We can define your corporate reputation as the collective perceptions about your company, that unfortunately, you have no control over. Your corporate reputation is derived from your company’s past actions and future prospects and it determines how your stakeholders will relate to you. As stakeholders, including your staff, customers, media, the community shareholders, regulators and competitors etc, interact with your company over a period of time , so they build perceptions and beliefs about your corporate reputation. Many a company has been ruined by corporate reputations gone bad. As the saying goes, it take time to build a great reputation and a second to see it come crashing to its knees. But are CEOs/ MDs and organisational leaders really concerned about nurturing great corporate reputations? Or is corporate reputation sometimes viewed as an unfortunate by-product of doing business?
Why is a great reputation so good for you?
1. It serves as a value signal in situations of information overload.
2. It improves your company’s standing amongst competitors.
3. It can significantly enhance financial performance by influencing how equity markets evaluate your company.
4. It may enable your company to charge premium prices thereby earning extra revenue and enhancing your company’s financial value.
5. It is a highly visible signal of your company’s capabilities.
6. It reflects your firm’s ability to be true to its value and performance promises.
7. Consumers’ buying decisions are increasingly being influenced by a company’s social reputation.
8. Customer loyalty is higher when perceptions of corporate reputation are favourable.
9. Corporate reputation is also critical in how stakeholders respond to your company when you are in crisis.
How does your organisation build a great reputation?
- Through your product and service quality
- Through the talent in your company
- Through your staff attitudes and behaviour
- Through how well you interact with your community
- Through your corporate governance
- Through your perceived integrity
- Through your company capabilities and core competencies
- Through the decisions that your company makes every day
Everything that your company does or does not do has a direct impact on your corporate reputation.
Camel down! Examples of corporate reputations that feel flat on their faces
1)The Dow Corning Corporation suffered a dramatic fall from grace in the early 1990s when it was revealed that its silicone breast implants leaked on some occasions and were a health hazard to women receiving them. Dow Corning had claimed that these implants would last a lifetime. Between 1.5 and 2 million women received them. It was alleged that Dow Corning had information about the leaking and its potential problems but failed to act.
2)Toyota indicated on September 29, 2009, that it would recall at least 4.2 million Toyota and Lexus cars to fix a potential safety problem caused by a floor mat affecting the accelerator. Later (January 21, 2010) Toyota recalled another 2.3 million cars in the US and Canada to fix accelerator pedals that became stuck and resulted in accidents and deaths.
3)The head of Danish airline Cimber Sterling had to apologize to the CEO of rival Norwegian Air Shuttle for making fake bookings of cut-rate Norwegian tickets “bought” by Cimber employees during January 2010. Cimber employees sabotaged Norwegian by reserving hundreds (over 650) of cheap Norwegian tickets under fake names. One employee “bought” 458 tickets. The CEO of Cimber said that his employees did this on their own initiative.
4)Coca-Cola launched its new brand of so-called “pure” Dasani bottled water in the UK in March 2004. But glitches occurred. Dasani was reported in the UK media to be nothing more than London tap water taken from the city system. Then it was noted that what the organization termed its “highly sophisticated purification process” based on NASA spacecraft technology was just the same processes used in most domestic water purifiers.
What do companies with great reputations do differently?
• They are responsible. They support worthy causes, demonstrating environmental responsibility, and community/ societal responsibility.
• They communicate wisely. Their communication is marked by transparency, full disclosure and open dialogue.
• They produce high quality products and services. They offer high quality, innovation and focus on customer satisfaction.
• They have Talented employees. They reward employees fairly, retain talent, attract talent, and promote diversity.
• They focus on performance. They do better than competitors, are stable, and have high investment value.
• They have sound Leadership. The CEO and senior team are sound, solid leaders, and implement good governance
Steps to building a great reputation
1.Formulate a corporate reputation strategy.
2. Integrate the communication and social responsibilities into the company’s corporate reputation strategy.
3. Develop a crisis management strategy to defend against threats to reputation.
4. Communicate the corporate story to internal and external stakeholders
5. Build a corporate culture that attracts and retains talent