A corporation’s reputation can make or break the business. Who hasn’t heard the unfortunate examples of Enron, Tyco, and WorldCom? These are all companies that failed to recover after devastating scandals ruined their reputations. There are many more examples of similar stories. At the same time, there are also corporations that thrive year after year as respected organisations. Some examples are Johnson & Johnson and Cisco Systems. Corporate reputation played an important role in each of these examples.
What Is a Corporate Reputation?
It’s sometimes easy to tell if a corporation has a really bad reputation or a really good one. However, measuring corporate reputation has not yet been perfected. It can be tricky to tell how the general population feels about a specific corporation. How the public feels about a corporation is essentially the definition of corporate reputation. More specifically, some experts note that the company image or reputation is determined by a variety of stakeholders or constituents, and is built over time.
What’s important to remember is that corporate reputation isn’t the same as image or corporate identity. Corporate identity is what the corporation itself communicates through its branding, commercials and services. A corporation’s image refers to some stakeholder’s opinions of the organisation. However, reputation truly shows how all stakeholders feel about the corporation, its communications and its actions.
How Do Some Corporations Earn and Maintain Their Sterling Reputations?
It’s not by chance that some corporations are able to enjoy a positive position in the public eye. Leadership, management, operations, the quality of products and services, and relationships with stakeholders all influence the strength of a corporation’s reputation. Communications practises and how well the corporation seeks and responds to feedback also influence this reputation. As you can see in the embedded PDF document, managing corporate reputation has its perks and there are some characteristics shared between organisations that are doing things right.
The practise of trying to influence a company’s reputation is called corporate reputation management. Need an overview? Check out the embedded video, which offers a short introduction to what corporate reputation management is.
How Does Corporate Reputation Management Work?
In a loose comparison, one group of experts, Hutton et al. said that corporate reputation management is similar to “trying to manage one’s own popularity”. This doesn’t mean that corporate reputation management has to be as awkward as managing one’s own popularity might sound. Another expert, Charles Fombrun, rightly compares corporations to citizens. In order to build a reputation, they must “act like good citizens,” he says. By reading the attached infographic, you’ll see how stakeholders form their opinions about corporations, which in turn determines their reputations.
Effective corporate reputation management means that organisations incorporate these concerns and goals into the very fibre of the corporation in the form of policies and actions. As is true with being popular, corporate reputation management also largely relies on relationships. Companies with strong reputations have excellent relationships that they manage carefully to ensure both sides benefit. Just as much as a corporation looks out for itself and its employees, it must also ensure customers and the local community are benefitting.
As discussed, there are many factors to consider when studying how corporations manage and influence their reputations. In an important, in-depth study, researchers Kitchen and Laurence discovered the following important points that summarise their findings, which are relevant to any organisation interested in managing its reputation:
- Corporate reputations are growing in importance
- The need to measure reputations in a systematic way is also growing in importance
- There are three major players that influence reputation: customers, employees and the CEO
- A good corporate reputation can help an organisation grow its business abroad and prepare new market areas
- The CEO plays the role of the chief communicator and as such, that person’s reputation is very much intertwined with the corporation’s reputation
- Managing reputation is a key component of managing in general and must be led by the CEO, who must integrate it into the management strategy
Corporate reputation management is possible when made a priority and has many benefits, including financial ones. However, it is an ongoing process that must always be tended to and cultivated to achieve the most desirable outcomes.