A new study by Weber Shandwick shows that for two-thirds of consumers, the reputation of a company's chief executive officer plays a part in purchasing decisions by creating an overall impression of the company.
The findings come from a study conducted in fall 2011 by KRC Research, which surveyed 1,375 adult consumers and 575 senior executives in companies with revenue above US$500 million across four markets: the US, the UK, China, and Brazil. The first release of data from the study addressed the impact of parent company reputation on individual brands (see "Parent company reputation drives consumer product decisions: global study").
In the new report, the executives surveyed reported that, on average, 49 per cent of the reputation of their company is attributable to the reputation of the CEO. In turn, 60 per cent of a company’s market value is derived from its reputation.
Consumers in the two emerging markets put more weight on corporate leadership than do their counterparts in the developed markets. Sixty-four per cent of Chinese consumers and 72 per cent of Brazilian consumers rely on executive communications when learning more about a company. The corresponding numbers for the US and UK, respectively, are 56 per cent and 46 per cent.
Unfortunately, CEO reputations are generally headed in the wrong direction. One out of two consumers have lost respect for corporate leaders over the past few years. Only 19 per cent reported an increase in admiration. As a result, overall corporate reputations also took a hit, with consumers holding both international companies (41 per cent) and their own countries' largest companies (38 per cent) in lower esteem than in prior years.
Respect for corporate leaders has taken a bigger hit in developed markets than in the emerging markets studied. While 72 per cent of US and 71 per cent of UK consumers have lost respect for such leaders in the past few years, Chinese consumers are evenly split (35 per cent lost respect and 38 per cent gained respect), while in Brazil, more consumers reported an increase in respect (33 per cent) than a decrease (21 per cent).
"Regardless of whether consumers have gained or lost respect for CEOs, the key point is that people are talking about individual corporate leaders—and this impacts purchasing decisions," said Darren Burns, managing director, China at Weber Shandwick. "This may not be entirely surprising in much of Asia, given the importance of hierarchy in local business culture. But with 39 per cent of Chinese consumers reporting that they ‘often’ have conversations about company leaders, organizations should understand that those at the top are being watched, and they need to set the tone and shape the brand.”
Weber Shandwick offers executive reputation services as part of its Enterprise Brand Engagement Model.
The article first appeared on Campaign Aisa