Reputation Rules

Citation

McGillicuddy, K.M. (2012), "Reputation Rules", Journal of Consumer Marketing, Vol. 29 No. 5, pp. 389-390. https://doi.org/10.1108/07363761211247505

Corporate reputation and integrity is a topic that has risen to the top of many sensational news stories of late, unfortunately often due to the poor handling of crises or ethical dilemmas. One theory states that one negative story about a company has the same impact as five positive ones. This book teaches us that reputation should be viewed as a core capability, not a function to be dusted off and put into action when crisis strikes. A company should have a process in place for identifying potential reputational issue areas, evaluating them and monitoring them on an ongoing basis, in both good and bad times. A strong reputation is as vital to a firm's well‐being as a strong product, finance or differentiation strategy and should be approached in much the same way. And reputation is not just the responsibility of the PR or marketing teams; it must be engrained from the most junior employee all the way to the most senior.

The first mistake is in thinking that reputation is only important in a crisis situation and that all crises are purely negative events. True, people are paying closer attention to a company in a crisis, and the company's activities immediately after such an event are crucial. However, companies should remember that proper planning for such events can in effect turn them into opportunities for manifesting strong corporate ethics and goodwill. Note also that in a crisis the public not only scrutinizes the activities that address the disaster, they also scrutinize everything leading up to it. How could the company have avoided this? Did they know about it months before? This important point supports the need for a strong pro‐active plan that infuses a culture of responsibility throughout the organization and allows the company to emerge respected, or at the very least, unscathed. A company must demonstrate transparency, expertise, commitment and empathy in order to restore trust. Good intentions are not sufficient in these situations; true action must occur and a sense of competence and genuine caring must come through.

Outrage and fear are the main drivers of reputational challenges. There is increased moral outrage when the public perceives there has been a violation of moral norms, particularly a violation of trust or fairness. One major downfall is when a company is perceived to have made a decision based on efficiency or financials as opposed to fairness. Fear is driven through the factors of novelty (an unfamiliar or unknown, for example with a new technology), powerlessness (a feeling of no control), salience (the image of a rare but horrific event, such as a plane crash), the victims of a crisis (particularly if they are vulnerable or relate easily to the general public) and dread (the feeling that “the worst” could happen). The author describes ways a company can address each of these factors.

Reputation comes to the forefront most when an issue is high in both audience interest and social importance. The media must not be underestimated in its power to publicize a crisis and a company's handling of it. The publicity generated by the media is typically a mix of opinion and fact, and a company must be aware of a situation and how it will be perceived and presented, even if this presentation appears unfair or inaccurate to the company.

In addition to the media, activist groups and politicians are also of key importance in a company's reputation. These groups may create a reputational crisis in order to force a change in business policy or practice, and they often choose a target based on a company's vulnerability to the attack, not necessary true culpability. The best approach is to view these groups as competitors, just as you would another company which is launching a product that will impact your business. This point of view is less emotional and forces a company to view reputation as a core competence and strategy, indicating the same approach they would have for a marketing strategy or financial plan.

It must be noted that even the best reputation management system will always be implemented by people. People make mistakes and have varying opinions and perceptions of concepts like “value”, “integrity” and “doing the right thing.” This would seem to make the effective handling of reputational integrity unpredictable at best. However, just as a strong financial plan cannot account for every mishap, natural disaster, competitive move or internal shakeup, neither can a plan for reputational excellence. But having the plan is certainly the first step in the right direction, and its constant management and improvement is the best defense, and certainly better than having no plan at all. If a company has such a plan and process, develops a mindset of situational awareness and insists that all their employees think and act as stewards of the company, the organization is likely to grow a strong reputation and emerge from crises with respect, dignity and a position of strength.

The bottom line: Reputation is not what you try to preserve in a crisis; it is a core capability integrated into a company's strategies, culture and values. This book is an easy and interesting read, an effective mixture of theory, real‐life examples and expert analysis. Even those not specifically focused on corporate reputation will find the explanations and dissection of current corporate events interesting and thought‐provoking. Examples include RC2's Thomas the Tank lead paint issue, Wal‐Mart's support of Hurricane Katrina victims, the Arthur Andersen scandal, the Mercedes “moose” test, and more. For the businessperson it provides a practical and convincing guide to making reputation a pro‐actively planned core strategy to be executed within their own company. For a college professor it is an impetus to teach that reputational excellence is a core part of any business plan along with elements such as product or pricing strategy. For the general reader, it provides an interesting perspective into the concept of corporate reputation and presents a useful set of weights and measures upon which to evaluate a company during a crisis.

Despite the enjoyable, informative and arguably true material that is relevant to so many readers, a fear might be that despite the convincing arguments for making this a core area of importance, today's companies are in a cycle of cost‐cutting, bottom‐line emphasis and limited resources. Reputational excellence may inevitably slip to the bottom of the list in terms of priority. It is likely that we will see a few valiant companies treat their reputational strategy with the importance and dedication it deserves, but far more will continue to pay close attention to reputation only when (and if) a crisis arises. This is unfortunate, for a genuine effort to build trust and reputation would certainly help to rebuild confidence in today's companies after so many egregious scandals. Free enterprise is the backbone that has served as a foundation of our country and has made us a world leader; instilling confidence in and respect for “Corporate America” once again would be significant. We can only hope that for today's companies, reputational excellence will over time rise to the level of importance it so richly deserves. Our customers, employees and stakeholders deserve it, too.