We know what a brand is, and why we need to build one. But reputation? We're not there yet.

Even those unfamiliar with the complexities of branding know that a brand is a form of identity that helps customers to distinguish one company from another.

Today brands are used to build relationships with customers that lead to trust, loyalty, and of course a decision to buy that company's products or services above those of competitors.

As the concept of branding has evolved, businesses have embraced the idea that a brand can (and should) be actively built and managed. It's understood that being deliberate about building a brand will enhance people's perceptions of the company.

Before we can embrace the advantages of being proactive about company reputation, we need to
understand what it is. Without this understanding, the obvious question is: “why invest in building reputation when it builds itself through a company's actions?"

Sure, we all know something about personal reputation.

When we think of Elon Musk or Richard Branson we think about eccentricity and entrepreneurial spirit. Tim Cook has a reputation for driving product innovation. Jacinda Ardern and Kamala Harris are known as political trailblazers, and Alan Joyce has a divided reputation - with shareholders and senior management on the one hand and customers and employees on the other.

But what about company reputation?  

Company reputation is the sum of perceptions about a company formed over time by its stakeholders. Their perceptions are based on how well a company's actions and performance meet their expectations across different dimensions. 

There are a couple of important distinctions here, so let's unpack them.  

Firstly, unlike brand, reputation is based largely on what the company has done (or perceived to have done), rather than what it has said.

In other words, brand makes a promise to stakeholders and sets their expectations. Reputation depends on the company keeping that promise and meeting, or exceeding, those expectations. 

Secondly, reputation spans multiple stakeholder groups - including customers, employees, company leaders, investors, the media, government, regulatory bodies, and the community.

Each stakeholder group has its own set of perceptions about the company, which influence how, or whether, they choose to engage.

Stakeholder perceptions are shaped by various sources of input. They include: direct or indirect experience; depth of knowledge and interest in the company and its offer; the length of association; the strength of connection; social and cultural context; and personal priorities.

For example, potential employees form perceptions and make an assessment about a company based on whether they believe it is a good place to work.

They consider factors like their interest in the company and industry; their association (eg. do they know someone who works there); their impressions of the culture, work environment, company purpose, and leadership; practical and logistical factors, and whether it meets their personal priorities (for meaningful work, good remuneration, flexibility, career development, long-term stability, etc.)

Assessments are being made, and perceptions are being formed, all day every day by stakeholders. It's the job of the reputation manager to ensure these perceptions reflect and signal the value the company delivers now, and will deliver in the future.

Above all, a company’s reputation must be authentic. It's not possible to make people believe something about the company if it doesn't match what they observe and experience in the real world. This will create a reputation / reality gap which harms reputation. That’s why all proactive reputation building work starts within an organisation, well before any external communication takes place.  

Building a company's reputation makes business sense 

According to Brunswick Research, "If reputation is an organization’s most precious asset, and the tangible business outcomes impacted by it are increasingly understood, are many organizations missing out on the power and benefits of proactive reputation building? How would shifting an organization’s emphasis from reputation risk management to opportunity building unleash added value and what would it take to usher in this new way of thinking?" 

A new way of thinking about reputation will require a deeper understanding of why it is important to approach it proactively and how to do so - beyond regular communication or stakeholder engagement activities. 

Corporate reputation has been studied since the late 1990s. But only in the last couple of years have studies revealed the link between high-revenue, high-reputation companies and those that consistently measure, leverage, and strategically communicate around specific reputation drivers.

In terms of its widespread acceptance, the idea of building company reputation proactively is at least 20 years behind the concept of building and managing brand proactively.  

However, a proactive approach is increasingly being adopted by forward-thinking companies globally. It is our mission at Reputation Sherpa to guide more Australian businesses to follow this proven path to success.

Please enter your email below if you would like to be notified when future blog posts are published, or if you would like to receive our newsletter.