I spend most of my working life building meaningful (leverageable) bridges between brand, reputation and culture. Here’s a sample of one of our white papers on the topic.
1. AN INEXTRICABLE LINK
Corporate culture and corporate reputation are inextricably linked. Culture refers to how business
is done; reputation to how it is perceived. The result of this connection carries significant implications for performance – internally and externally; positively and negatively; directly and indirectly; tangibly and intangibly.
In a recent survey by US-based investment bank and financial services multinational, Goldman Sachs – which in the past has faced its own challenges with regard to corporate culture – 75 per cent of business leaders interviewed agreed that corporate reputation was substantially driven by a company’s corporate culture.
Such opinion reflects the corporate zeitgeist. We live in an information age where scrutiny of corporations has never been so forensic, immediate or impactful. Understandably, the ramifications of this are informing corporate philosophies and transforming corporate practices, both of which speak to the essential and now highly visible role of culture in reputation.
Accordingly, this White Paper builds on ‘Reputation Turnarounds’ (White Paper 1, March 2019) and Reputation Recovery, Principles & Strategies (White Paper 2, April 2019) by affirming and expanding upon the relationship between corporate culture, reputation and performance.
2. WHAT IS CORPORATE CULTURE?
In the corporate context, culture refers to the social behaviour, values and norms found within a group, in this case, a business entity. Culture is anchored by collective behavior within an entity, and it extends beyond pragmatic procedures, symbols, guidelines, and KPIs. There are many other qualities vital to developing a positive corporate culture.
- collaboration, communication, correctness and competence
- customers and customer orientation
- efficiency and effectiveness
- environmental awareness and protection
- involvement in social/community projects
- respect and responsibility
- team spirit
- trust and trustworthiness
Such features inform your corporate culture, then emanate from it to equally inform your corporate reputation. And while employees are a key component in the nexus between culture and reputation, external factors are also important, including suppliers, distributors, media and the public. This internal and external by-play again demonstrates there is an inextricable link between corporate culture and corporate reputation.
3. CORPORATE CULTURE AND REPUTATION
The notion of a relationship between corporate culture and corporate reputation isn’t new. Despite this, the implications of culture on reputation have been dramatically under-appreciated and under-estimated.
In 1988, Weigelt & Camerer theorised that the role of culture in influencing strategy implementation and performance might also extend to supporting reputation-building activities. They cited “unwritten rules” which could guide employees in “ambiguous and unforeseen instances”. Eight years later, Fombrun (1996) cited “central cultural values, such as credibility, reliability, trustworthiness and responsibility” as being at the core of the “perceptual representation of a company’s reputation”.
Flatt & Kowalczyk (2008) posit the theory that corporate culture and reputation are intangible assets used by firms to create a competitive strategic advantage, to differentiate themselves from other firms, and to enhance firm performance. Their research sampled 104 firms, finding that culture not only enhances financial performance (as indicated by other research), but is clearly related to reputation. Findings also suggested that reputation acts as a mediator between culture and financial performance.
Such findings add considerable weight to theories in support of the connection between corporate culture and reputation. Furthermore, this connection is not only actual, but is dynamic, fluid and influential in terms of identity, strategy and performance.
Moreover, with regard to the influence of culture and reputation on financial performance, it should be a priority for any firm to strive for and sustain a positive corporate culture, as well as to accept and support the role of said culture in achieving a positive corporate reputation, successful brand recognition and positive and sustainable financial outcomes.
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