Corporate Reputation Management
Organizational reputation is becoming simultaneously both more important, and more easily damaged, in both cases because of the rise of the Internet and the increased amount of information and the speed of its dissemination around the world.
Corporate Reputation as a Fragile Process System
We view Corporate Reputation as a ”fragile process,” that is, as a system that typically:
- Has many ”moving parts”
- Has complex, time-dependent interactions as an integral part of operations
- Has a tendency to involve complex procedures and process rules
- Works successfully only from performing a rigid set of sequences
- Usually has very little ”slack” in the system
The result is that reputation often responds to events like networks do:
- A positive event can add to the network’s luster, but often only proportionate to its actual effect
- A negative event may have a disproportionate effect (e.g., cause the network to fail), because of what is called effects-based impact, the notion that a network does not have to be entirely destroyed to destroy its effectiveness (think of an electrical grid failing because key ”nodes” alone have been destroyed). Thus one or two small negative events may have a disproportionate impact on reputation
- Generally one can enhance reputation only by dealing with the core entity
- But often reputation can be disproportionately harmed by a smaller entity or a related one, or by a single action or event that is inconsistent with the organization’s perceived status (created by the ”Halo Effect”), e.g.:
- A supermarket’s reputation can be harmed by the actions of a vendor (e.g., by providing disease-carrying produce)
- A CEO’s questionable actions can disproportionately harm the company for whom he/she works
Implications of This Approach to Corporate Reputation
- Multiple small events create ”reputational capital” Proactive step: Systematically build reputational capital
- Gaps between performance and reputation can be damaging even if the perception is positive (since such gaps inevitably are identified by stakeholders) Proactive step: Continually assess both perception and performance for discord and continuously correct same
- A few adverse events can seriously deplete such capital Proactive step: Develop an effective early warning system to spot and defuse issues before they can cause damage
- Reputational capital is typically built primarily from within the base business outward, not from participation in external event and organization ”giving” inward Proactive step: Make reputation management an integral part of the operating rhythm of the organization
Based on our model, we can assess the fragility of your organization’s reputation, help organize ways to constantly monitor its health, and design systems that will help spot and deal with issues and problems before they cause real damage.
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