"A good name is better than great riches," a philosopher king said some 3,000 years ago. That truism can also be phrased in a more market-savvy way, "A good name is worth great riches."
How? Because a corporation's good name, its reputation, has value that generates profit.
The fact of the matter is simple. In most cases, you and I are most likely to do business with people or organizations we trust. And in today's global marketplace, where personal relationships can be fragmented and distant, trust is built on reputation in the marketplace.
In light of corporate scandals such as Enron, Global Crossing and Tyco to those of supposedly trustworthy mutual funds, is it any wonder then that people are asking, "Can I trust this company enough to do business with them?" The impact to corporate profitability due to its reputation (or lack thereof) is very real.
But the trust issue isn't just relative to the buyers of your products and services, it's vitally important to employees as well. It impacts their retention and their day-to-day business performance.
According to a survey of 1,200 workers by global consulting firm Watson Wyatt, 44 percent of American workers say top managers and executives are sometimes dishonest, and 40 percent say the same of co-workers. Meanwhile, 51 percent of workers say companies too often 'spin' the truth when talking to them, according to a separate survey of 1,000 Americans by Towers Perrin, another global consulting firm.
What does that perception of 'untrustworthiness' mean to you? And your business?
The lack of trust contributes to weaker ties between workers and the companies for which they work, which in turn has a significant impact on corporate profitability. How much, you ask? Well, one good example can be seen in the records of publicly-held corporations. There, the three-year total return to shareholders is almost three times lower at companies with low trust levels than at companies with high trust levels, according to Watson Wyatt's WorkUSA 2002 survey.
To put it another way, trustworthy companies, those with a 'good name,' made three times more money for shareholders than untrustworthy companies.
When you add the loss of employee trust to unethical business practices, the bursting of the "dot-com" bubble and the recession of the past few years, the response is natural. Shell-shocked consumers and business-buyers alike are taking a deeper, more measured look at a company's reputation before making a purchase or investment.
That's where RQ comes in.
What is RQ? RQ is a relatively new term for "Reputation Quotient." The term RQ was coined by Dr. Charles Fombrun, Professor Emeritus of the Stern School at NYU and the founder of the Reputation Institute (www.reputationinstitute.com). Dr. Fombrun has done extensive research with companies around the world to understand the roles that their reputations play in their success.
Fombrun and his group have learned that the most successful companies, and those that can endure great challenges, all have one thing in common: Strong reputations, or high RQ.
According to Christopher Foss of the Reputation Institute, "It's common knowledge that a good 50 percent of most companies' market value is made up of what accountants call intangible assets that are not on the balance sheet. Assets like knowledge capital, like the brand itself, relationships with vendors. And reputation is one of those intangible assets. But if you view reputation as a magnet that has the ability to attract resources that are crucial to the bottom line, the degree to which you have a strong reputation or don't is going to definitely affect your ability to attract resources and to do well financially."
The four principles of your company RQ The research conducted by the Dr. Fombrun indicates that there are four key principles of the reputation quotient:
Distinctiveness:
Strong reputations result with a company's distinctive position in the minds of resource holders or consumers. Much of this attribute is often related to the firm's brand positioning and marketing efforts, but its believability is directly linked to the other principals.
Authenticity:
Strong reputations arise when companies are genuine. Companies must 'walk the talk' in their media relations, corporate performance and governance. This is the area where many companies falter and find their reputations and profits flagging as a result.
Transparency:
Strong reputations develop when companies are transparent in their business affairs. This means lots of communication, creating highly visible presences across whatever media is available to them and engaging stakeholders in continuing dialogs.
Consistency:
Strong reputations result when companies focus their actions and communications around a core theme. This almost single-minded focus, when continued over time, builds a belief presence in the mind of the stakeholder that you'll do in the future what you did in the past.
Building up your RQ: It's all about the message' To some degree, reputation management is a science based on one simple concept: your stakeholders' perception
is your corporate reputation.
Knowing then that your reputation is a solid -- and manageable -- contributor to your bottom line, how do you build it up? Your reputation is based on the signals or message you send to your stakeholders. So, building your RQ can be approached as a three-step process to identify, build and manage your message:
Step 1: Determine Your Message
In their landmark book "Positioning," Jack Trout and Al Reis make the unassailable point that success is first and foremost dependent on knowing who you are and what you (want to) do that's different from anybody else. Unearth your unique promise of value. Learn what separates you from your peers and is compelling to those who need to know about you so that you can expand your success.
This is, for many in the staffing arena, sometimes difficult. For example, all too often you (and more importantly, your customers) hear something like, "Our quality service differentiates us."
Does it now? Can you prove it? Do you have metrics that quantifiably demonstrate that quality?
The point is that you have ammunition to prove your point of differentiation from every other staffing or recruiting firm that makes a similar claim. In this case, it means having the necessary system in place to accurately measure and report on every aspect of your business that demonstrates quality.
Step 2: Construct Your Message
Build a communications plan to express your brand. Your brand position must be one that everyone within your company and every stakeholder -- including customers and contingent employees and candidates -- outside your company can and will buy into.
Then, identify the tools that you will use to communicate your unique promise of value so that you will become consistently visible to those around you. Remember that as a staffing and/or recruiting firm, human capital is your area of expertise. Use it. Leverage it. Integrate that expertise into every part of your message.
Going back to our quality service example, you could create regular announcements of service quality standards you've measured and achieved. You could translate these into reports to customers and prospects. You could demonstrate the success of your placement services to candidates, and the efficiency of your payroll services to contingent employees.
Step 3: Orchestrate Your Message
Manage your brand environment. Integration is the key here for staffing and recruiting firms. You have to create and manage a single, consistent message that is repeated over and over again until the name of your firm becomes synonymous with the message you're delivering.
This means that everything must work together. By everything, I mean everything that is remotely business related. That includes your advertising and public relations, products and services, contingent employee benefits, staff employee benefits and community service programs. And don't forget your desk, the associations and philanthropic organizations you belong to and the office party, if you have one. You must ensure that everything that surrounds you sends the same on-brand message.
Do it right, and in our quality service example, your firm will be known as THE staffing and recruiting firm candidates and customers will want to work with. Equally important, high-performance contingent and staff employees will want to work for you. Why? Because you have a reputation for quality.
Conclusion As demonstrated by the companies whose sinking fortunes are due to poor ethics and poor reputations, a high RQ is more than just highly desirable. It generates real profit through a strong, consistent and believable message.
It takes serious time and effort to build a great reputation RQ, yet it can be trashed quickly if you aren't vigilant. And if that happens, it is not quickly regained. In short, a good reputation is a profitable one, and developing and maintaining a high RQ should be a principal component of your business strategy.
END
Recommended Reading :
Fame and Fortune: How Successful Companies Build Winning Reputations
Charles J. Fombrun, Cees Van Riel
- end -
About the Author
Phil McCutchen has more than 25 years of marketing and advertising experience and has written on a variety of topics related to software use, human capital management, graphic design and more.
tweet this!
