Reputation Gurus

A recent New York Times/CBS News poll reports that 81 percent of Americans believe “things have pretty seriously gotten off on the wrong track” in the U.S. Hardly a day passes without terrible news about an individual company or whole industry. Bankruptcies. Bailouts. Buyouts. Observers might call this an economic crisis.

Though unreported, a common thread in the downturn has been that many American companies have compromised their reputations. As the graphic here shows, a corporate brand or reputation is the product of customer interactions on eight factors – ranging from financial performance to product quality.

This means companies need to pay attention to how they are perceived overall. Unfortunately, some executives spent the last few years defining their companies’ reputations on the strength of financial performance alone.

When a brand is narrowly defined, risk increases because stakeholders have fewer factors on which to judge the brand. Failure to deliver on a brand’s more focused promise means that stakeholders lose faith or trust in the brand. Companies that defined themselves primarily on the basis of financial performance disappointed when they failed to meet financial expectations.

The tendency during challenging economic times is to trim spending on all “non-crucial” activities. But, companies must be careful in assessing what is really crucial. I’d argue that the corporate reputation or brand is at least as important – and valuable – as a few quarters’ performance.