Corporate Reputation: How "Best Company" Lists Figure Into Your Job Search
Corinne Marasco

A public opinion poll is no substitute for thought. - Warren Buffett

What went wrong?

These days, it's hard to avoid lists of companies ranked on some scale: The World's Most Respected Companies, The InformationWeek 500, Forbes' Platinum 400, Working Mother's 100 Best Companies for Working Mothers-FORTUNE magazine alone has 12 such lists. If you're a job seeker looking to answer the question "Who are the best companies to work for and what makes them so good in recruiting and holding top talent?" these lists are seductive because somebody else has already done the work of identifying the companies for you. You just need to narrow down the list and decide which companies to target.

But with so many of these lists floating around, how do you choose among them? How reliable is the information? And how should you use it in your job search? It's easy enough to ask what the best companies are and how they can entice high numbers of job seekers but that's not the total picture. You may be missing some important information about these "best company" lists. After all, Enron was seventh on the Fortune 500 list in 2001.

Defining Corporate Reputation

What is a company's reputation? Is it branding? Is it image? A company may have many different images and can have many brands; Procter & Gamble is such an example. A company's reputation is the sum of all stakeholder perceptions of and experiences with an organization. Stakeholders include the general public, customers, employees, and investors. A company's reputation also includes its identity, key values that an organization stands for and wants to be known for.

A company's reputation is a valuable asset that affects the bottom line. Companies with good reputations enjoy substantial benefits: the value of a company's reputation is estimated to be as much as 40% of its total market values and influences what people buy, the attractiveness of a company's jobs, and whether investors and analysts view companies favorably¹. A company's managers try to influence these perceptions through its recruitment programs, its advertising and sponsorship, its philanthropic activities, and its interactions with analysts.

There is a difference, however, between reputation and a good work environment. A company with an excellent national reputation may not turn out to be the best working environment for you personally. It's all about fit: how well your values and goals mesh with the corporate culture.

Measuring Corporate Reputation

According to Charles Fombrun, a leading expert on reputation management and Executive Director of the Reputation Institute, "measuring corporate reputations accurately is crucial if they are to be managed."² However, the multiple measures of corporate reputation that exist generate more confusion than understanding. Here's how some of the "best company" lists are generated:

• Fortune 500 - The List Of All Lists, based solely on financial performance.
• America's Most Admired Companies - Companies are rated by executives, directors, and securities analysts-not necessarily admired by the public.
• Best Companies to Work For - Companies ask to be added to the list and 2/3 of the score is based on is based on how randomly selected employees respond to the Great Place to Work Trust Index, a survey instrument measuring the quality of workplace culture.
• 100 Best Companies for Working Mothers - Companies complete an application and submit benefits handbooks and other information as documentation.
• Washington Power 25 - Every member of Congress, senior Capitol Hill staffers, senior White House aides, professional lobbyists, and top-ranking officers of the largest lobbying groups in Washington are surveyed. This list is clearly targeted to a particular audience.

What companies won't be on any of these lists? Mid- to small-sized employers, for example, where new growth jobs are found and where you may find excellent opportunities for professional growth. Government agencies where the work you do can contribute to the greater good. Not-for-profit associations and foundations, where you can also make significant contributions to the profession and the public are another example.

Fombrum observed that there are deficiencies in the way these lists are compiled that inhibit systematic analysis. For example, some are arbitrarily performed by panels and aren't replicable. Others are compiled using private information and can't be verified. Line up these lists next to each other and they're incompatible.

Fombrum developed a method to measure companies' reputations across industries and stakeholder groups. People were asked which companies they liked and respected (or didn't) and why. Fombrum discovered that people justify their feelings across six categories: emotional appeal, products and services, financial performance, vision and leadership, workplace environment, and social responsibility. He named the resulting index that summarizes these perceptions the Reputation Quotient (RQ).³ In 2001, several companies that employ chemists showed up on the list of companies with the best reputations.

For the third year in a row, Johnson and Johnson was Number One on the RQ index. The company has carefully cultivated an image as a caring company and is most associated with baby products, even though these make up a small portion of the company's total products. In fact, Johnson and Johnson scored high ratings in each of the six categories measured.

Other companies on the list include 3M (#5), Hewlett-Packard (#7), General Electric (#12), Procter & Gamble (#14), Pfizer (#26), DuPont (#28), Merck (#29), Xerox (#31), Unilever (#37), Chevron (#41), Exxon Mobil (#45), BP (#47), Texaco (#48), Lucent (#49), Royal Dutch/Shell (#51), and Bridgestone/Firestone (#60). Lucent, for example, saw its reputation score drop from previous years because of low ratings for financial performance and vision and leadership.⁴

How Do You Choose?

With all these lists, how do you choose? Whom do you believe? How can you make these lists work for you (if at all)?

Make your own list.

Ask yourself what are the five most important things you want in a prospective employer. Opportunities for professional growth? Flexible work schedules? Family-friendly workplace? Great pay and benefits? Social responsibility? Now take the various published lists and jot down what each has to say about your target companies in each of your categories (remembering that many of the items on these lists are self-reported). If you can't find information about some of the items on your personal list, check out other possible published sources of lists. For example, Washingtonian magazine has an annual list of best places to work with an insider slant to the Washington, DC area. Other large cities may publish similar magazines.

Check out the company Web site. Many companies highlight reasons why they're great places to work. Really savvy companies include mission and values statements, profiles, and comments from employees, like Procter & Gamble, Merck, and Pfizer. Johnson and Johnson posts an extensive values statement on its Web site. Some companies will also link to media stories that have covered this information because it's good public relations (see 3M, for example).

The bottom line is you have to train yourself to look at these published "best company" lists with a somewhat cynical eye-think of them as popularity contests. You need to decide what's best for you; don't rely on someone else's ranking or opinion. "Best workplace" ratings are more descriptive of the company's corporate culture, and so more stable and predictive of HR-related outcomes like productivity and morale⁵ but not necessarily financial stability. Consider reputation ratings as "cues"-signals that the company is broadcasting about itself. Your task as part of your broader job search is to verify the accuracy, intent, and reality behind those signals.⁶

Corinne Marasco is Content Manager for JobSpectrum.org

Related Resources

Charles Fombrun is Executive Director of the Reputation Institute and Professor of Management at the Stern School of Business of New York University. Results of the RQ Gold 2001 Survey of US Corporate Reputations were released in the Wall Street Journal in January 2002. To see the full results, visit Harris Interactive's Web site.