Reputation Management

The Key to Successful Public Relations and Corporate Communication

John Doorley, Helio Fred Garcia

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781351235006
• Edition: 4
• Topic: Commerce
• Subtopic: Relations publiques

Reputation Management is an established how-to guide for students and professionals, as well as CEOs and other business leaders. This fourth edition is updated throughout, including: new social media management techniques for the evolving age of digital media, and perspectives on reputation management in an era of globalization.

The book is embroidered by ethics, and organized by corporate communication units, such as media relations, issues management, crisis communication, organizational communication, government relations, and investor relations. Each chapter is fleshed out with the real-world experiences cited by the authors and contributions from 36 leaders in the field, including The Arthur W. Page Society, the International Communications Consultancy Organization, the PR Council, CVS Health, Edelman and Ketchum.

This was the first book on reputation management and, now in its fourth edition, remains a must-have reference for students taking classes in public relations management, corporate communication, communication management, and business. CEOs, business leaders, and professionals working in these areas find it a reliable resource for measuring, monitoring and managing reputation.

CHAPTER 1

Reputation Management

Character is like a tree and reputation like its shadow. The shadow is what we think of it; the tree is the real thing.

(Abraham Lincoln)

1.1 Managing Reputation As an Asset

1.2 Building Corporate Character

1.3 Cherishing the Reputation Asset

1.4 Kicking the Tobacco Habit

1.5 The Purpose of a Corporation

1.6 Squandering the Reputation Asset

1.7 Reputation Capital

1.8 Identity

1.9 Legalized Sports Betting

1.10 The wrong perspective

1.11 Can Reputation Be Managed?

1.12 Economic Case for Corporate Reputation

1.13 Can Reputation Be Measured?

1.14 Comprehensive Reputation Management

1.15 Pushmi-Pullyu Syndrome

1.16 Reframing the Problem

1.17 Lessons from the Financial Crisis

1.18 The 10 Precepts

1.19 Everybody’s Got Brand

1.20 Brand Management

1.21 Brexit–No Brexit

1.22 Systems theory

1.23 Best Practices

1.24 Questions for Further Discussion

1.25 Resources for Further Study

Notes

■ ■ ■

Book authors John Doorley and Helio Fred Garcia began working on this book in 2004 and the first edition was published by the scholarly publisher Routledge/Taylor & Francis in 2006. It was the first textbook—the first book—on reputation management. The authors begin this first chapter of the fourth edition with a brief summary of what has happened in the field since the first edition.

1.1 Manage Reputation As an Asset or It Will Become a Liability

1.1.1 A Brief History of Reputation Management

Book co-author John Doorley first started thinking about reputation management as a formal discipline when he was head of corporate communications at Merck during the last 12 years of the last century. Then the largest healthcare company and one of the world’s most admired companies, its market capitalization was usually in the top five of U.S. companies and in the top 10 worldwide. Yet its revenues and tangible assets were a fraction of those of other large market-cap companies.

Some reputation scholars back then wrote that the difference, averaged over time, between a company’s market cap and the liquidation value of its assets is reputational capital. A quick, qualitative survey of CFOs indicated they believed that equation overstated the value of reputation. But the CFOs also agreed the value of reputation was a significant part of the difference. It seemed plausible that, indeed, reputation could be a company’s “most important asset,” as CEOs often called it. But executives and scholars thought of reputation as intangible, so they scoffed at the term reputation management.

But executives and scholars thought of reputation as intangible, so they scoffed at the term reputation management.

That was when John designed a process called “Comprehensive Reputation Management” and copyrighted it with the U.S. Library of Congress in 2003. It defined reputation as the sum of perceptions of the stakeholder groups and was based on the proposition that to manage the parts is to manage the whole. Comprehensive Reputation Management included this formula:

R ( reputation ) = P ( performance ) + B ( behavior ) + C ( communication )

The authors included it in the first edition of Reputation Management reasoning that authenticity was part of performance, behavior and communication. The second edition included in the formula, as a distinct factor, the authenticity factor (Af), a measure of how true the organization is to its intrinsic identity (what it stands for). If the organization stays true to what it stands for, it is whole, and the Af is one: The sum of performance, behavior and communication, that is, reputation, is undiminished.

R = ( P + B + C ) × Af

Many communication agencies and even the big consultancies now list “reputation management” among their practice areas. The fact is that most of them stop at measuring and monitoring reputation, far short of managing it. Most large corporations have risk managers, but they usually manage financial and legal risks, with little or no focus on reputational risks, let alone on the upside, the undervalued “attributes” of reputation.

The fact is that most of them stop at measuring and monitoring reputation, far short of managing it.

On the other hand, The Edelman Trust Barometer, which measures trust, that ultimate benefit of a good reputation, was conducted and published for years before it included drivers of trust similar to the drivers of reputation. The annual Trust Barometer evolved and is now one of the most anticipated and relied upon measures of trust in companies, industries, governments and other institutions.

How has reputation management progressed since 2006? Fast forward to late 2019 and the submission of copy for this book to the publisher.

• Studies have shown that the intuitive about reputation is true. That is, companies with the better reputations attract more and better job applicants, gain more favorable earned media, have larger premiums, and pay less for goods and services. The most important long-term benefit is trust. Trust is not reputation; rather it flows from it.
• Studies by Simon Cole (“The Reputation Dividend”) and others have shown that the value of reputation is approximately 20% of the market cap of large companies. (See the Cole and Macleod article in this chapter.)
• More scholars are studying reputation.
• More young communicators have gained exposure to the concept that reputation has tangible, significant value.
• The reputation surveys teach us a lot. One of the oldest, the Fortune Most Admired Companies survey, measures the perceptions of three well-informed stakeholder groups, the same as when it began in 1983, using the same eight attributes plus global competitiveness.

A 2014 survey of 1,000 CEO-level executives by The Conference Board (“The 2014 CEO Challenge”) listed brand and reputation management among its top five strategic priorities, alongside financial soundness, global competitiveness, innovation and human capital. Brand (how the organization wants itself, a product or service to be perceived) is routinely managed based on brand perception studies which are, essentially, reputation studies with one stakeholder group (customers and prospective customers). So why is reputation, across the spectrum of stakeholders, still not being managed in most companies and other organizations?

Brand (how the organization wants itself, a product or service to be perceived) is routinely managed based on brand perception studies which are, essentially, reputation studies with one stakeholder group (customers and prospective customers).

Reputation management is often confused with crisis management. For example, when leading communicators are asked whether the infamous 2017 United Airlines crisis, where a passenger was dragged from a plane belly up, was caused by a failure in reputation management or crisis management; many answer crisis management. The United Airlines crisis was caused by a failure in reputation management, not crisis management. Specifically, the failure was in not flagging the company policy that required airline employees to contact port authority officers to have a passenger, unwilling to relinquish a seat, removed if the airline needed it. Once cellphone photos and videos taken by fellow passengers were posted online, there was nothing the company could do but mitigate the financial and legal damages. Within days, the company announced it had changed the thoughtless policy.

The United Airlines crisis was caused by a failure in reputation management, not crisis management.

Are some communication professionals failing to see the ethical issue here, the difference between preventing a crisis and waiting for it to happen? Crisis management is big business. Or might it simply be the case that many communicators, corporate and agency leaders, still fail to see the short- and long-term business advantages and opportunities in reputation management—the building dimension, not just the safeguarding?

Back to the formula: R = (P + B + C ) × Af. It leads us, according to those who use it, to these self-evident conclusions and principles:

• A failure in performance, behavior or identity cannot be fixed by communication. If communication did not cause the problem, it cannot fix it.
• Reputation management can prevent vulnerabilities from becoming crises.
• The process also provides an opportunity to identify attributes where an organization might be undervalued, for instance, on innovation, executive leadership or employee talent.
• The very existence of a reputation management process will identify earlier the looming crisis. That should have been the case at General Motors with the ignition switch crisis and at Volkswagen with the emissions device duplicity. That should have been the case at Michigan State University, USA Gymnastics and the US Olympic Committee, under whose employment, and what some victims saw as imprimatur, Dr. Lawrence G. Nasser sexually violated as many as 200 girls and young women. In February 2018, Nasser was sentenced to at least 100 years in prison. The three organizations have denied a cover-up. None can deny a lack of due diligence.¹
• Reputation is the net...