Organisation Reputing – Where is it heading?

By Thanzyl Thajudeen

In the era where intangible assets and properties dominate the economy; where the world is thrown out with millions of brands; where there is intense competition in every corner of the border; where there is an ever-increasing need for transparency and corporate governance; where there are many demo-psychographic changes occurring, and where there are much more things to say about it, it’s obviously critical for organisations to halt and think about its reputation.

As Warren Buffet said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” Reputation is one of the world’s underestimated powers though it is only now that only many of the top global brands practice it on a continuous basis, whilst many other brands, mostly locals, are not even considering this strategic aspect.

Traditionally, organisations have been only focusing on brands per se, and brand managers would do anything to save or limit damage to it. Similarly, the overall brand, what we know as the ‘corporate brand,’ is the ‘Big Dad’ that has been left out all these years. Reputation management is a hot topic spoken across the globe due to its shift from a reactive to a proactive, continuous stance.

A simple and beautiful process

Organisations, no matter what the type, need to establish a formal reputation management process in this highly risky business environment, where everything is valued on intangibles. The Corporate Reputation framework that was developed by Fombrun (1996) shown on this page is a best model of how to develop a successful reputation management process.

The best example that comes to my mind is Procter & Gamble. Procter and Gamble, a Fortune 500 multinational, is the eighth largest corporation in the world in terms of its market capitalisation. The company operates in more than 180 countries and serves nearly four billion consumers.

Brand Value: P&G has a market capitalisation worth $ 180 billion and has the strongest portfolio of brands.

Corporate personality, image and identity:

Employees – The employees at P&G feel a sense of pride for being a part of P&G’s rich cultural heritage and its global scale of operations.

Consumers – P&G stands for quality and value for money for the consumers. It always put consumer at the centre and has always evolved itself with their demands.

Suppliers – P&G has more than 80,000 suppliers globally and it sends across messages by recognising their contribution in the company’s success through award ceremonies.

Communities – P&G is consistently engaged in community’s welfare activities. For example, the recent contributions for Haiti earthquake victims.

Investors – P&G has been paying dividends without interruption since its incorporation in 1890, and the company’s dividends have also increased every year.

Media – It has quite a media-friendly website which has a media section which comprises of latest press releases, media kit with product images and logos to download, quick facts about the company and list of media contacts.

Government – P&G works very closely with government regulators to ensure that their products meet safety and efficacy criteria.

Corporate reputation:

Leadership – Nearly a half-million people apply for P&G jobs every year. They hire less than 1% and attract top.

Respectable – It ranked third on the world’s most respected companies list compiled by Barron magazine.

Diverse – Diversity and inclusion is deeply rooted in the company’s Purpose, Values and Principles. P&G brings together individuals from different backgrounds, cultures, and thinking styles providing remarkably different talents, perspectives, and life and career experiences.

Innovative – P&G has constantly evolved itself with changing times. It ranked 12 among world’s most innovative companies as per Business week.

Socially responsible – P&G is deeply committed to improve children’s lives through their socially responsibility programs.

Why manage and measure reputation?

As stated by one of my favourite icons, Oscar Wilde, “One can survive everything, nowadays, except death, and live down everything except a good reputation.”

Organisations cannot risk this in today’s world. Just like an individual’s reputation, organisations are also living organisms in this planet.

When there is successful reputation management, organisations, no matter what the industry they serve, whether big or small, will enjoy higher, longer term profits, positive media feedback, enhanced brand value, positive brand personality, appealing corporate values, higher sales and market share, increasing levels in employee and customer satisfaction levels, effective stakeholder engagement and promising long term sustainability and competitiveness in the marketplace overall.

By reading out the positives it brings in, we can clearly notice the downsides – just the opposites of them, but with more components packed with a surprisingly big blast to the organisation.

With accordance to Global Reputation Pulse, a project by Reputation Institute, reputation is measured by scoring aspects in leadership, performance, products/services, innovation, workplace, governance, and citizenship, along with four core perspectives which are feeling, esteem, admire, and trust.

These scoring and ratings gives out how the stakeholders perceive the organisation as a whole and at different functional perspectives.

Crisis communications

As Dilenschneider (2000) said in The Corporate Communications Bible, all crises threaten to tarnish an organisation’s reputation. An organisation’s reputation is built around its identity, personality, image, as well as the relationships with its stakeholders. Image is the final perception what the stakeholder sees – once the organisation faces crisis, it’s the image that gets tarnished.

For example BP’s image as socially-responsible ‘Beyond Petroleum’ was tarnished since the oil spill in the Mexican Gulf. This damage in turn affects the stakeholder relationships negatively with a viral effect, hence affecting the way they perceive the organisation.

Crisis is what comes to our mind whenever we think of reputation. Yes, of course – but it’s not only crisis as it’s a part of the overall corporate reputation management process.

It’s true that due to crisis, Tylenol (Johnson & Johnson) back in the 1982 wouldn’t have expected a murderer adding 65 milligrams of cyanide to some Tylenol capsules killing seven people which destroyed 31 million capsules at a $ 100 million cost; Odwalla’s apple juice back in the 1996 infected by E. coli bacteria reporting 49 cases and death of a small child losing the company one-third of market share; Mattel, a toy maker plagued with 28 plus product recalls back in the 2007; Pepsi faced claims of syringes being found in cans of diet Pepsi back in 1993; BP’s oil spill in the Mexico Gulf in 2010 damaging the brand $32 million a day.

Only a few organisations had handled it successfully and the fate of others has pushed their corporate brand to hell. Crisis communications is a part of the overall corporate communications mix.

But all this happened not because of fate – all this happened for organisations to learn how critical a continuous reputational management process is and how it saves and limits damage to all aspects of its business operations – be it locally or globally.

Whose hands does it fall onto?

Remember, everything in this world is integrated somewhere, somehow, and by any means. This is the 21st century, and it’s a battle for the big corporates to win reputation or die themselves.

In most companies, corporate reputational management is handled by the Business Continuity and Improvement Division. Wonder why it’s not in the hand of marketers? From my eyes and thoughts, I could conclude that this strategic aspect needs to be given to marketers of the 21st century to handle it – my big brothers who understand the criticality of reputation management in the corporate world know what I’m talking about.

Marketers in today’s world need to be everything – not only from the traditional sales, marketing, communications, and business development – but from turnaround executives through to leaders in ethics and governance.

We need to sell our reputation – think hard, map, realise, and act – it’s a simple process which needs to be carried out continuously and not one-off.

Why is this so hard for organisations if they can spend millions of dollars on R&D, communication and promotional campaigns or internal appraisals? All of these starts with questioning yourself being a big corporate – wouldn’t you go that extra mile to save your corporate brand?

Reputation; a country’s perspective

Every nation has its own reputation – this may be negative or positive. For instance, South Africa’s reputation has been tarnished due to violence in human rights, Australia’s reputation has been damaged due to attacks on Indian students, Hungary’s reputation tarnished due to extremism... Even Sri Lanka’s 30-year-old civil war has been tarnishing the country’s economic growth and image very badly.

On the positive side, Sri Lanka has now had a upturn reputation in tourism due to post war climate and is looking at attractive visitor numbers; we can think of Italy for branded leather bags and accessories, Switzerland for its rich luxury watches and chocolates, Germany for its luxury automobiles, etc.

Reputation Institute, one of the leading reputation consultancies worldwide, has pointed out three dimensions – effective government, advanced economy, and appealing environment. According to the CountryRep 2009 Study, Switzerland caught the top place for business environment, products and services, effective government, catching up second in social welfare, and brands and innovation; Italy number one in cultural appeal and entertainment possibilities and attributes; Japan dominated in reputation for the brand and innovation attribute; whilst Canada and Australia were the only two non-EU countries to be included in the top 10.

I’m starting to wonder what happened to the other countries. If Swiss, Italy and Japan could do this, why can’t others? It’s just a matter of following the simple rules that are being put down. If the country cannot do this, hire a reputation consultancy or professionals; is this a hard task compared to spending efforts and monies on election campaigns?

Conclusion

The same as a country’s reputation goes for companies in any type of industry – whether the organisation is big or small in size, private or public, local or multinational, profit or not-for profit – reputation management is a must. Act now before it’s too late.

(The writer is the world’s youngest Associate Member of the Chartered Institute of Marketing, and provides advice and ideas on various topics. You can reach him on [email protected])