By Chipo Mapungwana
BP, Samsung, Standard Bank, Apple, MTN, are amongst global brands whose reputations have been dented in recent months and years. Reputation can be defined as a distribution of opinions about a company or the interaction between and amongst stakeholders. An organisation might have different reputations depending on the audience. Reputation is therefore bestowed upon us by other people and is formed on the basis of direct and indirect experiences. Therefore everything that a company does has a direct and indirect impact on its reputation.
Over the past decade, communication with organisational stakeholders has developed into a central focus of corporate strategy. Any communication that makes a company more transparent enables shareholders to appreciate its operations more clearly, facilitating a better reputation. Corporate reputation therefore has become a source of competitive advantage resulting in increasing brand equity. While unforseen crises happen that affect corporate reputation, many companies have been found wanting through bad management decisions that have had both internal and external consequences. What are some of the ways that a company can enhance its reputation?
1) Hire the right people and then treat them right.
Staff are a critical audience in corporate reputation as it is the responsibility of employees to protect company reputation. Companies that want to enhance their reputation should hire the kinds of people that they want to represent them. Very often staff are hired on the basis of criteria that have little to do with how a company wants to be perceived as well as its future strategic direction. Companies with great reputations attract top-notch staff because of their reputation. Human capital is a resource that is also becoming a source of competitive advantage as staff who are great at their jobs and are head hunted and command premium compensation. When companies fail to provide acceptable working conditions or are embroiled in unfair labour practices, this significantly affects reputation. Recent reports of Apple’s sweat factories as well as Wal-Mart’s continuing labour issues cloud otherwise great reputations.
2) Create quality products and services
Companies with good reputations are known for quality and innovative products and services. Customers expect brands to have products and services that justify the prices that they pay for these products. By providing quality products, a company enhances its reputation. In order to create quality products and services, companies such as Google, IBM, Coca cola are continuously creating value by investing heavily in customer and product research. They have also structured their companies to focus on customer retention. The ability of a company to innovate and provide quality brands is depended on the effort a company puts in creating a customer and marketing focused business.
3) Care about what your community cares about.
To enhance reputation, companies should have values that resonate with what their communities care about. Recent legal action against BP, McDonald, and Zara for environmental pollution, fattening foods, staff welfare and unfair labour practices provide a gateway through which reputation is lost. Companies that fail to respond to community and global challenges or are seen in violation of issues that their communities care about have borne the brunt of their mistakes. The repercussions of these mistakes include negative press coverage, product boycotts, and global censorship leading directly to financial consequences because such errors and thus dents in reputation may cost millions if not billions to clean up. On the other hand, companies that have shown caring attitudes about their communities and environmental issues affecting them have been rewarded by customer support and patronage.
Where to go from here
They are many ways in which a company can enhance its reputation. A great reputation serves as a value signal in situations of information overload. There is also growing realisation that reputation can enhance financial performance because of how customers and investors view brands with good reputations. These brands are able to charge premium prices helpingthem to earn extra revenue from repeated purchases. A great reputation that is strategically guarded and enhanced is a visible signal of the firm’s leadership qualities and the probability that the firm will continue to add value.
by Chipo Mapungwana