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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.

Client Testimonials

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Governance Manager, Information Technology group

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