Corporate Reputation

Mgema Musa Zephania
BAPRM 42615

Corporate reputation is a soft concept it is the overall estimation in which an organization is held by its internal and external stakeholders based on its past actions and probability of its future behavior.

The organization may have a slightly different reputation with each stakeholder according to their experiences in dealing with the organization in what they have heard about it from many company  put the importance of a good reputation to the back of their minds while they attend to more hard engaged day up to day urgencies.

On the other hand, many organizations consider their greatest asset to be their good name or reputation this  is especially true in knowledge based organizations such as professional services firms in the consulting, legal, medical, and financial sectors and in universities. They work actively to build they have  good reputation, to build the ‘bank of goodwill’ towards them.

The main benefits of a good corporate reputation can be found in
Customer preference in doing business with you when other companies’ products and services are available at a similar cost and quality

Your ability to charge a premium for products stakeholder support for your organization in times of controversy your organization’s value in the financial marketplace.

Although reputation is an intangible concept, research universally shows that a good reputation demonstrably increases corporate worth and provides sustained competitive advantage.

A business can achieve its objectives more easily if it has a good reputation among its stakeholders, especially key stakeholders such as its largest customers, opinion leaders in the business community, suppliers and current and potential employees.
If your organization is well regarded by your main customers, they will prefer to deal with you ahead of others.

These  people will influence other potential customers by word of mouth suppliers will be more inclined to trust in your organization’s ability to pay and to provide fair trading terms. If any problems occur in their trading relationship with you, your suppliers will be more inclined to give you the benefit of the doubt when you have a reputation for fair dealing. Likewise, government regulators will trust you more if you have a good reputation, and they will be less inclined to punish you if you trip up along the way. And clearly, a potential employee will be more likely to sign up with you if you have a good reputation for your treatment of staff compared with an employer who may have an equivocal reputation.
A US survey by Burson Marsteller found that 95% of chief executives surveyed believed that corporate reputation plays an important or very important role in the achievement of business objectives. Yet only 19% had a formal system in place to measure the value of their corporate reputation. If corporate reputation is so important, why don’t more organizations measure it Possible reasons include:
Reputation is an intangible and complex concept, which takes time to change.

The dollar value of improvements to a growing reputation is difficult to quantify.
Senior managers are obliged to deal with more immediate and demanding operational priorities – reputation is a long-term concept.
Reputation ranges over such a broad area of the organization’s activities that it is difficult to allocate specific responsibility for work on enhancing the corporate reputation to individual functional areas.

Cost the typical cost of applying a conceptual model to consumers  individual investors and community leaders in one major study of companies in one industry might cost as little depending on the size of the industry.
One thing is certain there is a high cost to pay for losing reputation the good standing among stakeholders. Past experience has shown that a badly handled crisis can strip big chunks off a company’s share price, share price plunged 20% after the Exxon Valdez incident. A smaller organization could be devastated by loss of reputation. Conversely, the skilful handling of a major issue or crisis can maintain a good reputation and cushion the organization’s share price against a drop in market share.

Corporate reputation also is important to the career of your CEO. As part of the process of evaluating the performance of the chief executive, there has been a growing trend for boards of directors to measure changes in their organization’s reputation.

And international surveys show that more than half of an organization’s reputation can be attributed to the CEO. According to US research conducted in 2003 among 1,400 influential stakeholders, about 50% of a company’s reputation could be attributed to the CEO.
The figure was even higher in German research conducted in 2001, where the CEO’s reputation accounted for two-thirds of overall corporate reputation. Thus the CEO’s reputation can potentially add millions of dollars to the market value of the company.
Professor Charles Fombrun, research professor of management at the Stern School of Business, New York University, is probably the leading international authority on corporate reputation.
He believes that a reputation develops from a company’s uniqueness and from identity-shaping practices, maintained over time, that lead stakeholders to perceive the company as credible, reliable, responsible and trustworthy best regarded companies achieve their reputations by systematically practicing management.

They adhere rigorously to practices that consistently and reliably produce decisions that the rest of us approve of and respect by increasing our faith and confidence in the company’s actions, credibility and reliability create economic value.

The two main sources of a corporate reputation are experience and
information a person’s past dealings with your organization and the extent and nature of their direct and indirect communication with you.
A favorable reputation requires more than just an effective commuication effort it requires an admirable identity that can be molded through consistent performance, usually over many years.

United States research found that the sources of information about the organisation that enabled business ‘influential to form a view on an organisation’s reputation were
Source of information Proportion
Personal experience 64%
Major business magazines 37%
Articles in national newspapers 35%
Word of mouth 31%
Articles in trade journals 30%
Television news 14%
Articles in local newspapers 24%
Television current affairs programs 13%
The business influential comprised CEOs, senior business executives, financial analysts, institutional investors, government officials and the media.

Main components of corporate reputation

1. Ethical: the organization behaves ethically, is admirable, is worthy of respect, is trustworthy.

2. Employees/workplace: the organization has talented employees, treats its people well, is an appealing workplace.

3. Financial performance: the organization is financially strong, has a record of profitability, has growth prospects.

4. Leadership: the organization is a leader rather than a follower, is innovative.

5. Management: the organization is well managed, has high quality management, has a clear vision for the future.

6. Social responsibility: the organization recognizes social responsibilities, supports good causes.

7. Customer focus: the organization cares about customers, is st
rongly committed to customers.
8. Quality: the organization offers high quality products and services.

9. Reliability: the organization stands behind its products & services, provides consistency service.

10. Emotional appeal: (it is an organization I feel good about, is kind, is fun.

Additional components were found in some of the systems studied. These included value , differentiation , presence , and communication quality .