Why is Reputation Important?

Jacob Ammentorp Lund
Jacob Ammentorp Lund

You may have heard it as a child, or had it fall 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.

Curating a positive reputation is different than simply leaving it up to the opinions of others. For an indivisual, 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 like a criminal because of your skin color or because your religion has a bad reputation in some circles. It is difficult to directly control the biases of other people, but sentiment can be crafted to a greater or lesser degree.

Reputation can stem from one person’s judgment then blossom into a cloud of darkness as it poisons the collective judgement of a person or business. This new “identity” (reputation) becomes overlaid on like a blanket, becoming all someone sees. Today, this is an identity exists both in real life and online. Everyone, from teenagers to entrepreneurs to entire corporations, have a reputation – good, bad, or somewhere in between.

It does matter, to an extent, what others think

So despite what your guidance counselor told you 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 have survived if we weren’t influenced by the opinions of our peers. As a species we are hardwired to account for 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 in dividends when it comes to bolstering your reputation. This is true for people and for businesses as well.

In fact, some research has demonstrated that your closest social circle may be the main thing holding you accountable to your 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 intrinsically that it feels bad to be left out, but in our ancestors’ circumstances, group exclusion could equate to death.

Why is Reputation Important in Business?

Corporate reputation isn’t very different from individual reputation in terms of its importance. It’s been studied quite a bit in recent years, perhaps 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 the 2017 presidential year everyone 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 really 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 corporate reputation?

Clearly, corporate reputation is a complicated machine. So who is in charge of maintaining 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 manages 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 in terms of 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 true, organic “trust.” Customers love to do what feels comfortable, so companies that are too quick to change their identity in 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 article originally appeared in Reputation X.

This article was written by Kent Campbell from Business2Community and was legally licensed through the NewsCred publisher network.