Riku Ruokolahti: Organizational policy and employee engagement are key to reputation management
“That’s just how it is, of course. It’s always been obvious.”
In the previous chapter, we revisited the philosophical roots of reputation and competitiveness and compared established theory with statistical evidence. By this I mean the link between reputation and stakeholder support.
I have often noted that the evidence presented has been dismissed with a shrug: “Of course that’s how it goes. This has always been a no-brainer.” To this, I could simply comment, for example: “Yeah, yeah, that’s nice, but it hasn’t been a no-brainer.” If the connection between reputation and stakeholder support has always been crystal clear, I’d love to hear how you’ve reacted to this even clearer-than-water issue.
Competitiveness is at the heart of all business operations, strategic planning, and management. If the mechanics of stakeholder support have always been firmly under control, surely the metrics, goals, and the expected impacts of those goals have been on point for quite some time now? Not to mention strategic planning—have things been run on this basis?
That is the million-dollar question. The meta-analysis presented here confirms the theory quite convincingly. Stakeholder support does not merely follow reputation; it amplifies it. This leads us to the conclusion that this is not just an interesting and logical theory, but documented, established practice. The business impacts of reputation can be understood and tracked. From a management perspective, this makes a huge difference compared to many other “obvious” concepts.
In this chapter, we will explain as clearly as possible how the transition to systematic reputation management often takes place. To give the chapter a touch of real-world management, we will use the semi-fictional company Giant Corporation as an example. The example is semi-fictional in the sense that I use the fictional company to summarize many real events, but the figures we examine are actually measured data from an anonymous company.
A buzz in the corner room
Let’s play with some thought experiments again. Today, you’re the head of leadership. Your mission for the day is to allocate resources, monitor progress, and set the direction for the entire leadership team at Giant Corporation. You’ve just started your job, and the corner office is a hive of activity. The heads of various functions and business units are bustling about with their key staff, arguing about what matters most in this world.
The HR director talks about how the workforce is a company’s most important resource. Joining him is a young rising star who explains that employer brand is everything, citing Jim Collins and the War for Talent study. There’s a line at the door. Next up is a visionary and knowledgeable marketing director eager to speak about the brand. This is where we need to invest!
And the door opens. The Head of Sustainability walks in, wanting to discuss the compatibility of the company’s strategy with the fight against climate change. The stock-price-oriented
CFO wants to shift the company’s focus to cost competitiveness, and the Head of Development is changing the innovation process. The sales director, on the other hand, calmly recommends—with sound reasoning—that the High-Pressure Funnel sales model, which he himself developed and has proven effective in the heat of battle, be placed at the center of the company’s strategy, and that we start, for crying out loud, to really go for it instead of making excuses. The Administrative Director sees risks in everything and hopes that we don’t just go off and mess things up.
Finally, a communications director who has drawn inspiration from a prestigious university’s graduate program steps up and explains that Giant Corporation’s reputation is a really important matter that concerns everyone, and that the entire executive team must now commit to this.
The speeches are excellent; everyone’s arguments are crystal clear and the logic is airtight. The discourse is peppered with carefully selected quotes from academic superstars. Inspiring! This company’s leadership is no ordinary bunch. Your problem is that the wishes and arguments are at odds with each other, and the experts presenting their cases have differing views of the situation. It’s enough to make your head spin. You certainly can’t please everyone, and “something for everyone” means nothing for anyone.
Keep your eyes on the ball
There is a grain of truth in that previous exaggeration. An organization is, in its own way, a political environment where different actors very often have conflicting agendas. Many things that seem crystal clear in your mind are, in reality, as foggy as a November morning.
In the chapter on the maturity of reputation management, it was already emphasized that reputation management is a team sport. To succeed in this sport, you need to get everyone on the same page. To achieve this, at least the following two things are required.
First of all, this self-evident point must be argued and proven beyond a shadow of a doubt. This should be done at a level and in a language that ensures the arguments resonate with all parties involved. Ideally, the discussion will reach a point where the participants largely agree and prioritize reputation in a similar way.
Reaching this kind of conclusion usually requires numbers and data. This is precisely where the quantitative meta-analysis presented earlier really shines. Everyone knows that arguments along the lines of “reputation is so important”—spiced up with academic anecdotes—usually aren’t enough to convince a broad and diverse audience. Or people might very well think you’re right in principle, but their priorities won’t change. Things only change along with priorities. Like: “Climate change is real, but I’m still flying to Asia for a long weekend.”
Second, you need to reach a shared understanding of the company’s reputation. If you have different perceptions of your reputation, you cannot work together to improve it. In that case, you’ll likely end up with a truck pulling up with its horn blaring and dumping a pallet full of surveys on your desk. There are customer experience and satisfaction surveys, employer brand studies, employee satisfaction surveys, political analyses, sustainability reports, opinions from the neighborhoods surrounding factory sites, a wheelbarrow full of brand studies, and one study has even selected the year’s communications director. The table is groaning under the weight of reports that are excellent and necessary in their own right, but the metrics aren’t comparable, and each one examines different content. Every individual participating in the discussion finds support for their own opinions in them. After an exhausting data marathon and a lively discussion, you have no shared understanding of the situation. Oh, if only I could go home!
Reputation must be measured and analyzed on its own terms
If the meta-analysis of the relationship between reputation and stakeholder support tells the story of the overall impact of reputation, then the measured structure of reputation provides a snapshot of the organization’s reputation.
In the section on the maturity of reputation management, I referred to the way reputation is shaped in every possible interaction an organization has with its stakeholders. For this reason, for example, customer experience or any metric centered on a single issue is not the same thing as reputation. Reputation consists of the perceptions of the organization and its operations that stakeholders have accumulated over time from any perspective. An organization can be viewed, for example, as an economic entity, a workplace, a member of society, a community, a producer of products and services, or an active actor expected to behave in a certain way in its business operations now and in the future. For this reason, a set of metrics designed for some other specific need cannot capture the organization’s holistic reputation and its impacts. That was never the intention, and reputation cannot be measured by accident.
We’re looking at a well-known meta-analysis of corporate reputations among the general public. We’ve already seen this chart in the chapter on stakeholders, but now the context is more comprehensive.
Jobs are calling
Let’s stop the small talk and get down to business. Let’s call a meeting of the executive team at Giant Corporation. The goal is specifically to establish a shared priority and a clear understanding of the situation regarding our reputation. That’s all for now. We’ll leave the reversing research truck at the loading dock and choose Reputation&Trust as our tool. The communications team could certainly name other reputation metrics, but we’ve heard a lot of good things Reputation&Trust from our colleagues.
The analysis highlights this year’s most reputable and least reputable companies, along with their stakeholder support. The data becomes extremely interesting when viewed in context. Discussion of the phenomenon and the companies flourishes until someone asks where we ourselves would place ourselves on the map. The group becomes cautious. It’s not fun to guess wrong. Only the bravest reveal their cards.
The tension eases as Jätti Yhtiö Oyj’s data point snaps into place. Here we are! And that’s not all. Right next to us appear our two most significant competitors. There’s just one image in front of us, but it says a lot. Where are we—the conversation calms down—and why are we where we are—the conversation starts up again.
At the same time, the link between reputation and stakeholder support is confirmed. Thanks to this confirmation, team members understand why reputation management is important and where it fits into the company’s strategy. At the same time, our team’s competitive spirit is rising. We are gradually starting to pull together. The dam has broken, and you open a discussion about where we, Giant Corporation, Inc., should be. The level of ambition varies. Soon we realize that knowing where we are isn’t enough. Now the priorities have been set. This really needs to be managed!
Measuring the structure of reputation among stakeholders provides a snapshot of the current situation
Assessing and prioritizing the situation is a good start, but it is not yet leadership. The situational awareness must be deepened, and based on that, objectives must be set, followed by plans to achieve those objectives. But let’s focus first on situational awareness. As noted in previous chapters, the general public represents a kind of overall reputation for the organization. Giant Company operates in the international B2B market and, as such, has nothing commercial to offer Finnish consumers. However, there are several aspirations regarding the general public.
It is crucial that Finns trust the Giant Corporation. We need the support of our domestic market to succeed globally. This support could take the form of more favorable legislation and smoother approval processes for subsidized product development projects. As a company, we are particularly dependent on regulation. Our head of public affairs is a product of the political system and is considered an incredibly well-connected and smart figure. Trust in the person is strong, but there’s a question mark over the company. In fact-based background discussions, we’ve started hearing comments like: “I agree with the argument, but we also need to consider how this will be interpreted by voters. Supporting Jätti Yhtiö Oyj’s proposals in this situation…” We’re not losing on the facts, but emotionally, we’re starting to take a beating.
When we examine the structure of its reputation, we notice that perceptions of Giant Corporation are quite divergent. The company is seen as highly profitable and financially stable, but at the same time as a poor communicator. Is it the case that Giant Corporation does not listen to or understand its stakeholders? The truth may be one way or another, but the general Finnish public holds the perception that Giant Corporation handles communication poorly. Ratings for the company’s governance and responsibility are also quite low, and the price-quality ratio of its products is not considered particularly impressive either.
The structural analysis reveals that Giant Company’s average reputation relies quite heavily on its financial performance. Is this a good or a bad thing? It depends on how the various components of reputation affect stakeholders. But we’ll return to this a bit later with the help of data analysis. Let’s first consider the structure of reputation on its own.
The company’s joker starts talking and frames Jätti Yhtiö Oyj’s reputation within a narrative structure: “Can this be interpreted to mean that an arrogant company makes unlimited amounts of money without caring about its responsibilities or stakeholders?” Ouch. That wasn’t very funny after all. The measured reputation structure can indeed be interpreted this way.
Their expressions are serious, and the conversation is lively. Where does this perception come from? Are the measured perceptions accurate, or do the general public’s perceptions differ from the Giant Company’s actual performance? In other words: do we have an operational problem or a communications problem?
If perceptions of the company’s interactions, management, accountability, and products and services are in line with our actual performance, the problem is certainly not one of communication, even when we’re talking about reputation. On the other hand, if our actual performance demonstrably exceeds public expectations, we can begin to address the problem directly through communication.
But how can we tell which perception is true and which is a misconception? The point here isn’t to get philosophical, but rather to be practical. The question is still relevant, however. Jätti Yhtiö Oyj’s performance in various areas is always measured against expectations. Even mediocre performance can seem good to us if our own expectations aren’t very high. In this context, it is important to understand the expectations of stakeholders, and you, the management team of Giant Corporation, must discuss the operating environment and how it is changing.
You grit your teeth and boldly ask out loud: “Is it really the case that people are just misinterpreting us and the whole thing is one big misunderstanding? Or is it that expectations regarding companies have changed faster than Giant Corporation’s operations have actually evolved?”
Industry and competitor analysis provides context for the results
The painful issue raised in the previous paragraph is drowned out by a flood of defensive comments. We are in an industry that not everyone accepts from the outset… The general public doesn’t understand that we have to operate… Political influencers use us as their pawns… Legislative changes have forced us to lay off… and so on.
If anyone dares to ask such a terrible question, the conversation almost invariably turns to looking for someone else to blame. No one wants to look weak, so the operating environment is used, as is traditional, as a general scapegoat. The company has done a fantastic job, but the whole world is fighting against it!
I’m being a bit blunt here, even though I often consider reputation management to be a thankless task for those involved. The reality is that the operating environment is the same for everyone. It is, of course, true that it is constantly changing and that, from time to time, certain changes are exceptionally difficult for entire industries. Everything is constantly changing, and on average, people do not like change. Of course, this is also reflected in the reputations of companies and organizations.
However, it is not the role of the world around us to adapt to our business. Adaptation is our responsibility. And adaptation means that we need to look inward and align our own actions with our operating environment. Just ask the film crew from the “Operating Environment” episode.
It is also true that different industries have different starting points when it comes to reputation management. If you were to establish a mining company in Finland today that grew rapidly and delivered world-class performance across all metrics, it would be hard to imagine the company struggling to win the title of “most reputable company” next year. A Finnish breakthrough in the global mobile gaming market could yield a different result. The industry and its history influence people’s perceptions and expectations, and through them, their interpretation of the organization and its intentions. These expectations “out there” are, in themselves, part of the operating environment.
The best way to gauge your own performance relative to the operating environment is to compare your company’s reputation with that of other companies or organizations in the same industry that are in a similar situation. This provides context for your organization’s reputation—a point of comparison that highlights the level of your own performance.
It's time to pull up that competitor comparison!
The situation was clearly starting to get a little frustrating. The entire executive team is meeting for the first time to discuss this issue, and Giant Corporation has clearly fallen behind the rest of the industry. Now people are starting to question the research methodology. Who was asked about this? How was this data collected? And when was it collected? Is it possible that it’s related to that story we had in Etelän Media right around that time…
The data on Jätti Yhtiö Oyj was collected using the same standard and at the same time from all entities surveyed. Its statistical accuracy is +/-0.04 units in either direction on the 1–5 scale presented. And no, that one story in Etelän Media does not account for the differences in scale relative to the competition. This interpretation is supported by the fact that Jätti Yhtiö’s reputation was at a similar level in the previous survey as well.
Resistance is broken down through dialogue. It is always difficult to accept new information that contradicts our previous understanding or hopes. To those who have already formed their own view of the situation, these ideas may sound pointless or frustrating, but they are certainly not. In reality, we are on the verge of a breakthrough. People’s doubts and fears are now out in the open, and we have opened up to discussion. A discussion based on measured and unambiguous data. We are now moving rapidly toward a shared understanding of the situation across the entire leadership team. We are at the heart of reputation management.
What about other stakeholders? What kind of reputation do we have among customers, employees, investors, or political influencers? Of course, we haven’t measured these yet, but we have taken the first—and often the most difficult—step. We are able to prioritize our reputation in a consistent manner, and we have a unified understanding of Jätti Yhtiö Oyj’s reputation among the general public. Moving forward, working together will certainly be easier.
Riku Ruokolahti has written a handbook on corporate reputation and reputation management. The section published here—on organizational policy and employee engagement—is part of the handbook’s second section: Systematic Reputation Management.
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