Corporate leadership held responsible for economic crisis

June 3, 2013

In May, we released the next report in our BrandPower Series, focused on examining the attributes that comprise Favorability. For the sake of keeping the report a manageable length, we cut out one further layer of analysis that we’d now like to share with you: understanding how Perception of Management varies within the Top 100. What we found was fascinating.

In May, we released the next report in our BrandPower Series, focused on examining the attributes that comprise Favorability. Our annual BrandPower Rankings Report had uncovered depressed Favorability as the primary driver of decreased brand performance across the Top 100 corporate brands. The Favorability Report took that analysis a step further and identified the attribute “Perception of Management” as being disproportionately responsible for the drag on attitudes towards corporate brands. For the sake of keeping the report a manageable length, we cut out one further layer of analysis that we’d now like to share with you: understanding how Perception of Management varies within the Top 100. What we found was fascinating.

Attribute misalignment
There are three attributes that comprise Favorability: Overall Reputation, Perception of Management and Investment Potential. The alignment of these attributes is very telling in understanding the pressures within an industry/category in general or for a specific brand. In a healthy brand, we expect to see the Favorability attributes behave in a typical pattern. That is, we expect to see a declining hierarchy among the attributes, in a relatively uniform pattern. If this pattern is disrupted, it raises a red flag.

And red flags were raised when we looked at the five-year trend of the Favorability attributes for the Top 100. In 2008, the Perception of Management attribute came out of alignment and remained lower than Investment Potential for nearly three years. In the past two years, we have seen a recovery in this metric, with a clear inflection point in 2010. It is clear from the data that the executives from top brands are being held personally responsible for financial downturn. This pattern represents a backlash against the corporate leadership culture that respondents feel is liable for creating the meltdown.

The most elite brands shoulder greater reputational burden
To examine this phenomenon further, we broke the Top 100 into two groups, the Top 25 companies and the 75 companies ranked 26 – 100. Interestingly, the Top 25 companies are driving this negative trend and continue to have Perception of Management as the lowest ranked attribute, beyond the identified inflection point in 2010. This suggests that the Top 25 companies, which are the most highly visible companies in our database, may be shouldering a significant portion of the blame for the sluggish economic conditions that exist. While the companies ranked 26 – 100 had depressed Perception of Management, they rebounded to a more normal alignment after 2010 (bringing up the average scores across the Top 100).

Lack of clarity
Even if attributes are in the proper alignment, the spacing between scores can be informative. When the attribute scores are similar and the attribute graphs merge towards each other and move in unison, we call that “clarity.” It means respondents have a very clear, concise and consistent attitudes toward the brands. When a brand’s attributes are in a state of clarity and also exhibit an upward momentum, we know it is a great opportunity for a company to invest in growing their brand. It is a prime opportunity for efficient communications.

When we look at the spacing of the attributes for the Top 100, we notice that the gap between Overall Reputation and the other two attributes remains larger than normal. Although the Favorability attributes have rebounded to proper hierarchy, this divergence reveals continued dissatisfaction with the way these companies are managed and performing. However, the higher score for general brand perception indicates that there is some underlying confidence that these companies can recover.

The duality of a strong brand
Our BrandPower Rankings Report heralded the ability of a strong brand to buoy a company in tough economic times. While our database as a whole lost 9.6% in BrandPower (an aggregate of Familiarity and Favorability) while the Top 100 brands only lost 5.7%. However, being a strong brand brings its own set of challenges when economic conditions become unfavorable.

In tough times, these brands maintain their strong Familiarity, but suffer from reputational losses. The attitudes towards corporate leadership plummets as the public looks for targets to hold accountable for their personal struggles. The more salient a brand, the more likely it is to be subject to dramatic shifts in perception. The good news it that companies with strong brands also rebound more quickly. They can use their strong foundational strength to adjust messaging and recover faster than those who don’t invest in building their brands over the long term.

For more information, read our full Favorability Report.

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