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Reputation: A Universal Challenge

Across boards and executive teams, corporate reputation has always been, and continues to be, a complex and largely misunderstood concept. This in itself is concerning, given its value as an intangible asset and the critical role reputation plays in organisational performance. Add to this the media attention and scrutiny of a Royal Commission and reputation quickly becomes a topic on everyone’s mind, on every board agenda, and on the front page of every business publication.

While corporate reputation remains an enigma, it presents a class-A risk for all organisations. Conversely, organisations that proactively invest in and leverage their reputation enjoy enviable corporate worth and sustained competitive advantage. Reputation was once only about risk mitigation; however today, it’s the prime lever for performance.

What is Corporate Reputation?

Corporate reputation is the sum of all views and beliefs held about an organisation, based on assessments of its past actions and probability of its future behaviour. Importantly, while this definition is broad enough to be correct for all stakeholders, the way in which reputation is viewed and prioritised varies wildly based on the audience and their needs. For instance, shareholders generally assess reputation through a financial performance lens, whereas customers form attitudes based primarily on their experience with an organisation. Regardless of how stakeholders view reputation, the process of shifting perception relies on a key task: modifying expectations of future behaviour or performance.

The Value of Reputation

Reputation develops from a company’s sustained ability to communicate and behave in a manner that reflects its unique identity and associated value proposition. Information and experiences that reflect a company’s unwavering credibility and reliability will provide stakeholders with a stronger sense of brand equity and economic value (i.e. share price and beyond).

Internally, What Drives Reputation

Although reputation is a complex topic, the ‘process’ involved in driving a positive reputation is remarkably simple, at least in theory. It begins with putting governance in place to ensure consistent delivery of meaningful promises, born from an appropriate strategy. The ‘delivery’ of promises inherently means experience design and development are all adequately matched with the expectations of stakeholders. For this to be sustainable, however, culture reform is often necessary, as the culture of the organisation drives employee behaviour; and in turn, this fuels the vast majority of experiences. While this may not appear simple, when you’re talking about changing the perception of millions of people, it’s about as straight forward as it gets.

Externally, What Contributes to Reputation

There are only two things that shape public perception and therefore corporate reputation: (i) information (communication), and (ii) experience. Importantly, it’s the relationship between the two that differentiates respected companies from those that are trusted and even loved. Organisations that develop and project an admirable identity and purpose, before modelling congruent behaviours over many years, are the organisations that stand out, create ‘emotional bookmarks’, and lead customer awareness and consideration.

Interestingly, the attractiveness and believability of organisational ‘statements of intent’ (e.g. brand promises, key media announcements) play a significant role in the make-up of public perception and assessment. Meaning, people will assess organisations against the promises they make, as long as the promises themselves are relevant and compelling. Benign promises, or statements that fail to speak to the basic category requirements, serve only to confuse and dilute an organisation’s reputation.

Who Traditionally Manages Reputation

Given the critical role of media relations in shaping reputation, corporate affairs are the ‘arms and legs’ of corporate reputation, with ultimate accountability falling on the CEO and board. The skills and expertise within most corporate affairs teams are vital in shaping and managing the role of earned media (the most credible media). However, given the intensifying role of experience in shaping public perception (largely due to social transmission/sharing), the most effective management and reputation governance models elevate reputation to a standing agenda item for the executive leadership team.

What’s Changed in Corporate Reputation

During the past 10 years, public perception and the assessment of organisations has gone through something of a silent transformation. Social media has forever changed the way people use data to assess the credibility and desirability of people, products, services and organisations. The mere fact that an individual can now share intimate details of an experience with hundreds or even millions of people means that reputation measurement and management is forging through unchartered territories.

In many instances, the value attributed to traditional media has decreased, while the perceived value of social story sharing has increased. People associate significant authenticity to individuals sharing experiences and as a result, the influences that collectively shape perspectives are now weighted towards fewer, but more trusted data points. For most organisations this presents a real challenge because a poor customer experience can now have devastating repercussions. It also means that reputation management and development must be tied inextricably to experience governance and ultimately, talent and culture.

Executive and Directors  | Reputation Governance Questions

As a director, it is no longer enough to simply recognise potential reputation risk. A deep understanding of all facets of reputation risk ‘and development’ is now required. Directors need to understand how effectively their organisation is working towards building a healthy, strategically advantageous reputation. Five key questions all directors need to be asking :

  • What is our reputation risk mitigation and development strategy?
  • Who’s accountable for our reputation and how are we measuring its performance?
  • Is reputation tied to our executive’s and senior leader’s KPIs?
  • How well are our corporate affairs team connected to our brand, culture and experience teams?
  • What does our organisation do to demonstrate our purpose and live our unique identity?
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