It’s not just about coping with crises. Remember when reputation was all about crisis management, and having a PR plaster for every problem? Today, reputations flourish or flounder based on how you run your firm all of the time …
According to the Financial Times, the term refers to the observers’ collective judgements of a corporation based on assessments of financial, social and environmental impacts attributed to the corporation over time.
Example: Many agencies or companies publicly assess the reputations of corporations. One of these is Fortune magazine which produces a global annual rating called the ‘world’s most admired companies’. The criteria used to rank these companies include innovation, quality of management, people management, financial soundness, social responsibility, product/services quality and global competitiveness. In 2010, Apple was ranked number one, followed by Google. The Reputation Institute also carries out a project called the Global Reputation Pulse – this researches the reputations of the world’s largest companies and identifies the ones with ‘the best corporate reputations’. Reputation rating agencies often use differing criteria and methods. As a result, though financial performance proves the most predictive factor of reputation score, the ratings vary considerably across assessors (ft.com).
Beyond PR, beyond smoke and mirrors…
The slogan is ‘stakeholder society’ and the stakeholders include all impacted or engaged by the organisation, they are:
- employees
- customers
- suppliers
- investors
- creditors
Are all affected by your reputation. So if not on how you handle crises, then on what does your reputation rest?
According to one annual survey, the key determinants of corporate reputation are:
The talent at the top:
How strong, how balanced is the top team? Does it have the right mix of insiders and fresh views from outside?
The actual product/service you offer your customers:
The proof of your product is in the testing -; what do your customers actually make of the product/service they receive from you? When they call you, what kind of customer service ‘greets’ them?
The treatment of your staff:
What is your staff turnover rate? What do your font-line employees say about you? How easy is it for you to attract the right kinds of people?
The state of your finances:
One for the city: how many shareholders have you made happy? How fares your ROA, EPS, or P/E?
The care for your community:
This one brings up the rear in the survey, and look at how ‘green’ your policies are
The rate of your innovation:
Basically, how innovative/creative are you? Do you constantly come up with new features or products, or are you relying on what has worked for years?
The tell-tale signs:
Other clues; for example the parity of pay packets; remember British Gas? Or the opulence of your HQ
cause for concern
A new marketing phenomenon set to grow is cause-related marketing (CRM) in which firms are aligning themselves with a cause in a bid to boost their reputation:
profit with principle
firms can reap the rewards of their PR if the cause and the firm’s values go hand in hand
The corporate not the brand
As the expense of advertising for individual brands rises, cause-related marketing allows firms to cut costs by running single-focus ads on the corporate image
There are seven theories that inform corporate reputation: institutional theory, agenda-setting theory, stakeholder theory, signalling/impression theory, identity theory, resource-based theory and social construction theory.
Look at the deeper dive on Reputation Management learn more about these concepts and what they mean for corporate reputation.