Corporate Reputation – What it is and why it matters

By Brad Addison - CoFactor Managing Partner; and communication, engagement and reputation management specialist
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We’ve all heard the term reputation and we understand what it means to do business with reliable companies with good reputations. We can appreciate that having a good reputation is important. But what is corporate reputation and why does it matter?

What is Reputation?

Reputation is the beliefs or opinions that are generally held about an organisation or person (or thing).

While academics have pondered the perfect definition for decades, they all essentially arrive at the same thing: reputation is what your stakeholders think of you. Their perception is based on the company's past actions and is therefore a probability of its future behaviour.

Corporate reputation is an attitudinal concept - it’s the stakeholder who acts as an evaluator of the organisation. A company’s overall reputation is therefore the sum of stakeholder perceptions.

Why business reputation matters

No matter the size and scale of your business there’s significant upside in a positive corporate reputation. Here’s just three:

• Enhances company value - A positive reputation influences company value and helps to differentiate the company or brand, increasing its ability to compete and grow market share
• Shapes the behaviour of stakeholders - The greater your reputation, the more likely your stakeholders will behave toward the organisation in desirable ways, eg buy, invest, join and support.
• Builds trust and mitigates risk - A positive reputation builds ‘trust equity’. When bad things happen to good businesses, those with excellent reputations are given the benefit of doubt or are at least more resilient to brand damage.

On the other hand, the impacts of a poor reputation or reputation damage are numerous, including:

• loss of stakeholder trust and confidence
• customers, partners and suppliers withdrawing their business or support
• a fall in employee engagement and difficulty hiring quality staff
• regulators applying greater scrutiny and punishment; and ultimately
• reduced company value

What makes up a company’s reputation?

There are a number of well accepted components or attributes that make up a company’s reputation.

• Appeal - Do you have a strong emotional appeal - do I feel good about you?
• Capability - How good are your products and services?
• Leadership - How strong is your leadership? Do you have a strong vision?
• Performance - Is your financial performance strong?
• Workplace - What kind of employer are you?
• Innovation - Are you an innovative company?
• Governance - Are you a good corporate citizen? Are you ethical, transparent, fair?

Think about companies considered the most reputable in the world like Rolex, Disney, Netflix, Lego, BMW and Apple; they all score highly on the above attributes. As do Bunnings, Qantas, Toyota, and Bendigo Bank - considered amongst those with the best reputation in Australia.

How we can improve your reputation

While your reputation lives in the minds of your stakeholders, you have significant potential to shape their views and improve your reputation, driving your business objectives and increasing company value. We’ve helped clients of all sizes identify and produce practical, actionable solutions to help build and protect their reputation.