Corporate Reputation Management

UNIT – 12: CORPORATE REPUTATION MANAGEMENT

Contents

12.0     Objectives

12.1     Introduction

12.2     What is Reputation?

12.3     What is Corporate Reputation?

12.3.1  Stakeholders’ Reputation

12.4     Corporate Reputation Management

12.4.1  Corporation

            12.4.2  Management

            12.4.3  Corporate Identity

            12.4.4  Corporate Image

            12.4.5  Corporate Identity Vs Corporate Image

12.5     Brand reputation imperatives

            12.5.1  Brand Identity

12.5.2  Brand Image

12.6     Promotion of Corporate Values

            12.6.1  Ways to promote core values

12.7     Public Relations in Corporate Reputation

            12.7.1  Public Relations

            12.7.2  Corporate Reputation

12.8     Summary

12.9     Answers to Self-Assessment Questions

12.10   Model Examination Questions

12.11   Glossary

12.12   References

12.0   OBJECTIVES   

After studying this unit, you will be able to

• Define ‘corporate reputation’
• Describe brand identity & brand reputation
• Differentiate between corporate identity and corporate image
• Explain what is corporate reputation management and corporate values
• Identify the role of public relations in building corporate reputation

12.1   INTRODUCTION

            Reputation is defined as “the collective representation of an organization’s past performance that describes the firm’s ability to deliver valued outcomes to multiple stakeholders.

In fact, sale of products or services must start before the sales man calls on the potential customer.  That is possible only when there is reputation for the organization in the market.  A good corporate reputation enhances the value of everything, an organization does and says.  A bad reputation devalues products and services, and it acts as a magnet for further deterioration.

12.2   WHAT IS REPUTATION?

            What is reputation?  The dictionary meaning of reputation is “the overall quality or character as seen or judged by people in general (good name), the beliefs or opinions that are generally held about someone or something”.  Reputation is the sum total of corporation’s daily actions and it will determine whether recruits will join, consumers will buy and journalists and legislators will give the benefit of doubt. 

            Expressed in plain terms, reputation is the tract record of an organization in the public’s mind. Reputation unlike corporate image is owned by the public.  It is not formed by slogans.  A good reputation is created and destroyed by everything an organization does, from the way it treats employees, to the way it handles conflicts with outside constituents.

12.3   WHAT IS CORPORATE REPUTATION?

            Corporate Reputation means ‘a good name that a company earned and retained in the minds of the public and it is always associated with the products it sold or services rendered and manifested in the social responsibility it discharged’. A poor reputation will affect the company adversely, while good reputation will pay in both operational and financial ways.  A survey reveals that the better the corporate reputation, the higher the stock price.  There is a strong correlation between higher corporate reputation and higher price earnings. 

Here are some of the advantages of higher corporate reputation:

·        It adds extra psychological value to the products and services (trust)

·        It helps customers choose between products and services that they perceive as functionally similar.

·        It increases employee job satisfaction.

·        It enhances advertising and sales-force effectiveness.

·        It supports new product introduction.

·        It acts as a powerful signal to the competitors.

·        It helps raise capital in the equity market

Some of the effects of poor reputation are:

·        The share market analysts do not like the company and undervalue its share price.

·        Journalists pay particular attention to companies with poor reputation and even when these companies do something good, the journalists may remind their audience that this company has a bad history.

·        Customers seem more concerned and price sensitive about products and services from less well-respected companies.

·        Poor reputations tend to feed poor employees’ morale

Thus there is need and scope for earning and maintaining higher corporate reputation.

Self-assessment questions – I

1.      What is reputation?

2.      What is meant by corporate reputation?

3.      Who are the stakeholders? Why are they important for a corporation?

12.3.1              Stakeholders’ Reputaion

            In the modern corporate world, stakeholders are the term used for public. The idea or concept of stakeholders has come from the term stockholders which means people who have bought shares from publicly held company and, thus developed vested interest in that company.  In a way stockholders are the owners of the company with specific interest in the shares and profits of the company.  Similarly, there are many others with similar vested interest in an organization, such as employees, customers who may or may not actually own the company’s stock, but they have interest in the company as customers, suppliers or opinion leaders and are collectively called stakeholders.  Thus stakeholders cover a broader spectrum of public.  Sometimes, public also stand for the audience in public relations who receive messages through media.

            A company has different types of stakeholders and the perception of the company differs from one group to another.  This diversity presents a daunting task only if you try to manage all these separate perceptions.  What is needed is a way of clustering people into groups which are likely to hold similar evaluations of the organization.  Here the talk is to split these stakeholders into a manageable number of groups.  These groups are linked to an organization in different ways.  The stakeholders include shareholders, employees, customers, government and regulatory agencies, financial analysts, media, dealers and suppliers. 

The better the reputation among these public, the better is the success of the company. To create corporate reputation, it is necessary that programs are designed to suit the different audiences/stakeholders.  Such programs must be developed based on the corporate strategy of the organization.  It is at the time of crisis that a good reputation acts as a ‘shield'

12.4   CORPORATE REPUTATION MANAGEMENT

Edelman Public Relations (a public relations agency) defines the management of corporate reputation as “the orchestration of discrete public relations initiatives designed to promote or protect the most important brand you own – your corporate reputation”.  This reputation will be good or bad, strong or weak depending on the quality of strategic planning.

 

12.4.1  Corporation

            What is a corporation? The dictionary meaning of corporation is “a large company or groups of companies authorized to act as a single entity and recognized as such in law”.  It is also a group of people elected to govern a city or town.  For example, the Oil & Natural Gas Corporation and the Greater Hyderabad Municipal Corporation etc., otherwise all corporations, such as industrial, commercial, financial, public service, transportation, and telecommunication use public relations techniques in creating mutual understanding and goodwill of their corporate publics.

12.4.2  Management

            Management is the process of getting things done with and through others; It has also been defined as a process of decision making, designing, strategic plans, controlling and coordinating activities to achieve organizational goals. Every organization is run by the principles of management. Management by nature of its functions in any institution/organization/corporation takes different dimensions to accomplish the mission or to reach the set goals. 

Reputation management is one among various types of management viz HR management, Financial management, materials management, production management, marketing management, business management, office management, industrial relations management, media relations management, crisis management and public relations management and so on. An organization seeks to manage its relationships with its stakeholders as well as the environment through identifying the problems, responding to them and making necessary adaptations in the process of earning the right image, the desired identity & a good reputation.

12.4.3  Corporate Identity

            The dictionary meaning of identity is “the distinguishing characteristic or personality of an individual”.  The fact of being who or what a person or thing is.  Such a meaning is applied to both individuals and corporations as a corporate citizen.  Corporate identity may be described “as the distinctive insignia or logo of a corporation, easily recognized and remembered by the public”.  It encompasses an organization’s core values, standards and its goals.  Corporate identity has a historical background.  In the early period, kings would lead their armies and identify themselves by means of an emblem or a flag.  They later became the corporate identities of modern organization. Corporate identity is explicit in many visible forms of an organization.  It is conveyed through corporate products, services, stationery, uniforms, exhibition stands, corporate publications, house journals, annual reports, transport vehicles, advertisements, diaries and calendars so that the public could understand and form an impression of the organization.

12.4.4  Corporate Image

            The Reader’s Digest, Great English Dictionary defines image as “representation of the external form of a person or thing in art”.  It is derived from the Latin word ‘imago’ which means to imitate.  The image is the impression, the feeling, the conception which the public has of a person or a corporation.  It is also regarded as a picture in the mind and has become a favorable term of public relations practitioners in implementing PR activities.  Some experts say PR is an image building exercise.  Maruti cars, Tata products, Microsoft software have their own image in the market.

            What is corporate image?  It is defined as “the impression of an organization in the minds of the people”.  Such an impression of the public is based on their knowledge about the organization and their experience with its products and services.  An individual knows all about his/her business and organization, but an outsider knows very little about that particular organization and its business.  Unless the individual takes the initiative to tell the outsider about his/her business, the latter does not take initiative to know about the company.  It is in this context that public relations as an information and communication function, enters the field.  It is the primary task of PR not only to tell about the organization and its products and services but also create a favorable image in the minds of various organizations’ public based on its performance.  It is because a corporation’s identity and image reflects in its dealings with the employees on the one hand and customers on the other hand.

            In fact, corporate image is the total public impression of an organization as expressed by the internal and the external public.  Of course, such an image depends on the organization’s mission, vision, policies, qualitative products and services, better financial performance and in particular, its courteous behavior with both the employees and the community. The better the service, the greater will be the image.  A good image of an organization indicates its effective functioning and better performance.

12.4.5  Corporate Identity Vs Corporate Image

            The terms ‘corporate identity’ and ‘corporate image’ are sometimes confused with each other and considered one and the same.  The corporate identity of ITC Limited is printed on the cover page of a publication Transforming Lives and Landscapes and the ITC Rural Development Philosophy of Work.  Here, the organization is communicating its identity as part of rural development service.  People look to ITC with its corporate identity whereas the corporate image is how ITC’s targets rural public actually view it after experiencing its rural development schemes, such as social and farm forestry, integrated watershed development, economic empowerment of women, web empowerment of farmer through e-choupal to transform them into powerful agents of social change.  Today, ITC has a better image in the market.  As such corporate identity is an identifiable visual symbol of the organization whereas corporate image is the perception of the person that exists in one’s mind.  Both must run hand in hand and complement each other.

Self-assessment questions - II

1.      How do you explain corporate reputation management?

2.      What is meant by corporate identity?

3.      Define corporate image and explain the role of public relations in promoting image of a corporation?

12.5   BRAND REPUTATION IMPERATIVES

           

What is a brand? Brand is the "name, term, design, symbol, or any other feature that identifies one seller's product distinct from those of other sellers" Initially, branding was adopted to differentiate one person's cattle from another's by means of a distinctive symbol burned into the animal's skin with a hot iron stamp, and was subsequently used in business, marketing and advertising. A modern example of a brand is Coca Cola which belongs to the Coca-Cola Company.

A brand is often the most valuable asset of a corporation. Brand owners manage their brands carefully to create shareholders’ value, and brand valuation is an important management technique that ascribes a money value to a brand, and allows marketing investment to be managed to maximize shareholder value. The word "brand" is often used as a metonym, referring to the company that is strongly identified with a brand.

Marquee or make are often used to denote a brand of motor vehicle, which may be distinguished from a car model. A concept brand is a brand that is associated with an abstract concept, like breast cancer awareness or environmentalism, rather than a specific product, service, or business. A commodity brand is a brand associated with a commodity.  Amul milk? is an example of a commodity brand. The imperatives for gaining brand reputation are brand identity and brand image.

12.5.1  Brand Identity

Brand identity stems from an organization i.e., an organization is responsible for creating a distinguished product with unique characteristics. It is how an organization seeks to identify itself. It represents how an organization wants to be perceived in the market. An organization communicates its identity to the consumers through its branding and marketing strategies. A brand is unique due to its identity. Brand identity includes following elements - Brand vision, brand culture, positioning, personality, relationships, and presentations.

Brand identity is a bundle of mental and functional associations with the brand. Associations are not “reasons-to-buy” but provide familiarity and differentiation that’s not replicable getting it. These associations can include signature tune (for example - Britannia “ting-ting-ta-ding”), trademark colours (for example - Blue colour with Pepsi), logo (for example - Nike), tagline (for example - Apple’s tagline is “Think different”) etc.

 Brand identity is the total proposal/promise that an organization makes to consumers. The brand can be perceived as a product, a personality, a set of values, and a position it occupies in consumer’s minds. Brand identity is all that an organization wants the brand to be considered as. It is a feature linked with a specific company, product, service or individual. It is a way of externally expressing a brand to the world. Brand identity is the noticeable elements of a brand (for instance - Trademark colour, logo, name, and symbol) that identify and differentiates a brand in target audience mind. It is a crucial means to grow your company’s brand.

Brand identity is the aggregation of what all you (i.e. an organization) do. It is an organization’s mission, personality, promise to the consumers and competitive advantages. It includes the thinking, feelings and expectations of the target market/consumers. It is a means of identifying and distinguishing an organization from another. An organization having unique brand identity have improved brand awareness, motivated team of employees who feel proud working in a well branded organization, active buyers, and corporate style. Brand identity leads to brand loyalty, brand preference, high credibility, good prices and good financial returns. It helps the organization to express to the customers and the target market the kind of organization it is. It assures the customers again that you are who you say who you are. It establishes an immediate connection between the organization and consumers. Brand identity should be sustainable. It is crucial so that the consumers instantly correlate with your product/service.

Brand identity should be futuristic, i.e., it should reveal the associations aspired for the brand. It should reflect the durable qualities of a brand. Brand identity is a basic means of consumer recognition and represents the brand’s distinction from its competitors.

12.5.2  Brand Image

            Brand image is the current view of customers about a brand.  It can be defined as a unique bundle of associations within the minds of target customers. It signifies what the brand presently stands for. It is a set of beliefs held about a specific brand. In short, it is nothing but the consumers’ perception about the product. It is the manner in which a specific brand is positioned in the market. Brand image conveys emotional value and not just a mental image. Brand image is nothing but an organization’s character. It is an accumulation of contacts and observations by people external to an organization. It should highlight an organization’s mission and vision to all. The main elements of positive brand image are - unique logo reflecting organization’s image, slogan describing organization’s business in brief and brand identifier supporting the key values.

Brand image is the overall impression in consumers’ mind that is formed from all sources. Consumers develop various associations with the brand. Based on these associations, and experiences they form brand image. An image is formed about the brand on the basis of subjective perceptions of associations’ bundle that the consumers have about the brand. Volvo is associated with safety. Toyota is associated with reliability. The idea behind brand image is that the consumer is not purchasing just the product/service but also the image associated with that product/service. Brand images should be positive, unique and instant. Brand images can be strengthened using brand communications like advertising, packaging, word of mouth publicity, other promotional tools, etc.

Product’s Character

Brand image develops and conveys the product’s character in a unique manner different from its competitor’s image. The brand image consists of various associations in consumers’ mind - attributes, benefits and attributes. Brand attributes are the functional and mental connections with the brand that the customers have. They can be specific or conceptual. Benefits are the rationale for the purchase decision. There are three types of benefits: Functional benefits - what do you do better (than others), emotional benefits - how do you make me feel better (than others), and rational benefits/support - why do I believe you (more than others). Brand attributes are consumers overall assessment of a brand.

Brand image has not to be created, but is automatically formed. The brand image includes products' appeal, ease of use, functionality, fame, and overall value. Brand image is actually brand content. When the consumers purchase the product, they are also purchasing its image. Brand image is the objective and mental feedback of the consumers when they purchase a product. Positive brand image is exceeding the customers’ expectations. Positive brand image enhances the goodwill and brand value of an organization. To sum up, “Brand image” is the customer’s net extract from the brand.

Self-assessment question – III

1.      How do you distinguish brand identity from brand image?

12.6   PROMOTION OF CORPORATE VALUES

Corporate values are the operating philosophies or principles that guide an organization’s internal conduct as well as its relationship with its customers, partners, and shareholders. Variously called, the core values, these are usually summarized in the mission statement or in the company’s statement of core values. These are the guiding principles that help to define how the corporation would behave. Some examples of core values for a company might include:

·      A commitment to sustainability and to acting in an environmentally friendly way. Companies like ITC have environmental sustainability as a core value. 

·      A commitment to innovation and excellence. Apple Computer is perhaps best known for having a commitment to innovation as a core value. This is embodied by their "Think Different" motto. 

·      A commitment to doing good for the whole. Google, for example, believes in making a great search engine and building a great company without being evil. 

12.6.1  Ways to promote core values

Core values impact the image and operations of a business. Simply defined, core values comprise a set of ethical and professional issues held dear by a company. Core values commonly include concerns such as tolerance, diversity, fairness, environmental awareness, sound business practices and employee equality. Claiming such values and maintaining a workplace in which these values actually live entail two very different things. Myriad ways to promote fair businesses practices exist, from employee training and team building to corporate culture and code of ethics.

 

Employee Training

 

Employee training programs present the perfect opportunity to begin inundating the workplace with core values. With each new employee, a new chance to promote the core values of the company arises. Successful training programs of this nature create a core of employees who not only understand but also adhere to the core values of the work place. If a set of core values is implemented after the hiring of employees, these employees can be re-trained under the banner of "professional development" so as to not give the impression that they require additional training and, thus, the implication that their work performances are subpar.

 

Team Building: Team building promotes core values in a collective manner. Team building activities entail games, puzzles, and other educational or team-oriented activities designed to create a stronger personal bond between co-workers. Choosing team-building activities that reflect the core values of the work place, such as diversity, tolerance or fair business practices, reiterates values while helping employees internalize them. The collective promotion of core values creates a culture in which each individual feels as though they must toe the line, because such situations emphasize the importance of the collective over the individual and each individual's role in maintaining the success of the collective.

 

Workplace Culture: In his book "Ethics in the Workplace: Tools and Tactics for Organizational Transformation," author Craig Edward Johnson writes of the importance of workplace culture in the promotion of core values. Consider, for instance, training programs. If a training program addresses core values in a way that does not reflect those values, trainees cannot be expected to adhere to workplace values. As Johnson writes, the key aspects of values promotion come from the top of the workplace chain; to be blunt, the behavior of the plebeian class reflects the culture the ruling class creates. To promote core values, encourage employees to challenge directives that deviate from core values and the expression of moral and ethical opinions and debate.

 

Ethics Code and Program: Espousing certain core values does not equate promoting and encouraging them. A key step in the promotion of core values in the workplace entails the creation of a company ethics code and program. The United States Government requires public companies to maintain ethics codes, which comprise a written document outlining the core values of the company. An ethics program takes the words of the code and turns them into action. Ethical programs include training, team building, the facilitation of communication between employees and results orientation. Results orientation constitutes a program that rewards the achievement or fulfillment of core values, rather than punishing the non-fulfillment of them.

            Adherence to core values set as operating philosophies and summarized in mission statement is bound to enhance corporate reputation.

Self-assessment questions – IV

1.      What are the ways to promote corporate values?

12.7   PUBLIC RELATIONS IN CORPORATE REPUTATION

            Various authors, professional bodies, PR practitioners have defined public relations in different ways. Dr. CV Narasimha Reddi, in his book “Public Relations and Communication Handbook-2002” has included over 100 such definitions of public relations. Probably one of the best to suit the context is that of Edward L Bernays who defined that “Public Relations is the attempt by information, persuasion and adjustment to engineer public support for an activity, cause, movement or institution” and of Denny Griswold who explained that “Public Relations is the management function which evaluates public attitudes, identifies the policies and procedures of an individual or an organization with public interest and executes a program of action to earn understanding and acceptance. If this is the concept of public relations, it has a major role to promote corporate reputation.

           

12.7.1  Role of Public Relations

            Public Relations plays a greater role in earning corporate reputation. The corporate reputation is not earned overnight.  It is a long drawn process based on several factors from good policy in the interest of public to better customer service.  Good reputation is always built over a period while bad image is created with one bad action.  If the image is bad, it is the job of public relations to analyze the situation and keep the management informed of such bad images so that appropriate steps could be taken to rectify the defects and improve the corporate image of the organization.  Public relations with its persuasive techniques and messages must endeavor to reach all the public – the employees, customers, opinion leaders, regulatory government bodies and the media who have the most accurate possible corporate image. Based on the corporate performance, the quality of products, public relations has to project the reputation of a company.

12.8.2  Corporate Reputation

            The management’s commitment to achieving its stated goals, and the skill and energy with which all component programs are implemented and communicated contribute to the creation of reputation.  Corporate reputation or image is based on how the company conducts or is perceived as conducting its business.  The attributed values (such as authenticity, honesty, responsibility and integrity) evoked from the person’s corporate image constitute corporate reputation.  Reputation like image is based on all impressions gained by the public, but there is difference.  Unlike image, reputation is formed from personal experience.  Image is based on beliefs developed from a distance without the benefit of contact.  Reputation of a corporation, according to a few scholars, is based on three key factors: (i) economic performance of an organization (ii) social responsibility and (iii) the ability to deliver valuable outcomes to stakeholders. These three facters act as food for thought to public relations in promoting corporate reputation.

Self-assessment question - V

What is the role of public relations in promoting corporate reputation?

12.9   SUMMARY

·          Reputation is defined as “the collective representation of an organization’s past performance that describes the firm’s ability to deliver valued outcomes to multiple stakeholders.

·          Stockholders are the owners of the company with specific interest in the shares and profits of the company.  Stockholders are called stakeholders and in other words stock-owners.

·          Corporate Reputation means ‘a good name that a company earned and retained in the minds of the public and it is always associated with the products it sold or services rendered and manifested in the social responsibility it discharged’. There is a strong correlation between higher corporate reputation and higher price earnings.

·          Corporate identity is the distinctive insignia or logo of a corporation, easily recognized and remembered by the public.  It encompasses an organization’s core values, standards and its goals

·          Corporate image is the total public impression of an organization as expressed by the internal and the external public. Such an image depends on the organization’s mission, vision, policies, qualitative products and services, better financial performance and in particular, its courteous behavior with both the employees and the community.

·          The imperatives in earning brand reputation are to seek brand identity and brand image which can be possible by consistent performance and some ethical principles adopted by a company.

·          Corporate values are the operating philosophies or principles that guide an organization’s internal conduct as well as its relationship with its customers, partners, and shareholders. Variously called, the core values, these are usually summarized in the mission statement or in the company’s statement of core values.

·          Public Relations plays a greater role in earning corporate reputation. The corporate reputation is not earned overnight.  It is a long drawn process based on several factors from good policy in the interest of public to better customer service which is possible only through sustained efforts applying the principles of PR.

12.10 ANSWERS TO SELF ASSESSMENT QUESTIONS

Self-assessment question – I

1.      Reputation is the good name earned over a period of time by an individual or a corporate for their performance in the society.

2.      Corporate reputation is a good name that a company earned and retained in the minds of the public and it is always associated with the products it sold or services rendered and manifested in the social responsibility it discharged. The advantages of higher corporation are many. There is a strong correlation between higher corporate reputation and higher price earnings. 

3.      Stockholders are stakeholders, who will have interest in a corporate. They are important because they are both owners and audience as well to the corporate. They influence the corporate.

Self-assessment question - II

1.      Corporate identity is the exclusive sign owned by a corporation which is easily recognized and remembered by the public. It is a physical presentation of a company through a log.

2.      Corporate image is the impression of general public on an organization. It is associated with the quality of their goods/services and the social responsibility discharged. Based on the performance of corporate performance, PR has to build corporate image.

Self-assessment question - III

1.      Brand identity is the distinct mark with which the product or service is identified, easily recognized and remembered by the public while brand image is the name and fame earned over a period of time.

Self-assessment question – IV

1.      Corporate values, also called as core values can be promoted through fair business practices for employee training and team building to corporate culture and code of ethics.

Self-assessment question - V

1.       Public relations plays an important role in corporate reputation management because reputation is linked to the satisfaction of stakeholders and these publics need to be addressed differently. Quality of product, financial performance are the key to promoting corporate reputation.

12.11 MODEL EXAMINATION QUESTIONS

Answer the following questions in about 30 lines each

1.      What is reputation and how stakeholders are involved in reputation management?

2.      What is the difference between corporate identity and corporate image?

Answer the following questions in about 15 lines each

1.      What are the imperatives in brand reputation?

2.      What is corporate reputation? How does public relations help in reputation management?

12.12 GLOSSARY

Brand                                       =          A trademark/distinctive name identifying a product

Corporation                             =          A large company or an entity recognised by law

Corporate citizen                     =          A company’s role & responsibility towards society

Corporate public                      =          All segments of public that have interest in a corporation

Core values                              =          Corporate values set as guiding principles

Identity                                                =          A distinguishing characteristic of a corporate

Image                                       =          Presentation of external form of a corporation

Reputation                               =          Good name to a corporate in the minds of the people

Values                                     =          Related to business ethics

12.13 REFERENCES

Ronald J. Burke & Cary L. Cooper                  Corporate Reputation, Managing Opportunities and Threats, Gower, Canada, 2011

CV Narasimha Reddi, Dr.                                Effective Public Relations & Media Strategy, Prentice Hall of India, Phi Learning, New Delhi 2009

Rosa Chun, Rui Da Silva & 2 others                Corporate Reputation and Competitiveness, Amazon, USA, 2002

-          Y. BABJI