In a world where trust is currency and transparency is paramount, how people perceive your business can shape its entire trajectory. Whether launching your first product or expanding a growing team, you’ll find that your reputation leaves a lasting impression and that kindness plays a major role in shaping it. A strong company culture grows from genuine care, and when people feel supported, they naturally want to be part of it and share it with others. In this way, a reputation for kindness gives you staying power…….Continue reading…..
Source: StartupNation
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Many organizations create public relations and corporate communication departments dedicated to assisting companies with reputation management. In addition, many public relations and consulting firms claim expertise in reputation management. The growth of the public relations industry has largely been due to the rising demand for companies to establish credibility and reputation.
Incidents which damage a company’s reputation for honesty or safety may cause serious damage to finances. For example, in 1999 Coca-Cola lost $60 million (by its own estimate) after schoolchildren reported suffering from symptoms like headaches, nausea and shivering after drinking its products. Although most companies see reputation management as a central part of a CEO’s role, managing reputation involves a set of ongoing activities that are best managed when they are delegated to a specific individual in the organization.
This is why some companies have created the position of chief reputation officer (CRO). A growing number of people in the business world now have the word “reputation” in their titles – including Dow Chemical, SABMiller, Coca-Cola, Allstate, Repsol YPF, Weber Shandwick, and GlaxoSmithKline (although no longer). Hoover’s shows a list of such officers.
Social media like Twitter, Linked In, and Facebook have made it increasingly important for companies to monitor their online reputations in order to anticipate and respond to criticisms of their actions. There are two main routes that customers can take when complaining about companies: individual-direct response or broadcast-based response.
For a company, it takes a lot of time and effort to address individual-direct responses. One study showed that “…72% of customers expect a reply within one hour.” In order to best recover from negative complaints on social media, it is important for a company to prove its authenticity by providing more specific answers directly to its critics.
A corporate reputation can be managed, accumulated and traded in for trust, legitimization of a position of power and social recognition, and people are prepared to pay a premium price for goods and services offered, which in turn generates higher customer loyalty, a stronger willingness from shareholders to hold on to shares in times of crisis, and greater likelihood to invest in the company’s stock.
Therefore, reputation is one of the most valuable forms of “capital” of a company. “Delivering functional and social expectations of the public on the one hand and manage to build a unique identity on the other hand creates trust and this trust builds the informal framework of a company. This framework provides “return in cooperation” and produces reputation capital. A positive reputation will secure a company or organisation long-term competitive advantages.
The higher a company’s reputation capital, the lower the costs of supervising and exercising control.”According to stakeholder theory, corporations should be managed for the benefit of all their “stakeholders,” not just their shareholders. Stakeholders of a company include any individual or group that can influence or is influenced by a company’s practices. The stakeholders of a company can be suppliers, consumers, employees, shareholders, financial community, government, and media.
Companies must properly manage the relationships between stakeholder groups and they must consider the interest(s) of each stakeholder group carefully. Therefore, it becomes essential to integrate public relations into corporate governance to manage the relationships between these stakeholders which will enhance the organization’s reputation. Corporations or institutions which behave ethically and govern in a good manner build reputational capital which is a competitive advantage.
A good reputation enhances profitability because it attracts customers to products, investors to securities and employees to its jobs. A company’s reputation is an intangible asset and a source of competitive advantage against rivals because the company will be viewed as more reliable, credible, trustworthy and responsible to its employees, customers, shareholders and financial markets.
In addition, according to MORI’s survey of about 200 managers in the private sector, 99% responded that the management of corporate reputation is very (83%) or fairly (16%) important. Reputation is a reflection of companies’ culture and identity. Also, it is the outcome of managers’ efforts to prove their success and excellence. It is sustained through acting reliably, credibly, trustworthily and responsibly in the market. It can be sustained through consistent communication activities both internally and externally with key stakeholder groups.
This directly influences a public company’s stock prices in the financial market. Therefore, this reputation makes a reputational capital that becomes a strategic asset and advantage for that company. As a consequence, public relations must be used in order to establish long lasting relationships with the stakeholders, which will enhance the reputation of the company. Reputation models can be placed in a broader framework that distinguishes reputation from its underlying causes and from its consequences.
This approach is important to clarify the meaning of reputation. Causes of reputation are seen to reside in stakeholder experiences. Stakeholder experiences relate to a company’s day-to-day business operations, its branding and marketing and “noise” in the system, such as the media and word of mouth.
Further causes of reputation may include the perceived innovativeness of a company, the customers’ expectations, the (perceived) quality of the company’s goods and services and the subsequent customer satisfaction, all of which differ according to the respective customers’ cultural background.The consequences of reputation reside in the behaviors (supportive or resistant) that stakeholders demonstrate towards a company.
Behaviors such as advocacy, commitment, and cooperation are key positive outcomes of a good reputation. Boycotts and lawsuits are key negative outcomes of a bad reputation. Organizations frequently make missteps that cause them to lose the positive regard of stakeholders. In the wake of studies addressing the disproportionate penalties that accrue to high reputation firms when they make such missteps.
Reputation researchers have proposed models to account for both reputation damage and reputation repair, summarizing prior work in disciplines including economics, marketing, accounting, and management. In the context of brand extension strategies, many companies rely on reputation transfer as a means of transferring the good reputation of a company and its existing products to new markets and new products.
Consumers who are already familiar with other products of an established brand, exhibiting customer satisfaction and loyalty, will more easily accept new products of the same brand. In contrast to brand extension, the general concept of reputation transfer also requires the transfer of a company’s values and identity to the new products and/or services and the related brands when entering new markets.
It is important, however, to pay attention to the image fit between preexisting and new brands, for this factor has been proven to be critical for the success of brand extensions.
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