What is Vodacom doing wrong that Woolworths is doing right? Well, a recent announcement by the Reputation Institute suggests that the telecoms giant is not doing a good job at managing its reputation, while the retailer is doing a stellar job. To find out more about the research, ZA Confidential spoke to Trevor Ndlazi, country manager for the Reputation Institute in South Africa:
ZAC: What is Woolworths doing right that many other firms are failing to do?
TN: Woolworths have embedded into their business culture and business processes a way of doing business that has as its outcome a strong reputation. They are not building reputation by PR and marketing but by actually doing business in way that talks to the needs of their stakeholders. This is captured in their Good Business Journey approach.
ZAC: Is its strong reputation just a feel-good matter, or does it help the business?
TN: Reputation drives support, so it is absolutely critical to business. People will support a business, either by buying from it, recommending it, saying good things about it, etc, based on its reputation. All of these things have an impact on the bottom line. Reputation is therefore critical to sustainable business success.
ZAC: To what extent might a new threat be just around the corner – as it was with Woolworths over allegations it had breached the rights of a small producer when it produces a Ginger Beer, and also with its perceived whites-only recruiting stance?
TN: It is because a new threat is around the corner that companies need strong reputations. A strong reputation allows companies to survive these types of threats because the company builds goodwill and reputation capital over time and when mistakes in companies happen, as they invariable will, the reputation that has been built helps the company to weather the crisis as stakeholders’ faith in the company will allow them to give the company the benefit of the doubt.
ZAC: What has Vodacom done wrong to suffer such a big fall?
TN: It is difficult to say with absolute certainty, as we did not ask respondents for reasons for their ratings. We do know however that negative changes in reputation perceptions are preceded or triggered by incidents or events. These events would generally be where the company acts in a way that stakeholders did not expect it to act, for example the company may have positioned itself as working to give stakeholders the best value. But if it happens that the company is then found or seen to be acting against this position, this may damage its reputation. We suspect that may be the case with Vodacom and the mobile termination issue.
ZAC: Neither the mining nor the financial services sector do well, either. Might it be that we now live in times when most people are pretty suspicious of corporates?
TN: We have witnessed declines in scores in all but two companies; we also see a similar trend internationally. There does seem to be a loss of faith in companies currently happening, post the global financial meltdown.
ZAC: The construction sector suffered a lot of reputational harm due to many breaches of competition law over bids for World Cup Stadia, Gauteng highway improvements, and other projects. Is this reflected in your research?
TN: Yes. The construction company that was included in the study was placed with the mining companies in terms of its reputation score.
ZAC: Do you do a similar exercise on political parties, and if not what do you think it might show?
TN: No we do not. It would be very difficult to speculate, but might show interesting results.
I am not sure about this research. While Woolworths may be doing well, my own annoyance at its recent failure to sell wine on a public holiday, when it was on sale at a rival supermarket, really annoyed me. It probably happened after this research, but I was even more annoyed when Vodacom offered 1Gig of free data on a recent Sunday – but the network was rubbish and I am not sure I was able to get any benefit from it. Will Woolworths latest corporate expansion in Australia boost its image, or does it face a big disaster, as has happened to other ZA companies in Oz? Admittedly Woolworths knows the Australian market well, and has a CEO who worked there. And how will Vodacom’s reputation fare in the tie up with Neotel? If this leads to new offerings at good prices, it will win my vote. And let’s face it, the borderline anti-white bosses at Telkom are not likely to win much respect from many South Africans.
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