Reputation analysis identifies a firm’s or industry’s perceptual image among key stakeholders based on a given set of factors. This is to enable it to improve its relations with them in the future, ultimately increasing the firm’s performance.
According to Grahame Dowling: “When strategy involves either growth or innovation, a company puts its corporate reputation into play. Growth involves stretching the company’s operations, sometimes to the breaking point. Innovation involves doing something new.”
While the particular reputation factors examined in a given analysis may vary, they all relate to the reputation of the firm in the eyes of stakeholders and should give an indication of the success or otherwise of the firm’s reputation management strategies.
Dowling suggests that the major sources of corporate reputation risk fall into six broad areas:
- 1. The industry in which a firm operates.
- 2. Identifying strategies.
- 3. The culture and daily operations of the firm.
- 4. The comments and behavior of senior executives.
- 5. Managing stakeholder relationships.
- 6. Response to a crisis.
Firms that can effectively monitor their reputation among selected stakeholders across the six board areas mentioned previously will have a useful view of what type of strategic initiatives might be required to enhance their image. It will give the firm direct feedback of its reputation as perceived by stakeholders after the affects of public relations and advertising, media exposure etc.
The image a firm communicates can heavily influence the actions of key stakeholders of the firm, including customers, employees, investors, and so on. The result of this is that the firm’s reputation also has an impact on the overall value of the business, in dollar terms and also in terms of its value as a potential business partner in strategic alliances. The management of corporate reputation, then, can be seen to be an important part of the successful management of a firm overall.
Depending on which factors or attributes are used for conducting reputation analysis, a firm can use the results to effectively plan strategies to differentiate itself from its competitors in the marketplace. CRA can easily generate rankings on various attributes for any given set of firms. A firm requiring this information could also use independent industry reputation analysis. Industry reputation analysis usually analyzes only a given set of firms on a given group of attributes. It could be the case that one firm is viewed as very community minded, while its direct competitors might be viewed as being more environmentally friendly. Either image has its advantages and could be used as part of a detailed differentiation strategy.
A starting point for reputation analysis might be the list of 26 items that are consistently used, compiled by Craig Carroll and Maxwell McCombs. These popular factors are listed here, ranking them from most popular to least.
Craig E. Carroll and Maxwell McCombs (
2003). “Agenda-setting effects of business news on the public’s images and opinions about major corporations,”
Corporate Reputation Review, Vol. 6, No. 1, pp. 36–46.
After a list of particular attributes has been finalized, the next step is to conduct a survey among the firm’s key stakeholders. The individuals approached would be asked to rank each factor according to their own perceptions. Often statistical software will be used to interpret the data after a sufficient quantity of surveys have been carried out. This sort of statistical analysis allows the researcher or analyst to both filter and weigh the attributes and identify the key drivers of the firm’s reputation.
Adapted from Charles J. Fombrun, Naomi A. Gardberg, and Joy M. Sever (
2000). “The Reputation Quotient
SM: A multistakeholder measure of corporate reputation,”
The Journal of Brand Management, Vol. 7, No. 4, pp. 241–255.
Once reputation analysis has been carried out, the next step is to translate the findings into action by developing a longer-term strategic management plan to maintain/improve corporate reputation based upon the results. Ongoing reputation management is usually the responsibility of the company’s public relations or communications department and will include both management and monitoring functions. Other strategic competitive analytical techniques may also contribute valuable information to the reputation management process.
