A Black Eye
For Big Business

Reputations of Top Corporations
Tumble in Consumer Survey

By Ronald Alsop
Staff Reporter of The Wall Street Journal

Big corporations are stuck in the doghouse. More than two years after a wave of accounting scandals shook the public’s trust, the reputation of many of the best-known companies continues to decline. In their latest corporate-reputation study, Harris Interactive and the Reputation Institute found that the public is still mad at many of the 60 companies in this year’s ranking: Three-quarters of the survey respondents graded the image of big corporations as either "not good" or "terrible."

One respondent, Eva Johnson, a homemaker in Franklin, Ohio, says she is so disillusioned with corporate financial scandals that she’s tempted to start hiding her savings in her mattress. "It’s sad, sad, sad," she says. "I’m very disappointed in how money can rob the goodness in people."

Record Low Scores

But the public’s scorn runs deeper than the scandals. Americans also feel less positively about customer service, the treatment of employees and the environmental policies at many companies measured in the survey. Prescription drug prices were a particularly sore point with some of the respondents who rated Pfizer (No. 28 in the ranking) and Merck (No. 32).

"I really wonder how executives at drug companies sleep at night knowing they overprice the American market so much that some people have to choose between being able to pay bills or afford medication," says M. Brandon Fargis, an information-technology specialist in Burlington, N.C.

Although still No. 1 in the ranking, even Johnson & Johnson is feeling the sting of corporate distrust. For the first time in the five years it has held the top spot in the reputation ranking, its Reputation Quotient score dropped below 80 points (out of a maximum 100). J&J’s strong association with babies couldn’t shield it this time from consumer wrath over drug prices.

The 60 companies in the reputation ranking vary somewhat from year to year because they are based on a nomination process in which 6,331 people selected from Harris Interactive’s database are asked to name the companies they currently believe have the best and the worst reputations. Then every fall, a second group of nearly 22,000 online survey respondents rates the reputations of the most-nominated companies on 20 attributes. Harris Interactive says all data are weighted to be representative of the U.S. adult population.

The average reputation score for all 60 companies fell to 66.7 points in 2003, a record low. And scores for 15 companies dropped significantly (by more than two points), with Gateway and Exxon Mobil losing the most ground. Gateway’s financial troubles and its shrinking share of the computer market are damaging its reputation. Exxon Mobil is financially robust, but its continuing fight over punitive damages in the 1989 Exxon Valdez oil spill keeps the Alaskan disaster fresh in people’s minds and lowers its rating for environmental responsibility.

Ratings for workplace quality fell significantly, as respondents reacted resentfully to layoffs, measly wage increases and benefit cutbacks. Wal-Mart Stores, in particular, suffered on the attributes "a good company to work for" and "rewards employees fairly," dropping to No. 23 in the ranking from No. 17 in 2002. Its rating was damaged by publicity about cleaning contractors using illegal immigrants in its stores, workers’ complaints about low pay, and employee discrimination suits against the retailer.

"Wal-Mart claims it’s so American, and then it goes and uses illegal immigrants," says Beth Skaggs, a grocery-store bakery clerk in Moorpark, Calif. But Wal-Mart maintains that it had actually been cooperating with the government’s investigation when federal agents rounded up 250 illegal immigrants working on cleaning crews in some of its stores in October.

Survey respondents also gave lower scores to many companies for lackluster customer service. Among those receiving extremely low service ratings were telecom companies MCI (the former WorldCom), AT&T, Qwest Communications International and Sprint.

U.S. auto companies were hammered as well. In addition to griping about unreliable vehicles, people complained more than ever that American car makers continue to churn out too many gas-guzzling SUVs. General Motors’ Hummer especially came under attack for its low gas mileage. "You might as well pour gasoline directly onto the road," quipped one respondent.

Ford Motor wasn’t spared either. "Ford is so hypocritical," says Jason Shawn, a software engineer in Manassas, Va. "Its advertising shows its trucks and SUVs driving through beautiful landscapes, but it fails to mention that by driving these vehicles you’re actually killing that beautiful landscape."

Ford is working to change such perceptions with plans to introduce a hybrid SUV this summer.

On the positive side, Honda Motor jumped the most in overall rank—to 11th place from 25th in 2002. The Japanese company fared especially well in its ratings for corporate sincerity, a good workplace, trust, admiration and respect.

No Redemption

One of the most volatile companies in the ranking from year to year, Microsoft has returned to the top 10. Microsoft always scores well for leadership, vision and financial performance. But in the latest survey, fewer critics accused it of monopolizing the software market, and more people praised Chairman Bill Gates for his philanthropy. Indeed, Microsoft ranked fifth in the survey for supporting good causes, illustrating how top executives’ reputations and corporate reputations often intersect.

Many reputation strategies clearly aren’t working. The public didn’t buy GM’s plea for "redemption" in a big corporate ad campaign last year that claimed it had overcome many of its auto-quality problems. Indeed, GM, along with Time Warner, Kmart and American Airlines, has shown the most consistent decrease in reputation scores over the past few years. "Too many companies think they can simply advertise their way out of a bad reputation," says Joy Sever, senior vice president at Harris Interactive.

Now more than ever, the public has a show-me attitude. Respondents repeatedly say they have yet to see companies demonstrate more goodwill toward customers, employees and the communities where they do business. "Companies still don’t get it that people do make purchasing decisions based on corporate reputation," says Frederick Stuart, head of a small recruiting firm in Philadelphia. "Businesses that work for the good of their local communities will benefit from their better reputations."

How has your perception of big corporations changed over the past year? What companies do you think have the best reputations? Write to letters.classroom@wsj.com.