Reputation Management

Reputation management is the strategic use of corporate resources to positively influence the attitudes, beliefs, opinions, and actions of multiple corporate stakeholders including consumers, employees, investors, and the media. Fortune magazine relies on eight attributes in the development of the annual list of America's Most Admired Companies: innovativeness, quality of management, employee talent, quality of product/services, long-term investment value, financial soundness, social responsibility, and use of corporate assets. This list illuminates the extent to which reputation management emanates from everything a corporation does and says, whether voluntary or involuntary. When managed properly, corporate reputation can improve an organization's ability to sell products and services, attract investors, hire talented personnel, and exert political influence. Although not a zero-sum game, reputation management relies on a corporation's ability to distinguish itself from its competitors in the hearts and minds of various publics, thereby enhancing its overall position in the marketplace.

Reputations are value judgments that evolve over time based primarily on the emotional, financial, social, and cultural attachment between an organization and various publics. A 1990 study by Charles Frombrun and Mark Shanley suggested that publics attribute corporate reputations on the basis of three main factors. First, publics look at how the organization is positioned in its industry by using market and accounting signals to indicate performance. Second, organizational signals regarding conformity to social norms are evaluated. And finally, organizational strategic positions are considered in the construction of corporate reputation. The depth and breadth of reputation construction underscores the importance of reputation management to the overall well-being of a corporation—a fact not lost on corporate executives. According to a recent study of CEOs by Hill & Knowlton USA and Chief Executive magazine, 96 percent of the CEOs surveyed consider corporate reputation a vital component of business success.

Good corporate reputations do not just happen. Rather, the corporate reputation must be managed and cultivated. Organizations reinforce the desired corporate reputation across all business functions, including internal and external communication activities. It is the vast nature of corporate communication that makes it simultaneously the most important and the most difficult component of reputation management. For many multinational corporations, the consistent communication of organizational values is one way to ensure consistency across business units and among various [Page 746]stakeholders. For reputation management to be successful, the communication of corporate values and goals needs to be in sync with the lived experiences of the organization's stakeholders. For example, the recent Philip Morris campaign promotes the company as a leader in philanthropic giving. The campaign is technically accurate; Philip Morris does contribute over $60 million annually to different charitable organizations. However, the idea of Philip Morris as a philanthropist is so far removed from the lived experiences of the majority of publics that the message may have low salience, or worse, further enhance public perception that Philip Morris is less than honest.

Corporations are increasingly aware of the salience of reputation and the difficulty in repairing a tarnished reputation. Nearly 20 years after the Valdez spill in Alaska, recent news articles about the Exxon-Mobil merger include reference to the incident. Conversely, Jim Hutton, Michael Goodman, Jill Alexander, and Christina Genest (2001), suggested that well-managed communication activities have the potential to convert peripheral stakeholders into reputation advocates for corporations. Consider the case of Microsoft and its antitrust suits. It can be argued using Frombrun and Shanley's (1990) criteria that Microsoft managed its business and corporate reputation in a manner that appealed to the American ideal of capitalism even for those publics that may not have had a direct connection to the situation.

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