Companies that invest time in explaining the virtue of their own activity to their employees benefit from an increased level of internal bonding that helps to motivate employees.
For example, if companies that face strong public hostility can persuade employees that what they and their organisations do is right, it can create a culture amongst their employees of “us against the rest of the world”, which is resistant to public hostility as well as triggering a spark for employees to work as a joint team.
People are motivated towards consistency and congruence in their attitudes and beliefs, and in many cases, this corporate culture of “us against them” relies on cognitive dissonance: the idea that individuals will refuse to accept the truth (“my company is an awful devilish organisation”) when it is in conflict with well-anchored beliefs (“I joined this firm because it’s the best”).
Action point: Use the table to establish an overview of potential gaps between your company’s reputation, and reality – if there are gaps, should your organisation improve its ability, or reduce expectations?
Key elements that shape reputation risk:
| | Stakeholder expections are established based on: |
|---|
| Setting expectations: | - Company history: (1) Backward-looking (2) Company track record and performance.
- Company strategy: (1) Forward-looking (2) Established by the company, and (3)
Communicated to the public.
|
| | Perceived performance is driven by: |
|---|
| Measuring performance | - Actual performance: Reputation is mostly (but not entirely) determined by what a company
does, not what it says.
- Communication: Effective communication with stakeholders and the media can help shape
opinions and reputations.
|
| | An event’s effect on reputation can be positive or negative: |
|---|
| Reputation impact | - The company exceeds expectations and its reputation is enhanced.
- The company falls short of expectations and its reputation is damaged.
|
Guest Expert: Dr. Thomas Roulet, King’s College
Sources: [email protected] (2014) 2014 Global survey on reputation risk, Deloitte. Oct; Eccles R.G., Newquist, S.C., Schatz R. (2007) Reputation and Its Risks, HBR, Feb.; Pfeffer J. (2016) Why We Absolve Successful People - and Companies - of Bad Behavior, SBI, June 6.
Action Point
Use the table to evaluate your company’s handling of reputation risk by rating to what extent you agree or disagree with the statements.