2021 was another year in the clutches of COVID, but with the initial shock of the 2020 onset behind us, the world steadily grew more accustomed to living with the pandemic and mitigating its impact. Countries, companies, and people, in general, started to show hope for a return to a post-COVID normal.
This looks to materialize in how we attribute trust and affinity to companies in general, but some questions remain: has COVID-19 changed the playing field? Are we assessing companies on new terms? And what are the new criteria for winning stakeholder trust?
With 2021 in the rearview mirror, we look back at another year where the pandemic, for the most part, stole headlines and served as the primary lens through which people viewed the world.
The dominating narrative also impacted our collective perspective on companies, although 2021, in comparison to 2020, showed that spikes of COVID cases in the markets that Caliber tracks had only a short-lived impact on reputation.
Whether the impact of negative media coverage has softened or our trust in societal and corporate measures to curtail the spikes has gotten greater is hard to say, but the fact is that trust in business in most markets proved to bounce back quicker than before, following outbreaks of COVID throughout the year.
The impact of COVID-19 spikes on corporate reputation in Europe
Across European markets, the flare-ups of COVID cases throughout the year seemed to have an impact on corporate reputation, measured through the Caliber Trust & Like Score.
Average scores for companies in the UK started low in 2021 but quickly trended upward as the healthcare system controlled the spike in COVID cases faster than before, and likely also impacted by the fact that the UK administration stayed its course of lifting restrictions.
Germany also quickly tamed the COVID spikes in February/March, which correlates with the bounce-back in average reputation levels there in Q2. France showed resilience in trust levels throughout the year despite a rising number of cases around mid-year, which was quickly controlled.
Spain stands as the odd one out. Here, the national Trust & Like Score index drops a massive 8-points from January to February and doesn’t recover throughout the year. In general, Spain has experienced a significant downturn in public trust in business from the start of 2020, when the index had an average score of 75.
A potential explanation could be that the path to recovery of an already challenged economy was disrupted by COVID which meant that companies didn’t hire or even had to lay off people in a market where general unemployment hovers above 15% and youth unemployment exceeds 30%. In the first part of the year, several large corporations in Spain announced layoffs, blaming the impact of COVID on business.
These announcements resulted in more than 35,000 redundancies across industries. In May, a 7-month-long lockdown was lifted, and Spaniards could again travel within and outside of the country. While this should be a reason for optimism, trust in business dropped lower.
This could relate to BBVA, the second-largest bank in Spain, announcing that it would lay off approximately 4,000 workers; another hard blow to the economy and especially to public trust in Spanish businesses.
Discounting the unique situation in Spain, the overall perception of businesses in Germany, France, and the UK shows a budding return to pre-COVID levels throughout the year.
Despite seeing rising COVID cases and the introduction of Omicron in the last part of the year, we do not believe trust in business is now affected by the pandemic as it was previously. Instead, we see other macro issues impacting perceptions as things start to normalize and the public starts to feel the aftermath of the pandemic.
In the UK, the onset of the energy crisis (hitting harder due to fossil fuel dependency and being a non-EU member) appears as a possible impacting factor for falling trust in business, and in Germany, delay in production lines of many manufacturing companies central to the national economy, play a central part in a downgrading of expectations of national GDP, in turn providing a probable explanation of negatively-trending public perceptions of businesses in general.
The pandemic spawned new, global macro-situations – companies must connect with consumers to win
In 2021, the COVID pandemic for the most part impacted trust in business in line with how well our governments and healthcare systems managed to mitigate the health crisis.
The movement of average levels of corporate reputation alongside the development of the pandemic can be related to the general positive or negative environment for doing business. However, it does also reveal that stakeholder trust is lost or gained by the failure or success of companies to adapt to the impact of macro events on the industry they operate in.
As an example, the Energy industry saw major changes caused by a sharp increase in demand caused by changing consumption patterns during the pandemic, converging with external factors causing a low supply. The higher demand and lower supply in the market meant that energy prices soared, causing a crisis for consumers and providers alike.
The immediate reaction from consumers on the price hikes that started materializing in October and onwards saw support drop to all-time lows – Read Caliber’s article “Energy prices are soaring – are energy companies suffering the blame?” for more.
A similar and parallel situation was the case for the automotive industry, which was caught in supply chain issues due to a low supply of semiconductor chips.
Rising demand for semiconductors in electronics came as the global workforce set up home offices and sought to expand home entertainment systems, and as consumer spending patterns, in general, shifted toward physical products, as experiences such as travel and other leisure opportunities were reduced with imposed restrictions.
The extreme situation alongside rising costs of fuel and increasing consumer focus on the environment served as a conducive factor for pushing more current and future motorists towards new mobility alternatives. Read more in our 2022 Automotive Industry report.
The result of the pandemic, price increases, and supply chain issues is that all industries are now being scrutinized more than ever. Future interactions are now less likely to be guided by loyalty to a distributor or brand but increasingly by how well the company connects with stakeholders and addresses global macro issues like environmental impact and future technological development to meet their demands.
Corporate reputation trends for 2022
So, how can companies connect with their stakeholders? What are the trends to watch for companies wanting to succeed in the post-pandemic world?
The pandemic showed us that companies cannot detach themselves from issues that affect them or their industry – even if they have no influence on the development of the situation.
Therefore, companies must be focused on staying updated on their stakeholders’ perceptions and preferences and closely monitor how the industry in general is perceived across major markets.
However, as a general guide for what generates a strong reputation with stakeholders, we can look at our global reputation driver analysis – those aspects that are most important when trying to build trust and affinity with stakeholders.
Across markets and demographics, looking at the full sample of people interviewed in 2021, the three aspects most vital for building a strong reputation are Relevance, Integrity, and Authenticity. What these three factors have in common is that they are all deeply rooted in values and purpose.
Reputation is to a large degree built by being a company with relatable purpose and values (Relevance), behaving responsibly (Integrity), and being truthful in words and actions (Authenticity).
In a post-COVID world, we predict that this value-based focus could materialize in the following trends:
- Relevance through having a targeted purpose – Gone are the days of having a generic purpose, which could easily be transferred to another company and hold just as true. Showing real relevance through values and actions that stakeholders can relate to is a central element of building stakeholder trust. We believe that stakeholders will increasingly expect companies to show a more targeted purpose reflecting the unique ambitions and goals of the company and how they intend to use their expertise to solve issues relevant to them.
- Integrity through social capitalism and corporate activism – Corporate integrity is increasingly moving towards including clearer stances and actions on important topics related to central discourses. Some of the current discourses relate to ideals of social capitalism, i.e. the impact of the company on society, on the environment, and on the lives of their employees. Here we see a need for companies to take on a role as agents of change or activists – for example, by implementing new environmental standards or creating new norms for employment. The latter is becoming a prominent debate already, with companies being assessed on their ability to embrace remote and flexible working habits in the wake of the pandemic. Improving the quality of life for employees through a less rigid approach to what has traditionally been considered acceptable working hours and locations will be a battleground for talent and retention in the coming years.
- Authenticity through transparency, simplification, and accessibility – Authenticity is at the heart of connecting with stakeholders. It is the measure connecting corporate promises and resulting actions, which all stakeholders use to assess future interactions. Authenticity, in a corporate context, is about doing what you say, which makes the importance of communication even greater. We believe that building stronger perceived authenticity must be centered on transparency, simplification of communication, and accessibility. Transparency comes through information disclosure, clarity, and accuracy of information. Simplification comes by cutting through the noise in conveying a message and focusing on the most important aspects for the target audience, communicating to them in their language and on their terms. Accessibility comes by actively making stakeholders aware of opportunities to engage.
The above points are just some of the trends that we see for the evolution of corporate reputation in 2022 and beyond. We believe that the pandemic has been a transformative event that will provide both opportunities and challenges for building corporate reputation going forward and that companies that embrace a value-based approach to building connections with stakeholders will be the ones succeeding in the long term.