The Importance Of Corporate Reputation

There are 3 elements to Corporate Reputation. (These are referred to as the reputational radar.)

1) Brand Reputation: how the public perceives a brand.

2) Organisational reputation: what the public thinks about the ‘organisation’ as opposed to the ‘brand’. For example, Unilever PLC has a house of brands and also has individual sub-brands. Therefore the public reputation of the company can be different from the reputation surrounding each of the individual brands.

3) Stakeholder reputation: the reputation that stakeholders have of the brand or the company that they are dealing with. (Stakeholder = person group or another organisation that has a direct or indirect stake in a company.)

When you are discussing Corporate Reputation, it helps to define and be clear about which element of reputation, from the list above, it is that you are specifically referring to.

Definition of Reputation

There are lots of different definitions of what corporate reputation might consist of. The main point is that corporate reputation has to be earned. A company can try to forge and carve their image, however, whether that image will lead to a favourable reputation (which is aligned with the image, and therefore hopefully a positive reputation), will depend on the actual activities and the tangible results, good or bad, that customers experience.

“Reputation is the sum of values that stakeholders attribute to a company, based on their perception and interpretation of the image that the company communicates over time” John Dalton, Managing Corporate Reputation.

“Reputation is the principal means through which a market economy deals with consumer ignorance” Professor John Kay.

Corporate Reputation Framework

Corporate Reputation is the endpoint in a chain, see the image above. A chain that comes from the corporate image, with the corporate image coming from the corporate identity or brand; which will, in turn, come from the personality that the organisation is trying to create. Lastly, all of these elements are wrapped up in the corporate communications that the company is producing.

Benefits of Corporate Reputation

Corporate Reputation acts as a lynchpin for all of these concepts in the reputation framework, with lots of things feeding into it such as the image and reputation and what the organisation does to enhance the reputation. The main benefits of having a solid reputation are trustworthiness and credibility. Corporate Reputation determines the levels of credibility, trustworthiness, responsibility and reliability that a stakeholder has with the organisation.

It’s also worth noting that an organisation may own a brand and may also try to create its image around that brand, but it is the stakeholder that owns and creates the reputation.

In summary, it doesn’t really matter what a company does, because what determines the organisation’s reputation is what the stakeholders think of it; managing Corporate Reputation is therefore all about managing the stakeholder’s perceptions.