications can build up real trust for an institution. We are living in times of fake news, and people know that there is always a little bit of fake news in marketing. Look at the bodies and faces used in advertising: they are perfect, they're faultless. Reality is different. Corporate communications cannot sugar coat everything like marketing can.
My final thesis is the answer to the question, "how does disruption in our industry affect the company?" The answer is, "not much". For example, there is no better place to talk about disruption in aviation than Berlin, where there are ongoing delays to the long-awaited opening of the Berlin-Brandenburg airport, and where AirBerlin went bankrupt last year. These problems have not affected or damaged Lufthansa’s image or reputation.
Dr. Anneke Neuhaus: I am responsible for Thought Leadership at Siemens and brand management is part of my remit, so it will not be surprising that I believe that brand is very important for corporate reputation. Reputation and brand are the pillars of perception of a company, as well as important assets and values for the company. The brand stands for trust and offers differentiation; it gives orientation to all stakeholder groups, and thereby shapes the perception of the company. Reputation and brand are two sides of the same coin and cannot be separated. And when I talk about marketing and brand, I'm not talking about ads and the illusion of perfection. You have to invest in a brand and a strong and consistent brand architecture – this is the basis for a long-term stable perception.
Andreas Bartels: Trust and reputation, however, are not the same. There are several examples where they differ. Hardly any passenger likes Ryanair, its reputation is not great. But people trust it. Millions of travellers fly Ryanair, and they would not do so if they had no trust. Another example is the reputation of banks, which, following the financial crisis in 2008, is not the best. But clearly people still trust banks, otherwise they would move their money out of the banks. Therefore, trust and reputation can be different.
Dr. Anneke Neuhaus: The examples you cite are significant, but from my point of view it is more a question of the dimensions of reputation. It is a question of being consistent and recognisable. And you need trust to believe that it will stay this way. So trust is the key aspect in building up reputation. Without trust, you can build neither reputation nor a brand.
Do either of your companies set targets around reputation?
Dr. Anneke Neuhaus: We have a set of KPIs related to the different business areas, due to the special needs and demands. However, we try to build up an overall system of KPIs for Siemens. Even if the KPIs are differentiated regarding our markets, stakeholders and brands, there is always the aspect of the overall perception of Siemens. That is why we are now focusing on what is crucial and where we want to allocate our resources in order to strengthen our reputation.
What is the appropriate role for a CEO in taking on a public positions relating to business and to social issues?
Andreas Bartels: The CEO plays an important role in particular when it comes to how to position the company towards the government and the public arena. For us as an air transport company, that is crucial. Our industry is not fully liberalised or deregulated. On the contrary, we need flight rights to service international destinations. These flight rights are negotiated by governments of the states involved, not by the airlines flying the routes. But we carefully watch that the positioning of our CEO is related to business or industry issues. We don’t think a CEO should comment on each and every topic. We believe in communication focused on the right topics.
"The CEO plays an important role in particular when it comes to how to position the company towards the government and the public arena."
Dr. Anneke Neuhaus: It is a question of balance. Our CEO, Joe Kaeser, is currently one of the most political CEOs and so we always try to find a balance. Certainly, there must be a focus on business, I agree, but when it comes to subject like the Fourth Industrial Revolution, for example, or all the fears and uncertainties associated with digitalisation, it is not possible to focus only on business topics. I recently read a statistic that nearly 80 per cent of people have no concrete idea what digitalisation will mean for their lives, so as a company you cannot develop so many future-oriented solutions and try to be the innovation champion yet not be an active part of this discussion. All these aspects have relevance for the future of work, for the factory of the future, for building up new value chains or eco-systems. It is not up to CEOs to explain the world, but all the questions raised in the context in which the company is acting are relevant and should be addressed by the CEO.
You both work for global companies. Is there a difference between building trust or reputation in Europe as compared to Asia Pacific or US?
Dr. Anneke Neuhaus: It is challenging. For example, in Asia Siemens is an icon and you do not have to explain a lot. When you say you are working for Siemens, it is a door opener that gets you all sorts of appointments and contacts. In Europe, the story is different depending on the market. For example, although we generate less than 15 per cent of our revenues in our domestic market, Germany, every business decision there is closely scrutinised, often publicly. The launchpad for building trust or reputation is the market-specific perception of the company, which must be carefully evaluated on an ongoing basis.
"The launchpad for building trust or reputation is the market-specific perception of the company."
Andreas Bartels: We also see different pictures. Europe is our home market and our flag carriers Lufthansa, Swiss International, Austrian Airlines and Brussels Airlines are in a way representing their European home countries. Eurowings, as a pan-European point-to-point airline stands, for Europe, too. Not only do we benefit from the trust and reputation our airlines and group companies were able to build in their respective home markets, we also take advantage of the good image of the home countries. Germany, Switzerland, Austria and Belgium are known for quality, reliability, punctuality and hospitality. These attributes are helpful for building trust and reputation in every corner of the world.
A second factor kicks in with different general images of the air transport industry in certain parts of the world. For instance, the Middle East is enthusiastic about aviation. They regard air travel as a great chance to develop their economies and to make their countries more relevant to the world. Asia also sees aviation as a chance to fuel the growth of their economies. These environments are good for trust and reputation-building communication. In other regions, it is more about critical issues such as CO2 footprint or noise emissions. In these cases, you have to deal with different stakeholders like NGOs and you have to answer a different set of questions. The US is currently a very political field where trade policy is top on the agenda.
Dr. Anneke Neuhaus: This brings me to a huge challenge for Siemens. Due to digitalisation, we have completely new ecosystems. In the past, you probably had a clearer view on the spectrum of business activities of Siemens. However, right now we are one of the 10 largest software companies in the world in terms of revenue and number of employees, which is not so typical for a company known as an industrial champion. Another challenge is that we are increasingly working in new ecosystems, among others with former competitors to create the best solutions for our clients. Who gets the credit for this type of co-creation when, after working together for a while, there is a change in the partnership? For example, if, after working for three years with a competitor on a project for a client, one of you decides another partner would be a better fit, who gets the credit from the client for those three years of work? This is a very important aspect of reputation, trust and brand, because when you are a trusted company with a good reputation, it is easier to get the credit. Therefore, reputation is definitely not a nice-to-have; it is a key enabler for the business and future positioning. .