Corporate Reputation. Leading With Purpose.
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- Sherilyn Melton
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1 Ikea, Google and Microsoft Top International Brands Corporate Reputation in the Nordics Leading With Purpose
2 Introduction With a total population of around 25 million, the Nordic market constitutes the eleventh largest economy in the world. It is renowned for big, established brands such as Lego, Nokia and Volvo and - thanks to high levels of internet penetration and entrepreneurial activity - has also recently spawned a new generation of tech companies such as Skype and Spotify. The region is a stronghold of the oil and gas industries as well as clean technologies and renewable energy. In a period of prolonged economic uncertainty, where trust in corporations is generally low and consumers are looking for reassurance that corporations are playing their part as responsible citizens, we set out to discover what drives corporate reputation in the Nordics. We asked over 4500 people from Denmark, Finland, Norway and Sweden what is important to them in their roles as consumers, employees, investors and not least citizens. We also asked them to rate the top 100 Nordic companies across a range of metrics from trust and responsible behaviour, to innovation, leadership and financial performance. For comparison and benchmarking purposes, a number of international and additional Nordic companies from key sectors were included in the research. The link between economic challenges and corporate responsibility is clear. There is a perception that companies do not pay their fair share of taxation and the demand for companies to give back to society in other ways is high across all countries. Our findings confirm that having a clearly defined Corporate Purpose helps to build trust and a competitive advantage among Nordic stakeholders. Good customer service, treating employees well and engaging with local communities are all key drivers of trust and what turns customers into brand advocates. Research shows that a strong and well communicated Corporate Purpose can also impact financial performance up to 17% [1]. We hope that this Nordic market insight will help companies understand what drives corporate reputation in the Nordics and how to balance Purpose and Performance in their communications. PURPOSE Trust Advocacy Responsible Behaviour Public Image Good Employer Environmental Responsibility Positive Contribution to Community PERFORMANCE Products and Services Financially Strong Innovation Strong Leadership Communicates in a relevant way [1] IMD s regression analysis on industry standardised return on investments over two five-year periods ( and ). 2
3 Part 1 Corporate Rankings 3
4 Purpose & Performance Index TOP 10 Nordic Companies When asked to rank the top 100 Nordic companies on a range of metrics from trust and responsible behaviour to leadership and financial performance, Norwegian dairy producer Tine came out top overall, scoring particularly well on Purpose metrics. Danish toy company Lego was rated top on Performance. Only one Swedish company, Volvo, made it into the top 10 list. Danish companies score highly on both Performance and Purpose, with a tendency to rate better on Performance. Finnish and Swedish companies tend to do slightly better on Purpose metrics than Performance. Norwegian companies do very slightly better on Performance ratings than Purpose. PURPOSE Trust Advocacy Responsible Behaviour Public Image Good Employer Environmental Responsibility Positive Contribution to Community PERFORMANCE Products and Services Financially Strong Innovation Strong Leadership Communicates in a relevant way Top 10 Nordic COMPANIES PURPOSE PERFORMANCE Total Score Tine Lego System Novo Nordisk Carlsberg SOK/S-ryhmä Norsk Tipping Valio Arla KONE Volvo 4
5 Purpose & Performance Index Across all Sectors Consumer facing sectors such as manufacturing, technology, food and drink, and retail score best by far on the Nordic Purpose & Performance Index. Among the international companies included in the research for benchmarking purposes, the technology sector also tops the ranking. It is worth noting that the manufacturing and technology sectors score particularly well on Performance metrics, whereas retail and food and drink companies are seen to have a stronger Corporate Purpose. As a sector, business services is ranked lowest on the Nordic Purpose & Performance Index. Energy, construction, finance and telecoms are also sectors that do less well. The biggest discrepancy between Purpose and Performance is for the telecom sector which is rated particularly poorly on Corporate Purpose. Nordic telecom companies score low on trust, public image, responsible behaviour and their consumers are not prepared to act as advocates. ALL SECTORS PURPOSE PERFORMANCE Total Score *Nordic companies only TOP SECTORS* BOTTOM SECTORS* Technology Food and Shipping/ Paper/ drink Retail Oil and gas Logistics Forestry Telecoms Financial Manufacturing Construction Energy Business Services 5
6 INTERNATIONAL COMPANIES SCORE BETTER ON PERFORMANCE When benchmarking against the international com panies included in the research it becomes apparent that, whereas Nordic companies are generally seen as strong on Purpose driven metrics such as trust, non-nordic brands score best on Performance related metrics like innovation and financial strength. Technology companies generally score highly on the Purpose & Performance Index because they are seen as financially robust and as having a welldeveloped products and services offering. They are also perceived as having a strong public image but being weak on environmental responsibility and not viewed as caring about the environment. Companies need to think more than just about maximizing profits. They need to pay taxes in the country they re working in, not hiding it away. FINLAND Ikea tops the list, being perceived across the Nordics as financially strong, innovative and a company that communicates well with its customers. Although not headquartered in the region, Ikea is still perceived as Swedish and is popular in all four Nordic countries. Swedish stakeholders still describe Ikea as a leading Swedish company. I want to know that the company remains active in the community, using the profits to reinvest. This is an easy way to contribute to where they are active. sweden 6
7 Part 2 Corporate purpose and leadership 7
8 Corporate purpose drives trust Good customer service, treating employees well and engaging with local communities are all key drivers of trust. Not surprisingly, the most trusted companies within each market tend to be domestic. This is also true when comparing Nordic and international companies where we see Nordic companies outperforming international ones thanks to higher Purpose scores. Trusting means that the company is open and honest about its finances, and also has a reputation as a good employer Norway The company must operate openly and honestly in accordance to its values. It should treat its employees well and be honest with its customers. FINLAND TOP 5 MOST TRUSTED COMPANIES BY MARKET MOST TRUSTED NORDIC COMPANIES 1. Tine Denmark Finland Norway Sweden 2. Carlsberg 1 2 Lego Carlsberg Fazer Kone Tine Norsk Tipping ICA SKF 3. Norsk Tipping 4. OP-Pohjola 5. Lego 3 Coop OP-Pohjola Coop Arla 4 Novo Nordisk Valio Gjensidige Forsikring Scania 5 Mærsk SOK/S-ryhmä Posten Norge Volvo 8
9 Purpose Three Times More Important Than Financial Performance Two thirds of Nordic stakeholders believe that the CEO should be the public face of a company and that CEOs need to have a strong profile both internally and externally. Among those that feel that CEOs should have a strong profile, Corporate Purpose and vision were identified as the issues CEOs should be most concerned about both inside and outside of their organisation. In fact, communicating a company s Purpose and core values are deemed to be more than three times as important as communicating a company s financial performance. Danish companies are seen as having particularly strong leadership among Nordic stakeholders. Companies with strong leadership 1. Maersk 2. Novo Nordisk 3. Lego 4. Reitangruppen 5. Statoil CEOs do not need to be well known outside of their own company 38 % Which of the following is closer to your view? 62 % CEOs should be the public face of a company: they need to have a strong profile internally and externally Good leaders should not only think in terms of profit, but should position the company to be part of the community, and act to the society s benefit. Norway Company leaders must be responsive inform the employees and then the media. They should be unafraid to apologise when there are errors and not let subordinates take the hit for them. Sweden 9
10 Sustainability is more than just the environment The environment is an important issue for the Nordic public and nearly 80% of stakeholders across the region say that they are concerned about the environmental impact of companies. Top 5 companies by topic But they also agree that, for a company, sustainability is more than just being environmentally friendly. Good working conditions, contributing to the local community, less focus on quarterly earnings and more of a long-term view on financial performance are all definitions of sustainability. 1 Seen to care about the environment Vestas Making a positive contribution to the communities where they operate Tine Behaving in a responsible manner Coop 2 Coop Norsk Tipping Tine A company should make sure that it does not harm 3 Tine Coop Novo Nordisk the environment in the short and long term. Environmental 4 Valio Posten Norge Norsk Tipping considerations in particular should be taken into 5 SOK/S-ryhmä SOK/S-ryhmä Lego account for the life cycle of products. Sweden 10
11 Part 3 Consumer insight 11
12 Clear link between economic challenges and corporate responsibility Our research shows that Danes and Norwegians are more positive about the state of their nation than Swedes and Finns. Over half of Danes think their country is heading in the right direction compared with just one fifth of Finns. Danes and Norwegians are also more positive about the economy while only 13% of Finns feel their economy is going in the right direction. The link between economic challenges and corporate responsibility is clear. In Finland particularly there is a perception that companies do not pay their fair share of taxes. Across the Nordics, there is a demand for companies to give back to society. Two thirds feel that companies have a responsibility to contribute to local communities and overall this is one of the metrics that the companies included in this survey performed worst on. Contributing to the community can, however, take many forms. Respecting the local environment, creating new jobs, paying taxes and contributing to charities are all important. Top 5 companies that make a positive contribution by market Top Nordic Employers 1. SOK/S-ryhmä 1 2 Denmark Lego Coop Finland Fazer Valio Norway Tine Norsk Tipping Sweden ICA Arla 2. KONE 3. Novo Nordisk/Valio 4. Tine/Lego 5. Carlsberg 3 Carlsberg SOK/S-ryhmä Posten Norge SCA 4 Mærsk KONE Statoil Volvo 5 Nortura OP-Pohjola Coop SKF/Scania/Ericsson/Skanska 12
13 The nordic Consumer A company s values are important for the Nordic consumer who is willing to pay a premium price for a product or service from a company they view as responsible. A quarter of Nordic consumers say they have advised someone to use or buy products from a company because it has acted responsibly. 41% of Nordic consumers would like companies to engage with them on the issues they want to hear more about: mainly the companies commitment to social responsibility and the wider impact they have on society and the economy. Social media is an effective tool for customer engagement and Ica, Telenor and Ikea are companies that are seen as particularly good at utilising social media for engagement. How important do you think it is for a company to have a strong presence on social media? 40 % Somewhat important 14 % Very important 30 % Not very important 15 % Not at all important Can you think of any companies that are particularly good at utilising social media? Engaging with me is how I become familiar with a company and its values and practices and makes me more likely to be loyal to them. Norway Overall Nordics 13
14 FIVE Tips for Effective Communication in the Nordics 1. Define And Communicate Your Corporate Purpose Corporate Purpose has evolved from Corporate Social Responsibility (CSR) and sustainability and is today a distinct concept in itself. Whereas CSR is often seen as a bolt-on to a company s core business, Purpose cuts across all business functions. Part of a company s DNA and its raison d être, Purpose guides and informs the basis of the mission, vision and values of a company. 2. Walk The Talk Corporate Purpose is key for both internal and external communication, however the Purpose comes first, it is not a communications tool. Purpose is central to strategy development and guides business decisions, allowing companies to take a holistic view and strategically align values, organisational culture and operations. This helps to avoid any disconnect between what companies say they do and how they actually operate. It also helps avoid accusations of greenwashing. 3. Maximise CEO Profile Internally and Externally There is a growing demand from consumers, employees, investors and other stakeholders for CEOs to be the public face of a company and to have a strong profile both internally and externally. A company s Purpose and values are seen as the key issues a CEO should be most concerned with communicating both inside and outside the organization. 4. Localise Communication The 25 million people that make up the Nordic market are culturally and linguistically close to one another. The Nordic public also shares core values and beliefs around the role of companies in today s society. However, as our research shows, the most trusted companies within each market tend to be domestic: communicating in local language, engaging with local communities, treating employees well and having good customer service. 5. Use Social Media For Customer Engagement Nordic stakeholders want companies to engage with them, but not just for advertising and promotional purposes. Social media is an excellent tool for engagement if used correctly. As a first step, ensure that your own social media channels are used for discussions and dialogue rather than promotion. As a next step, participate in all the other discussions taking place on the web around your products and brands. Performance with a Purpose is based on the belief that companies can and must achieve business and financial success while also leaving a lasting and positive imprint on society Indra Nooyi, Chairman, PepsiCo 14
15 Methodology Burson-Marsteller commissioned leading research firm Penn Schoen and Berland to undertake an online quantitative survey of 4531 people in the Nordic region between July and September Quotas were set for gender, age and region to ensure that the sample is representative of each population. The following companies are included in the research To find out more about your company s Purpose & Performance ranking, please contact: Sara Alsén Managing Director, Strategy Nordic Region sara.alsen@bm.com +46 (0)
16 Burson-Marsteller, established in 1953, is a leading global public relations and communications agency with unrivalled presence and expertise in the Nordic region. Our teams of experienced consultants in Copenhagen, Helsinki, Oslo and Stockholm work closely together on a day-to-day basis to provide clients with strategic insight and innovative public relations, public affairs, reputation and crisis management, digital strategy, advertising and other communications services. Having wholly-owned offices in all Nordic countries, not only sets Burson-Marsteller apart from the competition but ensures that we can deliver seamless communications services across the region. Worldwide, Burson-Marsteller operates in 110 countries across six continents. Penn Schoen Berland (PSB), a member of Young & Rubicam Group and the WPP Group, is a global research-based consultancy that specialises in messaging and communications strategy for blue-chip political, corporate and entertainment clients. PSB s operations include over 200 consultants and a sophisticated in-house market research infrastructure with the capability to conduct work in over 90 countries. The company operates offices in Washington, D.C., New York, London, Seattle, Los Angeles, Dubai, Delhi, Miami, The Dominican Republic and Denver, which are supported by an in-house fielding capability and are fully equipped to provide the complete creative solutions PSB clients need. 16
17 Foto: Shutterstock Burson-Marsteller Denmark Kronprinsessegade København K Tel: Mail: info.dk@bm.com Burson-Marsteller Norway Kirkegata Oslo Tel: Mail: oslo@bm.com Burson-Marsteller Sweden Mäster Samuelsgatan Stockholm Tel: Mail: stockholm@bm.com Burson-Marsteller Finland Kalevankatu 20, PL Helsinki Tel: Mail: info-pbm@bm.com 17
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