9 minute read
What is Corporate Reputation?
Updated on August 10, 2021 by Reputation X
- According to Andrew Lester of FreshBusinessThinking.com, “A company’s corporate reputation is the sum of all the views and beliefs held about the company based on its history and its future prospects, in comparison to close competitors.”
- Corporate reputation is arguably a company’s most valuable intangible asset.
- Underestimating the importance of corporate reputation can be fatal.
- A positive corporate reputation is very difficult for competitors to replicate or overcome and can have a huge impact on a company’s bottom line.
- One of the keys to building and maintaining a good corporate reputation is keeping your stakeholders in mind first and foremost.
- Corporate reputation can be molded by things like search engine results, the content on your site, reviews, news coverage, and public actions by your company and its leaders.
What is corporate reputation?
Most successful leaders of corporations don’t gain their level of success by listening to everything that everyone tells them or says about them. Sometimes it’s going the opposite direction or taking a risk that turns out to be the best move when trying to break through. But once you’re at the top of the heap and overseeing a business, it becomes increasingly important to have your ear to the ground and be aware of your corporate reputation – your stakeholders’ perception of your company
Before you can fix a broken reputation or leverage a good one, it's important to fully understand what a corporate reputation is and how it is formed. The chart below breaks down the different influences on a company’s reputation.
In an article written by Andrew Lester for FreshBussinessThinking.com, Lester writes, “A company’s corporate reputation is the sum of all the views and beliefs held about the company based on its history and its future prospects, in comparison to close competitors.”
So whose views and beliefs matter most when it comes to corporate reputation? Stakeholders…
These are just a few examples of corporate stakeholders. While each of them will view your company in different ways because they each have different interests, collectively their sentiments define your corporate reputation.
What else drives corporate reputation?
- Company values
- Quality of products or services offered
- Employee sentiment and workplace environment
- Business methods
- Customer service
- Market value
When defining corporate reputation, it is important to keep in mind that it is an intangible asset. In the corporate world, an asset is anything of value to a company.
Tangible assets can be broken down into two categories: current assets and fixed assets. Tangible assets such as cash, real estate, land, equipment, and inventory are more commonly discussed and easier to track, as you can typically assign a dollar amount to them.
Much like these quantifiable assets, a corporate reputation has significant value to a company. Unlike tangible assets, however, the value of corporate reputation is not correlated with something physical and can be more difficult to precisely determine.
Here’s a simple graphic that shows the difference between tangible assets and intangible assets:
Goodwill, brand recognition, brand search results, reviews and ratings, and business methodologies are examples of intangible assets that directly contribute to a corporation’s reputation, and your reputation is a powerful asset that can be greater than the sum of its parts.
But because corporate reputation is an intangible asset, it can be easily overlooked and neglected by business owners. Some owners might not even see the signs that they need reputation protection or repair, causing losses to their reputation and revenues that could have been avoided.
Underestimating the importance of your company’s reputation can prove to be a fatal error. Developing a corporate reputation strategy is critical.
Why is corporate reputation important?
Although corporate reputation can be difficult to quantify, it is something that needs to be monitored because a good reputation can have such a tremendous upside for business.
A positive corporate reputation is very difficult for competitors to match or overcome.
“Good corporate reputations are critical not only because of their potential for value creation, but also because their intangible character makes replication by competing firms considerably more difficult,” write the authors of an academic paper in the International Journal of Business and Social Science.
Perhaps this is why most companies in a poll conducted by McKinsey & Company stated that improving or maintaining their corporate reputation was their top priority when addressing sustainability issues.
Image courtesy of McKinsey & Company
Corporate reputation is also important because it is directly linked to the sales funnel – and thus the bottom line.
An organization’s sales can rise and fall with the ebb and flow of its corporate reputation. This is where using marketing to shape a brand’s reputation comes into play.
When someone performs a Google search for the products or services your company provides, are you showing up high enough in the search results? What do online reviews of your product/business look like? What do the images and content about your company that appear in search results say about your brand?
These are all important questions to ask when defining your corporate reputation.
How do you build corporate reputation?
Understanding and acknowledging the fickle nature of corporate reputation is the first step toward building or managing it. Bolstering and maintaining corporate reputation is an ongoing process for CEOs and other leaders of organizations, but it all starts with keeping stakeholders in mind first and foremost.
Being able to communicate better with stakeholders and ensure that their needs and concerns are addressed is the backbone of corporate reputation management. That communication with stakeholders is supplemented with how your brand is perceived by stakeholders. This perception is affected by several factors.
Search Engine Results
Different stakeholders are going to search for different things, but it’s important to put yourself in their shoes and think like an investor, customer, or employee.
Most of the time when stakeholders perform Google searches, they use what are called “longtail keywords.” These are search phrases that have three or more words. Search engine optimization (SEO) research shows that these longtail keyword searches have higher conversion rates than shorter search terms.
So when strategizing SEO for your company, ranking for longtail keywords is crucial when establishing your organization’s credibility on the web. After all, if it’s not on the first results page for Google, it might as well not exist.
Image courtesy of SEMrush
When stakeholders do successfully find your brand through search engines, what content will they be seeing?
Has your organization been receiving negative press or positive press? It’s sad but true: even corporations with the best reputations sometimes have to dig for positive press, whereas negative press is always abundantly front and center. Also, keep in mind that reviews are an increasingly important type of positive or negative press.
That makes it that much more important to monitor and manage the type of news coverage your company receives. Negative press can snowball and has to be proactively dealt with. Positive press has to be leveraged and capitalized on while relevant.
If your organization has partaken in some sort of goodwill or charity, or one of its products/services has been recognized or awarded, make sure there is an abundance of content about it (i.e. blogs, social posts, press releases, etc.). Get brand evangelists talking about it and give them the tools to promote it. Leading an organization and building a positive corporate reputation is about constantly finding ways to make the positive press outweigh the bad as greatly as possible.
Actions speak louder than words. Your company’s marketing can be as positive as possible, but if the actions of your organization don’t fall into line and fulfill the promises of the marketing and branding, it can create distrust between stakeholders and your corporation.
Distrust and good reputations don’t mix.
How does your company handle a crisis? Do employees speak highly of your organization on and off the record? What does the CEO’s personal life look like in the public eye?
All of that and more can sway public perception and affect corporate reputation. It’s important to keep in mind that those with the best reputations didn’t get there by blowing smoke; they made decisions with stakeholders’ interests in mind and showed that they can be trusted as an organization through continuous positive action.
Just because you can’t touch it, see it, or count it doesn’t mean corporate reputation isn’t one of the most important assets to any organization. It is arguably a company’s most valuable intangible asset, and it is subject to risks.
As a collective view of stakeholder interest and sentiment, corporate reputation is a pillar of success for any business and is a trait that can separate a company from its competitors.
It is paramount that company leaders identify and monitor their corporate reputation regularly. If corporate reputation building, management, or repair is needed, professionals who specialize in reputation management can help.
What is corporate reputation?
Corporate reputation is the sum of all the views and beliefs held about the company based on its history and its future prospects, in comparison to close competitors. The views and beliefs that matter most are that of the company’s stakeholders such as employees, customers, and investors.
Why is corporate reputation important?
A positive corporate reputation is very difficult for competitors to match or overcome. Corporate reputation is also important because it is directly linked to the sales funnel. An organization’s sales can rise and fall with the ebb and flow of its corporate reputation. This is where using marketing to shape a brand’s reputation comes into play.
How do you build corporate reputation?
Understanding and acknowledging its fickle nature is the first step toward building or managing your corporate reputation. Bolstering and maintaining corporate reputation is an ongoing process for CEOs and other company leaders, but it all starts with keeping one word in mind: Stakeholders. Being able to communicate better with stakeholders and ensuring you address their needs and concerns is the backbone of corporate reputation management. That is supplemented with how your brand is perceived by stakeholders, which is affected by several factors such as SEO, news coverage, reviews, and public actions.