Beyond Perception

BEYOND PERCEPTION: REPUTATION, INVESTOR CONFIDENCE AND LONG-TERM VALUE 

In this interview, we speak with Sandra Macleod, Group CEO of Echo Research, to explore the findings of their Beyond Perception report and what they mean for investor relations professionals. The discussion highlights how investors are viewing are taking an increasingly sophisticated view of trust and confidence, and considers how IROs can measure and communicate corporate reputation in an impactful manner.

What does this report tell us about the relationship between reputation and long-term shareholder returns? 

The ‘Beyond Perception’ report makes a simple but important point: reputation is no longer just a communications issue, it’s an economic one. 

Our Reputation Dividend research shows that reputation plays a meaningful role in how investors judge a company’s quality, resilience and future prospects. When a business is well regarded, it tends to inspire confidence in management, strengthen belief in the strategy, and reduce perceived risk. It also supports customer and employee loyalty. All of this feeds into expectations about future performance, and ultimately, valuation. 

For Investor Relations professionals, this means the investment case is not built on financials alone. Investors are constantly forming views on whether leadership is credible, whether the strategy is realistic, and whether the organisation can actually deliver over time. In other words, they are judging whether the company’s promise feels believable. 

The implication is clear: reputation should sit alongside financial and operational metrics when explaining long-term value. 

The report shows trust-driven value becoming increasingly concentrated among leading companies. What are the best performers doing differently? 

The strongest performers tend to build trust through consistency. They are clear about where they are going, disciplined in how they execute, and straightforward in how they communicate. Just as importantly, there is alignment between what they say, what they do, and what stakeholders experience day to day. 

They also don’t treat reputation as something owned by one team. It is shaped across the business by leadership decisions, product quality, culture, governance and how the company behaves under pressure. 

Over time, that trust compounds. Companies that consistently deliver and behave predictably tend to build a ‘reserve of confidence’ or a ‘bank of goodwill’, which becomes especially valuable in more uncertain periods. 

Should listed companies be providing investors with more direct reputation metrics and KPIs? 

The goal should not be more disclosure for its own sake, but more useful disclosure. Investors are always looking for insight they can act on. 

Most companies already track elements of reputation, employee engagement, customer sentiment, leadership credibility, brand strength and so on, but these tend to sit in different parts of the organisation and are rarely brought together in a coherent way. 

The opportunity is to identify a key number of indicators that genuinely matter to value creation. What drives reputation, and therefore value, will differ from one business to another. For some, it may be financial strength or management quality; for others, innovation, talent or customer experience. 

We describe this as a company’s “Reputation DNA” which is as unique to each organisation as your thumbprint is to you. 

A useful KPI should go beyond general sentiment. It should show progress of the organisation’s reputation journey:  which aspects of reputation are driving value, where the company is outperforming or working on, and where there is the greatest opportunity to improve or protect value. 

That is ultimately more meaningful than a single, generic reputation score. 

When engaging investors, which aspects of reputation matter most? 

The analysis looks across the fundamental drivers of reputation, including long-term value potential, financial soundness, quality of management, effective use of corporate assets, innovation, people management, quality of products and services, social responsibility and competitiveness. Importantly, their contribution to value is neither equal nor static. 

For IROs, that distinction is critical. Some attributes act as value anchors, giving investors’ confidence in the quality, resilience and future prospects of the business. Others offer greater potential to create incremental value and differentiation. And weaknesses in important attributes can mean that a company is simply not receiving the valuation credit its underlying performance might warrant. 

Reputation is the market’s accumulated judgement of the company and its prospects. The IR opportunity is to understand which elements of that judgement are creating value, which are constraining it, and where there is unrealised headroom. 

That turns reputation from something to be described to investors into something that can be actively managed as part of the value-creation story. 

What are the biggest reputational risks that boards and investors are underestimating today? 

One of the most significant risks is a disconnection between what a company says and what stakeholders actually experience. 

Organisations can invest heavily in shaping a narrative around purpose, culture or sustainability, but trust can erode quickly if reality doesn’t match the story. 

A second issue is speed of escalation. Issues that might once have stayed contained, whether operational, cultural or customer-related, can now manifest as investor concerns very quickly. Matters such as executive behaviour, customer treatment, supply chain disruption or cyber incidents can rapidly raise questions about leadership, governance and ultimately valuation. 

Boards should therefore pay attention not only to known risks, but also to early signals: shifts in stakeholder expectations, competitor threats, emerging weaknesses in trust, or growing gaps between internal perception and external reality. 

IROs are often well placed to provide insight and intelligence here, as they tend to pick up changes in investor sentiment early. 

If you could give FTSE CEOs one piece of advice on creating shareholder value through reputation, what would it be? 

Treat reputation as the outcome of how the business is run, not just how it is communicated. 

Strong reputations are built when leadership behaviour, strategy, operations and stakeholder experience all reinforce one another. Communication can amplify that, but it cannot compensate for a disconnect. 

There is an old saying: you cannot communicate your way out of a crisis you behaved your way into. 

For CEOs, the key question is whether the organisation is actually delivering the experience it aspires to be known for across customers, employees, investors and other stakeholders. Are priorities, behaviours and investment decisions aligned with that? 

When they are, reputation becomes a powerful driver of value. When they are not, it becomes a source of risk. 

What reputation-related questions are investors asking today that they were not asking five years ago? 

There is a growing focus on what sits behind the numbers. 

Investors want to understand the strength of the organisation itself, its leadership depth, culture, workforce capability and stakeholder relationships, and whether these can support delivery over time. 

Resilience is also under greater scrutiny. How would the business cope with a major disruption, whether operational, regulatory or reputational? 

At the same time, there is more focus on credibility. Are commitments realistic? Does management consistently follow through? Are claims supported by evidence? 

This expands the role of investor relations. It is no longer just about explaining current performance, but about building confidence in future delivery. 

If an IRO had a limited budget and could invest in only one initiative, where should they focus? 

Start with understanding. Before ploughing ahead, it is worth building a clear, evidence-based view of how the company is perceived by the stakeholders that matter most. 

That includes identifying where investor perceptions align with management’s view  and where they diverge. A focused reputation diagnostic can reveal whether the underlying issue is strategy, leadership, customer experience, talent, governance or something else entirely. 

With that insight, engagement becomes more targeted and effective. In many cases, better understanding delivers more value than additional communication. 

What might an effective “reputation dashboard” for the board look like? 

The most effective dashboards are both focused and practical. 

Rather than tracking dozens of metrics, they concentrate on a small set of indicators linked directly to strategy and key stakeholders. These might include trust and confidence, management credibility, clarity of strategy, employee advocacy, customer sentiment, emerging risks and competitive positioning. 

It is also useful to frame this in terms of what the company must protect, what underpins its licence to operate, and where it wants to grow. 

One element that is often missing is the gap between internal and external perceptions. That gap can be highly informative. 

Above all, the dashboard should show movement. Is confidence improving or declining? What is driving that change? And what does it mean for strategy, risk and value? 

Used well, it becomes part of the board’s decision-making process, not just another reporting tool. 

One further finding for the IR community 

Britain’s Most Admired Companies Study, which we conduct in partnership with the London Stock Exchange, offers a particularly reassuring perspective for the IR community. 

When we look specifically at Investor Relations respondents, the attributes they consider most important to corporate reputation are quality of products and services, clarity of strategy, financial soundness and quality of management. Strikingly, this closely mirrors the priorities of the wider C-suite respondents in the study. 

That alignment is important. It reinforces the idea that reputation is not a softer consideration sitting alongside the investment case. The fundamentals that build a strong corporate reputation are increasingly the same fundamentals on which confidence in a business rests: the quality of its leadership, the credibility of its strategy, its financial resilience, competitiveness and ability to deliver consistently over the long term. 

There is one intriguing difference. IROs place the ability to attract, develop and retain top talent slightly ahead of innovation, while the wider C-suite reverses the two. Perhaps that reflects the IR community’s recognition that even the best strategy and growth ambitions ultimately depend on having the leadership, skills and culture to deliver them. 

For IROs, this creates an increasingly important role: connecting reputation, investor confidence and the corporate value story. They are uniquely placed to identify changes in investor perception, bring that intelligence back into the boardroom, and help ensure that what the company promises is supported by what it demonstrably delivers. 

In that sense, reputation is not separate from the investment case. Increasingly, it is part of the evidence on which the investment case is judged.