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Name is everything, and loss of name potentially business threatening
“As companies realise what havoc the loss of a good reputation can wreak on their brand and stock value, they will pay more attention to how they are presented and rated by the media, customers, and all stakeholders.”
Wall Street Journal, 19 February 2004
Sound reputations enable organisations to better attract all important forms of capital, including economic and intellectual capital. They serve as a magnet, allowing organisations to attract and retain talent, clients, employees and suppliers. Reputation serves as a buffer, protecting organisations from attack and external shocks. Reputation helps organisations build meaningful partnerships. Reputation is a major factor in delivering business goals.
Research has shown that the stock prices of companies with better reputations revert to original levels much quicker after a market crash than those of firms with worse reputations. Further financial benefits for businesses with better reputations include lower costs of capital, less volatile stock prices, increased growth rates and higher sales per employee.
Most organisations now accept that reputation is important and that a sound reputation produces tangible benefits. The management of reputation, however, is still a developing field. It requires an organisational infrastructure which works collaboratively towards meeting common business goals and is in keeping with the corporate mission. It should not constrain itself in traditional communications silos. It must be managed strategically and under the direct leadership of the CEO. Defining a reputation platform is similarly critical – not simply to present the face of the organisation but also to demonstrate a leadership position. Critical stakeholder relationships must be managed in dialogue, and approached with partnership in mind. Reputation risk needs to hold equal importance with operational risk.
Finally, as with any asset, reputation needs to be measured using a range of factors beyond awareness and favourability. It needs to address responsibility, delivery, stakeholder support and community participation. It needs to be benchmarked against best practice. And it needs to form the basis of continuing development and improvement in reputation management.