How much is your reputation worth?

Your Corporate Reputation is your company’s most valuable intangible asset. Although everyone can, to some extent, understand the concept of reputation – since each one of us has developed personal and professional reputations, aside from having opinions on other people, products, companies, organizations – this is a complex topic, filled with several objective and subjective elements.

Think about it: when the name of the companies and products you like the most come to your head, you probably use a combination of objective data – financial results, investments, number of followers, number of positive evaluations of a product, just to name a few – and subjective data to build your opinion. Your perceptions on quality, your personal experience with that company, other people’s opinions, your personal views and ethical values, all of those combine to inform your overall impression of a company and/or its products and services. It also allows you to grant them a perceived value.

Not only that but all of us, to varying degrees, understand that risking or losing a part or the totality of a reputation carries an extraordinarily high cost, because each one of us know how hard it is to gain respect and admiration in our personal lives.

Organizations throughout the world have experienced, all through the centuries, reputation crises, while many others have taken advantage of the opportunities that arise when this intangible asset stands out from those of its competitors.
 
Even though great advances in the understanding and management of Corporate Reputations have been made in the past decades, most of it is still firmly based solely on subjective perceptions rather than data and knowledge. Management of a major asset is still done mostly with intuition than with science.

This is, however, changing. High-profile cases, with global repercussions, of well-known names, over the past decades, have demonstrated that is perfectly possible for an otherwise excellent company, with a profitable operation and good internal processes, to lose absolutely everything – or nearly that – because of reputational risks that, in many cases, they did not even know existed, or monitored or failed to manage properly.
A 2005 Economist Intelligence Unit (EIU) article shows that losses to Corporate Reputation are top of mind among global executives (and twelve years later that figure is probably even higher):

Every day, in Stock Exchanges the world over, we see the impact that a set of perceptions from individuals on publicly-traded companies has over the perceived value of those organizations and their operations. In the financial markets the perceived value and the potential of a company is the result of a combination of hard data and insights of the multiple professional stakeholders that follow it.

It’s clear that we need to apply that kind of approach to help companies to better evaluate, quantify, measure and manage their reputations. The math and the science to do that already exist and new methodologies are being developed to support organizations who wish to have greater control over this crucial asset.

One exciting such application of existing science is Risk modeling analytics used to help reputational risk management. In this great article published in this past summer’s issue of Corporate Reputation Magazine, Dr. Alex Canavezes, Principal Consultant for Quant Analytics, a UK financial consulting firm, describes a great, innovative approach to start looking at this complex issue.

In a world becoming ever more connected, in which the complexity of the relationships between companies and their multiple internal and external stakeholders grows by the minute, Corporate Reputations have a key role in the perceived value and sustainability of an organization.

And even though the risks have never been greater, the opportunities that a well-executed, proactive Corporate Reputation management strategy offer simply cannot be ignored by those who wish to be leaders in their industries.

In the competitive landscape of the coming decades, corporations that better understand, measure and manage their reputations and associated risks will enjoy clear strategic advantages over the rest.

So, the real question is:

How much is your Corporate Reputation worth and how well are you managing it?