The four building blocks of a reputation management program

Strategy & Leadership

ISSN: 1087-8572

Article publication date: 1 June 2000




Kartalia, J. (2000), "The four building blocks of a reputation management program", Strategy & Leadership, Vol. 28 No. 3.



Emerald Group Publishing Limited

Copyright © 2000, MCB UP Limited

The four building blocks of a reputation management program

The four building blocks of a reputation management program

Jim Kartalia

Abstract Reputation management is a critical part of any company's strategic plan. Reputation is affected by everything a company does or says and, in some cases, what it does not do or say. Reputation management is a discipline that focuses on meeting the organization's strategic and financial goals. It is also a process that allows an organization's leaders to be proactive in the face of crisis. The building blocks of reputation management include identifying the vulnerabilities that could affect reputation, preventing problems by establishing policies and procedures to guide employee behavior, communicating what the organization stands for, and managing crises, which is a combination of disaster planning and emergency preparedness.

Keywords: Crisis management, Company image, Strategy

In today's interconnected global economy, a company's reputation is its greatest asset (Kota Kinabalu, Managing Partner, Azlan & Koh Knowledge and Professional Management Group).

In a time of expanding Internet economies and the reality of globalization, these words summarize the importance of a reputation management program – a new but critical component of the winning organization's strategic plan. A business's reputation consists of the overall quality or character of the organization as perceived by its various stakeholders and is critical to success in today's business world. Historically, reputation was the end product of all the random experiences groups and individuals had with an organization. Leaders made decisions based entirely on their own idea of what was right. In modern times, it became popular to conduct surveys of customers, conduct exit interviews with soon-to-be ex-employees, and track all sorts of statistics to determine if the organization was doing a "good job" in its particular field. This is no longer good enough. Executives must treat reputation as the critical asset and resource that it is. Accordingly, it must be managed and protected.

Today, reputation management is a discipline focused on meeting the organization's strategic and financial goals by improving its reputation with all of its stakeholders, and a process that allows organization leaders to be proactive rather than reactive in the face of crisis. It is building, sustaining, and protecting an organization's good name, and generating positive feedback from stakeholders. Such an enterprise begins with top-level accountability. In centralized organizations, an executive-level official might be responsible for reputation management. Decentralized organizations often create a team of executives from various departments and disciplines.

Not recognizing the significance and importance of reputation or failing to create a culture that emphasizes to all involved the daily need for managing and protecting the reputation is one of the gravest errors an organization can make. For this reason, a formal, reputation management program should be implemented.

The four building blocks of a reputation management program

Identification is the first and most important of the four building blocks of a formal, reputation program. An organization must identify its vulnerabilities – the issues, problems, and perceptions that affect its reputation. Is it a trustworthy partner and a quality provider of goods and services? Is it a financially successful concern and a desirable employer? More critical than ever before, is the organization a responsible global citizen and a protector of the environment? All of these questions (and more) are vital in defining and establishing the enterprise's reputation.

Companies and institutions of all kinds and sizes can gather this information using the tried-and-true methods coupled with focus groups, 800-hotlines, e-mail and Internet sites, meetings with representatives of the community, and so forth. Organizations need these "multi-listening" capabilities in place, and they need to use them with great frequency to be accurately attuned to stakeholders, constituents, and publics. The collected data must then be quantified using measurement and benchmarking tools. This will give the organization information and knowledge to thoroughly analyze causal factors and maximize solutions for building, sustaining, and protecting reputation.

...Today, reputation management is a discipline focused on meeting the organization's strategic and financial goals by improving its reputation with all of its stakeholders, and a process that allows organization leaders to be proactive rather than reactive in the face of crisis...

Prevention is the next building block. It the least costly, most efficient, and most commonly overlooked means of protecting a treasured reputation. Prevention starts with published policies, guidelines, and procedures that all employees are expected to adopt and follow. They must reflect the reputation the organization wants to achieve. With these policies in place, the groundwork will be laid for a "defect" reporting system. Information about defects can indicate the start of minor problems while they are still at a manageable stage, or it can indicate more serious deficiencies. Either way, the information must be reported to the most senior level. Throughout history, almost all crises began with a seemingly minor incident not reported soon enough or at a high enough level. Incident information often gets trapped at a lower level of management that possesses neither the experience nor authority to handle it appropriately. Successful crisis prevention requires quick, focused response and management intervention by the highest executive ranks.

The issue and incident reporting system must be enterprisewide. Reputation defects can occur anywhere in the organization. Sexual harassment is not unique to any particular department. Computers can crash at any time. That is why top executives need an "early warning" system. The sooner they are involved, the less likely a scandal or crisis is to erupt. Organizations need to build a knowledge base of issues, incidents, and problems, as well as of outcomes, solutions, and results. This historical information, coupled with ongoing identification processes, provides management with a complete knowledge database to help build better training and more successful prevention programs.

Communication, the third building block, is the combination of actions taken by the organization and its employees. It is also the means by which the corporate entity tells stakeholders what it stands for. This is much more than a public relations campaign. It involves ethics, compliance, human resources, and every part of the organization. Outside experts can be employed to help design, implement, and monitor specialized communication programs that will be more effective and far-reaching than they might be by using only internal resources. Elements of the program include employee communications, customer advisory panels, environmental safety announcements, governmental education forums, and community-relations campaigns. Consumers and other stakeholders make decisions about their "relationship" with an organization based on the quality of its product or service and, perhaps more importantly, on the perceived "quality" of the organization itself.

Crisis management, the last of the building blocks, is the way an organization responds when the inevitable disaster occurs. It is the combination of disaster planning and emergency preparedness that allows the organization already possessing a positive reputation to survive when "bad things happen to good companies."

How corporate leaders view the value of reputation

Lest we minimize the importance of reputation and crisis response, consider two classic examples: Tylenol and the Exxon Valdez. Eighteen years after the fact, Johnson & Johnson is still the textbook model for how an organization should respond. Exxon remains its opposite. The entire public relations subspecialty of crisis management owes its being to organizations searching for ways to emulate one and avoid the mistakes of the other. Testing progress in the discipline of reputation management, Chief Executive Magazine partnered last year with Hill & Knowlton to survey chief executives about their own involvement and that of their organizations in this area.

They found that fully 96 percent of the 650 executives who responded firmly believe that as reputation goes, so goes the company. This is true of profits, stock price, market share, ability to attract and retain employees, everything. More specifically, over 75 percent of the respondents agreed that superior reputation helps sell products and services and 28 percent saw reputation as impacting a company's pricing power. In a tight job market, it is noteworthy that 61 percent said reputation was a factor in attracting top employees and 41 percent felt a "positive rep" reduced turnover and all the expenses that go with it. The majority also expressed the opinion that an organization with a strong reputation is more likely to be viewed positively in time of crisis than one viewed questionably by an already skeptical public. Yet, in spite of this, only 19 percent of all organizations represented said they had formal programs in place. While all agreed that perceptions were critical in determining the value of organizations, one can only speculate about why so few have implemented formal, reputation management programs.

Social conscience: part of an organization's reputation

Corporate growth and longevity require much more than successful transactions. Earlier this year, thousands of protestors staged violent and disruptive demonstrations against the World Bank in Seattle and in Washington, DC. The people who planned and paid for the Millennium Celebration that was cancelled also suffered. Busloads of demonstrators headed for Coca-Cola to protest racial discrimination in employment practices. Greenpeace is protesting the BP-Amoco merger. Society is simply demanding more of its corporate and institutional citizens, while anti-business violence is on the increase. Child labor, pollution, and rights to collective bargaining are only a few of the issues drawing fire. Courts are ordering huge compensatory and punitive damages when corporations are held liable for the outcomes created or influenced by their actions. Organizations that survive this societal change know that even their harshest critics are stakeholders whose input must be sought and considered in an effective reputation management program.

As evidence of their social conscience, many organizations are pursuing certification from new, non-governmental organization (NGO) behavior guidelines patterned after ISO 9000 principles. They include SA 8000 (Social Accountability), the Global Reporting Initiative, the global Sullivan Principles, and the Organization of Economic and Cooperative Development (OECD) Multinational Corporate Guidelines. All of these guidelines require a formal reputation management program that meets standards of effectiveness.

The time to act is now

It is not sufficient to say, "No comment," when the barn door is open and the horse is gone – unless "Comment" is the horse's name. In any other case, this non-response indicates that the organization has no plan, has no idea there is a problem, and is completely unprepared to deal with it.

Putting a reputation management program into service requires work. It takes an investment of time and energy from which organizational leaders cannot afford to shy away. There are, however, consultants and software programs available to support executives in getting started. A good knowledge solution to enterprise reputation management makes a clear statement to all stakeholders, whether they are employees, investors, customers, partners, regulators, or media representatives, that the organization has made protection of its reputation paramount and that preservation of its reputation is a daily corporate imperative. Thus, the four building blocks of the reputation management program – identification, prevention, communication, and crisis management – become the mantra and the tools with which the successful company exercises responsible stewardship over that most precious of assets – reputation.

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