Thursday, May 21, 2009
Reputation management cannot be superficial and deal only with appearances. A company must understand its stakeholders intimately and pay careful attention to the way in which it interacts with them. For a company to develop and maintain a positive reputation, every aspect of its business needs to be aligned to the reputation it seeks. This covers things like product design, employee engagement, interaction with local communities, purchasing policies and financial stakeholders’ rewards.
Good corporate reputation generally follows one of two things. It is either born from the translation of a big idea into an approach to business that strikes a positive chord with stakeholders, setting it apart from its competitors. Alternatively it develops when a company clearly understands what its stakeholders want and tailors its products, activities and business model to this.
In both instances a positive reputation is only achieved if the approach is fully embedded in the culture and operations of the organization. Failure to do this will expose a misalignment between what a company says and what it does, and no amount of PR or branding will hide this.
I believe effective reputation management needs to start with a company’s employees. They are the creators of a company’s products, the deliverers of its service and the drivers of its performance and so need to embody the company’s ethos in all of their actions. This won’t happen unless that ethos is effectively communicated, encouraged, shared and rewarded. Recent events in Westminster have been as damaging for the House of Commons itself as they have been for individual MPs.
The company’s values should drive recruitment, appraisals and training. Managers must be enabled, through analytical and development tools, to foster behaviors in their teams that support the organization’s culture. Sustaining that culture should be central to reward policies and reward must also be aligned to the interests of external stakeholders. Employees need to understand that their behaviours collectively create the reputation of the organization they work for – and that positive reputation, in turn, makes them more valuable as individuals.
Engaging employees in the development of an organization’s corporate reputation is, quite simply, a foundation level investment. Unless employees make a daily contribution to the maintenance of the company’s values and priorities, its reputation will depend primarily on factors beyond its control, such as market trends or consumer fashions.
Schlesinger, Heskett and Sasser made the case for the service profit chain* some years ago, but the key part of their thesis holds true today – that engaged and motivated employees deliver uncompromising customer service that results in better than average financial performance.
Customer experience is vital. Many reputations have been won or lost by companies’ receptions or call centres. Unless the service or products delivered by a company support its reputation and improve perceptions, consumers will quickly transfer their loyalties. And blogs and review sites now make it easy for consumers to spread bad news quickly.
A company’s approach to corporate citizenship is important too. Failure to address its environmental impact will have a negative impact on reputation. A sustainable business model that shows the organization makes appropriate use of natural resources, avoids the use of cheap labour and supports the communities in which it operates is key.
The communication of both good and bad financial performance honestly and in a timely manner is also central to the safeguarding of an organization’s reputation. The financial community needs to understand the company’s strategy and how success is measured. They must also be able to see indicators that reveal high or low performance on a range of metrics. These need to go beyond the usual financial parameters and include things such as customer loyalty, market share and environmental impact.
With lasting positive corporate reputation relying on the alignment of perceptions and realities, what role can communicators play? Here’s my seven point action plan:
1. Help the organization understand its strengths and weaknesses
2. Provide insight into the needs of stakeholders and the nature of competitors
3. Create tools that enable the company to align employees’ behaviors to its culture
4. Disseminate stories internally that spread best practice and reinforce culture
5. Use storytelling to ensure that stakeholders are aware of what is important to the organization, what its culture is and how that will help everyone to be successful
6. Ensure that the way the organization presents itself, through PR, branding or advertising, is aligned with its target reputation
7. Be the voice of reality by ensuring the organization doesn’t fall into the trap of thinking that positive reputations can be created simply through clever branding and communication, when it is stakeholders’ experiences that matter most
*The Service Profit Chain by James L. Heskett, W. Earl Sasser and Leonard A. Schlesinger
Nick Glanvill
nglanvill@greentarget.net