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