The global economic crisis shined a spotlight on trust and reputation and logically raised this question: How are trust and reputation related?

Trust is the most important resource in modern societies. Our interaction with social partners presupposes that we can trust them to behave in the way that we expect. Trust is built through personal experiences and, most importantly, through recommendations or reputation judgments.

In other words, reputation is a name for trustworthiness.

It's no wonder, then, that the economic crisis shattered trust in the financial markets, and also shifted corporate reputation rankings. A May 2009 survey by the Research Institute for the Public Sphere and Society, focusing on Swiss companies, showed large banks with a reputation deficit in the eyes of consumers while other companies maintained positive reputations. Specifically, the reputations (and perceived trustworthiness) of large banks and small banks were reversed.

Reputation, or trust in a company or brand, changes — for better or worse — only when some facet of corporate reality does.

Before the crisis, major banks in Switzerland (i.e., UBS, Credit Suisse) belonged to the club of the world's most reputable companies. Then the crisis revealed the success of many large banks to be illusory: They had built their futures on flawed financial products. The gap between appearance and reality resulted in reputations that were "too good." Conversely, small banks were largely ignored before the crisis; their reputations were "wishy-washy" and undervalued. However, the crisis revealed these banks to be companies with sustainable business policies.

What lessons for reputation management can be drawn from this?

Lessons from the large banks:

• Sometimes a "good" reputation is not justified. The perception is better than the actual situation warrants.
• When this is the case, the time should be used to change the corporate reality.

Lessons from the small banks:

• Sometimes a perception deficit is not justified. Communication must then be applied to influence external perceptions.
• However, communication cannot always be used to correct adverse external perceptions, specifically when the general thought climate does not permit it.
• Therefore, appropriate reputation management may also mean willingly accepting a reputation deficit for a while in order to remain true to one's own profile despite contrary trends.

In either case, the economic crisis has illustrated that reputation management cannot be reduced to mere communication. Reputation, or trust in a company or brand, changes — for better or worse — only when some facet of corporate reality does.

Dr. Mark Eisenegger is co-head of the Research Institute for the Public Sphere and Society of the University of Zurich, associate lecturer at the Universities of Zurich, Lugano, and Fribourg, and a board member of the European Centre for Reputation Studies. Dr. Eisenegger specializes in organizational and corporate communication as well as reputation research and media transformation.

Markets and individual stocks rise and fall, driven in large part by reputation. The reputation of a company is determined by testimonial belief, but those beliefs may be either true or false. Thus, reputation can be unreliable.

For companies considering reputation management, this suggests four strategic propositions:

• To avoid a bad, reliable reputation, don't do anything bad. If bad behavior pays, pursue a good, unreliable reputation.
• To overcome an unreliable bad reputation, continue to behave well, facilitate the flow of market information, and amplify this information with marketing.
• To establish a good, reliable reputation, do what you say and say what you do.
• Maximize the benefits of a good, unreliable reputation, but beware the market.

Companies can (and do) choose either one of these. For a company seeking to profit by its reputation, the most important question to face is this: How imperfect is the market?

In competitive media markets, business journalism will be more invasive, and untrue beliefs about a company — unreliable reputations — will more quickly be exposed. And the markets will respond accordingly.

The market will catch up with companies that have unreliable good reputations. Just when this will happen depends on market structure and the flow of information. For instance, the better the flow of information among businesses, within a business, and between a business and noncorporate players, the sooner that information will have an impact on market performance.

For corporate communicators, understanding this flow is essential, particularly when noncorporate players include the media. In competitive media markets, business journalism will be more invasive, and untrue beliefs about a company — unreliable reputations — will more quickly be exposed. And the markets will respond accordingly.

The proposition that reputation ultimately matters less than behavior is one reason to love the markets — even if it takes a while to shed light on that behavior.

Dr. Jonathan Silberstein-Loeb is a research fellow at the Oxford University Centre for Corporate Reputation. His research concerns the interaction of business, politics, and technology in the mass media. He is particularly interested in the historical development of media corporations as well as the relationship between communications and corporate strategy. He received his Ph.D. in history from the University of Cambridge in 2008.

Risk management for individual business areas is standard operating procedure for measuring risk/return profiles within corporations. Unfortunately, corporate communications departments have long been challenged by the effort to determine risk.

In practice, corporate communicators often rely on intuition when assessing the potential damage of a news story, but the business world values¹ numbers — pitting "gut feelings" against figures in a world where numbers typically rule.

To answer the desire for figures, corporate communicators have turned to various risk matrices that attempt to quantify the risk that publication of a news story has on reputation. However, before assessing risk, it is important to consider how events become news. Is it simply a matter of the combination of common news values¹ such as prominence, surprise, cultural proximity, economic proximity, and matter of fact? Is it presenting information in a pre-formatted way: problem > causes > solutions > actors?

Corporate communicators often rely on intuition when assessing the potential damage of a news story, but the business world values numbers — pitting "gut feelings" against figures in a world where numbers typically rule.

Neither of these is enough to explain how an event becomes news. Stories that score low on common news values frequently still become news, while many events with these values never do. What's more, neither the news value approach nor the problem/solution approach accounts for how a reporter or editor reacts to the information and makes decisions.

The likelihood of an event becoming a news story can be more accurately determined by framing — creating a framework for interpretation. An event becomes interesting to the media if it fits into their existing frames. Framing and news values, taken together, can provide a solid basis for modeling and measuring risks to reputation from potential news stories. Two key questions for communications managers to consider are these:

• How do the reputational scenarios in your company fit into current media frames?
• How intense are the news values in the reputational scenarios of your company?

The answers to those questions will determine the level of reputation risk associated with a given scenario — in a format that can be expressed in figures. Corporate communicators and their top management can then consider multiple ways of dealing with each potential risk.

But those precisely charted risks may never be realized. And much time and resources would have been wasted preparing for them.

The solution to managing reputation risks related to media? Rather than thinking in terms of figures vs. "gut feelings," the best approach is figures plus "gut feelings."

Dr. Frank Herkenhoff heads the media relations department at the Frankfurt, Germany, stock exchange Deutsche Börse AG. Previously, he was a consultant at Pleon focusing on the financial business sector. He is also a lecturer at Leipzig University in the field of public relations. Dr. Herkenhoff holds a master's degree and a Ph.D. in mass communication.

¹ In Europe, the news value theory was primarily developed by Einar Östgaard (1965), Johan Galtung and Mari Ruge (1965), Oystein Sande (1971) and Karl Erik Rosengren (1970), and was subsequently reconceptualized by Winfried Schulz (1976). Reputation Capital: Building and Maintaining Trust in the 21st Century, p. 199.

When it comes to issues management, any corporate communicator will tell you that it is important to properly manage issues before they become crises. But proactive issues management can do more than protect reputation; it also can boost reputation when a potential crisis is not an issue.

Issues management enables corporate communicators to achieve this:

• Be ahead of the game — or at least shape your own agenda.
• Be a translator of outside views to those inside your organization.
• Be a translator of inside ideas to the outside world through thought leadership.

Efforts undertaken at EADS beginning in 2007 demonstrate how corporate communicators can harness issues management for reputation management. EADS addressed issues through two spheres of action: overall perception of the company and early recognition of changes in the company's environment.

Issues management can do more than protect reputation; it also can boost reputation when potential crisis is not an issue.

In 2007, surveys of consumers and opinion leaders showed innovation to be the company's strongest image factor and leadership in technology to be its second strongest. They also showed performance indicators (financials, products) and low personal relevance for consumers were weaknesses of EADS's image. From that understanding of the outside views of the company — and understanding that tensions can arise between the expectation of stakeholders and the performance or behavior of the company — EADS adopted a communications strategy of highlighting the company's contributions to society. This was done in these ways:

• An advertising campaign, called "made by EADS," that positioned the company and its products vis-à-vis several "big" topics; for instance:
  • Satellite technology represents "Answers, made by EADS."
  • Emergency services represent "Rescue, made by EADS."
  • Defense technologies represent "Security, made by EADS."
  • Innovative research represents "Possibilities, made by EADS."
• Media activities.
• Positioning of the CEO through speeches and op-eds.
• Exhibitions.
• Technology communications.

To identify changes in EADS's environment that might impact its top or bottom lines, the company began conducting internal and external risk and opportunity surveys. The surveys seek input from EADS's top management and from educated consumers with an interest in politics and the environment. The company compiles findings from this research into a quarterly "Trend & Issues Analysis Brief," which it uses to stay ahead of emerging issues.

The proactive efforts taken in both spheres of action (company and environment) have shown positive results. Opinion surveys conducted since 2007 show a three-year trend of EADS's overall corporate reputation developing favorably in its "home countries" of France, Germany, Spain and the U.K.

Jan Müller is vice president, issues and strategy, at EADS corporate communications in Munich. Müller joined the Aerospace Group in 2003. He is also in charge of CEO affairs for EADS corporate communications in Munich. Prior to that, he served as deputy head of the planning and campaign staff at the Christian Democrats' federal headquarters. He holds a master's degree in rhetoric and philosophy from Tübingen University.

Dow Chemical's award-winning "Human Element" advertising campaign has been credited with transforming the company's image from a well-known but little-understood chemical company to a company committed to improving lives everywhere by addressing global economic, social and environmental concerns. It also has been cited for contributing to a 29 percent increase in Dow's stock price within one year after its launch. The story behind this campaign demonstrates a key role for research in helping to establish corporate reputation.

Dow is the world's second-largest chemistry-based company. It ranks 38th on the Fortune 500 list and operates 150 manufacturing sites in 35 countries. Founded in Midland, Mich., in 1897, the company has a long history of product development, including relatively recent announcements of producing next-generation electric car batteries and solar shingles. However, when asked what Dow Chemical makes, most people can name only one household product: the Scrubbing Bubbles bathroom cleaner, a product it sold to S.C. Johnson Wax in 1998 (and which was called Dow Bathroom Cleaner when Dow owned it).

The areas where a company excels often aren't important to overall reputation . . . Messages rooted in research can positively impact reputation.

Dow's goal was to be the largest, most profitable and most respected chemical company in the world, but consumers generally had little idea what the company did. Its reputation centered, in part, on a product it no longer made or sold. Further, in 1999, Dow announced plans to purchase Union Carbide, a company saddled with reputation issues stemming from the 1984 Bhopal Disaster. Under those circumstances, how could Dow establish the reputation it sought?

The company turned to research, specifically Ketchum's Brandbuilder, an interactive survey of key target audiences that examines corporate reputation and compares results among competitors and "aspirational" companies. Broadly, the research found that, to improve its image, Dow needed to move away from talking about the science behind its products to talking about the personal impact of its products on consumers — to establish an emotional connection with influencers. Specifically, it found that five attributes are key drivers of Dow's reputation:

• Trustworthiness
• Ethical business practices
• Customer service
• Product/service quality
• Good place to work.

These and other Brandbuilder findings were used to develop the "Human Element" campaign. Subsequent research has shown that media exposure from the campaign has increased Dow's brand equity by more than 25 percent.

Among the key learnings from research's role in the campaign:

• The areas where a company excels often aren't important to overall reputation.
• Messages rooted research can positively impact reputation.
• Educating consumers about a company almost always leads to a stronger reputation. For Dow, respondents in India, where the tragic Bhopal gas leak incident occurred, even rate the company higher.
• Changes in communications levels can quickly impact reputation.

David Rockland is a partner of Ketchum and managing director of Ketchum Global Research Network. He is responsible for overseeing the agency's research products and services, as well as developing innovative approaches to public relations research and measurement for clients around the globe. He also serves as head of Ketchum Pleon Change, Ketchum's change management and workplace communications consulting firm.

Siemens AG is a global powerhouse in electrical engineering and electronics. The 162-year-old company, based in Germany, employs about 475,000 people and serves customers in 190 countries. Prior to Siemens 160th anniversary, the company faced several reputation challenges:

• Erosion of the brand through compliance issues
• Changes in top management
• Lack of clarity and transparency internally and externally about what Siemens stood for
• Major portfolio changes, which impacted overall positioning
• Lack of a clear brand profile in the global marketplace.

Siemens' corporate communications team was tasked with driving a new strategic positioning with consistent communications inside and outside the company and across business groups and regions. Key objectives included regaining trust internally and externally and repositioning the Siemens brand to strengthen the company's reputation worldwide.

A major challenge from the start was this: How do you build or manage reputation for a non-consumer-facing brand?

Beginning around 2005, Siemens had divested businesses such as mobile phones and home and office communications products. Through several acquisitions, it shifted its portfolio more toward offerings for business customers in the energy, industry and healthcare sectors. Management identified these markets as being positioned to ride a tailwind from four megatrends: demographic change, urbanization, climate change and globalization.

How do you build or manage reputation for a non-consumer-facing brand?

While Siemens' key products aren't sold to consumers, they offer solutions to consumer problems raised by these megatrends (e.g., growing demand for healthcare and elder care; increasing scarcity of natural resources; and increased demand for safety and security). Hence, in 2007, the company launched a communications campaign called "Answers," focused on how Siemens offers answers to the world's toughest questions.

The integrated campaign addresses four key audiences through various communication efforts.

"Siemens Answers" aims to build trust through third-party endorsement and dialogue. The campaign targets advertising to high-quality lead media with strong credibility. It integrates Siemens topics Siemens-branded content (such as advertorials on the company's green portfolio) into relevant editorial environments. And it uses events and trade shows to engage audiences in meaningful conversations, such as its "Future Dialogue" program, which partners with the Science Express and The Economist Conferences, to bring together prominent speakers to discuss how science, business and society can cooperate to master major challenges of mankind.

The global campaign is ongoing.

Stefan Denig is head of corporate communications, issues management, at Siemens AG in Munich. He joined Siemens in February 2006 after holding various communication positions for companies such as Deutsche Bank and Allianz. He has degrees in literature and international relations from the Université Paris IV/Sorbonne Nouvelle and the Institut d'Etudes Politiques in Paris, France, and has taught at universities in Munich and in Pittsburgh.