Strategy

The brands we trust

Our first annual survey ranking the reputations of Canada’s top companies shows who held up in down times.

Also see the Top 50 ranked by a variety of metrics including workplace, citizenship and products/services.

There are myriad measures of a company’s success, from gross revenue to total profits to stock price to executive compensation to the size of the corporate jet. Most of these business benchmarks are simple to distil into a simple statistic. The Reputation Institute specializes in a far more ephemeral indicator of corporate achievement. The research and consulting firm measures how admired, liked and respected companies are. For the past five years, the New York — based institute has conducted the Global Reputation Pulse, using more than 70,000 interviews in 32 countries to measure the corporate reputations of 1,300 companies worldwide. And now, for the first time, the Reputation Institute has teamed with Canadian Business to offer an in-depth look at the reputations of the Top 50 companies in Canada.

Based on the responses of 2,244 Canadians, the institute determined that Tim Hortons has the best corporate reputation in the country. “People love Tim Hortons. It’s not at all surprising,” says Rob Jekielek, a principal consultant with the institute. Canadians’ affinity for Tim Hortons is akin to the admiration felt for Ikea in Sweden or Johnson & Johnson in the United States. The company’s first-place finish also offers a clear indication of what bolsters a company’s reputation in the eyes of Canadians. Tim Hortons, like other leading companies, emphasizes its Canadian heritage and identity. “A lot of the companies that are at the top of the list are older Canadian companies that speak to Canadians,” he says. “And this year being an Olympic year, I think it also had a lot to do with the Olympics, and Canadian heritage and Canadian pride.”

Tim Hortons received a Global Pulse score of 83.22 out of a possible 100. Placing second in the rankings was Quebec drugstore chain Jean Coutu with a mark of 82.21, followed by Bombardier, which scored 80.85. These high marks place them on the top tier of companies worldwide with strong reputations, alongside international players such as Japan’s Nintendo, Ferrero of Italy and the United States’ Kraft Foods.

Jean Coutu was one of five companies in Canada’s Top 10 that are based in Quebec. The retailer engenders a strong emotional connection with its customers, and places perennially at the top of reputation studies, according to Jekielek. It is also possible the store’s customers, mainly located in Quebec, take particular pride in Jean Coutu’s roots in that province. Meanwhile, Bombardier, which designed the Olympic torch, saw its score leap by 7.49 points compared with 2009, making it a clear beneficiary of the “Olympic bounce.”

“It’s a pure Canadian company,” says Jekielek. “The roots are tied to a Canadian family.”

Placing fourth in the rankings was Yellow Pages, with a score of 79.81. The phone directory company seems a bit of an anomaly in the ranking. It not only lacks a strong Canadian identity; it has no particular connection to the country at all. But Jekielek says Yellow Pages benefits from customers’ familiarity with their product and its years of service providing information to Canadians. “The companies that do have the best reputations typically have a longer heritage,” he says. “It doesn’t mean that you have to, but … overall reputation is tied to how long you’ve been able to do well.”

Completing the Top 5 was Rona, which as both a Quebec-based firm and an Olympic sponsor, received a score of 79.38. Also landing within the Top 10 were Saputo (79.34), Canadian Tire (79.21), Research In Motion (78.44), Metro (78.23) and WestJet (75.22).

At the other end of the scale were Hydro One, with a score of 58.14, Rogers Communications (57.34) and Bell Canada (54.92). Companies with scores below 60 have “weak” reputations, according to the Reputation Institute, which says the mean score for all companies it surveys across the globe is 64.2. Hydro One, Rogers and Bell likely suffered because they are perceived as monopolies or near monopolies by consumers, says Jekielek. “When you get companies that are closer to monopolies or oligopolies, people feel they have few other options,” he says. “If Bell’s a problem, Rogers may be the only option. It’s a problem if you already switched once.” That said, both telecommunications companies managed to improve their scores from the previous year’s survey, evidence that their stated commitments to improving customer service are bearing fruit.

In conducting its Canadian study, the Reputation Institute focused on Canadian-owned corporations that deal directly with consumers as well as those, like Power Corp., with high public profiles. Within that criteria, the study included the 50 companies with the highest revenue for which financial information was publicly available. Conducted online in January and February of this year, the study asked each respondent to rate five companies they considered somewhat or very familiar. All companies had to be rated by at least 100 people. (As a result, the sample was skewed somewhat in favour of Quebec, home to 38% of respondents.)

The scores were tabulated using participants’ responses to four questions: how much they admire and respect a company, how much they trust a company, to what extent they feel good about a company, and the extent they feel a company has a good overall reputation. “When we think about reputation, at its core it is a very emotional relationship that people have with companies,” says Jekielek. But the study also includes follow-up questions to determine which rational factors — like quality products or well-treated employees — motivate a consumer’s emotional stake in a company. Based on these questions, it seems a company’s products and services are most closely linked to its reputation, followed by ethical business practices and corporate citizenship.

Metro boosted its score by nine points, likely thanks to a major rebranding campaign and sponsorship deals with the Ottawa Senators and Toronto Maple Leafs. Meanwhile, Scotiabank leapt 7.2 points and overtook Bank of Montreal as the most highly regarded bank in Canada, driven by its support for cultural events and its deeply patriotic “Show Your Colours” advertising campaign.

Scotiabank, which placed 18th overall, will likely see increased business thanks to its improving reputation. The study revealed a strong correlation between customers’ high esteem for a company and the likelihood they would recommend it to others. Close to 63% of respondents indicated they would recommend the top-rated companies to others, compared with just 32% who would recommend the lower-tier performers.

Consumers also hold higher opinions of companies that they actually use. Respondents gave an average score of 72.8 to companies with which they had direct experience, compared with just 69.9 for ones they knew only through advertising or public-relations campaigns.

Since its start 13 years ago, the Reputation Institute has attempted to apply these kinds of hard numbers to intangible concepts like esteem and admiration. The notion that a company’s reputation has tangible value is nothing new; corporate balance sheets have long listed “goodwill” alongside assets like property or cash. Warren Buffett, the billionaire investor, justified his purchase of Coca-Cola stock in 1988 and Gillette in 1989 based on the brands’ equity, or consumers’ positive feelings toward the companies’ products. In the mid-1990s, public debate over whether it was possible to tangibly measure an organization’s reputation sharpened as business schools jostled for position in annual rankings published by financial periodicals. In 1997, the Reputation Institute was founded at New York University’s Stern School of Business with the goal of developing tools to more accurately measure corporate reputation. It also provides advisory services (which draw upon proprietary research including the global reputation survey, first published in 2006) to corporations interested in managing and improving their reputations.

While the Reputation Institute has worked for the past few years with Forbes magazine in the United States, its partnership with Canadian Business represents its first similar foray in this country. “In a lot of cases, people don’t have very good methodologies for thinking about reputation,” says Jekielek. “Once you start measuring these sorts of things, you have baselines, and you’re able to set strategies, set goals.” He adds: “What we’re trying to do is elevate the conversations people have.”