MISSION INTANGIBLE

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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Employer brand

Nir Kossovsky - Wednesday, September 02, 2009
Stefan Stern writes on management for the Financial Times. In yesterday’s issue, he reviewed the concept of “employer brand.” According to the consultancy Business in People, (BiP), the employer brand “encapsulates how your workforce behaves, the impression employees create while carrying out their work, how well they are managed and led, whether or not they feel engaged, and so on.” It is an intangible asset that attracts and retains employees.

In the language of the Intangible Asset Finance Society, “employer brand” translates to “business processes and reputation.” And as the call out in the FT article affirms, “when it comes to retaining good people or attracting new ones, your image and reputation count.”

So far so good. Stern writes that Hiscox Ltd (LON:HSX), an insurance firm, realized a 30% increase in EBITDA last year. The firm’s CEO engages BiP. Proof that a good reputation arising from good human resources business processes fosters above average returns. And we have no argument with the conclusion.

Stern then writes that BT Group plc  (NYSE:BT), the telecommunications conglomerate, failed to honor its commitment to attend a recruiting fair leaving an indelible stain on their reputation. And their stock price is down 30% over the past year. BT's attitude to people, he notes, is very different than Hiscox's and by implication explains the differences in economic performance. 

We can not independently test the contrasting reputations with the Steel City Re Corporate Reputation Index since it currently does not extend to companies trading on non-US exchanges, and we do not dispute the economic results. But we would like to verify the implied relationship since it is a core area of interest to the Society.

Fortunately, Stern’s newspaper, the FT publishes a sentiment index through its affiliate, Newssift. The FT Newssift sentiment data that offer rough measures of reputation as reflected in the business press, do not support Stern’s argument.

As shown below, for the twelve month period between 2 Sep 2008 and 2 Sep 2009, articles in the business press covering Hiscox were positive 43% of the time, and negative 23% of the time; articles covering BT were positive 49% of the time and negative 18% of the time. By this metric, BT has a superior reputation.



We have invited Stern to comment.

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