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The Major Drivers of Corporate Reputation Management

              Reputation is oftentimes defined as a set of beliefs that are held regarding something or someone’s traits, values or activities. Reputation is often associated with trust and/ or quality and it can be attributed to individuals, products, services, groups or organizations. To many, it serves as a determining factor when it comes to individual engagement and decision making. Many organizations and individuals in competitive markets have realized the impact that reputation has on them, which led to greater expansions in reputation management. The practice aims to build, monitor and control the narrative surrounding one’s traits, values, professionalism/ quality and it can support their respective goals or interests.

              Advances in globalization and technology, specially search engines and social media has led to the exponential growth in the importance and value of reputation management. Companies also benefit from vast data pools that are created once individuals go about their everyday online activities, which can serve as additional insight in the area. In this article, GPetrium will look at the types of reputation that may need management while applying business case scenarios that involve corporate and individual as examples.

Types of Reputation to Manage

              In today’s environment, reputation is built, maintained, controlled and monitored in a variety of different mediums and spectrums. Understanding the different types of mediums in which reputation need to be managed and how such practice is important to ensure that organizations are well positioned for success.

8 key areas of reputation management

Base Culture – Drives the main principles that one perceives to be important and aims to strive towards. Failure to live to its perceived culture or to build a culture that at least partially aligns with its surroundings (societal values and morals) can lead to reputation loss which subsequently impacts expected outcomes. Most often, companies post about the values that guide their general behaviour in their website and report on them in an annual basis. As an example, Coca Cola openly commit to partaking on sustainable practices in their operations when the company is described.

 

 Social Media Presence – Aims to engage with others in virtual communities and networks to grow one’s relationships and reputation. Social media presence may range from employment-oriented networks such as Linkedin to Twitter, Facebook, forums and many more. Online reputation management in social media has become a growing trend and different companies take different approaches. Some companies choose to maintain a strictly professional relationship in which they simply advertise some of their operations and initiatives on their page and reply to urgent matters when necessary, as Hydro One’s LinkedIn page for instance. Other companies such as McKinsey & Company, use social networks as an opportunity to practice brand development to further segment their expertise. Wendy’s on the other hand, generate publicity by humorous popular content which ensures that they are engaging with clients in different levels across different platforms.

 Crisis Management– As time passes, moments of intense difficulty, trouble, or even danger are brought forth by internal and external factors which may require immediate attention and responses. The way an organization handles moments of crisis, not only during the difficult moments, but also in preparation to such moments and post-activities can heavily influence perception and impact individual or organizational reputation. For instance, Airbnb’s CEO and cofounder, Brian Chesky, published an open letter during the Covid-19 pandemic detailing the reasons the company was laying-off 25% of its workforce. Despite the hard news, the letter was received as an example of how to handle crisis in a humane way that is respectful of the consequences such actions may have on their employees.

 Customer Experience – Associated to the end-to-end experience that customers face, customer experience is present throughout the customer’s purchase cycle – from their journey of discovery to acquisition and utilization of said products or services. It can often spill over on other mediums in which reputation is also managed such as social media platforms which can result in positive or negative impacts depending on how well the customer experience was delivered. Notoriously, in 2017 an employee from United Airlines forcibly removed a passenger out of a flight because the plane was overbooked. The incident resulted on the customer being seriously injured and was recorded by other passengers. The incident negatively impacted the company’s reputation and the CEO had to issue a public apology the day following the incident.
 
 Financial Reputation or Credit Score – As the saying goes “Cash is King”, this motto drives the importance of fiscal health to organizations and individuals. In most cases, failure to maintain a certain level of financial reputation can impact a financial institution’s perception of a borrower, limiting their ability to finance or leverage their activities. It can also, in some cases, impact value perception of stakeholders and relationships.

 Supplier Relations – Anyone that is dependent on suppliers to deliver a product or service that supports their activity will oftentimes understand the importance of maintaining good supplier relations. Even in a B2B environment, words can travel fast, specially if it is associated with a poor business-customer experience such as late/ no delivery, failure to pay, among others. Managing said reputation can be detrimental to long-term success and growth.

 Online Reputation System – Is a reputation system, mostly found in e-commerce, that aims to give buyers and sellers a tool to comment on each other in areas that the platform deems important in relation to the product/ service. The information disparity between consumer and seller has significantly shifted over the years thanks to online review systems. Several customers will often research a product online, or hear about it online before a purchase. Sometimes, the research might not even be on the platform in which the customer will finalize the purchase. That can happen when the review database of the website does not contain a lot of customer review, the data is considered untrustworthy or the user UI is not friendly.

 Societal Culture – Every culture has a subset of traits and beliefs that drive their attitude and activities. For an organization to succeed, it is essential to consider its reputation as it pertains to the markets that it intends to service. Failure to do so can often lead to backlashes from customers and employees that may impact the bottom line in that specific market. Further, companies need to also to be aware of shifting priorities and beliefs in their demographics as failure to change may also negatively impact the company. For instance, in 2018 the brand Victoria’s Secret fell into hot waters with the public for not having models with diverse shapes, colors, and sizes to model their clothing – which ignited body shaming complaints.

 Legitimacy or Trustworthiness – Trust can be everything in relations and transactional deals. Failure to uphold the values and quality that others expect a brand to have can be detrimental to a brand’s reputation and sales may suffer. Famously, in 1985, Coca-Cola changed its beverage recipe, customers soon came out with organized campaigns and petitions requesting that the classic Coke recipe be brought back into the market. which got customers so infuriated that they organize campaigns and petitions to bring the classic Coke recipe.

Applications in Reputation Management

              Corporate Reputation Management is a continuous effort that organizations of all sizes have to contend to as they shape internal and external relations. When done right, stakeholder opinion may improve tremendously, driving increased revenue, recognition and other accolades. This segment will look at a few key examples of reputation management as it relates to the types talked about above.

 

Organizational culture – Imagine an organization that proclaims in public to embody values of being innovative, people oriented and believes in equal pay for equal work. However, information comes out that its gender pay gap is a staggering 30% difference, employees have been poorly managed and it shows on the quality of service provided. Such factors are all compounded by the consistent lack of innovation in relation to peers in the industry. It is to be expected that in a highly competitive market, a company’s reputation could be severely impacted from a customer, employee and prospective stakeholders’ perspective.

 

Social Media Presence – Users have come in droves on social media to complain about a product that company XYZK Ltd put on the market. XYZK never had any social media presence and customer support was not enough to pick-up the trend until a month later when major department stores began taking their products off the shelves and revenue suffered a dip. The issue arrives at the CEO’s desk and he requests the company to resolve the matter. The company is now a month late to the game, with limited to no expertise in social media management as it attempts to recuperate from its failure. On the other hand, it may mishandle its social media presence, leading to further reputational loss and even run the risk of getting swiped away in the cancel culture phenomenon.

Social media gives organizations an opportunity to reach out to its stakeholders in a less formal environment, allowing it to build goodwill and presence. Internet use has grown exponentially throughout the years, with estimates showing a change of 1.36 billion in 2010 to 3.73 billion users in 2016 (Worldbank 1, 2) and social media use has accompanied this rapid expansion (OurWorldinData). Companies that lack some sort of social media presence have little to no power over the management of its online reputation. At the same time, a poorly managed social media circle can be detrimental. For example, a company that attempts to take a combative posture in socially charged environments will oftentimes find strong backlash on the media.

 

Emergency Response – A call arrives at your desk – “There has been a major cyberbreach with major material impact on the organization”. You end the call with multiple questions in mind: “What do we know about the breach? Were our previous security protocols following industry standards? What is the size of the breach? Did it impact key customer and organizational data? How much information about the breach is available to different stakeholders? How much information is expected to be available at some point (due to regulation, leak, etc)? What are the steps we will take to safeguard our stakeholders?” These are just a small subset of questions that may arise. The responses the organization takes throughout the emergency can cause further damage or create an opportunity for growth and build trust.

 

Customer Experience – A customer purchases a jar from company XYZK Ltd. The company promises to deliver within 7 days, with just enough time for the birthday. Unfortunately, the delivery is late by 10 days and the jar is not the same that was requested. Under these conditions, the customer developed a negative perception due to delay in delivery and misrepresented product. Such negative experience can then be relayed to other individuals (word-of-mouth, online reviews, social media – Instagram, Twitter, YouTube, or any other website – even reported on news channels depending on the topic) further reputational damage. On the other side, if the product arrives on time or earlier and is considered to be better than expected, the birthday party itself can serve as a word-of-mouth reputational gain, among other opportunities.

 

Financial Reputation or Credit Score – The company is running out of cash to pay its weekly operations. You go to the bank to request for a credit extension to support the organization, however, once the bank representative looks at the organization’s financials and realizes that prior credit is behind payment by 6 months, it becomes clear from their perspective that it may be better to cut their losses. At this time, they decide that it is better to not provide any credit extension, potentially leading to insolvency.

 

Supplier Relations – Any business that is dependent on suppliers to deliver on their operations knows the importance that maintaining good supplier relations can have on an organization’s success. Sometimes, said relationship can help the organization receive requisite supplies earlier than stipulated on the contract, lead to consistent service delivery, smooth customer service response or provide an extended invoicing terms (such as additional 30 days to pay the invoice).

 

Online Reputation System – As e-commerce continues to grow rapidly, organizations and platforms have had to find ways to build reputation systems that facilitate online trust between parties such as the famously known five start review system. A company that falls below the expected reputation rating in a platform, can often find it harder to sell their products or services or even be negatively impacted by the algorithm and not have its products reach customers as often as other products with higher ratings. The opposite is true with growth in the number and overall rating that the organization gets. Some organizations will engage in unethical or ethically grey area activities to enhance their reviews or decrease their competitor’s reviews.

 

Societal Culture – Climate related issues have become a hot topic in some markets and stakeholders and investors such as Blackrock have moved toward more sustainable investment practices. Companies that fail to account for societal cultural shifts as part of their strategy and operations, may find themselves losing ground, specially reputation, with its key stakeholders in the long-run.

 

Legitimacy or Trustworthiness – For example, if a beverage company failed to keep its standards and quality, customers may decide to stop purchasing their product. At the same time, if they manage to constantly deliver on the same flavor and quality for years and even decades, all while managing their brands, customers and suppliers, their reputation is likely to grow.

Best Practices

              Brand management has been in existence since the dawn of civilization, however, in today’s technologically driven and rapidly connected world, communities and individuals have gained different platforms to express their opinion and beliefs. Some claim that social media has the power to give voice to those members of the community who were previously unheard – which is a great thing, however, it does require that brands pay careful consideration to the impact of their decisions and operations. As such, in addition to employing the best practices highlighted below, critical consideration and sound judgement is necessary in order to properly develop and maintain a successful reputation management program.

  1. Monitor activities
    From major online reputation management such as PR releases and e-commerce reviews, to social media, search engines or public relations, it is important to monitor activities to ensure clarity over the events that can impact the organization’s brand and its marketplace.
  2. Remain level-headed throughout all interactions
    Regardless of the relationship with the stakeholder, remaining level-headed and thinking twice (maybe thrice) can help ensure that the organization’s reputation remains strong and manageable. Aggressive confrontation will seldomly achieve organizational goals and can negatively impact the brand and its perception of professionalism.
  3. Actively work to resolve key legitimate issues brought forward by stakeholders
    The moment an organization is operating, it is bound to face challenges that can impact stakeholders. Therefore, when legitimate issues do occur, relationships must be managed in ways that are representative of the company’s values, culture, and brand. Sometimes a simple “Thank you for raising this concern. We are aware of the issue and we are actively working to quickly resolve the matter.” can make a major difference in the right circumstance. Above all else, maintain an honest relationship with your stakeholders.
  4. Meticulously tackle illegitimate attacks to the organization
    There is a non-trivial amount of illegitimate attacks happening everyday, through different channels. Therefore, it is important for the organization to build strong governance protocols that can be used to tackle the matter. For example, a customer may slander the organization for late delivery, however the organization may be able to keep track of all its deliveries and prove that in fact, the product arrived on time. This can be used to remove the review on e-commerce websites.
  5. Be known for your trustworthiness
    When an organization is consistently delivering upon their promises and expectations, the average customer is much more likely to be lenient towards legitimate issues and more likely to question illegitimate attacks. One of the benefits of maintaining a positive organizational image.
  6. Take legal recourse if the situation demands it (be aware of the monetary and reputational cost)
    Some specific cases may warrant legal action against individuals or organizations. Issues may range from cyber-libel, to sabotage, and uncompetitive practices. Nevertheless, it is important to keep in mind the consequences of pursuing legal action which are often costly and may negatively impact the organization’s image.
  7. Know your limits
    There are situations where the organization may not have the means to manage their reputation on their own – especially when it has experienced a challenge that is outside the usual scope or capabilities of the organization. At times like these, it can be beneficial to contract external expertise, hire new employees or reallocate resources to tackle the matter. This can be very common in emergency situations as well.
  8. Make use of data analytics and automation to facilitate operations
    Build the structure to continuously gain insight on the information that is available about your organization online in an easy, hassle-free manner. A database that showcases exemplary responses to specific situations can be a helpful tool for staff. It is important to note relevant factors to the response, such as values displayed and outcome of said response. This can help companies automate customer response. At the same time, organizations may face the risk of lowering their customer experience by over-automating a process and frustrating a customer. Poor data analytics lifecycles and governance can also lead to suboptimal results, and consequently, decisions. Substandard data sources or unsuitable KPIs and CPIs are just a couple examples. See “The necessary balance between KPIs and CPIs”.

    The opinions in this article is of the authors and do not reflect clients or other’s views.

    Authors

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