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Reputation management is the new mantra (Courtesy: The Business Line )

T N Ashok, Corporate Consultant and former Economic Editor of PTI.

Reputation management is the new mantra
By T N Ashok, Corporate Consultant and former Economic Editor of PTI.
Courtesy: The Business Line

MOST corporates in India and worldwide are giving more importance today to reputation management as opposed to public relations or image building. Is there really a difference between the two, you might ask. Yes, there is. The big difference is that corporates which have some semblance of a reputation are more interested in preserving it, which is vital to its own future. It’s definitely better than starting afresh and embarking on a fresh image-building exercise or a makeover. A corporate takes several years to build a strong image for itself either in the public eye or in the market with its customers or vendors. It is mostly based on the strengths of its financial assets, manpower, technology, quality, reliability and service.

The image is externally based on strong internal fundamentals. A corporate’s strong internal unison and efficiency sustain this external image. If cracks begin to appear internally through
financial mismanagement or faulty or delayed deliveries, then the corporate’s image takes a beating in the market. Once reputation suffers, business is hit and the corporate’s profits begin to dip, thus leading to unsustainable bottomlines. Therefore it is imperative for a corporate to carefully preserve the reputation it has painfully created in the market over the years.

To help achieve this objective, the top management of the company usually works in close cooperation with its communication department, making public healthy information about itself or retrieving a bad situation by explaining through background briefing to the friendly media the actual position and the industry environment in which it works. This helps sustain the corporate’s image.

Transparency in communication helps the corporate sustain its image and it necessarily has to be selective in the general interests of the corporate. Hiding behind closed doors or dodging information seekers is not a healthy practice and leads to unnecessary media curiosity, often triggering unfounded or loosely sourced misinformation about the corporate that can affect its image. If the corporate is a listed entity, it can cause considerable havoc in a day’s dealings at the stock exchanges, affecting shareholders that have placed immense trust in the corporate.

Let’s see how reputation management serves the various interests in the company. First, let’s look at the shareholders that form the backbone of the company. Stakeholders: Internal stakeholders are the employees and shareholders of the corporate. External stakeholders are its customers, suppliers, the media, Government authorities and the society.

Reputation: Perception is the mental impression of internal and external stakeholders of any organisation. The mental impression is formed by any person based on his individual experiences with the said organisation, coupled with the organisation’s performance and ethics. Reputation is the commonly held evaluation of the organisation based largely on the perception of various stakeholders. What we are in effect saying is that the reputation of any organisation is directly related or proportional to its performance, ethics and experience it provides to the stakeholders.

Reputation risk: Reputation of the corporate is compromised when an organisation’s performance, ethics or experience with stakeholders suffers. Reputation is often enhanced or risked due to the following factors:
Financial performance, corporate governance and quality management, social, ethical and environmental performance, employees and corporate culture, marketing, innovation and customer relations, regulatory compliance and litigation, communication and crisis management.

Reasons for reputation risk: A corporate is at great risk when its stakeholders’ perception turns negative. The corporate’s reputation consequently takes a dip. Risk factors for any corporate or organisation’s reputation could be attributed to the following factors:

Poor business performance, lack of business ethics, bad experience of stakeholders, lack of communication skills by management – internally and externally, lack of transparency, not being proactive during a crisis.

What should one do when a corporate’s reputation nosedives or suffers?

Don’t panic, be calm and strategise
Don’t pass the buck or blame others
Don’t find a scapegoat
Don’t indulge in witch-hunting
Sit and think calmly and analyse the reasons for the bad reputation incurred
Thereafter handle the remedial measures proactively
An or homogenous approach is not feasible if there are different companies under one umbrella or in the fold – each will have its own strengths and weaknesses
Take professional help and the help of experienced people in the organisation
Be transparent in all your dealings at all times – you will win the day.

Proactive: Here is where an image audit will serve your purpose. Periodically study the perception of stakeholders through image audit. Understanding the stakeholders’ perceptions and rising to their expectations would often reduce the risks. Internal departments – human resource or communications – can conduct image audits.

But it is best done by a professional agency outside the corporate as it will be less biased in its approach. Moreover, stakeholders of a corporate will feel more comfortable with outsiders as they will feel freer to face the auditing process, and confidentiality will be guaranteed in respect of the identities of the respondents.

There are very few people trained in conducting image audits. If an internal communications department is to do it for the corporate, it is best done in tandem with the professional agencies involved in this work as they have wide experience, instead of doing it alone.

Effective management of risk will not only go a long way in protecting the corporate’s reputation but will also enhance it. Every challenge coming the way of the corporate is to be treated as an opportunity to enhance reputation. Ability to manage reputation and its associated risks will effectively become a core competence for a corporate in a fiercely but often murky competitive world.

Contact: tn.ashok@power.alstom.com