REPUTATION
MANAGEMENT
Presentation by John Dalton
What’s Changed
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Image is no longer a credible communication tool –
people and organisations talk about reputation
Today, to sustain a competitive advantage, even for a
short term, requires a brand to have developed a
reputation, which means that it delivers on its
promise – and not just its image
Reputation is about transparency and delivery,
through consistent, credible communications and
behaviour – central to which is a strategic corporate
communications function
Context
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The economic advantage of having a good reputation is
well established
Issue of causations and correlations between positive
reputation and financial performance still being debated as
issues are complex
Reputation relates to social capital and social authority
Reputation and its management witnessed a paradigm shift
since early 2000 and the development of social media
Context
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Witnessing an era of a reputation economy
Brands cannot hide and must deliver on brand promises
Reputation cannot be managed per se, just guided and
shaped
Reputation also linked to business resilience – the
ability of a brand to adapt and market pressures and
withstand volatility
What is Reputation?
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No universally accepted definition
“A collective representation of an organisation’s past
actions and results that describe the organisation’s ability to
deliver valued outcomes to multiple stakeholders”
(Fombrun 2001)
A form of assessment - how stakeholders perceive
organisational and employee behaviour
Growth in reputation agents: credit agencies; NGOs;
regulators; scorecards and indices – Dow Jones
Sustainability Index
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Confusion of Terminology
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Brand/product reputation
Organisational reputation or
corporate reputation
Industry reputation
The concept of reputational capital
What is Reputation?
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A collective representation based on stakeholders’
opinions
An aggregate evaluation that stakeholders make
about how well an organisation meets its customer
needs based on current and past actions
A holistic impression of a person or company
based over time; it can neutral, positive or negative
What is Reputation?
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For many, the reputation construct is based on:
Past action: – based on past performance, therefore
reputation has an important retrospective component
Current state: the perceived state of the organisationbased on direct and indirect experiences and
information received
Future prospects: financial and behavioural –
environmental or social
LSPR © 2012
What is Reputation?
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Reputation is most damaged when a crisis attacks an
organisation’s core competence – this leads to
considerable reputational damage
Problems do not even have a reality, just a perception
that something is wrong
Intangible risks are all too often overlooked and far too
much emphasis is still placed on risk analysis post crisis
event: need to develop pro-active risk and issue
analysis systems
Corporate Communications &
Identity Image & Reputation
IDENTITY
IDENTITY
IMAGE
REPUTATION
Identity
Various perspectives
Marketing :
Organisational :
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IMAGE
– impressions
– received
– visual design & personality
REPUTATION
Corporate Reputation- The Interplay of Identity &
Image
Vision & Mission
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Corporate
Identity
Positioning
Shaped by
Corporations
Corporate Image
Corporate
Reputation
Shaped by
Customers
Reputation: An Overview
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“Reputation is the sum 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
A company’s overall reputation is a function of its
reputation amongst its various stakeholders
Harvard Business Review –Feb 2007
What is Reputation?
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It is a intangible – economic asset
Linked to brand equity and management
Should not be considered interchangeably with image – some
differences
Perception is important in reputation and can often be
viewed as the reality
Tone for reputation is set at the top – CEO’s reputation very
important
Involves the management of visibility and credibility
What is Reputation?
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Reputation is emotional as well as rational
Depends of consistency of delivery and credibility
Built up over time through repeated interactions (can
be catalysed by celebrity or events)
Subjective and socially dependent
Relative- depends on the behaviour of the market and
others
Reputation is largely controlled by stakeholders’
viewpoints
Related Issues
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Reputation and the mismatch between capabilities and assets
Business models increasingly based on trust
24-hour news media
User-generated content (UGC)
Online communities
Innovation and disruptive technologies
Power micro-constituencies
Black Swan events and the global economy
Regulatory compliance
Sources of Reputational Risk
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Management decisions
Unacceptable employee behaviour
Breaches of environmental or social behaviour
Technology failures or data loss
Failures in health and safety
Failure of regulatory compliance
Failure in traceability –contamination
Accidents
Online/social media damage/rumours
IP infringements
NGO activisms
Faux pas by employees or senior management
Misconceptions about Reputation
Management
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RM is largely a function of corporate communications
RM is relatively simple
Reputation issues can be tackled and solved by technical and legal address
Just doing the right thing is enough
Reputational challenges are largely the result of external challenges
RM is a corporate function
Reputation is best understood in terms of analytics, numbers and financial performance
Growth and previous success are essential ongoing elements of building reputation
Reputation exists within the corporation
Basic Rules of Reputation
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Have credible brand experiences and
products/services
Having strategic intent: vision and mission
Having sound brand values
Admit errors and correct them
Have a social media strategy to develop reputation and
tackle online reputation management (ORM)
Basic Rules for Reputation
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Ensure that structures and operations are “fit for purpose”
Have a credible and congruent CSR strategy
Develop customer experience
Have a strong brand identity
Be adaptable and innovative
Understand risk and issues analysis – pre-crisis planning
Stakeholder engagement
Brand narrative
PR and Reputation Management
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PR – how brands, people and organisations manage their
media and customer perception; largely tactical and short
term
Corporate communications – how organisations manage
their internal and external communications; more strategic
than PR and engages with multiple stakeholders
Reputation management – how stakeholders’ collectively
view the organisation – i.e. reputation exists outside of the
organisation
Brand & Reputation
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What is the difference between
brand and reputation – are they the
same?
Brand = promise
Reputation =
delivery on the promise
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Reputational Management
Traditional PR
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Less strategic
Non-integrated
Focus - short-term
Key people involved
Aims to give the best
possible image
Media relations focused
Focus on transactional
stakeholders
1990s, 2010
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More strategic
Integrated
Holistic - long-term
Involves all employees
Aims to deliver an image and brand
promise
Uses all forms and opportunities to
communicate policy and values
Greater emphasis on multiple
stakeholder relationships
2017
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PR and Reputation
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PR
Desired image
BRAND
Vehicle of promise
Reputation
Delivery of promise
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Reputation and CSR
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Corporate social responsibility (CSR) or corporate
sustainability/citizenship has become a vital strategic tool for
managing reputation
Examples:
Pampers
Mont Blanc
Avon and breast cancer
Marks and Spencer –Plan A
Marine Stewardship Council
Social Media and Reputation Management
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Online reputation management (ORM)
Social media requires a strategic response
Platforms for social media
Blogs
Twitter
Facebook
Linkedin
Social bookmarking
Social news
YouTube
Wikis
Purpose of Online Reputation Management
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Online reputation management (ORM) is
largely reactive with emphasis on SEO
However, it should be equally be strategic and proactive, with a clear understanding of who are the
key influencers, the best platforms to engage and
what content to include
Places to Search for Negative Comments
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Blogs
SERPS
Review sites
Message boards
Online forums and discussion pages
Hate sites
Twitter
Social bookmarking sites
Structure/Process of ORM
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Conduct an audit on of online comments and opinions
Establish any key phrases or terminology being used, frequency and
origin
How are comments being framed?
Establish, what, if any, issues, need to be addressed and why?
Establish if there is any factual or perceptual misrepresentation
Monitor what is being said and actively engage
Publish and promote new sites to help displace any existing
negative comments
Monitoring Reputation
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Google Alerts: www.google.com/alerts
IceRocket:
www.icerocket.com
Technorati:
www.technorati.com
Twitter Search: www.twitter-search.com
TwitterMeme: www.tweetmeme.com
Alexa:
www.alexa.com
Financial
results and capital
Customer
benefits
Business
processes
Tangible
assets
Intangible
assets
Stakeholder
relations
Human/Structural
capital
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Culture
values
Adapted from: Intangible Assets: J.
Daum; Wiley, 1999
Reputation and Intellectual Capital
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“If we picture a company as a living organism, say a tree,
then half of the mass or more of that tree is underground
in the root system. And whereas the flavour of the fruit and
the colour of the leaves provides evidence of how healthy
that tree is right now, understanding what is going on in the
roots is a far more effective way to learn how healthy that
tree will be in years to come”
Leif Edvinsson and Michael S. Malone; Intellectual Capital
Intellectual Capital
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MARKET VALUE
Market Value
Financial
Capital
Intellectual
Capital
Human
Capital
Structural
Capital
Customer
Capital
Organisational
Capital
Intangibles
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NEW
ECONOMY
Brand capital
Sales “push” focus
Customer “pull” focus
Human capital
Production focus
Customer focus
Working capital
High
OLD ECONOMY
Low
(WIP, finished goods)
(direct delivery
to customers)
Physical capital
Intangibles
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Market Capitalisation
Brand
Reputation
IP
Customers
Employees
Innovation
Organisational
structure
Book value ___________ $
* The above would also be affected by other variables including
macroeconomic factors, shareholder sentiment and market speculation
Importance of Intangibles
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Most people recognise the importance of intangibles and
how brand and reputation are the two critical elements, but
people are still poor at fully comprehending how intangibles
can be made to work harder and, hence, generate more
wealth – the erosion of reputation as an intangible results in
significant and long-term damage for a corporation that is
difficult to reverse
Reputation is the outcome intangible upon which
stakeholders based their collective views on the performance,
values and behaviour of an organisation
Reputation Elements
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Reputation and capabilities
Reputation and business models
Reputation and innovation
Reputation and audits
Reputation and brand narratives
Financial Performance and Reputation
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Link with investor relations (IR)
Need to understand the value of a business
Its potential to deliver in the future –shareholder
value
Enterprise value and brand equity value
Fundamental or relative value
Fundamental Valuation Models
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Discounted cash flow (DCF) model
Cash flow return on investment (CFROI)
Dividend discounted model (DDM)
Real options valuation
The above are based on cash flow
Residual income model
Economic value added (EVA)
The above based on returns
Examples of Relative Valuations
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Earnings multiples P/E
Cash and EDITDA
Asset multiple - price/book value
Operating multiples – EV/customer
Value Drivers
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A value driver is some entity that helps generate value for the
corporation – it can be financial, operational, technological, or reputational
Barriers to entry
Brand strength
Relative market share
Satisfied customer index
Customer loyalty index
Industry growth
Appreciation rates for target groups
Reputation and Shareholder Return
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Reputation is more than just shareholder return
Shareholder value is an outcome, not a strategy
Linked to TSR is socially responsible
investment (SRI)
SRI and Reputation
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What is meant by socially responsible investment?
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How important is it?
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What is investment screening and the purpose of
ethical investment?
RM and Systems Perspective
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Reputation as a complex construct cannot be
understood or defined from one simple perspective
As complex open systems, modern organisations should
be best viewed with a systems perspective
A system is a product of the relationship between any of
its parts, giving primacy to the interrelationship between
elements and not the elements themselves in the system
Reputation Management
The Key Elements
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Identity and Image
Use and protection of assets and IP
Management quality
Strategic media relations - messages
Customer experience
Brand experience
Innovation + R & D
Communications
Structures and operational efficiency
Financial performance and stability
Investor relations
Stakeholder relations
Brand equity and credibility (relevance and strength)
Other Factors that
Influence Reputation
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Leadership – getting people to work in the same
direction to a common purpose
Values – workers and other critical stakeholders
should
understand
through
your
corporate
communications what are your values and beliefs as an
organisation
Culture: corporate culture is shaped by both the
above and is central to
Reputation and Image
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There is some confusion over the use of these two terms. They are
often used interchangeably, but there are some fundamental
differences:
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Image and reputation differ in time - reputation evolves over
time – image is very much the “here and now”
Reputation, as a concept, is more deeply rooted in moral language,
whereas more diffuse copywriting-like language is associated with
image
Image is orientated on how things might “appear”, whereas
reputation is more symbolic and fragmented
Reputation is based on the collective assessment by many
stakeholders on an organisations identity and image
What are the
Advantages of Reputation?
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Increased market share
Enables “premium” pricing
Better protection – “shield” – especially in a time of crisis
Employee loyalty
Better capital investment
Easy to enter new markets
Helps build brand equity over time
More attractive to investors and builds credibility
Facilitates brand extensions
Reduces impact of competitor actions
Provides stability and gives credibility
Increases brand loyalty
Critical Questions
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Who is in charge of managing your reputation?
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Do you have your own scorecards?
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Define what issues matter to you?
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Have you conducted a reputation audit?
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How credible are your corporate messages?
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How does your industry and market affect your reputation?
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How do you deal with audit and assurance?
Fortune- World’s Most
Admired 2010
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7.
8.
9.
10.
Apple
Google
Berkshire Hathaway
Johnson & Johnson
Amazon.com
Procter & Gamble
Toyota
Goldman Sachs
Wal-Mart Stores
Coca-Cola
Source: Fortune Magazine March 2010
Fortune- World’s Most Admired 2011
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7.
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10.
Apple
Google
Berkshire Hathaway
Southwest Airlines
Procter & Gamble
Coca-Cola
Amazon.com
FedEx
Microsoft
McDonalds
Fortune- World’s Most Admired 2012
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2.
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7.
8.
9.
10.
Apple
Google
Amazon.com
Coca-Cola
IBM
FedEx
Berkshire Hathaway
Starbucks
Procter & Gamble
Southwest Airlines
Tools for Managing Reputation
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Corporate advertising
Corporate presence in social networking sites
Developing a strong identity/image
Strong risk and issue analysis (environmental scanning)
Congruent and developed CSR programmes
Good governance and regulatory compliance
Innovative products and services – brand “energy”
Monitoring of evaluation of “noise” in the web
Strategic marketing and promotion (sponsorship)
Well developed stakeholder management and external communications
Talent management and employee engagement
Effective crisis management
Corporate Advertising
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Paid media that seeks to benefit the image of the corporation
as a whole
Issue or advocacy advertising
Publicise CSR or philanthropic activity
Correct a misconception or response to an activity
(crisis) – recovery strategy
Issue – plastics industry; BP; Shell; Total
Before an IPO
Crisis situations: Mattel
United Technologies Corporation (UTC)
Directing Communication Through
Common Starting Points
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Marketing
Communication
Organisational
Communication
Strategy
Management
Communication
Common
Starting
Points
Identity
Brand
Reputation and
Corporate Communications?
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Reputation can be managed and controlled partly through
corporate communications
Corporate communications is a management function that offers a
framework for effective co-ordination of all internal and external
communication with the overall purpose of establishing and
maintaining favourable reputation with stakeholder groups upon
which the organisation is dependent
Reputation Must Be Strategic
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Although it is increasingly difficult to manage
reputation, through the strategic corporate
communications function, it is possible to manage
three key elements;
• Good communications (getting across vital “themed
messages”
• Good deeds and behaviour (link CSR and
sustainability)
• Good stakeholder relations (work in collaborations
with organisations to solve mutual problems)
Best Practice in
Developing a Reputation Strategy
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Make it credible and serious - make it a senior management priority with
accountability
Integrate it across functions – make a “joined-up”, holistic system that aligns all
the values and behaviour irrespective of the organisation function under
consideration: adopt a common model
Be realistic, set sensible objectives with appropriate funding
Understand the complexity of the issues involved and stakeholders’ concerns
Appreciate stakeholder conflict
Actively engage with stakeholders and be prepared to be criticised
Demonstrate transparency and a readiness to talk to the media and advocacy
groups, especially NGOs
Principal Elements of
Corporate Communications
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Management Communications
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Organisation Communications
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Marketing and Reputation Management
Marketing & Reputation Management
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Media Relations
Corporate Advertising
Product Advertising
PR & Reputation Management
Community Relations
Special Events
Sponsorship
Product & Brand Management
Online Management and e-Engagement
Overlap Between Marketing &
Organisational Communication
Marketing
Communication
Advertising
Sales
Promotion
Personal Selling
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Organizational & Management
Communication
Public Relations and
Marketing
Issues Management
Public
Public
Relations
Internal
Affairs
Communication
Experience
Marketing
Investor
Relations
VISION
REPUTATION
1. STRATEGIC INTENT
2. DEFINE COMMUNICATION
OBJECTIVES
3. IDENTIFY & PRIORITIZE
TARGET AUDIENCES
4. IDENTIFY THEMED
MESSAGE(S)
5. DEVELOP MESSAGE STYLES
6. DEVELOP MEDIA STRATEGY
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7. PREPARE THE BUDGET
Corporate
Communication
in Practice
LEGO
Philips
Shell
Alcatel-Lucent
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Brands and Reputation
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Phase I
Corporate
Identity
Phase II
Corporate
Image
Phase III
Reputation
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How to Develop a Reputation
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Quality of products and services
Passion for brand
Customer relationship marketing
Strong corporate governance and compliance
Integrated risk and issue management
Crisis planning
Corporate responsibility (CR)
Strong brand values, experience and communications
Organisational culture and structure
Contract fulfilment
Business presentation and conferences
Customer facing staff
How to Develop a Reputation
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Innovation
Vision and leadership by CEO
Investor relations and public affairs
Intelligence gathering
Developing media profile
Adaptive and ability to reinvent
Community relations
CEO’s reputation
Core competencies
Establishing networks and alliances
Understand the market
Develop brand experience: “moments of truth”
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How to Develop a Reputation
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Clear strategies and resources
Learning from other’s mistakes
Listening to customers’ opinions
Audit and assurance
Measuring and evalutation
IP protection
Stakeholder analysis, mapping and engagement
Deliver on customer promise
Think global, act local
How to Conduct a Communication Audit
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Based on GCI group – Corporate Brand study
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Internal – management survey - employee survey
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External – Stakeholders survey
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Assessment
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Gap analysis
Structural equation modelling
Sensitivity analysis
Competitor analysis
Strategic communication planning
Communication programme implementation
Evaluation, measuring and monitoring
Steps in Recovering a Reputation
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Take the heat – analyse and show distinct leadership
Do not stop communicating at any stage – disclose
things swiftly and honestly
Analyze in depth what when wrong and why
Initiate change strategies to restore errors and
communicate any major changes to key stakeholders
Measure what others are saying about you – Nielsen
BuzzMetrics
Ask Critical Questions
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What business are we in and what are our primary objectives?
Who are our most important stakeholders?
Which competitors do which wish to measure ourselves against?
What do stakeholders believe about us now?
What, and how big, is the gap between how we want to be
perceived and how we are perceived?
Which of messages have the most credibility?
What benchmarks are we going to measure reputation and its
improvement?
Measuring Reputation
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•Y & R’s Brand Asset Valuator
• WPP’s Brand Z
• Harris Interactive – EquiTrend
• Fortune’s Most Admired
• Harris-Fombrun –Reputation Quotient (RQ)
• The Reputation’s Institute -RepTrak
Measuring Reputation
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Various ways to measure reputation
• Measures based on commercial, applied research
programmes and indices
• General measures – based on corporate
performance
Measures based on research programmes
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Harris Poll Reputation Quotient (RQ):
www.harrisinteractive.com
Reputation’s Institute Rep Track: www. reputationinstitute.com
WPP’s Brand Z: www.wpp.com
Fortune’s Most Admired: www.money.cnn.com
Y&R’s Brand Asset Valuator: www.bavconsulting.com
Harris Poll EquiTrend: www.harrisinteractive.com
Brand Power: www.corebrand.com
FTSE4 Good index: www.ftse.com
Interbrand: www.interbrand.com
Dow Jones Sustainability Index: www.sustainability-index.com
Alternative Ways of Measuring Reputation
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Financial
P/E ratio
Total Shareholder Return (TSR)
Economic Value Added (EVA)
Return on Equity (ROE)
DuPont Model
EBITDA
Alternative Ways of Measuring Reputation
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Customer and employee surveys
Shareholder resolutions
Customer complaints
Risk reports
Staff turnover
Safety reports
Cases of litigation
Cases of regulatory issues
Carbon footprint
Social and environmental audits
The Reputation Institute’s RepTrak® Scorecard
Profitable
High-performing
Strong growth
prospects
Well organized
Appealing Leader
Excellent
management
Clear vision of
its future
Environmentally
responsible
Supports good causes
Positive influence on
society
75
High quality
Value for money
Stands behind
Meets customer needs
ESTEEM
RepTrak™
TRUST
Open & transparent
Behaves ethically
Fair in the way it does
business
PERFORMANCE
Innovative
First to market
Adapts quickly to
change
Rewards
employees fairly
Employee wellbeing
Offers equal
opportunities
Widescreen Test Pattern (16:9)
Aspect Ratio
Test
(Should appear
circular)
4x3
16x9