Halliburton, BAE Systems, Wal-Mart, de Beers, Exxon Mobil – do you get a warm feeling when reading these names? Perhaps not.
These firms, rightly or wrongly, have all had mud slung at their reputation. None of them, however, seems to be particularly down at heel, so you might ask: why worry about corporate reputation at all?
‘The question is: could they have done better if they had a better reputation?’ says Bill Nichols of Henley Management College. The answer is yes, almost certainly. We’ve got nice empirical academic models that demonstrate this.’
Not only can a good reputation boost the bottom line, it also helps attract the best employees and motivates the ones you have. And suppliers will offer you the best deals in the hope that a bit of your golden reputation will rub off on them. It also provides protection in times of crisis.
With the rise of the ethical consumer, corporate reputation has moved to centre stage. Recently there have been a spate of documentary films about corporate shenanigans: Enron – the smartest guys in the room ; Wal-Mart – the high cost of low price ; Supersize Me ; The Corporation ; Bowling for Columbine , to name a few.
Corporate reputation is no longer a footnote on some marketing collateral, it is a subject on every consumer’s lips. If you are seen to be doing bad things: destroying rainforests, covering up data about your latest drug, lying about the nutritional contents of your food, the information will spread and it will spread quickly.
The perceived wisdom in PR was that the first 24 hours of a crisis were the most critical, but Caroline Fisher, a director of PR agency Porter Novelli, says it is now down to the first hour. ‘Instant judgements are made on eye-witness reports,’ says Fisher.
With the advent of blogs, camera phones and podcasts, everyone is an investigative journalist. Bad news spreads at the speed of light. As US investor Warren Buffett 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.’
‘We are seeing companies take a much more serious role in corporate social responsibility,’ says Fisher. ‘Companies can no longer be just about making money. Organisations have a responsibility to the environment, to the public and to their employees. I think they take that very seriously now and I believe it’s mirrored by the community taking it more seriously.’
Fisher says corporate reputation is the external view of what your company looks like, so it is important to think about all of the stakeholders that interact with you as a brand. ‘That could be employees, government bodies, the media or analysts. The map of stakeholders is growing and growing,’ says Fisher. ‘And the starting point of defining messages is defining who it is that you want your brand to interact with and from that you build up a map of messages and means to target those individuals.’
Fisher says that in the early 1990s there was very little brand differentiation. So many brands were sending out the same message: We are the best of breed, we believe in quality, service, and so on. ‘It’s moved on from a one-size-fits-all message to a sophisticated one regarding what your brand is and what it means to different individuals,’ says Fisher.
But Henley’s Nichols is not convinced that fixing reputation should start with fixing the brand. ‘When you talk about reputation, people narrow it down to something called brand or something called PR,’ he says. ‘Each of those has a part to play, but what creates your reputation is a sum of what the whole organisation is doing.’
If you take an organisation with a thousand people, each one of those individuals will give on average 12 contacts their view of the business. And those 12 people will pass the message on to a further 12 people. ‘A one thousand-strong firm is actually engaging 144,000 people,’ says Nichols. ‘It’s that footprint that you’re dealing with.’
For Nichols, how you manage reputation is a variable of the degree to which your one thousand people articulate it for you. ‘In far too many firms, they think, if we fix the brand and the brand looks wonderful, then we’ve solved the problem,’ says Nichols.
‘But you may have created a problem because if that wonderful new image is a long way away from the reality, which the one thousand employees are articulating to their contacts, there will be a sharp disparity between reality and presentation.’
To Nichols, good reputation management involves moving everything forward together. So you do not launch a new brand. A new brand is the last thing you do, having completely remotivated the culture in terms of what people understand they are doing.
‘Corporate reputation is more often than not in the hands of staff, and they can make or break how a company is perceived in the public eye,’ says Steve Gerrard, marketing director at Mirapoint.
‘It is essential that controls are put in place to manage their prime source of communication – email.’ Gerrard adds that an employee’s email address identifies not only the individual, but also the company. And once an inappropriate email gets into the public domain, it can do untold damage to corporate reputation. ‘As such, if a company does not have a clear and consistent email policy for its employees, it needs to get one,’ he says.
But a recent study, conducted by Dr Christiane Spitzmuller of the University of Houston, found that monitoring staff activities, such as email use, is only productive if a company has the right attitude.
‘We found that if employees feel their organisation is focused largely on the blind pursuit of profits or meeting targets, then they are less likely to comply with monitoring surveillance,’ says Spitzmuller.
‘They may spend company time trying to avoid detection instead of engaging in more productive activities.’ Spitzmuller found that staff are more tolerant of being monitored if their company provides a team-oriented and caring work environment.
Nichols agrees. ‘If there’s a fundamental problem in the business, no amount of packaging or draconian rules are going to solve the fundamental problem,’ he says.
‘You need to start bottom-up and solve the problem internally. If the organisation is in some way victimising people or badly handling its customers, that sort of thing will get out. The difference between today and 25 years ago, is that the escape routes for information are that much greater.’
But it is not just employees who spread messages, it is all of your stakeholders, including suppliers.
‘We find that the biggest way of getting the message out for our clients is through third parties,’ says Fisher. ‘The chief information officer and the network of suppliers and partners can spread the message through their network and, of course, employ technology to do the work of spreading the message.’
Further reading:
Best practice: Maintaining a good corporate reputation
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