Wednesday, February 1, 2006

Corporate Reputation in The Digital Age

Good reputation equals good business
Cyber Age
ND Batra
From The Statesman

In the digital age, a company is nothing but its reputation and maintaining it is a big challenge.

Reputation is the foundation of trust and loyalty, which gives stakeholders confidence in dealing with the company. A company’s identity and image (along with its philanthropy) are the building blocks of its reputation.

Identity is a company’s assertion of its individuality and embodies the company’s vision, its reason for being there. It sums up its business case. The image of a company is the distinct memorable impression in the minds of the people as they interact with the company.

Together, identity and image raise the profile of a company, its reputation, its significance beyond commercialism and profit making. “A company’s identity,” says Paul Argenti of Dartmouth’s Tuck School in one of his books, “is the visual manifestation of the company’s reality as conveyed through the organization’s name, logo, motto, products, services, buildings, stationery, uniform, and all other tangible pieces of evidence created by the organization and communicated to a variety of constituencies.”

Stakeholders’ perception of the company, however, emerges from the totality of the impression, not so much from what is created by the company but in spite of it. While a company might do its utmost to build and control its identity, it cannot totally control the image, the impression and the perception, the public has about it.

A company’s identity and the image are never the same, but the closer they are, the better the reality. This is the basis of the company’s reputation. A company’s name, symbols, products, services, employees, buildings, its tangibles and intangibles, are not a cluster of facts but a dynamic system that creates specific value and meaning for stakeholders.

While it is desirable to achieve consistency in identity, McDonalds’ golden arches, for example, the perception of the company should no be expected to be the same in every country.

McDonalds’ is one of the fast food chains in the USA but in China it has the image of a classy American cuisine, desired by the young and the old, in spite of the fact that the identity of the company, its sounds and images, are quite consistent.The same identity provokes a different image in Karachi where several arsons have taken place without much public outrage.

A corporate identity must embody the company’s core values, the sum and substance of what is called its business case. Identity is the visualisation of its mission, and answers the unasked question: Who are we? What are we doing here?

Through logos, mottos, slogans and brands, a company enacts the drama of self-presentation and builds its image and perception in the mind of the public and various stakeholders. As mentioned earlier, while the identity of a company is a constant, image and perception are variables that ultimately determine the company’s reputation.

While a consistent and well-defined identity a company projects before the public helps it to build a perception of the company about what it stands for, the reputation is built over time and depends upon how the company conducts itself.

A strong reputation matters because it enhances a company’s attractiveness, muffles criticism and creates public support for a company’s activities.Customers don’t mind paying a little extra for a product when it comes from a company with a strong reputation for quality and fairness.

When a company faces conflicts, its good reputation enables corporate diplomats to conduct negotiations from a position of strength and self-confidence.

A company with a strong reputation attracts talented employees, who like to stay with the company for personal and professional growth. The likeability of the company by the employees and their day-today interaction with various stakeholders adds to the reputation of the company.

Employees become the corporeal identity of the company embodying its values and mission. But when a CEO is found with his pants down or his hand in the cookie jar, as it has happened with Enron, for example, the reputation comes crashing down. No amount of identity metamorphosis could bring the reputation back.

Apart from the integrity of corporate leadership that inspires respect and loyalty from employees and the general public, companies like Microsoft have enhanced their reputation by carrying out global philanthropic activities.

Corporate philanthropic giving at local, national and global levels should become part of a company’s business case. At the time of international catastrophes such as the Indian Ocean tsunami, Katrina hurricane in New Orleans, and earthquake in Pakistan, global companies get ample opportunities to showcase the humane side of their businesses by working with NGOs and other civic groups.

When a company is engaged in doing social good, let it be known to the public. After all, virtue is not hide in.

Some companies make use of institutional advertising to let the public know how involved they are in adding to the public good, just as Beyond Petroleum (BP), formerly British Petroleum, is doing with its corporate ads. It is informing the public about its commitment to the development of alternative sources of energy. BP looks green.

An imaginative and creative corporate advertising programme can enhance the reputation of a company and increase its likeability in the minds of various stakeholders. Likeability generates goodwill and creditability, which are precious assets for a company to attract and retain good, highly skilled employees.

Philanthropic activities of a company must be thoughtfully and tastefully publicised through corporate advertising to project the humane side of the company as Microsoft is doing through its global foundation to fight AIDS and tuberculosis.In contradistinction, what is Google doing? I want to know.

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