THE WALL STREET JOURNAL: Ranking Corporate Reputations: Bottom 10 (Worst Reputations): At 54. Royal Dutch Shell: 55: Tyco International: 57: Halliburton: 60: Enron: Tuesday 6 December 2005
Tech Companies Score High in Yearly Survey
As Google Makes Its Debut in Third Place;
Autos, Airlines, Pharmaceuticals Lose Ground
By RONALD ALSOP
Staff Reporter of THE WALL STREET JOURNAL
December 6, 2005; Page B1
It takes most companies decades to build a great reputation. Google Inc. did it in seven years.
The creator of the premier Internet search engine made a striking debut this year in the annual Reputation Quotient ranking, placing third among 60 of the most prominent companies in the world. Google, which took root in a Stanford University dorm room and was founded in 1998, ranked behind No. 1 Johnson & Johnson and No. 2 Coca-Cola Co., American icons that are both more than a century old.
Technology companies generally made an impressive showing in the annual ranking of the best and worst corporate reputations. The technology business enjoys the strongest reputation of any industry, receiving positive ratings from 71% of the nearly 20,000 Americans who took part in the survey. Respondents said most of the technology companies provide innovative, reasonably priced products that enhance their daily lives -- a claim that few other companies in the survey can make.
Some survey respondents called Google "indispensable" and "priceless." Michelle V.L. Miko, a Web developer in Moss Landing, Calif., said she "can't even recall how many years I've been using Google. It instantly became my search engine of choice because of its simplicity, accuracy and the clean way the site is organized. I rely solely on Google for the many things I have to research like obscure music lyrics and medical terminology."
Google's lofty share price also boosted its reputation, with respondents naming it as one of the stocks they would most like to buy and would most recommend to other people. "It's one company I would have been interested in investing in," said Ms. Miko, "had I had the chance to get in on the ground floor."
Other technology companies in the top 10: Sony Corp., Microsoft Corp. and Intel Corp. In addition, International Business Machines Corp. and Apple Computer Inc., buoyed by its popular iPod music players, both climbed higher in this year's ranking, landing at No. 19 and No. 27, respectively.
The technology industry is the exception. In the reputation survey, Harris Interactive Inc., a Rochester, N.Y., research firm, found that most industries, particularly automotive, airlines, pharmaceuticals and energy, lost ground in the ratings. Only the tobacco industry ranked lower than energy and pharmaceuticals.
The overall reputation of American corporations, already weak, slipped further this year. Despite corporate-governance reforms and a growing commitment to ethics and social responsibility, companies haven't redeemed themselves with the public. This year, 71% of respondents rated American businesses' reputation as "not good" or "terrible," compared with 68% in 2004.
"Corporate America continues to demonstrate a tremendous amount of greed, dishonesty, incompetence and a general lack of humanity that I believe is contributing to dissolving values and the work ethic in America," said Tamara Maimon, a university administrator in Novato, Calif. "Many young people that I come into contact with don't believe they have to work hard to make a lot of money; they believe they just have to make the right connection or BS or bully their way to the top."
Although many companies provided help after this year's natural disasters, especially Hurricane Katrina, many respondents didn't give them much credit. In fact, many respondents called on companies to be more benevolent -- and make their good deeds more visible to the public. For example, Procter & Gamble Co., which dropped to No. 13 this year from No. 4 in 2004, was called to task for not demonstrating enough social responsibility.
"If P&G is doing something significant, they should make it known, and it should be something that makes a difference in my family's life or my community," said Teresa DeVilbiss, an accounting representative in Roseville, Calif.
But publicizing social activism is a delicate issue for companies. Many are reluctant to tout their good deeds in advertising and news releases because they don't want to appear self-serving. P&G, however, includes information about its philanthropic response to recent natural disasters on its corporate Web site. "Our social-responsibility operating principle has always been to focus our efforts on the results of our contributions and volunteerism and employee leadership," a P&G spokeswoman said. "Getting recognition for it is secondary."
The Reputation Quotient study, developed jointly by Harris and the Reputation Institute in New York, was conducted in two parts. Between March and June, 6,977 respondents were asked to name the two companies with the best reputations and the two with the worst. The 60 companies named most often were then rated by 19,564 people in a separate survey between Aug. 30 and Sept. 26.
Respondents evaluated companies they were familiar with on 20 attributes that measure emotional appeal, financial performance, quality of products and services, social responsibility, vision and leadership, and workplace environment. The 60 companies in the final ranking vary slightly from year to year, depending on which are most top-of-mind with the general public.
One company has shown particular consistency. Johnson & Johnson has had a lock on first place since the survey began in 1999, successfully dodging the bullets fired at other pharmaceutical companies. It scored well for the quality of its products and for emotional appeal because of people's warm feelings about its baby-products business. It also received the highest scores for being ethical and trustworthy. J&J "is as American as Mom and apple pie," one respondent commented.
Although J&J derives more revenue from pharmaceuticals and medical devices than from baby products, Cynthia Posey, a program manager at the University of Texas at Austin, still thinks of baby powder when she hears the company name, "not drugs or the company's birth-control products." J&J, she said, "does a really good job at image control and should just keep quiet about pharmaceuticals."
People weren't as kind to the other pharmaceutical marketers in the ranking. Merck & Co., denounced by some respondents as greedy and dishonest, placed 45th. Eunice Black, a paralegal in St. Paul, Minn., said she doesn't "believe for a minute that the company didn't know all along about the risks of Vioxx. They're just like the tobacco companies that hid the risks of smoking for so long." Merck, which stopped selling Vioxx last year, contends that it withdrew the painkiller promptly when a clinical study showed increased risk of heart attacks or strokes after 18 months of treatment.
The company last appeared in the Reputation Quotient ranking in 2003 when it placed 32nd. In response to the survey, a Merck spokesman said, "Our decision to voluntarily withdraw Vioxx was a reflection of our commitment to putting patient safety first. Merck acted responsibly and appropriately as it developed and marketed Vioxx, and we extensively studied Vioxx and shared our scientific data with the public at every stage."
The three oil companies in the survey -- Exxon Mobil Corp., Chevron Corp., and Royal Dutch Shell PLC -- received low ratings and a scolding from the public for the "heartless" spike in prices at the pump and their gusher of profits. "The whole gasoline-price fiasco was a doozy," said Joe Fortunato, an art director in Cleveland. "They have had me over a barrel because where I live, there isn't adequate public transportation and I have to drive."
A spokesman for Exxon Mobil, the world's largest public energy company, said many consumers don't realize that gas prices are influenced by changes in the price of crude oil, supply and demand, government regulations, taxes and transportation costs. More than 90% of the retailers that operate stations selling Exxon- or Mobil-branded gas independently set their own prices, the spokesman added.
Wal-Mart Stores Inc.'s recent image-building advertising and PR blitz yielded no improvement in its ranking. The retailer placed 29th, compared with 28th last year. It scored well for financial performance, placing third in that portion of the survey. Wal-Mart declined to comment.
Rival Costco Wholesale Corp. ranked 18th, with some respondents saying they admire the warehouse-club operator more than Wal-Mart. "Costco treats its employees well," a respondent said.
Home Depot Inc., which ranked No. 12, benefited from the fact that customers appreciate its quality service. The home-improvement retailer, along with package-delivery companies FedEx Corp. and UPS, were cited most often for excellent customer service. Meanwhile, MCI Inc., Comcast Corp., Bank of America Corp., McDonald's Corp., and UAL Corp.'s United Airlines, received some of the worst scores for service.
Big mergers proved damaging when the negative reputation of one company rubbed off on the other. In fact, Sears Holdings Corp., which includes Kmart, ranked 41st, and Hewlett-Packard Co., which includes Compaq, ranked No. 31, experiencing two of the largest reputation declines this year.
The bottom of the ranking remains largely those involved in scandals: Enron Corp., MCI (formerly WorldCom and now being acquired by Verizon Communications Inc.), Adelphia Communications Corp. (now being acquired by Time Warner Inc.'s Time Warner Cable and Comcast), and Tyco International Ltd.
Respondents weren't appeased by the fact that some of those companies' former executives have been convicted and sentenced to prison. "Bernie Ebbers (former WorldCom CEO) and Dennis Kozlowski (ex-Tyco CEO) are a start," said Ms. Black, the Minnesota paralegal. "But there are still so many who haven't been brought to justice."
Write to Ronald Alsop at email@example.com
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