Taproot – The Chemistry of Reputation, Part I

It’s hard to understand why every organization does not have a reputation management process in place.  In fact, many pay for reputation research but do little with the results.  That’s nuts! And what’s even crazier is that this conundrum keeps me awake on some nights, pathetic as that may seem.

Three questions:

 1.  Why do most organizations still not manage reputation?

 Here’s what I suspect are the reasons:

  • Reputation is thought of as intangible, which implies it cannot be managed. It should be thought of as an intangible asset with great, tangible value that must be managed.  The reputation asset cannot be managed perfectly (The recent financial crisis showed that no asset can be) but it can be managed well.
  • Many leaders still confuse brand (how the organization wants to be perceived) with reputation (how it is perceived).  They willingly spend money on branding but reluctantly on reputation, which is a measure of the effectiveness of branding.  And brand perception studies usually cover customers and prospective customers only … seldom the other stakeholders.   Doesn’t the 2014 survey by The Conference Board of over 1,000 CEO-level executives, which ranked “brand and reputation” among their top five strategic priorities,  say something about the inextricability of the link?
  • Many think of reputation management as crisis management, yet with a thoughtful, long-term  reputation management process in place the chances of a crisis are greatly diminished.
  • Most major companies have a chief risk officer, thinking that he or she has reputation covered.  Yet the CRO usually only focuses on financial risks.  In any case, the CRO seldom has a plan to exploit the positives of reputation. In a very real sense, this CRO’s job is to prevent the appointment of another kind of CRO, the Chief Restructuring Officer – quite different from reputation management.

2.  So how does an organization manage its reputation? 

In 2003 I copyrighted a process called Comprehensive Reputation Management, which we at Mindful Reputation are implementing in a number of organizations willing to invest in reputation over the long term. The process is built on the premise that to manage the parts is to manage the whole.  Isn’t it true that all of science accepts that premise: To understand anything one must understand its component parts? For hundreds of years that has been the premise for biology, chemistry and physics.  And today’s breakthroughs in biomedical research would not have been possible without the molecular breakthroughs over recent decades  that identified the link between the parts of genes and the parts of proteins.

So before I take the metaphor of the components of life and reputation too far, let me offer the following  definitions of reputation (Reputation Management, 3rd ed., Doorley-Garcia, Taylor & Francis, 2015).   Hint for those believing that reputation management is important: Examine the definitions as if they were in a test tube. 

Reputation (R) = Sum of images of the organization held by the stakeholders

                    R = Net of good and bad images

                    R = Sum of relationships

                    R = (P + B + C) x Af
(performance, behavior, communication and authenticity factor)

3. So does reputation management work?

Of course it does! My colleagues Goldstein and Turner and I conducted research published by The Institute for Public Relations in 2011

http://www.instituteforpr.org/topics/corporate-reputation-management-in-the-us-pharmaceutical-industry/

The research indicated that: “ the reputations of firms may be linked to the degree to which they have formal reputation management programs… We compared the reputation measurement and management efforts of the most admired firms with those of less admired firms. The data indicate a positive correlation in five areas – that is, between reputation and having an ongoing reputation measurement program; having an active reputation management program; having a formal reputation management plan; having an individual or unit charged with responsibility for coordinating / overseeing reputation management; and having the chief communication officer as a member of the company‘s executive committee.”

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“Character is like a tree  and reputation its shadow. The shadow is what we think of it; the tree is the real thing.”  Abraham Lincoln 

This entry was posted in Opinion.