Why is Reputation Important?

Why is Reputation Important?

Maintaining a hard-earned business reputation is one of the primary duties of the PR pro. That's why listening to what your community is saying about you—to protect your brand—is as important as the messages you broadcast.
Kent Campbell
September 30, 2017

You may have heard about reputation as a child, or maybe it fell on deaf ears during those precarious teen years. It’s the age-old adage, “it doesn’t matter what other people think of you, but only what you think of yourself.” It’s the easiest advice to give, the hardest to take, and one of those life lessons that gets repeated in nearly every coming-of-age story. It’s also false.

Crafting a positive reputation is different than simply leaving it up to the opinions of others. For an individual, developing self-esteem is an essential milestone for sanity and survival. It’s self-esteem that protects you when a stranger treats you like you’re stupid because you have tattoos, or as a criminal because of your skin color or because your religion has a bad reputation in some circles. You can’t control the biases of other people, but you can nudge positive or negative sentiment to a greater or lesser degree.

Reputation stems from a person’s judgment then blossoms into a cloud of darkness as it poisons the collective judgment levied on an individual or business. This new “identity” (reputation) becomes overlaid on like a blanket, becoming all someone sees. Today, this identity, others perceive, exists both in real life and online. Everyone, from teenagers to entrepreneurs to entire corporations, has a reputation— whether that is good, bad, or somewhere in between.

It Does Matter, to an Extent, What Others Think

So despite what your guidance counselor said in high school, it does matter, to an extent, what others think, what they say, and what they promote online. Because of the importance of reputation, as a society, we wouldn’t survive without the opinions of our peers. As a social species, we are hardwired to care about the opinions of others.

The Reward of a Good Reputation

The fastest way to a good reputation, whether at home or in the workplace, is to behave in a way that benefits your social circle. According to a US News article, traits like kindness, generosity, and honesty help to foster a good reputation in the workplace. It seems that group-oriented behaviors, especially, pay dividends when it comes to bolstering your reputation. This is true for people and businesses as well.

In fact, research has demonstrated that your closest social circle may be the main thing holding you accountable to actions. Without the impending threat of losing your good reputation among friends, there’s little to hold you back from doing the “wrong” thing. The reason it works is simple: a bad reputation among peers often leads to exclusion from the group. We know what it feels like to be left out, but in our ancestors’ circumstances, group exclusion could equate to death.

Why is Reputation Important in Business

Brand reputation isn’t very different from individual reputation in its importance. It’s been studied quite a bit in recent years, in light of the ease with which information is transmitted and falsehoods spread online, as well as the effect of reputation on commerce. At the beginning of 2017everyone was talking about “fake news” because of its effect on political reputation. According to Davies and Miles in the 1998 Corporate Reputation Review, reputation in business terms involves three things:

  • How others see the business
  • Who the business is
  • What the business communicates about itself

Managing a business reputation requires alignment of these three elements. When even one of them is out of balance, the company’s entire reputation can come crashing down. Here’s a closer look at the factors that shape a corporation’s reputation.

  • Visual cues. Name, logo, and all of the imagery related to your company or brand.
  • Mission, vision, or philosophy. The guiding light of a company’s internal culture, these elements have a ripple effect when it comes to corporate reputation.
  • Behavior of members within the organization. What people are saying or writing. Articles, word of mouth, news, social media, and online reviews.
  • The success of the business. A spot on the Fortune 500 list will contribute to a positive reputation, for example.

Who Maintains Brand Reputation

Clearly, brand reputation is a complicated machine. So who is in charge of it? According to a 2005 study by Rosa Chun, senior lecturer at Manchester Business School, it’s unusual to find an internal reputation management department that’s directly responsible for managing corporate reputations. Instead, it’s often a shared effort, with marketing and communications handling the external perceptions, while human resources manage internal culture. Many companies even outsource their reputation management to firms that specialize in this field.

Creating, curating, and maintaining a positive reputation for a corporation is no easy task, but one of the most important facets regarding human psychology is to be consistent. Research by Roger Martin of the Rotman School of Management has shown that a customer’s loyalty to a company or brand relies more on familiarity than organic “trust.” Customers love to do what feels comfortable, so companies that are quick to change their identity in the face of a PR disaster may be more likely to lose customers in the long run. The better approach is often a slow and steady one, focused on rebuilding trust through multiple channels.

Why Reputation Matters

As we’ve explored, a positive reputation can provide group inclusion, while a negative one can ostracize you in a social setting, or lead to job loss or employment problems in a professional environment. The business outcomes of reputation are even more far-reaching, impacting how all stakeholders, from customers to shareholders to executives, behave toward the organization.

Curate a Positive Reputation

The digital era has invited with a whole new way of showing ourselves to the world, one that’s rife with complications for both individuals and businesses. When you’re doing business with someone on the other side of the globe, sometimes your reputation is all you have — so it’s in your best interest to make it the best it can be and to strive to curate a positive reputation.

This post was originally published on this site on February 24, 2017. We republish timely posts on Saturday, in case our readers missed it the first time around. This post has appeared in Reputation X, it was written by Kent Campbell from Business2Community, and is legally licensed through the NewsCred publisher network.