Why reputation?

Currently, organizations are under an increasing pressure from its stakeholders to better respond to their needs and interests. This pressure can generate conflict within organizations in terms of reputation.

Much of society agrees with the idea that development, construction and maintenance of a good reputation is important to all organizations, whether with or without profit. However, some still believe that the main objectives of an organization are to increase profits and create wealth for investors, understanding the reputation as an asset that is only “desirable to have”.

In any case, the biggest problem of reputation is the definition of the concept itself, because, ultimately, the perception of what is and is not a good reputation depends on the beholder. A wide variety of definitions have been brought out from the academic and professional fields. However, if one examines the different definitions of reputation it can be seen that there coexist two great visions, one which focuses on the perspective of the company and the other that focuses on the perspective of its stakeholders.

From the perspective of the organization, reputation is an intangible asset that allows the company to better manage the expectations and needs of its stakeholders and to create the necessary legitimacy so that it can develop its activities in the society where it operates.

From the perspective of stakeholders, reputation is an attitudinal concept that refers to the ability of the company, through what it says and does, to give a response to the needs and interests of those who interact with it.

Whatever the approach chosen, there is now a consensus around the fact that reputation is an intangible asset of great value for the company, since it is able to create barriers against the existing threats that exist in the environment. Thus, and as most of you already know, a solid reputation brings benefits to companies that are difficult to imitate, contributes to the quality perception of the products and services offered by  the organization and suggests that the company cares about its employees and customers, among other things.

Moreover, there is also a consensus when considering intangible assets as an important source to achieve competitive advantages, since they are valuable, difficult to imitate, replace and transfer. Thus, it is possible to argue that the intangible nature of reputation, its rarity and its social complexity can contribute significantly to the differences in competitiveness among organizations.
Moreover, organizations today can be understood as a set of relations and, consequently, the ability to maintain good relations with different stakeholders may be fundamental to create value for the organization. The ability to manage these relationships is vital to the function of communication, whether from the perspective of the perceptions that the different stakeholders receive due to the variety of relationships and exchanges with the company, the emotions they have towards it or the collective beliefs that exist within the organization about the identity of a company and its relevance.

Indeed, how the different stakeholders perceive what is said and done by the company influence the configuration of reputation. That is why they have recently appeared many methods to measure this phenomenon, in which companies try to get good positions.

However, in practice the management of reputation depends on creating real value for organizations through their relationships, their legitimacy and positive results, as well as improving their own capabilities. And in this sense, there have been doubts surrounding the existing methodologies that will eventually contribute to achieving this goal.

Therefore, we have already much work to do around this important issue. We cannot forget that as an intangible asset, reputation can help to develop and manage the expectations, needs and interests of stakeholders, but it is also difficult to reconstruct, because it is based primarily on perceptions and expectations. Consequently, all the stakeholders of the organization must understand its objectives and reputation should act in support of them.


Comments
12 Responses to “Why reputation?”
  1. Marc says:

    I think that reputation has something to be with the DNA of the company. Many people lack the humanity need to hold a good reputation while other fail to have the tools to improve a well done job and a good HHRR policy.

    Some people may think that reputation is just for huge companies or for tiny start-ups but I think this is a bad approach as we live in a world were the information flow with astonishing speed and a bad reputation will sooner or later stain the companies which are bad at managing their stakeholders.

  2. Gerard Rangoné says:

    Good article Marta, congratulations!!! Again you achieved to make me think :). Unfortunately many managers talk about reputation and their relevance but they don’t believe it. Profits and happy investors are still their main objectives. And, to be honest, although I absolulety agree with your comments, maybe they’re right. what do u think?

    • Some of them might be focused on image not on reputation… don’t you think so? Again the short term hits the long term…

      • Francesc Rius Tous says:

        The interest of a client to understand and rate the opinion that his employees have of the company, has brought me to the concept of corporate reputation. Why reputation? It has helped me to clarify concepts, to visualize a range of possibilities and open a lot of questions.
        Can we say that reputation is a good indicator to assess the step of response of an organization to the needs and interests of its stakeholders? What criteria do companies continue to prioritize what stakeholders prefer to meet their needs and interests? Might one think that different prioritization’s criteria of companies may involve different levels of reputation?

      • Francesc, as reputation is the result of the perceptions of the internal & external stakeholders of a company it is essential to understand which are their interests and needs related to the organization and whether it is responding to them properly. As you suggest, stakeholders in each sector are different and this the reason why reputation should be measured for each specific company and sector. Only doing so the company will be able to define an action plan that integrates the interests of each group with the aim of promoting a good reputation and the benefits that this entails as boosting sales, attracting the best talent, putting higher prices, promoting customers loyalty, a higher selling price of the company, etc.

      • Gerard Rangoné says:

        Absolutely. Unfortunately from my point of view the majority of managers are too much focused on daily operations, not keeping time to think about mid and long-term. Many times this situation is not only due to lack of interest from managers, but lack of commitment and low cappabilities from their teams, so managers cannot delegate properly because dont’t trust enough their personnel.

      • This is a big issue for the company Gerard: at the end reputation is about building trust between the company and its stakeholders. To achieve it managers should make an effort to boost a good internal reputation. People participation, motivation, recognition, information, empowerment, … should be enhanced inside the company in order to build trust and commitment. From my point of view managers have time to think in the long term and in their employees, what it often lack are real leadership skills.

  3. Gerard Rangoné says:

    Sure, absolutely agree! Unfornutaley many managers also lack willing to develope it and provoque changes into their organizations.

    This blog is amazing! My new reputation knowlege source. Thanks Marta and team!

  4. 🙂 Dear Gerard, we’re really thankful for your comments and enthusiastic response to our initiative. We’d like to thank all of u for your posts, they really inspire and motivate us to keep on with our brand new business around an important issue as corporate reputation is.

  5. Francesc Tous says:

    The clarity of your comments have allowed me to understand better the world’s reputation and also, to thing in new questions.
    If the reputation of an organization is the balanced mix of the opinion of its various stakeholders. Could we say that every stakeholder’s group has an opinion of the organization? A specific reputation (partial reputation) view from the perspective of the organization? If so, it seems that certain specific reputations can help more than others to the needs (interests) of the Organization. That would mean that to work with an specific reputation, rather than others (or global reputation), could be much more efficient to the organization, and therefore that managers saw the specific reputation as an easier tool to incorporate in their decision-making processes.

    • Dear Francesc, as you highlight a company may have a different reputation for each of its dimensions, as well as stakeholders as a result of its behavior and communications. As you suggest, companies should analyze their reputation for each of its dimensions and for their key stakeholder in order to prioritize the dimensions and key stakeholders they are more interested. Moreover, this would provide companies a real vision of the state of their reputation that would allow them to design a specific program to improve it in the areas where it is necessary. From my point of view, to consider reputation globally can not be used for managing the daily business but to economically assess the firm or to make a campaign of image in the media.

  6. Carla Loudeiro says:

    Hello Marta.

    This is the first time I read your blog. I have found your post very interesting and I want to tell you that kind of explanations for a recently graduated in marketing are really important in order to clear some doubts.

    After reading your post I have realized myself that the term “reputation” could be replaced by the term “identity” (this term can be used from inside the organization or even from the stakeholders), and I noticed that the whole stakeholders are similar to a another couple of terms: global communication (in order to create global relationships).

    I agree very much with your explainations about the topic: perceptions and expectations (feelings and maybe economic matters) are the main things perceived by the stakeholders (customers or companies). And here there is a very interesting topic to talk about (for ages I think): how measure that intangible assets?. You said there are some methods to measure that…I don’t know about it, maybe you can say me where I can find more info about that tools?.

    Thanks a lot. And keep going with that posts!

    🙂

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