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Corporate Reputation Management: A Definition

Source: Wikipedia, the free encyclopedia; altered for this blog

Reputation management is the process of tracking an entity's actions and other entities' opinions about those actions; reporting on those actions and opinions; and reacting to that report creating a feedback loop. All entities involved are generally people, but that need not always be the case. Other examples of entities include animals, businesses, or even locations or materials. The tracking and reporting may range from word-of-mouth to statistical analysis of thousands of data points.

Reputation management has come into wide use with the advent of widespread computing. Reputation management systems use various predefined criteria for processing complex data in order to report reputation. However, these systems only facilitate and automate the process of determining trustworthiness. This process is central to all kinds of human interaction, including interpersonal relationships, international diplomacy, stock markets, communication through marketing, and public relations and sports.

Reputation is generally wrapped around character; it’s what an individual, organization, society or state is known for, and it may be good, bad or ugly. It may be real, perceived, ambivalent or totally untrue. For example, there is a perception around the world that products from Taiwan are sub-standard; that is untrue but nevertheless it has now formed part of reputation that country’s reputation.

Reputation is different from image or branding because while the latter can be created, the former is an identity that evolves. Image is a pointer to where an organization is now and where it intend to be, and not necessarily where it is coming from or how to get to a new state that is healthier. Reputation management is not public relation or data collecting, nor is it advertising management. It deals with the root cause of a problem, offers solutions, set processes in motion and monitors progress towards these solutions.

Reputation can be:

Excellent – This means that the organization has obtained the highest position on the spectrum that makes its reputation impeccable. All the indices that ensure the best corporate governance are present; there is high quality of service/product, strong corporate compliance, strong brand values and communication, the organization anticipates and manages risk properly, relates well with all stakeholders (internal and external) without any major friction, fulfills contractual agreements, communicates effectively, learns from others’ mistakes and above all has clear and transparent vision, strategy, plan and is trustworthy. Unfortunately not a single company, government or country can be put in this category right now

Good – Organizations that belong to this category have achieved nearly everything that mentioned in the excellent category above, however one or two of them may be missing

Bad – Organizations find themselves in this category primarily because they repeatedly have broken peoples’ trust in them. Examples are numerous and include companies in the investment banking and the insurance industry

Ugly – This is the lowest depth of reputation, and it always happens as a result of a high level of deception by an organization or an individual. It may bring the individual or organization to a total ruin

It is possible for a person or organization to be boxed into any of these categories although they do not necessarily belong there. This could be due to a misunderstanding or because of a lack of transparency in business dealings. The end result can be disastrous and cause long term damage to a reputation. Proper management is needed to identify the source, create a strategy and quickly implement an action that realigns reputation while defining where and how the intervention should take place.

Identifying the state of one’s reputation, whether excellent, good, bad or ugly requires attention. The attention required, however, is different for each situation in order to identify the position of an organization on the reputation spectrum. There are several things that can serve as pointers, including: 1) High or low employee turnover, 2) Reduction or increase in market share, 3) Waning or increasing shareholders’ confidence, 4) Quality of product/service, 5) Customer retention is high or low, 6) Media report good or bad, 7) Third party rating and award is high or non existent, 8) Competitor’s perception of your organization, and 9) Host community perception.

All of these are indicators that contribute to indices such as corporate governance, corporate social responsibility, and organizational ethics and culture. They all contribute to reputation, which can be summarized as follows. 1) What you do or do not do, 2) What you stand for, 3) What you say, do not say or are perceived to have said.

This is what employees, clients and vendors will use in judging us. Ask yourself questions such as, how do I treat my staff? How does our organization respond to crisis? How much confidence do shareholders, investors and the bank have in me? How well do consumers accept our product/service? It is now left up to your organization to know what is being said and then align it with your brand. Your brand may be good and still have a bad reputation e.g. a certain oil and gas company is a powerful brand, but it acquired a bad reputation in corporate social responsibility.

Reputation management is therefore cyclical and the strategy must fit the stage in which an organization is in.

The cost of managing the reputation of an organization will be less if your preparation level is high. Reputation management can take place at any time during the development of an organization, as listed below:

Preparatory Reputation Management during pre-establishment of an organization
Introductory Reputation Management during the introduction of an organization
Incremental Reputation Management during the growth era of an organization
Experiential Reputation Management during the mature era of an organization
Perspective Reputation Management during declining stages of an organization

How then do we manage reputation whether excellent, good, bad or ugly, or in different stages of the cycle?

The organization must identify all the issues that affect its reputation (do a reputation audit)

It must analyze each one of the issues properly to ascertain the past, the present and the future state of those issues (e.g. Is market share increasing? And why is market share at the level it is?)

There is need to put forward change strategy options and pick the one that will be the most efficient and effective for the issue identified

Then use that strategy to put an action plan into effect

Finally, the results must be properly evaluated

As you can see, reputation management goes deeper than mere rhetoric, it requires action and engagement with different entities. Being a relatively new field of endeavor allows for techniques that are not present in traditional marketing communications. As noted in Forbes Magazine, the company with the best reputation always achieves a substantially higher return on investment.

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Corporate Reputation Management: A Definition

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