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2011 05 Reputation

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15 views

2011 05 Reputation

Uploaded by

Santiago Czop
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Reputation rules

May 30 2011, By Chris Serb

In 2010, five of the world's leading companies — BP, Toyota, Goldman


Sachs, Johnson & Johnson and Hewlett-Packard — battled major crises.

There was a lot at stake in each of these situations: Mishandling a crisis


can destroy decades of goodwill, and in extreme cases, can even destroy
a company itself.

In Reputation Rules: Strategies for Building Your Company's Most


Valuable Asset, Daniel Diermeier, the IBM Professor of Regulation and
Competitive Practice and director of the Ford Center for Global
Citizenship, asserts that the 24/7 news cycle and rise of social media
have made reputation management a higher strategic priority than ever.

"It used to be that if you did well by customers, treated employees fairly
and delivered value to shareholders, then a good reputation would
follow," Diermeier says. "But what used to be sufficient just isn't enough
anymore. Every business decision that we make can be put on a bigger
stage, and companies have to be ready for these challenges."

The impetus for Reputation Rules stemmed largely from Diermeier's


work with MBA students and participants in executive programs —
especially the CEO Perspective Program, which Diermeier co-founded
in 2005.

"It is striking, despite their different personalities and business


challenges, that 'reputation' is among the top things that almost all CEOs
are worried about," Diermeier says.

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In the book, Diermeier offers dozens of case studies and examines
strategies and principles for achieving the best outcomes. At its most
basic, reputation management starts with avoiding reputational risks
whenever possible, he asserts.

To build trust, companies must leverage their corporate social


responsibility efforts to gain a reputational benefit, as Wal-Mart did with
its Hurricane Katrina relief efforts.

Reputation management must also be integrated into a company's


strategy. Diermeier asserts that it's a capability — rather than a function
— that is based on an appropriate mindset and supported by processes
and company culture. Crises, however, can provide valuable
opportunities for building and reinforcing a company's culture and
values.

"It's critical how you handle failures," Diermeier says. "These are
teachable moments, opportunities to reinforce what your company stands
for."

Diermeier cites a bribery scandal at General Electric in the early 1990s.


Though an investigation revealed that only one employee had knowledge
of the bribes, the company fired, demoted or reprimanded 20 others who
should have realized what was going on. "GE was very conscious of the
need to send a message: 'You will be held just as accountable for damage
to our reputation as if you didn't meet your sales numbers,'" Diermeier
says.

In a world of increased reputational risks, all businesses need to build


reputation management capabilities at the enterprise level.

"Ask yourself whether your brand or your reputation is a critical success


factor for you," Diermeier says. "If it is, then you must ask if your

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company has the mindset, values and processes to manage reputational
risks. What I've tried to provide in this book is a guide on how to do
this."

Provided by Northwestern University

Citation: Reputation rules (2011, May 30) retrieved 11 May 2024 from
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