Reputation is a significant corporate asset since it shapes the attitudes and behaviors of a multitude of salient stakeholders such as employees, customers, shareholders, the media, and the community, amongst others. Furthermore, its intangible character makes replication by competing firms considerably more difficult.
Having an excellent reputation can lead to, for example, increased buyer confidence, differentiation from competitors, better supply chain management and substitution for expensive governance mechanisms. Overall, these factors can ultimately boost the financial performance of a firm which fulfills the core mandate of any corporate entity. Of course, the opposite may also be true – a firm’s negative reputation may result in low performance in which case remedial steps need to be taken immediately.
However, companies often face the challenge of assessing their reputation holistically and this is where reputation measurement comes into play. It is possible to use a variety of drivers and factors that examine specific aspects of a company and to then compute an overall reputation index that illustrates the multi-dimensionality of a firm. This can be most readily accomplished for publicly listed companies since they are well researched and publish data in the form of regular financial statements and sustainability reports.
A key step is to then compare how a brand behaves and communicates – the unique promise it makes – with what others think, feel, and say about a brand based on shared expectations, i.e., its reputation. Reputations are made through an amalgam of available information about a firm’s activities, consumer experiences and information originating from the media or from other monitors. In other words, the brand promise represents the reality in terms of the disclosed actions an organization takes, whereas reputation equals the perception of various stakeholders about an organization.
Comparing the brand promise versus the corporate reputation allows for the identification of what can be called a ‘credibility gap or boost’ which can be found at the intersection of the brand score and the reputation score. Awareness of gaps or boosts should be the foundation for designing measures that take advantage of strengths or correct misperceptions.
Although a reputation score higher than a brand score might seem positive at first glance, it portends a risk that an organization is not behaving adequately in a given area. Performing not as well as people believe can ultimately come to light and have negative repercussions that can spill-over into other areas.
In contrast, when the brand score is higher than the reputation score, it can indicate communication opportunities since an organization’s good behaviors are not fully recognized by stakeholders. Misperceptions need to be addressed through creative techniques, such as storytelling tailored to specific audiences, that direct attention to critical performance areas. However, changing prevailing misperception may require a long-term approach and thus commitment and ample resources.
Research has shown that some industries or companies are misunderstood simply because stakeholders are not fully aware of significant work organizations are doing in key reputation areas or because there might be inherent biases against industrial sectors such as biotech and pharmaceuticals.
Additionally, various functional departments within a corporation can evaluate whether substantive investments in initiatives, such as talent recruitment or product development, are paying off financially or should be aborted.
This iterative process of measurement and optimization should occur at regular intervals to ensure credibility gaps do not become detrimental and that a brand promise is fulfilled, or ideally exceeded, in the minds of stakeholders. Such an approach will also ensure that stakeholder engagements with a corporate remain ongoing and are beneficial to a firm.
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