02 Jun The New Reputation of Corporate Reputation
By BravoEcho
In this moment, corporate reputation feels volatile, at the mercy of changing politics, culture, and supercharged social media. Gone are the days when reputation was the stable record of a company’s success and longevity. Edelman tells us business is considered more trusted than other institutions, and people want to express their values, show their political and social priorities, and feel part of a community through the company relationships they keep. However, economic and political turbulence, along with self-appointed, social media fueled watchdogs on the lookout for anything that appears woke or performative, mean businesses now face more scrutiny, and are more vulnerable to reputation risk than ever before.
Examples of poor reputation management abound – Boeing has struggled to overcome safety concerns deemed to be the result of years of mismanagement; Disney and Target have had reputation run-ins with activists on the left and right because of their DEI policies; and Wells Fargo’s trust issues remain years after being found guilty of creating fake bank and credit card accounts to meet sales quotas.
Others have proactively built their reputation – Patagonia’s sustainability actions have matched their words, culminating in ownership being put in a trust to ensure its ethos is held to in perpetuity; CVS took a reputational and financial risk pulling tobacco products from their stores that appears to have paid off; and Chewy’s unique acts of kindness towards pet owners, especially those grieving, have cemented their reputation for empathy and caring.
What’s clear is that corporate reputation can be managed well, poorly, or left to be what it will be, but whatever the approach, it’s more complicated and important than ever.
More than warm and fuzzies.
During the global financial collapse, Harvard Business Review published a definitive piece on corporate reputation. In it, they declared “intangible assets such as brand equity and goodwill account for 70-80% of a company’s market value. So, reputation is critical. Yet most companies don’t proactively manage reputation risks; they react only after their reputation suffers damage.” 1 And in a piece from 2023 they noted the growing influence of politics and culture wars, christening a new reputation dynamic, “Crisis L” – where an event causes a plunging reputational hit followed by a flatline of persistent negativity as support from one side craters and no amount of apologizing, backtracking, or amelioration can bring a recovery 2.
The Conference Board released research last year looking at reputation through the lens of trustworthiness and likeability. They found these metrics were driven almost equally by rational measures (integrity, product/service offering, leadership, and innovation) and attitudinal ones (relevance, authenticity, differentiation, and inspiration) 3. Ultimately, what drove reputation? Everything, somewhat.
Ipsos analysis notes the future value of a good reputation – a benefit of the doubt and the chance to be heard should a crisis occur. But they find a present value too – a marketing efficiency as people are more likely to notice, believe, and act on marketing from a company they trust due to its good reputation 4.
Managing corporate reputation for corporate good.
Corporate reputation is complex, fraught with risk, but ripe with opportunity. The more a company prioritizes working as a team to define, defend, and execute a realistic vision of its reputation, the less likely it will be held hostage to fortune and outside forces. We see six core components of a robust management plan.
1. Map your current reputation.
Lay the foundation for your reputation strategy with insights into its origins, areas of strength, weakness, risk, opportunity, levers, and barriers. Benchmark against key competitors. Consider all key stakeholder groups – customers, employees, investors, policy influencers, suppliers, NGOs, and the general population. Codify the key drivers and the attributes that influence them.
2. Create the aspiration and a plan.
Define your desired reputation, ensuring it’s rooted in your brand, corporate values and culture, and business strategy. Put together a plan to rebuild, evolve or protect your reputation including key messages and actions.
3. Build reputation into decision-making.
Embed reputation management thinking in the company by including a reputation impact assessment in the corporate decision-making process. This will ensure reputation conversations happen, that the tensions when actions are both reputation drivers and risks are acknowledged, and that anticipated stakeholder reactions can be planned for.
4. Plan for the short-term and long-term.
Managing corporate reputation requires both 3-6 month issues and stakeholder management, and 1-3 year foresight planning. Monitoring mechanisms, both formal and informal, should be put in place to provide insight into actual and potential risks and opportunities.
5. Form a cross-functional team.
The responsibility for corporate reputation cuts across so many areas it’s vital that leaders from across the company come together to champion positive reputation narratives and respond with SWAT team urgency in a crisis. Led by corporate communications, the team should include at minimum marketing, public affairs, HR, ESG, and supplier/customer relationship leads.
6. Enact an ongoing measurement plan.
Corporate sentiment and its key components should be tracked across key stakeholders. This should include core metrics such as favorability, advocacy, and trust along with the identified key drivers and their associated attributes. This data should then inform and influence decision-making.
20 years and five minutes.
Warren Buffet’s famous quote is sharper than ever, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” The gold standard criteria for corporate reputation have not changed – consistent actions, strong ethics, reliable product/service quality and performance, and empathy for customers, employees, and communities over time. What has changed are Buffet’s directives to “think about that” and “do things differently,” which now require C-Suite and communications leadership to take real and real-time responsibility for reputation through conscious deliberation, proactive management, and ongoing measurement.
1. Reputation And Its Risks, HBR, 2007↩
2. Corporate Crises – And Reputation Recovery – Have Changed, HBR, 2023↩
3. Purpose Shapes Corporate Reputation More Than Innovation Does, The Conference Board, 2024↩
4. Unlocking The Value Of Reputation, Ipsos, 2023↩