Reputation and Performance in Germany’s Challenging Economy

When a country’s economy is close to recession status, many companies experience a decline in corporate reputation. They become less trusted, and as a result, stakeholders are less willing to purchase and recommend their products, less willing to say something positive about the company, and less willing to work for them.

Germany has faced a storm of challenges in the pandemic and “post”-pandemic eras: supply chain woes, ethical dilemmas in conducting business with controversial parties, an ensuing energy crunch and inflation, and political complexities (to name a few). The carousel of socio-economic crises has put increasing pressure on businesses in Germany, and most haven’t been thriving under it. As a result, corporate reputations in the country have taken a worrisome downturn.

So, what does it take for companies in Germany to rebound their corporate reputations and win back stakeholder favor? We’re sharing some key insights that you can start taking action on now to reverse this business trend in 2024.

Comms professionals in Germany need to focus more on innovative achievements.

Reputation is rooted in feeling, it’s a publicly developed general opinion or judgment of your organization. Our Drivers offer tangible rationale for why people think that way about you. In 2023, aspects related to what a company does (Products & Services and Innovation Drivers) had a weighted importance on Germany’s reputation of nearly 32%.

While Innovation isn’t currently Germany’s lowest scoring Driver, it has seen a 7.4-point decline from Q4 2020 to Q2 2023. Innovation’s Driver Factors provide deeper insight into what influences this Driver — measuring if a company is innovative, first to market with new products and services, and adapts quickly to change.

The public is looking to companies for new innovative solutions that help consumers afford more for less, while also creating new solutions for problems that need solving. There is a sense of public disappointment when companies are not able to deliver on this. Demonstrating your innovative achievements will be paramount to pleasing stakeholders and building back a more resilient corporate reputation.

Who is avoiding a reputation recession?

RepTrak’s 2023 Global RepTrak® 100 ranking found LEGO as the world’s most reputable company, and they’re the highest ranking foreign company in Germany. LEGO is perceived as a company that is truly purpose driven — a company that takes clear responsibility for both people and the planet. Furthermore, LEGO is perceived to have a product that delivers outstanding value to both children and grownups.

LEGO focuses its ESG related communication on current tangible achievements — instead of long term commitments and goals. They also exemplify a company who has invested heavily in innovative online tools, retail innovations, and product innovations. In Germany, LEGO has an Excellent Innovation Score. Yet, they never waver from their core purpose of inspiring builders of tomorrow while building a sustainable future.

LEGO understands that building a strong reputation comes with strong communication initiatives.

When macro events shape public agenda, corporations should not stay silent.

More and more, macro events are shaping public agendas in Germany. Climate change, the pandemic, the invasion of Ukraine, the resulting energy crisis, economic downturn, and inflation have all played a part in impacting stakeholder sentiment. Crises and change will always occur, and corporations need to ask themselves how to respond and what to communicate. However, too many companies have rather stayed silent — they have not participated in the debate, and they have not demonstrated how they are a part of the solution.

3 recommendations for companies in Germany

1: Prioritize your business goals before you build a reputation strategy.

Do you need a stronger reputation to attract new employees? Or are you looking to break into a new market or region? Building a reputation to attract and retain talent is different from building one for a “license to operate.”

2: Align activities around the Drivers with most influence.

Everything a company does and says influences their reputation, but not with the same force. Be sure to spend resources on activities that have most influence on your reputation. Every company is unique, and RepTrak data can show you what matters most to your market position, industry, and consumers.

3: Deliver the right message to the right stakeholder.

To communicate effectively, it’s not enough to hit the right topic with a single post or ad. You need to deliver the right message to the right stakeholder on the right channel. Be careful of channels that may have worked in the past, but aren’t the most appropriate or cost effective now.

Want to get out of the reputation recession?

Businesses in Germany have faced a storm of challenges in the pandemic and “post”-pandemic eras. But, as a new year approaches, businesses operating here can look to many German global reputation leaders who are avoiding the larger reputation recession that’s hitting the rest of the country. Companies like LEGO have navigated the complex dynamic between their business goals and stakeholder needs. Businesses who have a holistic outlook that combines these two factors will be well equipped to get out of this reputation recession in 2024.

To learn more about how RepTrak can help you get out of the reputation recession, schedule a demo today.

By Torben Callisen

Torben is Senior Director and part of RepTrak’s European Advisory team. He advises a portfolio of multi-national and German companies on reputation management, with expertise in Marketing and Communications. He has been deeply involved in making sustainability efforts a real asset, helping his clients win business and succeed long-term. Torben has been with RepTrak since 2021. Prior to joining RepTrak, he was a partner with a Nordic advertising agency and an independent consultant.