If reputation is simply perception, does it really matter?


Reputation is essentially the sum of others’ perceptions.

The nebulous and hard to measure nature of the asset leads many companies, particularly those with strong balance sheets and robust value propositions, to neglect investing in it.

Tempting though it may be, there are many current examples of where indifference to the fundamentals of reputation has damaged individual companies before reverberating across entire industries.

For many years, Australia’s major banks accepted the post-GFC anti-bank zeitgeist as a phenomenon to be endured. Immensely profitable and consistently growing in value, the banks turned inward, focusing on their reputations in comparison to each other rather than on the industry as a whole.

As the decline of the sector’s reputation continued unabated, a perception began to build that the banks didn’t prioritise their customers, were run by ‘greedy’ executives and were uncompetitive.

Reinforced by regulator interventions, a series of high profile scandals and a rising disparity between official and bank interest rates, the banking sector’s reputation continued to diminish.

Year after year, record bank profits further embedded negative perceptions of banks while removing incentives to address the industry-wide reputational crisis. Profits were on the rise, why change?

The government sensed this reputational vulnerability and brazenly announced a $6.2 billion levy on the banks in this year’s budget. Tellingly, in this age of hyper partisanship the levy received almost unanimous political support. All sides of politics were content to bask in the prestige of positioning themselves as punishers of the banks.

When corporate reputation is low, companies and even whole sectors of the economy become vulnerable – and few are more reputation conscious than politicians. Gaining prominence by coming down hard on a sector with an image problem is an effective way for a politician to improve his or her own reputational stocks.

This reality is a serious concern for businesses. Governments have a long history of targeting organisations and industry sectors with poor reputations – often unfairly, and with potentially expensive and far reaching long-term consequences.

In 2014 the NSW government responded to public concerns about alcohol fuelled violence with legislation which dramatically reduced patronage of bars and clubs in Sydney and Kings Cross. The changes were rushed, and as a consequence many licensed venues with good compliance and safety records closed. Given the complex and multi-dimensional nature of the problem, many have identified the poor standing of bars and clubs as making them an easy target for a government keen to bolster its own reputation.

SenateSHJ’s Reputation Reality report found that corporate reputation may be an intangible concept, but senior executives appreciate it is a tangible asset. They recognise that reputation is a key component of their organisation’s success. Consequently, they are becoming more actively involved in building trust and putting systems in place to protect and reduce risks to their organisation’s reputation. As the examples cited demonstrate, this is rarely a straightforward proposition, and even the most sophisticated and well-resourced businesses and brands are not immune to missteps.

Over the years that SenateSHJ has worked with clients on reputation management, we have developed strategies and techniques which bring much needed order and clarity to the complex dynamics which feed into reputation. In our experience, starting simple is the best way to manage complex challenges and often brings other benefits. Stakeholder landscape mapping, for example, is a fundamental component of a reputation management strategy which many clients find provides invaluable strategic insights into their businesses.

If you haven’t already done so, take a step back and consider how your business is perceived. An interesting starting point is to empathise with the stakeholders who are not central to your business or organisation’s daily functions, but are familiar enough with what your organisation does to have a perception of it, and drill down from there. One thing is for certain: there are only upsides from gaining insight and understanding of your reputation and the reality.

This article was originally published in The Australian Business Executive Magazine